A dubious 'recovery'

A dubious 'recovery'

April 14th, 2012 in Opinion Free Press

While it is true that the U.S. economy no longer actually is contracting, it is hard to argue that we are in anything resembling a robust recovery from the recession.

Federal Reserve Chairman Ben Bernanke drove that point home during a recent speech at George Washington University.

Contrary to the rosy assessments put out by the Obama administration, Bernanke noted that current investment and spending simply are not adequate to sustain real economic recovery.

Compared with levels prior to the recession, demand for consumer goods and services still is weak. And other factors that ordinarily would help boost the economy -- such as borrowing and trade -- have declined.

"Consumer spending has not ... recovered," Bernanke said. "It's still quite weak relative to where it was before the crisis. We lack a source of demand to keep the economy growing."

That bad news comes on top of questionable job growth figures. Unemployment remains well above 8 percent, having failed to respond as projected to the $862 billion worth of Democrat-approved "stimulus" spending. Joblessness was not supposed to exceed 8 percent with the stimulus, the Obama administration said. But three years later, we're still waiting for unemployment to fall back below 8 percent.

Meanwhile, the housing market remains gloomy. In addition to millions of foreclosures over the past few years, about 1 million foreclosures are expected this year. That further may depress home values -- and further undermine the big investment so many Americans have made in their homes. In fact, in January, home prices dropped an additional 0.8 percent -- which oddly was celebrated as "good news" since the decline wasn't quite as massive as it had been previously.

Home prices are nearly 20 percent lower today than they were in early 2007. That represents a major loss of household wealth.

The glut of foreclosed homes on the market also means it will be quite a while before new-home building takes off in really meaningful way. That is a troubling sign, because home building is an important sector of the economy, creating lots of jobs and tax revenue.

Meanwhile, the American people are saddled with needlessly high gas prices, in part because of instability overseas but also because the Obama administration has put so much U.S. oil -- off our coasts and in Alaska -- off limits to drilling.

Our country also faces serious economic challenges over which we have little control, such as the crisis in European nations that have overspent for decades and now are having to be bailed out one after the other by more fiscally responsible European nations.

Potential defaults in a number of countries would do serious harm not only to Europe but to the United States, which trades heavily with Europe.

Yet while Europe is at least taking steps to get its nations' debt under control, the United States is ignoring the debt-spawned crisis in Europe and our Congress continues to spend recklessly. We have racked up a debt of well over $15.5 trillion -- bigger than our entire gross domestic product, or all that our huge economy produces in a year! That means we must pay hundreds of billions of dollars annually just in interest.

We're moving in the wrong direction on so many fronts, but the Obama administration continues to insist we're in a strong recovery.

We wish that were true, but wishing can't make it so.