Tuesday marks an important 1-year anniversary. On March 9, 2009, the S&P 500 closed at 676.53, marking its bottom from a 17-month decline that began in October 2007. Since that bottom, the S&P has risen 68% under our "socialist" president to its current standing at 1,138.69. And while a lot of this is still somewhat bubblicious due to the unaccountable Wall Street bailouts and return of speculation money, it still is noteworthy, as the freefall that was evident a year has clearly stopped.
However, the clear lagger is employment, where the American economy continues to shed jobs and the resulting lack of demand threatens a serious recovery. But here, we also see clear signs of stabilization compared to where we were a year ago. (read the official BLS release yourself off to the right of this page)
Oct. 2009- Feb. 2010 - 556,000 jobs lost (93K a month).
Oct. 2008- Feb. 2009- 3.918 million jobs lost (653K a month, more than what was lost the last 6 months combined).
Let's also compare it to the last president who took over in a declining economy. And I won't even compare it to the 6 months after 9/11, as that's an extraneous event that no president should be blamed for.
Oct. 2009- Feb. 2010- 556,000 jobs lost
Mar. 2001- Aug. 2001- 608,000 jobs lost. Still higher.
Productivity continues to zoom ahead as well, going up by an estimated 6.9 percent in the 4th quarter of 2009. The textbooks and right-wing think tank world would tell you that high productivity and increased stock prices should drive hiring due to the comparatively high returns for adding labor, and that capital gains lead to reinvestment. But when comparing the stock market and the jobs market, the clear message is that rich folks are deciding to plow money into equities over employment and expansion. This is despite a number of reports I've heard and seen that indicate suppliers continue to fall behind on orders, mostly because they are feeling no retribution for their delays. Action needs to be taken to make these people do the most positive thing for our economy at this point- hire and continue to make things.
Does anyone else think higher cap. gains and reduced payroll taxes are the way to go in the face of this data? The last decade has proven once and for all that lower cap.gains do NOT get reinvested, but instead are hoarded for personal use and put back in to other forms of legalized gambling. This is not a way for an economy to sustainably grow.
It's also worth mentioning that we are now just over a year since the passage of the stimulus package, officially known as the American Recovery and Reinvestment Act (ARRA). Now, lots of people have pointed to the contuinued decline in jobs to say it hasn't worked and was a waste of money. But there's no doubt that the stimulus and other moves have stabilized our economy, as well as avoided even larger fiscal disasters at the state and local levels. As it is, state and local governments have lost a seasonally adjusted 165,000 jobs in the last year despite an increase in demand for services due to the increased unemployment and continued increases in enrollment for many universities. As I've mentioned before, government may be the only industry where we the amount of employment and scope of service is cut when demand goes up. How bad would it look without the billions from Uncle Sam in the stimulus?
Private sector employers have refused to hire, either due to a belief in low demand or a belief in keeping profits for themselves, so the public sector has had to be the one to pick up the huge slack in the economy. Numbers don't lie here, and while more is need to be done to reign in health insurance costs and other threats to hiring and our ultimate economic recovery, it is beyond doubt that the stimulus has succeeded as a stabilization policy. The biggest mistake made with the stimulus was its name- it should have been called the American STABILIZATION and Reinvestment Act. Because that's what it really was, it was an attempt to stop the bleeding that was in our economy in early 2009. AND IT WORKED.
We are nowhere near out of the woods, but we're in a lot better place than we were a year ago, and people better take a step back and realize it. Because if we go back to where we were a year ago, I don't know if we ever get back to a decent economy for most people in the real world.
