Recently released figures have resulted in mixed interpretations among economists about the 2013 economic outlook. Some say the economy is on pace to achieve a modest recovery pointing to better than expected housing figures, and a relatively low amount of first time unemployment claims during the holiday season.
However, while those predicting gains in 2013 feel that these figures indicate better economic times in 2013, the fiscal cliff fiasco gives just about every prediction a fatal caveat.
If a deal is not reached by the end of the year, there will be no shortage of blame being passed around D.C. when the economy ultimately dives. President Obama will doubtless seek to shed responsibility and pass the buck off to Republicans for the looming fiscal cliff failure, along with blame for what will likely be a poor economy in the first year of his second term. The only problem with this strategy is that even if a fiscal cliff deal is reached, the economic outlook for 2013 remains seriously troubling.
USA Today reported that first time jobless claims this week fell to their lowest levels since March of 2008. On its face, this figure seems encouraging but in reality, it is little more than a prediction thanks to widespread office closings during the Christmas holiday.
A department spokesman said many state unemployment offices were closed Monday and Tuesday and unable to compile complete data. Fourteen states provided estimates and the department estimated the numbers for five more states.
The government might estimate one or two states in a typical week, but 19 state estimates are unusually high.
Moreover, consumer confidence and spending levels are not commensurate with what one would expect when unemployment is supposedly dropping.
Consumers are starting to worry about higher taxes. A measure of consumer confidence fell to a five-month low this month, a survey released Friday found. And reports show the holiday shopping season was the weakest since 2008, when the country was in a deep recession.
Of course, while the “unemployment rate” as it is calculated by the Bureau of Labor Statistics did in fact drop from 7.9 to 7.7 last month, that change was almost exclusively due to the fact that work force participation tumbled and created an artificial drop.
The percentage of working-age Americans who are either employed or actively in search of a job was reported as 63.6 percent for November 2012, two percentage points lower than the previous month and the worst the country has seen since 1978.
Perhaps even more troubling than the workforce participation is the drying up of investment capital over the last three years. John Hewitt, CEO of Liberty Tax Service recently weighed in on the issue when asked whether he believed the economy was poised to make a turnaround in 2013.
I don’t… I’ve been in franchising for 43 years. For the first time ever in the last 3 years — in ’09,’10, ’11 — there were less franchise units in this location of all kinds. Of McDonalds, of Subways, of Dunkin’ Donuts, of Liberty Taxes, there are less franchise units of all kinds than each of the preceding year. That’s happening because the funding, the financing for franchising, is drying up.
Small businesses are suffering from primarily — not so much the recession, which is harmful — but just the lack of funding for small businesses in general.
Essentially, what we have sitting before us are a combination of factors which indicate serious problems ahead. High “real unemployment,” a historically low workforce participation rate, low consumer confidence accompanied by low consumer spending, and the sustained evaporation of investment capital.
The fiscal cliff is yet another support beam of the economy that is about to buckle. President Obama can blame economic troubles in 2013 on Republicans and fiscal cliff negotiations if he’d like, but the truth is that the aforementioned factors indicate that the economy has, in large part, already been dialed in.
What the fiscal cliff does offer President Obama and Congressional Democrats is a convenient scapegoat for an economy that is already teetering on the brink.
DONATE
Donations tax deductible
to the full extent allowed by law.
Comments
I believe the Democrats and the media (yes, I repeat myself) expect 2013 to be such a disaster for the economy that they will no longer be able to hide the stench. The media’s constant hype of the approaching “Fiscal Cliff” may have been intentional in order to assign false “cause & effect” in the coming year –> cause = an intransigent GOP who wouldn’t raise taxes on “the rich”, effect = economic disaster, obvious recession.
As a bonus for the Democrats, the forthcoming Obamacare taxes will be obscured by the across-the-board tax rate increase when the “cliff” is reached.
Therefore, it should be no surprise when 0bama inserts a “poison pill” in any negotiation ostensibly aimed at avoiding the “Fiscal Cliff”.
Make no mistake – Comrade Ozero wants the biggest economic collapse as possible to continue implementing Cloward-Piven.
The goal is to get as many dependent on Fedzilla to strengthen the communist coup/takeover of America and make the Constitution irrelevant.
Fiscal cliff deal? Ozero doesn’t need no steenking deal!
its not on the brink … it never got out of the 2008-2009 hole … at best the economy got it fingers on the lip … and with the EPA stomping on fingers the fiscal cliff just weakens the economies ability to hold on …
buckle your chinstraps … at this rate Obama may just move to Hawaii and setup shop there for the next 4 years …
How can any economic figures prepared by government employees and released by political appointees be believed?? Consider all the changes to the methodolgies of the various so-called ‘economic indicators’ over the last 30 or so years. Consider how much of what is supposedly measured is of little or no significance. Think about how many times the figures of any given ‘indicator’ are “adjusted” before a “final” figure is released. Think about how much political ‘hay’ can be made by the timing and contents of such a report. Anyone who still thinks that any of these reports contain anything that has been any closer to the truth than the far side of Jupiter??
And as if we didn’t have enough problems: Obama orders raises for Biden, members of congress, federal workers
http://www.weeklystandard.com/blogs/obama-orders-raise-biden-members-congress-federal-workers_692223.html
And what about all the unemployed and soon to be unemployed because of bad policies and uncontrolled debt???
Imagine if government was only a tiny blip on the radar – just another financial stock to be traded. We wouldn’t be spending our time talking about what so and so politician should do to save us from fiscal cliff(s) created by government policies that created them. We would sell of the stock and reinvest in a better financial instrument.
(I am invoking Milton Friedman and Ron Paul.)
“created:” I become redundant when I have a Righteous Ale while watching the market close down again for the fifth day in a row.
(having an ale invokes Martin Luther)
Why would banks want to loan money to risky private enterprises when they can loan their “excess deposits” to the fed and get a guaranteed 0.25% return? At the moment, banks have $2 Trillion more in deposits than they do in loans, so do the math. 1/4% of $2 Trillion is $5 billion. They’re getting $5 billion per year for doing nothing.
Banks these days don’t need depositors and they don’t loan money to businesses. They’ve been effectively nationalized.
Fact is if you have read the Fed reports on manufacturing, with very few exceptions, we have had bad numbers throughout 2012. The most recent report was the worst yet. At the same time Europe is contracting and China is struggling. Yet, CNBC and others would have you believe that Congress and the Fed are the sole arbiters of the economy and will magically make it all better. Although we haven’t been a true captitalistic economy for some time, we still are subject to market forces. Those forces say 2013 is not going to be a year of growth. If anything, 2013 will continue with stagnant unemployment, more municipal bankruptcies, stagnant housing market, and exploding costs on food and energy. I wont say inflation because technically, if your tech gagets don’t go up, the powers that be say there is no inflation, which is as reliable as everything else they put out.
I forgot to include the bad numbers that were in the most recent report for the service sector. That also contracted, and as most of you know we have also had a poor holiday shopping season. So yeah, 2013 should be great.