Pollyannaish Economic Prognostications

"At some point, someone is going to have to level with the American people about just how bad things really are and why, despite all the ministrations from Washington over the past two years, they don't seem to be getting much better."

- John Merline, Opinion Editor, AOLnews.com, Aug 13, 2010

I'm amazed at people who believe that the government knows best and can be trusted to control the economy. Centralized planning has never worked, in any country, ever. History is full of examples of failed socialist states, failed attempts at price controls in "free" states, and failed attempts at government controlled utilities (eg. British coal mines). In a free market economy the penalty for being wrong can be the loss of your job or the bankruptcy of the company. Mistakes are weeded out. This is not the case in government - "What our stimulus of a trillion dollars failed?! Why that must mean we did not spend enough and must keep doing more of what failed before." The penalty of failure is an important component of free markets and why the concept of "too big to fail" is such a dangerously wrong idea.

The opinion editor at AOLnews.com has published an article entitled, "Opinion: Where Did All Those 'Green Shoots' Go?" The article includes this chart of "Pollyannaish Economic Prognostications" from the Obama administration over the past two years. It maps government statements to the unemployment rate. From the chart you can conclude one of two things:

1. The government economists are totally clueless
or
2. The administration is lying and not reporting the real predictions of the economists

A) Obama budget predicts that the unemployment rate for 2009 will be 8.1 percent (actual rate is 9.3 percent), and says it will be 7.9 percent in 2010 (average so far: 9.7 percent). -- Feb. 26, 2009


B) Fed Chairman Bernanke says he sees "green shoots" of U.S. recovery, which, he said, would "pick up steam" next year. -- March 15, 2009

C) Obama says, "We are beginning to see glimmers of hope." -- April 14, 2009

D) CNN reports that "Job Recovery May Be on the Way." -- May 18, 2009

E) Jeffrey Kling of the Brookings Institution says, "It seems clear the U.S. economy has turned a corner." -- June 5, 2009
 

F) Bernanke says recovery is under way and "prospects for a return to growth in the near term appear good." -- Sept. 16, 2009


G) Obama says, "We are seeing the corner turn on the economy growing again." -- Feb. 7, 2010

H) Obama says, "The worst of the storm is over. ... We are beginning to turn the corner." -- April 3, 2010

I) Obama says, "The economy is getting stronger by the day." -- June 4, 2010

I) Vice President Joe Biden dubs the months ahead "Recovery Summer," and David Axelrod adds that "this summer will be the most active Recovery Act season yet." -- June 17, 2010

I) Obama declares the economic recovery is "well under way." -- June 29, 2010

J) White House press secretary Robert Gibbs says, "The economy is getting stronger." -- July 8, 2010
 
Bottom Line
 
What's the truth? Aug 10 the Federal Reserve issued a report saying the "pace of recovery in output and employment has slowed in recent months." Jobless claims have hit a nearly six-month high. There is talk in the media about a possible "double-dip" recession.
 
Check out the article "The Cabinet From Another World" by IBD Editorials.

"America is wising up to this administration's incompetence. Only minutes after [the labor] department reported that payrolls had shed another 131,000 positions in July, there was Secretary [of Labor] Hilda Solis speaking brazenly of the "strong and immediate action" the White House had taken to save or create "more than 2.5 million American jobs." But as the market action showed [the Dow fell 100 points in seconds], investors could see she didn't know what she was talking about."

"...There's never been an administration led by so few people with any experience in the private sector — including the president, the vice president and even the treasury secretary, who last week wrongly called it a "myth" that raising taxes on high-income Americans would hurt small business."