Ready for the bad news? The gross domestic product, a measure of the goods and services output of the entire American economy contracted by 1% this year. It did not grow, it contracted. This is worse than the most pessimistic forecast in a Bloomberg survey of economists, that was done before the figures came out. Partial good news, jobless claims fell to 300,000; they had been in the 360-350 range per week. The four-week average is the lowest since August of 2007. Very slowly getting better but very slowly the economy is getting worse.
Worse than the economy overall and the measurement which can be manipulated, easily is the GDP. The GDP is kind of funny. If you and your neighbor mow your lawn it is not part of the GDP. If you pay your neighbor to mow his lawn or your own law it is now part of the economy.
More grim than that is the level of business investment. Businesses investing in new equipment, new plants, new office furniture, new things for the business. It dropped by 1.6% annualized. It dropped by a bigger drop than the overall measure of the economy. Companies reduced their spending on structures- new plants, new offices etc. at a 7 1/2% pace. That is the biggest decrease in a year. Outlays for new equipment fell 3 .1%, the most since the third quarter 2012
It never has been. Trade was another soft spot. Exports declined! Exports, things made in America, then shipped off to other countries for sale, declined at a 6% annual rate. Imports rose, we are buying more and selling less, investing less and building fewer plants. Finally Americans understand the Bloomberg Consumer Comfort Index which fell to 33.3 for the period ending May 25, the lowest since last November. It was 34.1 the prior week.
Where is the recovery? Beyond all other issues, beyond confidence, beyond the failure of ObamaCare, beyond the foreign policy that is hell-bent on producing an enemy that may very well be able to defeat the United States, beyond all that, we have an economy that is not recovering because it is basically structured as a free market.
Our American people have freedom as our basic construct. We are consumers, we are investors, we are bettors. We will make a bet, on a company, on a horse, on anything we think we can make money on. We will bet, we will consume. We are a savvy people and something is terribly wrong with the driving engine of the world economy, which America has been, up until recent years. Something has terribly gone wrong here, because suddenly the people who are driving this train, believe it would be better and go faster and be more efficient if it was wind powered and used solar panels and was pulled by horses.
The economy is stagnant an and it’s going this way because of the policies of this administration and nothing else. Granted some of these policies were started by George Bush. But they have now been morphed into an evil transformation of the most prosperous producing economic system the world has ever seen. A system that is drawn hundreds of millions of people up out of poverty into opportunity and is now being dismantled in the name of social justice and equality. It will be the equality of poverty.
I can’t say all these things as if it was hypothetical or on a theoretical basis. We already know societies that have turned away from capitalism and turned away from freedom. Greece, Cuba, the Soviet Union, Egypt, France, etc.; the world is littered with governments trying to do more and more for their citizens than they can afford to do so.