A Clear and Present Danger

The good news on the economic front is that the bad news isn't as bad as it could have been.  Unemployment has dropped to 8.9%  (take that with as many pounds of salt as you think appropriate.)   Even better, U6, a broader measure of unemployment has dropped to 15.9%  This is the first time in almost 2 years that U6 has dipped blow 16%.  How thrilling is that?  The economy added about 192,000  new jobs in February.   Unfortunately, this is not quite enough to actually be helpful.  Meanwhile, new unemployment claims fell to 368,000.

By my reckoning, that still looks like a net loss of 176,000 jobs.

So the bad news is that the good news is somewhere between weak and anemic.  In fact, if you take off your rose colored glasses, it's hard to find any.  The economy needs to net out at about 150,000 new jobs per month just to keep up with population growth.  Further, at last April's rate of 19.6% among 25-year-olds, unemployment is distressingly high among the last three year's worth of college graduates.  Oh, wait - that's the LUMP OF LABOR FALLACY.

Here's Krugman:

The clear and present danger to recovery, however, comes from politics — specifically, the demand from House Republicans that the government immediately slash spending on infant nutrition, disease control, clean water and more. Quite aside from their negative long-run consequences, these cuts would lead, directly and indirectly, to the elimination of hundreds of thousands of jobs — and this could short-circuit the virtuous circle of rising incomes and improving finances. 

Of course, Republicans believe, or at least pretend to believe, that the direct job-destroying effects of their proposals would be more than offset by a rise in business confidence. As I like to put it, they believe that the Confidence Fairy will make everything all right. 

But there’s no reason for the rest of us to share that belief. For one thing, it’s hard to see how such an obviously irresponsible plan — since when does starving the I.R.S. for funds help reduce the deficit? — can improve confidence. 

Beyond that, we have a lot of evidence from other countries about the prospects for “expansionary austerity” — and that evidence is all negative. Last October, a comprehensive study by the International Monetary Fund concluded that “the idea that fiscal austerity stimulates economic activity in the short term finds little support in the data.” 

And do you remember the lavish praise heaped on Britain’s conservative government, which announced harsh austerity measures after it took office last May? How’s that going? Well, business confidence did not, in fact, rise when the plan was announced; it plunged, and has yet to recover. And recent surveys suggest that confidence has fallen even further among both businesses and consumers, indicating, as one report put it, that the private sector is “unprepared to fill the hole left by public sector cuts.”

Fed Chair Bernanke estimates that impending Rethug austerity will cost 200,000 jobs.  Sir Boner of Orange's response is, of course, "So be it."   Meanwhile, the flaming liberals at both Goldman Sachs and Moody's put the job loss number at around 700,000.  Well, I guess that's just more tough shit.

America - this is what you get when you vote for Rethugs.  Let this be a lesson to you.
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