First, the good news–Job losses appear to be lessening in pace and the economy looks set to make a turnaround:
Evidence is piling up that the worst part of the recession has ended. But that doesn’t mean the pain is over.
A better-than-expected unemployment report Friday — job losses declined to the lowest level in six months — capped a week of encouraging news, including firmer home sales, a revival in consumer spending and fresh optimism about the biggest U.S. banks.
The economy remains vulnerable to further shocks, and 13.7 million people are unemployed. The jobless rate rose to 8.9 percent in the new report and still seems headed for a stinging 10 percent.
Yet confidence is building that the recession, the longest since the Great Depression, will end this summer or fall, setting the stage for a slow recovery.
Pointing to recent improvements, President Barack Obama said Friday “the gears of our economic engine do seem to be slowly turning once again.”
By some measures, the darkest months have passed. The plunges in economic activity and rising waves of layoffs, seen from the end of 2008 through the start of this year, seem to have subsided.
“The winds are still howling, but I think we can see the sunlight on the distant horizon,” said Mark Zandi, chief economist at Moody’s Economy.com. “Clearly, the job losses are moderating.”
Good and welcome news, and it tells you just how tough things have been recently that we are rejoicing over a report that hardly sings of wine and roses in our future.
Now, for the important fact to note: This turnaround appears to be happening well before any stimulus projects have been put in effect. Oh, to be sure, the linked report mentions that there is anticipation of tax cuts and government spending taking effect, but the business climate is improving independently of any expectations concerning increased stimulus spending.
Why do I make a point of mentioning this? Why, because the Obama Administration will be sure to credit its work in passing the stimulus package in claims that it helped the economy turn around. This, despite the fact that the private sector is turning around well before stimulus works are implemented.
Something to remember in future months as the political debate over the economy shifts and changes. Bill Clinton successfully claimed credit for the end of the recession he ran against in 1992 . . . even though the National Bureau of Economic Research stated that the recession came to an end in March, 1991–seven months before Governor Clinton announced for the Presidency. Indeed, right before Election Day, 1992, reports came out that GDP had increased a whopping 4.8%. This didn’t stop Clinton from posing as an economic savior–an act he continues even today.
President Obama has surely learned from his predecessor, and will seek to repeat the Clinton Administration’s claim of credit for the economy. He shouldn’t be allowed to do so.