“Oh dear, or dear, oh woe is us… the economy isn’t improving under the Obama Administration,” wail the supporters of the Romney/Ryan ticket. Let’s break the DB rule (that Wall Street news isn’t necessarily economic news) and take the most common thermometer of economics presented by the corporate media — the Dow Jones Industrial Average. When the Wall Street collapse of 2008 hit bottom in March 2009 the DJIA was 6,626.94 after the Wall Street Wizards outfoxed themselves with derivatives and other shenanigans. Last week the DJIA was reported as 13,275.20. Haul out your handy calculator, and you’ll discover that since March 2009 the DJIA has increased by a tidy 100.322%.
Americans are deleveraging. In the First Quarter of 2009 the debt service ratio was 13.52. The ratio shows the relationship between disposable income and debt payments. The more households shed debt the more disposable income there is available. The DSR rose above the 13.00 mark in the First Quarter of 2001, and hit 14.08 in the Third Quarter of 2007. There’s a mixed message herein. On one hand reducing household indebtedness is a good thing — especially after it shot up during the Housing Bubble — because the higher the debt the lower the level of disposable income. However, in a consumer based economy fewer people making purchases on credit tends to depress demand for goods and services. Double edged sword though this may be, the point is that Americans have consistently been doing exactly what the GOP has been promoting, “personal responsibility and thrift.”
They don’t get to have it both ways — they cannot grumble that demand/growth isn’t increasing fast enough on one hand, and then grouse that people aren’t being responsible savers on the other.
Look at the trend line in private sector employment since we hit bottom in March 2009. By January 2010 private sector employment increased to the positive side of the graph, and has continued. The dip in the chart illustrates what happens when public sector employment decreases.
Now, let’s toss in a few Bonus Charts. Tax and Spend Democrats? Not. So. Much.
The highest rate of annualized federal spending growth happened in the first Reagan term, followed by President George W. Bush’s 8.1 rate. President Obama’s 1.4 rate looks rather pale in comparison.
And, for those trying to make the argument that corporations can’t hire more people because corporate taxes are too high — What of the increase in corporate profits shown in this FRED graph? Surely, if taxation were a major factor in the staffing decisions in corporate America then we’d have to assume that the companies were facing declining revenues such that hiring decisions were postponed? No. The hard fact of life is that hiring isn’t based on marginal tax rates — hiring happens when a company determines that it cannot meet the demand for its goods and services with its current level of staffing.
All the bluster about “Prosperity,” and rhetorical flourishes about “Freedom,” can’t disguise the actual economic picture. Wall Street is doing very well, thank you American taxpayers. Corporations are doing reasonably well. Americans are doing just what the Austerity Buffs are advising — deleveraging.
The part of America that is not faring all that well by comparison are middle class Americans who will be asked to shoulder more of the burden and get fewer services for their tax dollars, while the millionaires and billionaires are protected and rewarded with even lower tax rates in the Romney/Ryan plans.
And just for good measure — where did that deficit that the Republicans are so disturbed about come from? There’s an old stand by chart for that too: