One Year Ago Today: “Welcome To The Recovery”
One year ago, Timothy Geithner said them things about the economy he probably wishes he could take back right now.
It was one year ago today that Treasury Secretary Timothy Geithner wrote these fateful words in The New York Times:
We have a long way to go to address the fiscal trauma and damage across the country, and we will need to monitor the ups and downs in the economy month by month. The share of workers who have been unemployed for six months or more is at its highest level since 1948, when the data was first recorded, and we must do more to ensure that they have the skills they need to re-enter the 21st-century economy. Small businesses are still battling a tough climate. State and local governments are still hurting.
There are urgent tasks to be undertaken to reinforce the recovery, and Congress should move now to help small business, to assist states in keeping teachers in the classroom, to increase investments in public infrastructure, to promote clean energy and to increase exports. And while making smart, targeted investments in our future, we must also cut the deficit over the next few years and make sure that America once again lives within its means.
These are considerable challenges, but we are in a much stronger position to face them today than when President Obama took office. By taking aggressive action to fix the financial system, reduce growth in health care costs and improve education, we have put the American economy on a firmer foundation for future growth.
And as the president said last week, no one should bet against the American worker, American business and American ingenuity.
We suffered a terrible blow, but we are coming back.
On the same day that this Op-Ed appeared in print, though, Geithner acknowledged that the employment picture could get worse before it gets better:
Treasury Secretary Timothy Geithner acknowledged that it is still a “tough economy” for most Americans, and warned it’s possible the unemployment rate will go up for a couple of months before it comes down as more people enter the labor force.
“When they see a little hope that there may be jobs out there, they start to come back in again. And that can cause the measured unemployment rate to go up temporarily,” Geithner told “Good Morning America’s” George Stephanopoulos in an exclusive interview. “But what we expect to see, and I think most forecasters expect this&is an economy that’s gradually healing, gradually strengthening, businesses starting to add people back.”
The economy is not rebounding as quickly as Geithner and the Obama administration would like, he said.
At the time, my co-blogger Dave Shuler made this observation:
I thought his op-ed was overly cheery if anything. The “green shoots” he cites are nearly all within the margin of error and most trends are down. Worst, despite the passage of financial reform virtually all of the problems that produced the financial crisis are still in place.
As it turns out, of course, Dave was largely correct. There was some minor improvement in the employment picture in the fall and winter, but that has largely been erased over the past several months. The unemployment rate currently stands at 9.2%, while it was 9.5% percent at the time Geithner’s Op-Ed was published. While that sounds better, it really isn’t because it reflects the fact that job growth has actually slowed since the beginning of the year. Moreover, economic growth in the first two quarters of the year slowed to a crawl, and initial figures for the month of July do not inspire confidence at all. Monday, it was reported that manufacturing had slowed in June below its expected level. Yesterday, we learned that consumer spending had fallen in June for the first time in two years. Today, the market is reacting to the news that factory orders had dropped by nearly a full percentage point in June.
Technically, we’re still in a “recovery” because we’ve got (barely) positive economic growth. In reality, telling any American today, or even a year ago that we are “recovering” is likely to cause them to laugh in your face. Clearly, Secretary Geithner spoke far, far too soon. At this point, it seems unlikely that the economy is going to grow all that much over the next year, meaning that we’re likely going to be headed into the 2012 Presidential election with unemployment at 8% and the majority of the public still pessimistic about the economy. That can’t be good news for the incumbent in the White House.
Wonder why? Watch this!
The economy is going to reinvent itself whether we want it to or not.
@Ron: Thanks for the link. I’ll be sharing it as I think it does a great job of summing up our current situation.
There’s been no recovery. And whatever recovery we end up with will be very different from previous recoveries because the era of bigger, better, faster, more is officially over. We’ve entered an era of contraction, which could be a good thing or a bad thing depending on how it is managed. Of course, our political and business leaders must first wake up to present reality and get past the myth of perpetual growth before we can come up with a new economic paradigm. I’m not holding my breathe on that one.
I think we’ll see next month when the numbers are released that this is no longer the case.
A year ago today, congressional Republicans were only beating the economy with a club and threatening to hold their breaths until they turned blue.
Now they have an axe and are doing their level best to dismantle the economy entirely to discredit the president.
Back on the financial front not a single top executive from a major bank has stood in the docks for wrongdoing during the bubble. Is it really credible that none of the pumping up of the bubble was due to fraud or abuse? I guess Sarbanes-Oxley is just for the little people.
@Ron Beasley:
There is a lot of truth to that video. We cannot spend, tax cut, or jumbo Wall Street numbers for long. It is interesting also, that this budget deal is based and always based on CBO growth numbers which are always wildly optimistic. So therefore, even when they will cut future deficits, those deficits could be larger if we do not achieve our economic growth. So everyone gets disappointed again and the problems just keep piling up.
On the oil front, we are getting new discoveries in shale oil and Chesapeake Energy has found the Utica shale in Eastern Ohio. Now there are problems with frakking with the use of water, so this is not a win win for everybody.
As far as the economy reinventing itself, yes, and it always comes when it is too late for many people. Many of us have given warnings but they are ignored. And even the experts or economists are still out there saying the same things as we keep going downhill.
The old tried and true ways of investing in the country, in the people, and in the future are still the most honest ways of investing in potential areas of problems and growth. And the more you do more research, the better luck in finding solutions you need. Unfortunately, these investment should have been done years ago.
The problem with neo-socialism is that the bullet trains to utopia always manage to derail themselves and in so doing to slaughter their sleeping passengers. “Unexpectedly,” of course, to those in the media and in soft-science academia.
Hopefully the drones out there in Zombieland have learned a lesson from all this. I’m not optimistic.
@c.red:
Nah. Just until their districts turned blue.
For some reason Japan comes to mind. So…will we have 10 years of anemic economic performance?
I know…more government!! Yeah, that’s the ticket.
@Steve Verdon:
More Government, less government, won’t make a difference, Capitalism is the mother of all ponzi schemes and we will come crashing down one way or another.
@Ron Beasley:
I think the video is weaker than you apparently do, Ron. There are some things I agree with but it’s largely an exercise in serial goalpost moving:
Growth => rapid growth => rapid growth in developed countries => growth as we’ve known it
Is the end point, growth as we’ve known it, the same thing as growth? I don’t think so.
There’s at least one flat out lie: that we are running up against the boundaries of energy production. That’s hooey. Whether we are approaching the boundaries of carbon-based fuels is a reasonable discussion; carbon-based fuels are not the same thing as energy production. There’s an enormous amount of energy to be produced by all sorts of means. Oil is unequalled as both an energy source and means of energy storage and an end of cheap oil will have serious implications. But that’s a different issue than the one presented in the video.
There are some things in the video that I agree with. For example, I don’t believe that exponential growth can continue indefinitely. I think that physics is against it. However, that’s different from claiming that growth can’t continue. I also think it’s possible that debt-based growth can’t continue indefinitely (I’ve suggested something along those lines myself). Once again, that’s not the same as claiming that growth can’t continue.
@Dave Schuler: Growth will have to be redefined if we have growth. And remember it’s not just oil – it’s nearly all natural resources. We are at peak phosphorus will impact agriculture. We are near peak tin – less electronic goodies. And don’t forget peak water.
@Dave Schuler:
I concur. Energy sources and applications change. What we have now may be totally substituted by a discovery or someone’s innovation in the future. That clip Ron shared was dull and depressing. It takes all the woes today and extrapolates them out painting a dreary future, as if nothing of value will be added ever again to this world. In other words, the restless inventive mind, along with our economic growth is dead because some guy says so.
For one thing, the peak oil theory is not an absolute given. Many people/scientists claim there is a biological source which renders oil production as an ongoing cycle, rather than one that has a limited measured supply. Then you also have alcohol, hydrogen, algae and a plethora of other alternatives being experimented with as viable energy sources. Various types of fusion energy are being looked at in the long term. Solar panels are slowly being used more residentially (we have them on our home) and commercially, especially in the sun states, with applications being devised that may be incorporated into future highway construction, generating energy as cars pass over them.
Water shortages are forecast as a global possibility. But, there is such a thing as desalination. All a person has to do is pick up any issue of Popular Science, and it is brimming with ideas — some outlandish and others with real possibility. But, that is how the human mind and spirit works together, to create something that hasn’t even been dreamed of yet.
Outer space is a whole frontier yet to be explored as to what options and opportunities it holds for our planet. For this reason alone, it was an epic fail for Obama to shut down the space program, leaving it up to the private sector to take up where the government-funded NASA was stranded. With Obama’s myopic views we will now have to hitch rides with the Russians, perhaps even China, to get any supplies or people to the space station we helped to build. Obama has certainly not turned out to be the visionary of say JFK was, or even Bush, for that matter!
That was written of England in 1886, is it not true of America today? As this capital, even that controlled by Obama’s cronies (GE), leaves our shores, it will not soon return and it will and has happened without notice, this atrophy of the American engine. So applaud the EPA today, sing the praises of Obamacare’s implementation, but do not be surprised to find an America with out enterprise is also a much harsher and desperate America for those who cannot escape.
This from the same person who constantly complains about government debt…would you be willing to have your taxes increased to pay for a beefed up space program? Exactly how is Bush a visionary when it comes to space? Or is all this just an excuse to bash Obama…
@JKB:
From that same person talking about public sanitation in England:
Thank you for the quote. It’s interesting in context:
http://books.google.com/books?id=LmQVAQAAIAAJ&pg=PA18#v=onepage&q&f=false
Lill’ Timmy was schooled in the Japan policy response model; he was there. I watched a U of C (ahem, that is, the GREAT University of Chicago) economic roundtable discussion several years ago where the Guitner model, and its probable outcome was discussed.
They are looking prescient.
Throw shi…er, money up against the wall. No result? “Go find the horses and bring me another wheelbarrow of……”
@JKB: Out of curiosity, which countries are safer or capital invetment?