Jose Luis Magana, Associated Press
I have not been at all shy the past year or so in demonizing the job being done by the administration and the Congress in regard to damaging the American economy. Their constant childish bickering and their primary focus on extreme partisan politics rather than on the major challenges facing this nation have not served America and its citizenry well.
The month of August was characterized by an emotional political battle in regard to increasing the nation's debt ceiling, i.e. our need to issue hundreds of billions of dollars of additional debt in order to cover insatiable government spending. The possibility of this nation actually defaulting on its already massive $14,300,000,000,000 national debt was hammered at Americans daily.
The downgrade of the quality of American debt by Standard & Poor's from its prior AAA status to AA+ led to major stock market volatility in August. Emotional 400-point swings in both directions by the Dow average led investors of all shapes and sizes to question whether the stock market was the place to be.
Good news followed by bad news followed by good news, etc. regarding the European sovereign debt situation also weighed on U.S. financial markets and its investors. At least this issue was not of our making.
Prior evidence of the damage largely done by national politicians was the extremely poor performance of the U.S.economy during 2011's first half, with the economy growing at an annual rate of 0.7%. This pathetic growth rate occurred despite massive amounts of government spending, unconscionable budget deficits, and unprecedented money creation by the Federal Reserve.
A huge plunge in consumer confidence to a 30-year low was another bit of evidence. As noted above, stock market gyrations were a third.
The latest evidence of economic damage brought forth by this nation's leaders is the August employment report. As you have no doubt heard by now, the U.S. economy saw no net change in total estimated employment in August. Crystal-ball-gazing economists had expected a rise of around 60,000 net additional jobs.
Adding insult to injury was the fact that already tepid employment gains of the two prior months were revised lower by 58,000 jobs. The jobless rate stayed at an uncomfortably high 9.1% level.
The flat jobs number for August was the worst performance of the past 11 months. The dismal pattern of the past four months has again raised the specter of another U.S. recession.
My caustic view of political performance is shared by many economy watchers. Doug Duncan, the chief economist at housing finance agency Fannie Mae noted on Friday last, "The heightened market volatility has led businesses to question the durability of the recovery." He continued, "More firms will likely stay on the fence with regard to future hiring, increasing the chances of outright job losses in coming months, and putting the odds of a recession in the coming year at a coin toss." (latimes.com)
Paul Ashworth, an economist at Capital Economics noted, "The broad message is that even if the U.S. economy doesn't start to contract again, any expansion is going to be very, very modest and fall well short of what would be needed to drive the still-elevated unemployment rate lower." (latimes.com)
Perhaps most succinct is the cover story in the September 5, 2011 issue of FORTUNE magazine. It is entitled "AMERICAN IDIOTS … How Washington Is Destroying the Economy … and What We Can Do to Fix It" and was written by long-time business writer Allan Sloan.