Dear Fannie Mae,
It’s not you; it’s them.
The other day I wrote in a column, The Reddest of All Presidents, that a “host of economists, who always seem to be the last to know, have cut GDP growth forecasts recently, in light of rising unemployment and falling manufacturing output. The latest to see the light at the end of the tunnel in its proper context as a speeding train coming right at us is Fannie Mae’s chief economist, Doug Duncan. Fannie Mae always seems to be the last-est of the last to know.”
Please accept my apologies, Mr. Duncan. I was wrong.
The White House is always the last to know.
But, you know how busy the White House is building an economy “built to last,” while the rest of us don’t build anything.
On Friday, the White House surreptitiously revised downward their Gross Domestic Product forecast for the rest of year to 2.3 percent for the full year 2012, and 2.7 percent for the year 2013.
Given the subpar GDP growth already on the books for the year -1.75 percent before they revise the estimate downward again, which of course they WILL do- that means that the White House is projecting 2nd half economic growth of over 2.8 percent; and then an economic slowdown after that.
And THAT means the White House still has no clue.
The White House is predicting that the economy will speed up in the fall- based on what? Occupy Walmart spending?- and then slowdown for 2013.
The Obamaconomy has only averaged about 2.2 percent annually in three and a half years of failed policies, says Jim Pethokoukis of the American Enterprise Institute who compares Obama’s economy vs. Reagan’s. Pethokoukis also says that falling below the 2 percent GDP threshold- which I predicted back in December we would do this year- is a bad sign of things to come.
“Indeed, research from the Federal Reserve finds that that since 1947,” writes Pethokoukis, “when year-over-year real GDP growth falls below 2%, recession follows within a year 70% of the time. The U.S. economy remains in the Recession Red Zone.”
GDP growth is not one of those things that you can’t just jawbone via a teleprompter. Nor can you just borrow money and throw currency at the problem.
In all of 2010, when stimulus spending was supposed to be supercharging our economy, the Bureau of Economic Analysis' revised estimate released in July 2012 says that economy grew at a rate of 2.4 percent, far below what Obama thinks a do-nothing Congress can do in the second half of this year by getting Obama to do, um, nothing, finally.
And therein is the problem for Obama.
If you dig into the numbers, GDP, job growth, income and even tax revenues have been remarkably bad for an economy that is now spending a super-Keynesian 40 percent of GDP on super-charging GDP.
By the end of Obama’s first term, the country will have borrowed close to $5 trillion dollars, only to see that money return about 12 cents to the economy on every dollar borrowed- even if using the White House’s most hilarious gag-book estimates.
And the White House thinks that we should be borrowing more money so we can super-duper-charge the economy.
You’d really have to try hard to borrow $5 trillion and get back only $580 billion.
But that’s the type of math that Obama’s given us.
To put it another way, a twenty-year Treasury note, now at historically low rates, has offered better rates through the month of July- mostly- than all the fake “investing” Obama has done creating an economy “built to last” that “you didn’t build.”
If you take out the cost of financing all that growth, the country is in the hole.
They have borrowed all that money to support a presidency that has bought us less than zero.
You and I know it, because we live out here in flyover country and have to build businesses and pay for groceries and try to get raises to send our kids to college, while also supporting the 40 percent of government that drags down our GDP.
But in Washington, they are always the last to know.
You know? Yes, you do.
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