GDP Contracts 0.1% in Q4 2012

The U.S. Bureau of Economic Analysis reported today their advance estimate that the U.S. economy contracted at a compounded annual rate of -0.1% in the fourth quarter of 2012.

A few months ago, The Washington Dispatch began tracking the progress of the current recovery against the 1980s recovery.

Since the second quarter of 2009 (the last quarter of GDP contraction), real GDP growth has averaged 2.0% over the last sixteen quarters.  By comparison, in the sixteen quarters following the third quarter of 1982 (the last quarter of GDP contraction resulting from the early 1980s recession), real GDP growth averaged 5.0%, or more than double the current average:

This in spite of the fact that reckless and massive federal deficit spending (government expenditures are included in GDP) has been artificially inflating GDP under the Obama administration to an extreme degree:

Excellence in Recklessness:  The Obama Administration Stands Alone Atop the Mountain

Presented without comment:

Recall also The Washington Dispatch's earlier comparison between Mr. Obama's fiscal record and that of Franklin Roosevelt:

U3 Unemployment Rate 7.8% in December as Employment--Population Ratio Declines Again

A Bureau of Labor Statistics report released today shows that the U.S. U3 Unemployment Rate was 7.8% for December.

The Labor Force Participation rate matched its lowest total since the last recession of 63.6%.

The Washington Dispatch began tracking the current employment recovery against that following the 1980s recession with the release of January 2012 unemployment and labor force participation figures earlier this year.

Since unemployment peaked at 10% in October 2009, its decline has mirrored the decline in Labor Force Participation. Looking at the same number of months following peak unemployment of 10.8% in December 1982, Labor Force Participation rose while unemployment fell.

Declining labor force participation, stagnant unemployment, anemic GDP growth, and the Obama administration's economic policies and record continue to expose the U.S. economy to the risk of a "double-dip" recession.

The Employment--Population Ratio continues to hover around post-recession lows, declining to 58.6% in December:

Meanwhile the mean duration of unemployment tallied 38.1 weeks in December:

"Forward"

New Record for Food Stamp Usage:  Over 47.7 Million Americans

According to new data released by the U.S. Department of Agriculture, Participation in the SNAP program reached a new all-time high of 47,710,324 individuals in September, on the strength of the largest monthly increase in 16 months--over 600,000 new participants in a single month.

The number of participating households also hit a new high of more than 22.9 Million.  The average benefit per person was $134.29, and the total cost for the month of September was over $6.4 Billion.

Unfortunately for Food Stamp proponents, while the program is obviously feeding Americans, to the tune of around $200 Million per day, we are not seeing any positive impact on employment.

"If you want to create jobs, the quickest way to do it is to provide more funding for food stamps"

--Nancy Pelosi (D), California

U3 Unemployment Rate Falls to 7.7% in November as Labor Force Participation Declines Again

A Bureau of Labor Statistics report released today shows that the U.S. U3 Unemployment Rate fell by 0.2% in November.

The Labor Force Participation rate also fell by 0.2%, to 63.6%.

The Washington Dispatch began tracking the current employment recovery against that following the 1980s recession with the release of January 2012 unemployment and labor force participation figures earlier this year.

Since unemployment peaked at 10% in October 2009, its decline has mirrored the decline in Labor Force Participation. Looking at the same number of months following peak unemployment of 10.8% in December 1982, Labor Force Participation rose while unemployment fell.

Declining labor force participation, stagnant unemployment, anemic GDP growth, and the Obama administration's economic policies and record continue to expose the U.S. economy to the risk of a "double-dip" recession.

The Employment--Population Ratio continues to hover around post-recession lows, standing at 58.8% as of October:

Welcome to the "new normal." 

Willful Ignorance:  Democrats' "Fiscal Cliff" Negotiation Stance Ignores Reality

With the 2012 election in the rear-view mirror, the Obama administration and members of Congress have now turned their attention to the so-called "fiscal cliff."

The Democrats' opening salvo?  Once again calling for tax increases, specifically $1.6 Trillion in new taxes over the coming decade generated by hiking rates on households with income in excess of $250,000.

This immature, irresponsible, and irrational demand for more money is unbecoming of our so-called "public servants."  At a time when tax-paying Americans are having to do with less, Democrats defiantly refuse to address entitlement reform, and clamor for government to do with more.

Democrats, after justifiably criticizing the deficit spending incurred during the Bush administration, have long since dwarfed its fiscal recklessness.  Yet they refuse to behave in a responsible manner, and instead opt for the role of a teenage daughter with her father's credit card.

FY 2000 represented the peak of fiscal responsibility in the wake of the conservative takeover of Congress, spending cuts, and welfare reform.  The Federal Government enjoyed a surplus of nearly a quarter of a Trillion dollars.  If spending had been maintained at FY 2000 levels, adjusted for inflation, the U.S. would have enjoyed a net surplus of almost $1 Trillion from FY 2000 through FY 2011, rather than the net deficit of nearly $5.8 Trillion that was actually incurred.

Even with two-bookend recessions (brought about by the bursting of the dot-com bubble and the housing bubble) suppressing revenue, actual revenue generated from 2000 through 2011 was more than enough to cover fiscally responsible levels of spending, and to leave the U.S. with less national debt after a chaotic decade culminating in the economic collapse of 2008 than it held after the peaceful and prosperous 1990s.

Democrats are not serious about understanding why the U.S. is in its current fiscal mess.  Democrats are not serious about entitlement reform.  Democrats are not serious about reducing deficits.  One should not expect Democrats to be serious about resolving the so-called fiscal cliff in a responsible, rational, tax-payer friendly way either.

New Record for Food Stamp Usage:  Over 47 Million Americans

According to new data released by the U.S. Department of Agriculture, Participation in the SNAP program reached a new all-time high of 47,102,780 individuals in August, on the strength of the largest monthly increase in one year.

The number of participating households also hit a new high of 22.7 Million.  The average benefit per person was $133.42, and the total cost for the month of August was nearly $6.3 Billion.

Unfortunately for Food Stamp proponents, while the program is obviously feeding Americans, to the tune of around $200 Million per day, we are not seeing any positive impact on employment.

"If you want to create jobs, the quickest way to do it is to provide more funding for food stamps"

--Nancy Pelosi (D), California

 As participation rose again in August, the Employment--Population Ratio declined to 58.3%.

Election 2012 and Election Poll Modeling Post-Mortem

The Final Washington Dispatch Poll Model showed Mitt Romney leading with 48.7% of the vote over President Obama at 47.4% of the vote nationally.  Mitt Romney has received about 48% of the vote thus far, with some votes still left to count.  President Obama has received about 50%.  Undecideds broke heavily to Obama.

The model showed a dead heat in Ohio, 48% to 48%. We got a dead heat in Ohio, Obama leads 50% to 48% with 10% left to report.

The model showed a dead heat in Colorado, with Romney at 48%. Romney is at 47% with 10% left to report.

The model showed Romney at 50% in Florida. He's at 49% with 3% left to report.

The model showed Romney at 50% in Virginia. He's at 48%.

The model showed a dead heat in Iowa with Romney at 47%. He's at 46% with 4% left to report.

Nationally the model showed Romney at 50% among independents. He won 50% of independents.

Everywhere we look, the model was relatively accurate at predicting Romney's vote total, with true misses coming in New Hampshire and Nevada.

The model was, however, incredibly inaccurate at predicting President Obama's vote totals. This appears to be the case because of: (a) Undecided voters breaking heavily in favor of President Obama in the end, and (b) the turnout model based on 2004-2010 used for the primary Washington Dispatch Poll Model results was off, and the 2008 only or the 2008-2010 turnout model turned out to be the better model, depending on the state in question.  Why?  It seems that team Obama was right--2008 was not a fluke demographically because of the wave election, and 2010 was merely a better year for Republicans because of poor minority and Democratic midterm turnout.

White voters did in fact shrink yet again as a percentage of the electorate, and as a result counteracted the increased/decreased Republican/Democratic enthusiasm from 2008.

America is changing and Republicans are at a key cross-roads.

Mitt Romney won the Independent vote, and in the process delivered the best performance among independents by a Republican Presidential candidate in 25 years.

Independent Voters:

• 2012: Romney - Won them 50% to 45%
• 2008: McCain - Lost them 44% to 52%
• 2004: Bush - Lost them 48% to 49%
• 2000: Bush - Won them 48% to 46%
• 1996: Dole - Lost 35% to 43%
• 1992: Bush - Lost 32% to 38%
• 1988: Bush - Won 55% to 43%

There were simply too many Democratic voters in the 2012 electorate for Romney to prevail, and specifically too few women and too few minorities voting Republican.

The same electorate that voted to reelect President Obama by a slight majority also believed by a slightly larger majority that Mitt Romney would be better for the economy, and a large majority thought that the economy was the top issue of the election.

See National 2012 Exit Polling.

Mitt Romney convinced a majority of the voters he'd be better for the economy. Yet Mitt Romney lost the election, and lost by double-digits among women and lost by over 40% among Latinos.

The problem for the Republican Party could not be any clearer.  Romney's economic message of lower taxation, limited government, and free enterprise with less but more efficient government regulation worked.

Romney still lost the election, against an opponent whose entire strategy focused around using negative campaigning against Romney, specifically on social issues and by spending billions of dollars and many hours of campaigning painting Romney as an extreme social conservative.  True, the Obama campaign also attacked Mr. Romney personally on an economic front, but as the exit polls showed, this tact failed and Romney won the voters over on the economy, including many who voted for Mr. Obama in spite of that fact.

The Republican Party can win elections with its core economic and fiscal message and beliefs.  However, the Republican Party will only continue to suffer national election defeats if it continues to turn-off and fail to attract more female and minority voters.

Many Republicans predicted a repeat of 1980, and compared President Obama to President Carter.  While the comparison between failed leadership and policies may be apt, the election comparison clearly was not.  Based on the 1980 electorate, and the 2012 performance of Mitt Romney among various demographic groups, Mr. Romney would have won the election by 10% or more last night had the electorate looked anything remotely like the 1980 electorate.

It didn't.  And it won't, ever again.

Failure:  The Obama Economic Record

With only 5 days to go until the 2012 election, an election that by all accounts will find voters basing their choices heavily on economic factors, it's time to reflect upon and examine the Obama economic record.

UNEMPLOYMENT

Obama administration policies over the past 4 years have not only coincided with no improvement in employment, in reality the employment situation in the U.S. has greatly worsened over the past 4 years.  While the U3 unemployment rate now sits at 7.8% (with October figures scheduled to be released tomorrow), the decline from peak U3 unemployment of 10% has been primarily sparked by a simultaneous, and unprecedented, decline in labor force participation.

This unprecedented and lengthy drop has rendered the U3 measure meaningless.  The reality is that the U3 rate would have continued to rise over the course of Obama's term in office, measuring at or over 11% as of today, had labor force participation remained constant.  Instead, millions of Americans, who do want and need work, have completely given up hope and are no longer being counted towards the U3 unemployment rate.  Job creation in the U.S. has not even kept up with population growth, and over Obama's term in office the employment-population ratio has remained stagnant.

Meanwhile, the mean duration of unemployment has remained stagnant as well, hovering near all-time record highs.

The U6 Unemployment Rate, which counts short-term discouraged workers, continues to hover close to 15%.  But even this measure does not tell the entire story, as it does not include long-term discouraged workers, whom the government stopped tracking in the 1990s.  The true unemployment and underemployment rate in the U.S. today is likely in excess of 20%.  This is evidenced by stagnant income in the face of rising cost of living, and rising reliance on government aid, for example record increases in food stamp use.

SPENDING, DEFICITS, AND DEBT

During the 2008 campaign, then Senator Obama heavily criticized reckless spending under the Bush administration, referring to the deficits incurred under the previous administration as immoral, and even "unpatriotic."  Yet President Obama has both proposed and signed into law budgets delivering deficits in excess of One Trillion Dollars every year he has been in office.  The national debt has skyrocketed from around $10 Trillion to around $16 Trillion in just four short years under President Obama's stewardship.

Despite cries from the far left that President Obama hasn't spent enough, the fact of the matter is that spending levels under President Obama are dwarfing those seen during the New Deal under President Franklin D. Roosevelt.

Or for a more recent and more similar example, spending levels under President Obama are dwarfing those seen under President Reagan, who inherited a similarly deep recession marked by higher peak unemployment, higher inflation, and more quarters of GDP decline.

ECONOMIC GROWTH

The so-called Obama "Recovery" has been the slowest, weakest recovery from recession in recorded U.S. history.  GDP growth has remained anemic, and too insignificant to spur needed job creation, increased federal revenue, or rising income.  GDP growth has paled in comparison to levels seen during the Reagan recovery.

Further evidence of weak economic conditions has been the excess of nondefense inventory (excluding aircraft) over new orders, which has  now surpassed both the peak seen during the recession following the bursting of the dot-com bubble, and the peak seen in the aftermath of the collapse of the housing bubble and the financial melt-down leading to the most recent recession, and sits at an all-time high of more than $60 Billion.

This is a key indicator and red flag of the possibility of a "double-dip" recession on the horizon.  Weak economic growth, declining employment and labor force participation, exploding federal deficits and debt, increased individual reliance on government aid, and all other key economic trends reinforce this possibility.

And as for President Obama's plans for the next four years?  Continued massive deficit spending and a resumption of the status-quo.  Mr. Obama's only major proposal for change for a second term in office, his only concrete proposed "solution" for the fiscal problems that ail us, is a demand for higher taxes.  This in spite of the fact that levels of taxation are negatively correlated with economic growth, and in spite of the fact that spending, and not revenue, has been the sole driver of this nation's fiscal woes.

"Viewing our deficit and debt problems as a function of tax rates and tax revenues is misguided in the first place.  The United States' exploding deficits and national debt are entirely a function of spending. Consider the following hypothetical, in which the United States Federal Government maintained FY 2000 Spending levels, adjusted for inflation and population growth, for the decade between 2001 and 2010"

"Using static analysis, for the decade between 2001 through 2010, the United States Federal Government would have amassed a net budget surplus of nearly $2.2 Trillion, rather than the net budget deficit of nearly $4.7 Trillion we tallied.  This with the Bush Tax Cuts in place, as well as a brief period of economic expansion, book-ended by the collapse of the 2000 "Dot-Com Bubble" and the 2008 "Housing Bubble" and the resulting recessions"

The Obama economic record can be summed up with a single word:  failure.  For this reason, the President is unworthy of a second term in office.

GDP Grows 2% in Q3 2012, Spurred by Massive Government Spending Binge

The U.S. Bureau of Economic Analysis reported today their advance estimate that the U.S. economy grew at a compounded annual rate of 2% in the third quarter of 2012.

The primary driver of improved growth over Q2 (1.25%) was a massive spike in government consumption, the largest in three years and accounting for over one-third of the 2% growth estimate:

"Real federal government consumption expenditures and gross investment increased 9.6 percent in the third quarter, in contrast to a decrease of 0.2 percent in the second. National defense increased 13.0 percent, in contrast to a decrease of 0.2 percent. Nondefense increased 3.0 percent, in contrast to a decrease of 0.4 percent. Real state and local government consumption expenditures and gross investment decreased 0.1 percent, compared with a decrease of 1.0 percent."

A few months ago, The Washington Dispatch began tracking the progress of the current recovery against the 1980s recovery.

Since the second quarter of 2009 (the last quarter of GDP contraction), real GDP growth has averaged 2.2% over the last thirteen quarters.  By comparison, in the thirteen quarters following the third quarter of 1982 (the last quarter of GDP contraction resulting from the early 1980s recession), real GDP growth averaged 5.4%, or more than double the current average:

Falling demand, rising inventory excesses, and declining labor force participation have all contributed to lackluster growth and continue to expose the U.S. economy to the risk of a "double-dip" recession.