Saturday, July 30, 2011

"So be it"

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Yesterday, I wrote about my prediction for an "official" double-dip recession. One of the points I covered was the release by the Commerce Department of the second quarter GDP figures (along with the downward revision of the figures for the first quarter 2011 back to before the start of the Great Recession/Lesser Depression.)

Today, I have seen a couple of articles pointing out that the (lack of) government spending at all levels has been a large factor in the "disappointing" GDP figures. First up is this blog post from yesterday's Washington Post with the title "GDP Shocker: ‘Much of the drag was government’:

So what was the problem?

Government, according to Faucher. “The major drag came from government, on both the federal and state and local sides. Government subtracted 1.2 percentage points from growth in the first quarter, with the federal government accounting for about two-thirds of that,” he said.
Hoocoudanode, right?

Bloomberg reported it this way:
Spending and investment by state and local governments shrank at a 3.4 percent annual rate in the second quarter, matching the decline in the first three months of 2011, the U.S. Commerce Department said today. The fourth consecutive drop is the longest such slump since the government began compiling quarterly data in 1947.

The U.S. economy expanded at a less-than-forecast 1.3 percent annual rate, the Commerce Department said. State and local governments accounted for a 0.41 percentage point drag, the same as the first quarter, as governors and mayors adjusted to lower revenue by cutting employees and services.
Peterr over at Firedoglake has this post today pointing out the problems of folks at all levels when they have too much month left at the end of the money compounded by worry that Social Security checks may not be forthcoming in August. But this little nugget really says it all for me:
When even the Chamber of Commerce is telling Congress to worry about the economy, you know that the GOP has gone way off the deep end. OSK-Deutsche Bank economists concur, as do the folks at Macroeconomic Advisors
Now I do have to ask how many folks remember the response of Speaker of the House Boehner way back in February when it was pointed out to him that cutting jobs could hurt the economy:
So be it.
You really should be careful of what you ask for Mr Speaker.

And because I can:

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