Editore"s Note
Tilting at Windmills

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December 24, 2010

MEASURED OPTIMISM.... By the middle of spring, plenty of folks watching the economy were feeling relatively good. Economic growth in the first quarter was pretty strong, and in April, we saw more jobs created than at any point in four years. Conditions appeared to be improving so much, Karl Rove, National Review, and other media conservatives started working on ways to ensure Democrats didn't get credit for the recovery.

It didn't last. A variety of factors, most notably the European debt crisis, rattled global markets, growth slowed, and job creation stalled.

As 2010 comes to a close, however, we're once again seeing some sun peek through the clouds. The Wall Street Journal reports this morning, "As the economy gradually recovers, some big U.S. companies are cranking up their recruiting and advertising thousands of job openings." The New York Times added that a growing number of economists are expecting a stronger 2011.

Eighteen months after the recession officially ended, the government's latest measures to bolster the economy have led many forecasters and policy makers to express new optimism that the recovery will gain substantial momentum in 2011.

Economists in universities and on Wall Street have raised their growth projections for next year. Retail sales, industrial production and factory orders are on the upswing, and new claims for unemployment benefits are trending downward. [...]

Even so, economists are increasingly upbeat about the outlook, saying that while the economy in 2011 will not be strong enough to drive unemployment down significantly, it should put the United States on its soundest footing since the financial crisis started an economic tailspin three years ago.

Phillip L. Swagel, who was the Treasury Department's chief economist during the administration of George W. Bush and teaches at the University of Maryland, said, "The recovery in 2011 will be strong enough for us to see sustained job creation that will finally give Americans a tangible sense of an improving economy."

The rationale for "measured optimism" isn't without evidence. The job market is improving, as is consumer confidence. Private-sector profits are up, and some additional stimulus is now on the way.

Caveats, however, abound. The situation in Europe remains precarious, and in the U.S., state and local governments are still facing massive problems, as is the still-struggling housing market.

And there's one other thing that gives me pause: congressional Republicans. What will/would a government shutdown do to the recovery? What about the international shockwaves of a GOP push not to raise the debt limit? Just how negative will the consequences be if/when Republicans slash spending, focus on deficit reduction instead of growth, and take billions out of the economy?

I'm delighted by the optimism, and I sincerely hope the predictions are true. But I can't help but wonder the extent to which Republicans, deliberately or not, might screw this up.

Steve Benen 8:00 AM Permalink | Trackbacks | Comments (8)

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This doesn't surprise me. Call me an ol' cynic, but I've been wondering if businesses have been holding back on hiring until after the midterm elections so that they could get the legislators they feel they deserve ...

Posted by: pol on December 24, 2010 at 8:09 AM | PERMALINK

Global corporations know no borders, have no loyalties but the almighty dollar. They buy politicians out of petty cash, and quiet our unease with Dancing With the Stars.

Patriots are suckers and fools and we are economic serfs. Ask Bernie Sanders.

Posted by: DAY on December 24, 2010 at 8:15 AM | PERMALINK

Oh, they'll screw it up all right - DELIBERATELY!

They can't allow the economy to improve too much because they don't want Obama to get any credit, and maybe create a coat-tail effect that will hurt the RepubliConservatives efforts to gain control of the Executive and both houses of Congress in 2012.
And if they do win, since they're completely incomepetent when it comes to the economy (among a host of other things), it'll be a long, long time before the economy recovers. And that's if it CAN recover with a few more years RepubliConfederats at the helm.
Doom, despair, and agony on me...

But, have a Very Merry ChistmaHanukaKwanza Everyone!!! In other words, HAPPY HOLIDAYSY!!!

Posted by: c u n d gulag on December 24, 2010 at 8:31 AM | PERMALINK

Hmmm....if the economy is in substantial recovery leading into the 2012 elections, will the people who voted to overturn the democratic majority in 2010 apply those same analytical skills to give the credit to 1 1/2 years of a Republican- controlled congress?

Posted by: DelCapslock on December 24, 2010 at 8:47 AM | PERMALINK

On some democratic web sites I find there is a lot of whining about how they did not get everything they wanted from this administration. I have to wonder - how hard did they fight to ensure that democrats maintained a majority? (I am not talking about this site, which I find to be very positive)
My other thought was that if they whined like this before the mid terms they probably ensured that some one would hear them and not bother to vote for dems - so they really hurt themselves.

Posted by: js on December 24, 2010 at 9:05 AM | PERMALINK

It should go without saying that if the incoming crew of congressional GOP ignoramuses doesn't fuck up a fragile economic recovery with their teabaggy stupidity, then they will claim credit for it (b/c they got Obama to agree to the tax cuts for their obscenely rich benefactors). This is largely the same bunch that think that Saint Ronnie Raygun was responsible for the booming economy during the late 1990s after all.

What's sad is that there will be a sizeable portion of the population who will BELIEVE them -- along with a servile press to flatter them.

Posted by: Eisbaer on December 24, 2010 at 9:22 AM | PERMALINK

Follow the money!

Until MSM begins to run with the reality based meme,

Republicans advocate economic policies detrimental to our national economy because they want to see President Obama fail, force him to be a one termer, and then regain power under the guise that the economy has been in the tank under President Obama, while they actually have been the Party saying no all this time,

maybe I'd become a bit more optimistic regarding the integrity of the press, the truthfulness of evaluating Reaganomics and bushonomics, and the general trend of our economy as we enter 2011. -Kevo

Posted by: kevo on December 24, 2010 at 10:38 AM | PERMALINK

The situation in Europe remains precarious,[...] -- Steve Benen

When Poland first joined EU, it was whine, whine and bitch all the way about having to wait before being allowed to also join the Euro-zone. Now, with the examples of Greece and Spain -- which are having their troubles aggravated by the common currency -- there's almost dancing in the street. Indeed, the general tenor, among the economists and the politicians there is "let's not rush it, let's not re-apply quite yet". They must be reading Krugman :)

BTW. So much depends on perspective. In Poland, everyone's rather pleased that the unemployment is in the 8-9% range. Of course, their point of comparison is the late nineties/early zeros, when it was 12-15%

Posted by: exlibra on December 24, 2010 at 3:33 PM | PERMALINK



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