But…but…this goes against the Republican narrative!

American Jobs Act — Final

There really aren’t any controversial elements in here at all. Yes, Republicans are going to push back on any additional spending, but it’ll be hard for them to break this apart and only get the tax cuts through. So it’ll be up to them to go all or nothing. And that’s a risky move right now.

More as it develops…

What is with you Texans and your Governors? Jeezus…

Here’s the video…

If the vid doesn’t play…here’s basically what he said…

Texas Governor Rick Perry, who entered the presidential campaign on Saturday, appeared to suggest a violent response would be warranted should Federal Reserve Chairman Ben Bernanke “print more money” between now and the election. Speaking just now in Iowa, Perry said, “If this guy prints more money between now and the election, I dunno what y’all would do to him in Iowa but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treasonous in my opinion.” Treason is a capital offense.

Yes, Ben Bernanke…the guy Bush appointed.

So, is Perry backing down? Of course not. Here’s their official statement…

The Governor was expressing his frustration with the current economic situation and the out of control spending that persists in Washington. Most Americans would agree that spending more money is not the answer to the economic issues facing the country.

Sure, be frustrated. But understand A) how this mess happened and B) how we avoided catastrophic economic downfall due to Bernanke’s so called “treasonous” actions. Perry has no clue.

One thing’s for sure…2012 is going to be absolutely, positively wacky.

A very sobering piece to write, no doubt, but needed nonetheless. Especially when you consider the revised GDP numbers from 2008.

From Frum Forum:

Two years ago, Commerce estimated the decline of the US economy at -0.5% in the third quarter of 2008 and -3.8% in the fourth quarter. It now puts the damage at -3.7% and -8.9%: Great Depression territory.

Those estimates make intuitive sense as we assess the real-world effect of the crisis: the jobs lost, the homes foreclosed, the retirements shattered. When people tell me that I’ve changed my mind too much about too many things over the past four years, I can only point to the devastation wrought by this crisis and wonder: How closed must your thinking be if it isn’t affected by a disaster of such magnitude? And in fact, almost all of our thinking has been somehow affected: hence the drift of so many conservatives away from what used to be the mainstream market-oriented Washington Consensus toward Austrian economics and Ron Paul style hard-money libertarianism. The ground they and I used to occupy stands increasingly empty.

A decline of -8.9%.

Conservatives…let that sink in for a moment.

Anybody now think the stimulus was too big?

This from the Economist:

We can’t know exactly how things would have played out in a world in which key policymakers had better data. If the true scope of the economic disaster in the fourth quarter had been clear, however, it seems certain that Ms Romer’s models would have shown a need for more stimulus, that the White House would have agreed to push for more (and perhaps a lot more), and that Congress would have been much more receptive to a bigger bill. A drop of 8.9% does seem much more terrifying, after all, than a 3.8% decline. Bigger stimulus would have reduced the economic deterioration in subsequent months. The Fed might also have been more aggressive.

Of course, it’s not impossible that knowledge of the dire state of the economy would combine with a bigger stimulus plan to shake faith in American finances. It is unlikely, however. At the end of 2008, America’s net debt-to-GDP ratio was less than 50%. Other large economies were also tanking, and money was flooding into Treasuries. In late December of 2008, yields on 10-year Treasuries fell to near 2%.

America had plenty of room and every reason to borrow and spend heavily. What it didn’t have, unfortunately, was an accurate picture of the economic situation. And that was a crippling limitation indeed.

Frum closes it out with this tribute to Susan Sontag’s famous challenge to her left-wing brethren in 1982:

Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? The answer, I think, should give us pause. Can it be that our enemies were right?

Your thoughts?

Looks like businesses are finally feeling some confidence.

Maybe they read my post? Probably not.

Regardless, if the above number holds up when the government reports on Friday it would represent triple what Wall Street was predicting.

Daily Finance has more good news:

Separately, private placement firm Challenger, Gray & Christmas said planned layoff announcements in December by U.S. employers fell 34% to 32,000 in December from about 49,000 in November. That brought 2010 layoffs to about 530,000, the lowest total since 1997 and a 59% reduction from 2009, when job losses reached a seven-year high.

ADP’s December report showed that job gains were concentrated in services and in small and midsize businesses. Services added 270,000 jobs — the sector’s largest monthly increase on record, ADP said. Small businesses added 117,000 jobs; midsize businesses, 144,000; and large businesses, 36,000.

Construction employment was unchanged in December — but that ends the more than three-year-long monthly losing steak that started in June 2007. Goods producers added 27,000 jobs, manufacturing employment increased by 23,000 and financial services added 8,000 jobs.

We had signs that something like this could happen last month when jobless claims hit a 2.5 year low

Long story short, the trends are going the right way. Let’s hope they continue.

When an economic bubble bursts, normalcy can only return when price excesses created during the bubble are wrung out of the market. A recession is often the painful but necessary market mechanism that corrects the pricing distortion and consequent misallocation of capital that occurs in a bubble. When government intervention prevents the mispriced asset class from fully deflating, capital continues to be misallocated and economic malaise lingers on. This is the takeaway message from Peter Schiff’s Wall Street Journal editorial:

Schiff defended his thesis on CNBC:

Schiff’s holiday forecasts have become a regular feature on this blog. As long as his prognostications prove to be more right than wrong (as we’ve seen over the last five years) it is a tradition we will continue to observe. I do not find it particularly difficult to appreciate the wisdom in his common sense analysis. In fact, I find it much more difficult to understand how anyone could expect that a problem that was:

• Triggered by Federal government market-distorting social engineering policies intended to permit people to buy homes they cannot afford…
• Enabled by Federal Reserve Bank expanding the money supply and keeping interest rates artificially low to create the illusion of affordability for overpriced housing…
• Fueled with massive deficit spending…

could be solved by:

• More federal government market-distorting social engineering policies intended to allow people to to stay in homes they cannot afford…
• Even more Federal Reserve Bank expansion of the money supply enabling even lower artificial interest rates perpetuating the illusion of affordability for overpriced housing and…
• Fueling it all with even more massive deficit spending.

Definition of insanity anyone?

UPDATE: 1/4/10
Instead of insanity, how about Insana? On Friday last, Ron Insana opined specifically to refute Schiff’s thesis. Basically he is saying there is so much pent-up demand, real estate prices are so low, and the economy is improving enough that the housing market will stabilize here:

^{Cross-posted from “Divided We Stand United We Fall“}

To those who claim that the stimulus has failed, well, many serious economists and the the CBO say that without it we’d be in much worse shape. And even those who opposed it are wishy washy about it effects…which basically means it helped.

Regardless, a large chunk is still waiting to get into the economy and here’s more on what that means for the US and investors, from Clusterstock:

Despite talk about how the U.S. economy will soon lose the support of economic stimulus, or that stimulus ‘hasn’t worked’, U.S. fiscal stimulus for the economy is far from finished, and this doesn’t even consider additional measures being debated. [...]

This $278 billion will likely be delivered by the end of 2010, and it’s a huge sum for just four months. Thus the remainder of 2010 will continue to be supported by stimulus, and investors should take note. 2011 is when the economy will lose its training wheels, though an additional round of economic initiatives currently being debated could push the timeline back even further.

Couple this with the tax breaks for small businesses and the additional infrastructure spending that Obama is proposing and we’re looking at a situation where we’ll hopefully see unemployment drop below 9% by the end of winter. I know that’s 1% off what Obama and company said it would be at, but how can you fault them for not anticipating that the economy was in worse shape than they thought.

And what about those on the other side that said this thing could fix itself? Again, nearly every serious economist who doesn’t blindly follow the invisible-hand theory knew we need stimulus of some sort and that we would have been FAR worse off had we a) not done anything or b) just went with the tax cuts Republicans were proposing since those are proven to be far less stimulating to the economy than direct spending.

Here ya go…

Pretty straightforward. Dems aren’t going to win any economic ingenuity awards, but we’re out of the recession, private sector job growth is still holding on and we’ve got the shopping season coming up, which should drive even more.

But what if the Republicans had their way?

Well, let’s refer back to the Congressional Budget Office’s recent projections, as brought to you by Newsweek. Basically, the Republicans wanted to extend the tax cuts and that’s about it. What effect would that have on the economy?

Extending all of them, according to the CBO, would lower unemployment by 0.3 to 0.8 percent over the next year or so; extending them solely for people making less than $250,000 would produce a somewhat smaller effect, for a difference of roughly 200,000 to 500,000 people.

The problem, as economist William G. Gale of the Brookings Institution has noted, is that “of 11 potential stimulus policies the CBO recently examined, an extension of all of the Bush tax cuts ties for lowest bang for the buck.” In fact, he continues, “letting the high-income tax cuts expire and using the money for aid to the states, extensions of unemployment insurance benefits, [or] tax credits favoring job creation … would have about three times the impact … as continuing the Bush tax cuts.”

In addition, it’s unlikely that extending the cuts for the richest Americans would have much of an effect on small-business hiring, which is a claim that Republicans make with some regularity. Why? Because of the taxpayers that report running small businesses on their taxes, only 2 percent fall into the top two income brackets.* The other 98 percent of small-business owners make less than $250,000 a year and wouldn’t pay higher taxes under Obama’s plan.

Now, let’s look at their supposed deficit reduction measures, which they’ve been talking about constantly. Again, we’ll refer to the CBO and Newsweek’s analysis of it, which I’m repurposing here to make a couple additional points.

Obama spent $814 billion on the stimulus plan and Republicans didn’t offer an alternative, so it’s…

D: $814B
R: $0

On health care reform, Republicans want to repeal the law and substitute it with, well…nothing. Some think they’d take the Wyden/Bennett approach, but there’s no evidence that would actually happen. So what’s the problem with repealing it? The CBO says that the current health care law will cut $30B from the budget deficit in the next 10 years. What’s the cost of doing things in the same way (repealing it) ? $455B. That’s right…the health care bill is actually saving us $475B over 10 years. Still, you can’t subtract $455B from the Dem’s total, so Dems are still leading the deficit game in 10 years time…

R: $455B
D: $784B

Now, on to the Bush tax cuts. As mentioned above, only 2% of small businesses owners make more than $250,000 in income every year and their hit would be VERY minimal. For a refresher, let’s go back to the chart we posted a few weeks ago…

That’s right, people making up to $500,000 will have to pay roughly $400 more a year if the tax cuts aren’t extending. Folks who make $250,000 would pay even less than that. Most likely around $200 extra.

Yes…that’s it.

So, don’t believe the Republicans when they say not extending those benefits would kill jobs killer because $400 of salary can’t create a job.

The Dems’ extension of the tax cuts for everybody else will add roughly $3 trillion to the deficit in the next 10 years. What would the Republicans add? Another $700B.

What’s the total budget deficit over the next ten years for either party?

D: $3.784T
R: $4.155T

If you vote for the GOP this fall because you think they’re going to create more jobs and reduce the deficit, you’re a sucker. Plain and simple. They have no new ideas to turn things around and they’re simply referring back to the same play book that got us into this mess in the first place: deregulation and tax cuts.

Also, remember that if the GOP had their way they would reduce the federal government down so much it would cripple an already crumbling infrastructure. We need to innovate and continue to make sure the basic building blocks of our society are the best in the world or else we will not be competitive in the years to come. And, as the evidence shows, the Dems still offer the best plan for that. I’m not saying it’s the best, most innovative plan, but it’s demonstrably better both in terms of jobs and deficit reduction than the GOP’s.

(h/t: Washington Monthly)

The good news is that we added 90,000 jobs more than expected, and this job growth is the most in four years. Still, the unemployment rate went up and could stay there for a while. Because if our economy keeps growing and we continue to add more than a quarter million jobs per month, but can’t push down the unemployment rate…what are we supposed to do?

And to that point…the March and February jobs estimates were both revised up:

The Labor Department also revised upward the job numbers for March, saying the economy added 230,000 payroll positions that month as opposed to 162,000 reported earlier. And the nation added 39,000 jobs in February, instead of shedding 14,000.

By the way, here’s where the jobs are coming from…

In April, hiring by the Census Bureau accounted for 66,000 of the net new jobs created as the government took on more workers for the 2010 census.

The private sector increased employment by 231,000 jobs last month, up from 174,000 in March. Job growth came in almost every major industry, with manufacturing adding 44,000 jobs, professional and business services growing by 80,000 and leisure and hospitality payrolls up 45,000.

Now before anybody crows about government jobs, the private sector has just as many seasonal positions too, so save the “government is gaming the numbers” speeches. Jobs are jobs. Just ask the people who are collecting the paychecks.

Here’s a quick look at the trends…

Of course the GOP is hammering Obama for the higher unemployment rate, and that’s their prerogative…but they also don’t offer any solutions. Par for course with the current Republican leadership. Think they might want to link to their plans for job creation in the same release they’re lambasting Obama for not creating enough? Hmmm…well, I guess you can only offer solutions if you have some. So when faced with a reality where they don’t have any, they offer fear instead. Again, completely unsurprising.

Slightly below economists’ estimates of 3.3%, but 3.2% isn’t anything to sneeze at.

And while this Q1′s growth was smaller than Q4′s 5.6%, CNN Money explains why these numbers might be more important to our long term economic outlook:

In the fourth quarter, most of the growth was due to businesses no longer making the deep cuts in inventories that they had made early in 2009 when they were concerned about a sharp fall-off in demand. But the rise in consumer spending was fairly modest in the fourth quarter, increasing at only a 1.6% annual rate.

This time inventories made only a modest contribution to growth but spending by households grew at a 3.6% annual rate, and accounted for the overwhelming majority of the improvement in the economy.

For an economy based on consumer spending…this is a good sign. Because if people don’t buy things, the economy won’t recover.

Now folks have the confidence that they’re not going to lose their job tomorrow so their wallets and purses are opening up.

Here’s a graphic detailing how much compared to other months these past two years…

Still, there are some challenges…

Investment in residential real estate fell nearly 11%, ending a two-quarter rebound in that battered sector and subtracting from overall growth. And commercial real estate investment dropped at a 14% rate, although that was a slower pace than in the fourth quarter.

Still, the economy is improving, yes? Can we all agree on that at this point?

The gap has shrunk a bit, but the economy is turning around so in a year’s time it’s unlikely we’ll have the problems we’re having today. Basically, the question will then be… “Who is responsible for the economic growth in this country?”

Gallup has more on that…

Obama has stated that he “inherited the most profound economic emergency since the Great Depression.” And while some of his critics dispute the extent of the crisis, there is little debate that he arrived in Washington amid rising unemployment, struggling equity and housing markets, distressed banking and auto industries, and a rapid retreat in consumer spending. Americans in July 2009 clearly recognized that the nation’s economic problems preceded Obama’s term; at that time, close to half of Republicans (43%) — in addition to most independents (63%) and nearly all Democrats (92%) — believed Obama bore little or no responsibility for them.

And here are the numbers…

Sidenote…currently Obama’s approval rating is averaging about 48%. If this is as low as he goes as we’re pulling out of the recession…wonder what it’ll be this time next year.

Care to make any guesses?

More encouraging news about the TARP program…

From Washington Post:

Among the banks that rule Wall Street, Citigroup got a bailout that was bigger than the rest. Now the company is about to pay a king’s ransom for its federal rescue.

The Obama administration is making final preparations to sell its stake in the New York bank, according to industry and federal sources. At today’s prices, the sale would net more than $8 billion, by far the largest profit returned from any firm that accepted bailout funds, and the transaction would be the second-largest stock sale in history.

On paper, the government’s 27 percent stake has grown in value to $33 billion. The size of the deal in the works has Wall Street buzzing. Only the stock offering by Japan’s Nippon Telegraph and Telephone, which raised $36.8 billion in 1987, was larger, according to Thomson Reuters.

So, considering that these banks were in serious peril in 2008 and now we’re looking at making profits from those deals…does anybody question that this was a good idea?

And, as a reminder…from the CBO’s projections in late January

The CBO projects the government will ultimately make a profit of $7 billion from assisting the banks: $3 billion from the Capital Purchase Program, in which the government propped up banks by purchasing preferred stock; $2 billion from helping Citigroup and another $2 billion from helping Bank of America.

In other words, the banks are on track not only to pay taxpayers back all the $200 billion plus we’ve lent them, but put a dent — albeit a small one — in our enormous budget deficits.

So, since the CBO thought Citigroup would only gain us $2M, looks like we’ll be up another $6B…which results in a $13B profit.

Seems a fair cry from the claims of conservative and libertarian economists’ claims that we’d lose this money forever.

But hey, let me know what you think…

We do requests:

“I’m leaving on vacation or I would do it, but can someone do an overlay chart of the post-WWII recessions and the subsequent recovery? I suspect we’ll see a pattern. Recessions tend to end after a certain number of months, depending on the depth of the recession, whether Congress spends money or not.” – FH

Frank is leaving and I am just getting back from vacation, so I’ll take the baton. The following screenshots are from a nifty tool on the Minneapolis Federal Reserve Bank website. The red line is the current recession.

Post-WWII Recessions Tracked by Changes in US Output:

“The graphic points out an interesting aspect of recessions. They all end. And, surprisingly, they didn’t all need a trillion dollar stimulus bill from the Feds to end them. In fact, all of them combined up to now did not need a trillion dollar stimulus to end.”

This is worth repeating. If you pass a stimulus bill, recessions end. If you don’t pass a stimulus bill, recessions end. If you pass a small stimulus bill, recessions end. If you pass a large stimulus bill, recessions end. Recessions end. Full stop.

In terms of US Output, the graphs show the 2007 recession to be comparable to the ’53, ’57, and ’81 recessions (slightly worse than ’81, not as bad than ’57). In terms of employment, this is the worst recession since WWII. By any measure, this recession is lasting longer than any recession since WWII.

In terms of output, the recovery is underway. In terms of employment, it is not. Justin asserts that “…credit needs to be given to [the administration] for helping turn our economy around in such a dramatic fashion.” I am not sure what is so dramatic about the longest recession and slowest recovery of any recession since WWII, nor am I sure why any administration would want credit for it. Still, Justin is the voice of moderation compared to the hero worshiping fantasy found in the comments.

Given that this is the slowest recovery from the deepest recession in the modern era, any argument on what impact the stimulus package or the Obama administration did or did not have on the duration or strength of the recovery can only be made on a counterfactual basis – “expressing what has not happened but could, would, or might under differing conditions”. Despite the massive expenditures, you cannot say this recovery is more robust than any that has gone before. The only case that can be made in defense of administration policy is speculation that the recovery would have been even more tepid without the stimulus.

Problem being, a case can also be made that the uncertainty created by this administration’s wild spending, insane deficits, threatened increases in health care taxes, likely increases in health care insurance premiums on employers, an energy tax (cap & trade), repeal of the Bush tax cuts, increases in the minimum wage, uncertainty created in the health care, financial, and energy industries with the imposition of radical government mandated top down changes in industrial policy – all contributed to increasing uncertainty in the private sector and made the recession worse.

Both are counterfactual scenarios. Neither can ever be proven with certainty.

There are statements about administration policy on the economy that can be made with certainty. Clearly, administration policy has cushioned the pain of the recession for many who were hit hardest. Realistically and practically, this is a legitimate and necessary function of the federal government. Another certainty is that only about one third of the stimulus package allocation has been spent, and a significant percentage of that was in the form of pork for congressional districts that was not focused on creating new jobs (but may have arguably saved government jobs at the expense of the private sector). Unsurprising, since the bill was written by Nancy Pelosi’s House of Representatives, slightly trimmed by the Senate, and rubber stamped by the President. Based on the percentage of the bill spent to date, it is unarguable that a focused bill 20-30% the size of the one that passed would have had the exact same effect of “turning the economy around in such a dramatic fashion” to this point – without further inflaming the deficit and currency fears the stimulus package produced.

So should we applaud the administration for the economic performance of a bloated, politics-as-usual, pork-filled stimulus package that passed a year ago on a strong-armed partisan vote? It did provide one valuable service. In a single stroke it disabused independents of any illusion that the Obama administration would be vaguely centrist, post-partisan, fiscally responsible, more transparent, or agents of change in Washington D.C. We were immediately back to old-style back-room dealing, partisan politics and favoritism pushed by a classic borrow, tax and spend liberal. It set the tone and became the template for everything that the administration has done since. Credit for turning the economy around? I remain unconvinced.

Some welcome news for the White House, and the numbers could be even higher.

First, from the Wall Street Journal:

The Congressional Budget Office late Monday said it estimates that the federal stimulus package sustained between 600,000 and 1.6 million jobs in the third quarter, and raised gross domestic product by 1.2 to 3.2 percentage points higher than it would have been without the program. [...]

The CBO in March projected that the stimulus would result in 600,000 to 1.5 million more jobs than would have existed without the spending. In his blog post, Mr. Elmendorf says the CBO’s latest estimates reflect a finding that the impact of the package’s tax cuts have been about $10 billion larger than originally projected, while the impact on federal spending because of the legislation “has turned out to be slightly smaller than CBO initially estimated.”

“Economic output and employment in the spring and summer of 2009 were lower than CBO had projected at the beginning of the year. But in CBO’s judgment, that outcome reflects greater-than-projected weakness in the underlying economy rather than lower-than-expected effects” of the stimulus, according to Mr. Elmendorf’s blog post.

But the CBO does offer some caveats…

1. First, it is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package.
2. Second, the reports filed by recipients measure only the jobs created by employers who received ARRA funding directly or by their immediate subcontractors (so-called primary and secondary recipients), not by lower-level subcontractors.
3. Third, the reports do not attempt to measure the number of jobs that may have been created or retained indirectly as greater income for recipients and their employees boosted demand for products and services.
4. Fourth, the recipients’ reports cover only certain appropriations made under ARRA, which encompass only about one-quarter of the total amount spent by the government or conveyed through tax reductions in ARRA through September 2009.

What this tell us is it’s much likelier that the number of jobs created/saved is higher rather than lower. Because while the first point is valid, that nobody can predict what jobs would have occurred without the spending, the simple fact of the matter is that we can reasonably assume that, given banks unwillingness to lend right now, our economic engine would have continued to stall out.

As it stands now, we’re rolling…albeit slowly…but we’re still rolling.

By the way, can we agree once and for all that if the CBO can measure a “saved” or “retained” job that jobs were indeed saved?

As I’ve said numerous times before, voters aren’t stupid. They know who piloted our economic collapse last year and it’s going to be extremely hard for Republicans to convince them otherwise.

Still, it is kind of telling that Republicans blame Obama more for the economy than Bush, even though it’s by a very small 6 point margin. I mean, come on folks…we’re 10 months in and you REALLY believe that Obama is the reason why we’re still only treading water?

Also note how the number of Republicans is skewing the total to be 7 points more than what Independents think. Because that number is really what you should be looking at since they’ll determine whether or not Republicans make serious gains in 2010. And since the economy is bound to be the #1 issue at that time, this doesn’t bode well for the GOP.

Still, I predict that if the economy doesn’t get better by this time next year Obama and Bush will be even. At least among Indies. Because at that point it’ll be about 20 months in and, fair or not, Obama will own it.

But what do you think? When will Obama own the economy in swing voters’ minds?

True, it might go right back down tomorrow, but I have to say that this is a nice little psychological boost.

But it’s not just psychological.

Look at the 52 week spread in that picture…at this time last year we were down to 6,469. That’s a pretty significant jump in just one year’s time. Not only that, we were hovering around 8,000 in July and gained 1,600+ points since then (a 20% increase).

I don’t know about you but my 401(k) is looking a lot fatter these days.

So between this and the news about the recession…can we get some agreement that things are starting to look up?

More as it develops…

Yep. That’s right. A group of economic forecasters are projecting that we’ll see growth in the next quarter, so the recession is technically over. And hey, we can all be thankful for that.

However, the pain will linger for years to come.

The problem is that all of the lagging indicators of true economic health (rising employment, wages, spending, etc.) probably won’t start turning around until sometime next year…and even then it’s going to take a while for things to get back to normal.

Here’s more from BizJournal:

The association is expecting the nation’s inflation-adjusted Gross Domestic Product will grow at a rate of roughly 3 percent in the second half of this year. That’s after a sharp 6.4 percent contraction in the first quarter and a 0.7 percent drop in the second quarter.

The association also said the three-year downturn in the housing market appears close to coming to an end, with growth expected next year.

While the unemployment rate is forecast to rise to 10 percent in the first quarter, it is expected to slip to 9.5 percent by the end of 2010.

“The good news is that this deep and long recession appears to be over and, with improving credit markets, the U.S. economy can return to solid growth next year without worry about rising inflation,” Lynn Reaser, the association’s president-elect, said in a release.

And to the point about lagging indicators…here’s a sobering fact about unemployment…

Fewer than 8 percent of the panelists expect lost jobs will be regained before 2012.

If Obama doesn’t actually create a job in the positive direction, that could become a political hot potato for the 2012 election. And, realistically, jobs and spending will probably be the two issues on the GOP’s dart board anyway.

More as it develops…

The rise in unemployment is slowing down and we’re pulling out of this recession sooner than expected.

Why?

The reason is clear to me: we stepped in, took action and did something instead of just allowing the markets determine our fate.

WSJ explains…

The U.S. economy is beginning to show signs of improvement, with many economists asserting the worst is past and data pointing to stronger-than-expected growth. On Tuesday, data showed manufacturing grew in August for the first time in more than a year. “There’s a method to the madness. We’re getting out of this,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight.

Much of the stimulus spending is just beginning to trickle through the economy, with spending expected to peak sometime later this year or in early 2010. The government has funneled about $60 billion of the $288 billion in promised tax cuts to U.S. households, while about $84 billion of the $499 billion in spending has been paid. About $200 billion has been promised to certain projects, such as infrastructure and energy projects.

Economists say the money out the door — combined with the expectation of additional funds flowing soon — is fueling growth above where it would have been without any government action.

And yes, we can project whether doing nothing would have been better…

Many forecasters say stimulus spending is adding two to three percentage points to economic growth in the second and third quarters, when measured at an annual rate. The impact in the second quarter, calculated by analyzing how the extra funds flowing into the economy boost consumption, investment and spending, helped slow the rate of decline and will lay the groundwork for positive growth in the third quarter — something that seemed almost implausible just a few months ago. Some economists say the 1% contraction in the second quarter would have been far worse, possibly as much as 3.2%, if not for the stimulus.

For the third quarter, economists at Goldman Sachs & Co. predict the U.S. economy will grow by 3.3%. “Without that extra stimulus, we would be somewhere around zero,” said Jan Hatzius, chief U.S. economist for Goldman.

Yes, I know this is like fingernails across the chalkboard to several of you, but sometimes it’s entirely appropriate for the government to step in, prevent calamity and then leave. And now we see some positive steps that we’re moving forward again. Perhaps not a V-shaped recovery, but I definitely don’t think we’re going to see a “Lost Decade” as they did in Japan.

Hell, we’re actually making money from the TARP program and being repaid A LOT faster than we first thought. Also, there’s a chance we could make money from Freddie and Fannie. Obviously this wasn’t the intention when we stepped in, but a welcome surprise for taxpayers nonetheless.

More as it develops…

Thanks to Justin and company for welcoming me on here as a regular contributor. I will be posting on a number of issues, but one area you can expect that I will regularly be tracking is technology related developments and how they interact with the political world and policy. I also live less than ten miles from the Nebraska/Iowa border, so I’ll try to keep an eye on 2012 developments as the contenders test the waters there as well, on top of other interests like election reform, social issues, polling analysis and any number of things that I come across while skimming the hundreds of tweets and RSS feeds I go through every day. I hope you enjoy it, and now… on with the show!

We’ve been hearing about cellulosic ethanol for several years now, generally with the caveat that were at least a few years, and a few scientific breakthroughs, away from it coming to market and helping wean us from foreign oil. Unlike corn, which breaks down into the sugars necessary to be processed into ethanol relatively easily, cellulose is a hardy material that takes time and energy to break down. Its upside is that there happens to be more cellulose present than any other organic molecule on the planet. This is why millions upon millions of dollars has been poured into cellulosic ethanol research, genetically modifying naturally occurring enzymes to break it down faster and looking for ways to bring the price per gallon down closer to the price of gasoline.

Unlike corn, which takes land out of food production, is inefficient as far as how much energy it takes to produce and is a high maintenance crop, finding raw material for a cellulosic plant is easy. Wood chips from sawmills, the kudzu scourge spreading through the hot and humid Southeast, agricultural waste and even up to 80 percent of what ends up in our landfills could be used to make cellulosic ethanol.  Thankfully, the millions of dollars in research and development have begun to bear fruit.

A gas station near Ottawa is the first in the world to begin selling a cellulosic blend, called CE-10, to the public. Iogen, the company behind the demonstration plant that produced the fuel, plans to build its first full scale cellulosic ethanol plant in Saskatchewan. It has reached an agreement with the local government and Royal Dutch Shell to convert an old Mill site to their purposes, with the government even agreeing to purchase any green energy produced at the site. The running demonstration plant only has the capacity to produce about 3 million liters of ethanol each year, using wheat straw agricultural waste, while the new plant will be able to pump out about 75 million liters. It will make use of a more diverse feed stock, including agricultural waste from other crops, grasses native to nearby areas and even wood chips from area mills.

The march of progress continues, with a number of large companies making big investments into these technologies. Last year GM purchased a large share of Coskata, a big player in the emerging cellulosic ethanol industry, who claims to have developed a process that simplefies the complex and costly process of breaking down cellulose and brings the cost of production down to being competitive with gasoline. There are as many as two dozen companies with plans to build plants similar to Iogen’s, but the economic downturn is effecting their ability to finance these projects. Coskata is hoping to get some stimulus money, in the form of loan guarantees, to help finance its plant, with an estimated production of 50-100 million gallons a year.

As President Obama often says, if we intend to be a leader in the green energy industry of tomorrow, we need to move boldly in that direction today. Now is not the time to let companies who wish to lead us in there falter because of financing problems. Some are talking about a new stimulus bill, which most people reasonably see as a terrible idea, that would focus on these kinds of projects and job creation. The first should have done so, and I have little confidence that a new one would make it through congress without being similarly unfocused and pork laden.

We don’t get too many of these chances, where we can kill three birds with one stone. Job creation, independence from foreign oil and environmental progress can all be had with some smart funding priorities. Lets hope the administration recognizes this in time.

He’s repeating a lot of what he said earlier in the year, but I still think selling idea of passing health care reform as essential to our long term economic strength is a tough pill to swallow for Independents.

What’s more, if this editorial would have dropped a few weeks ago it would have held a lot more weight because it wouldn’t be seen as a response to criticism. But now it feels defensive, and that’s not where Obama wants to be in this fight.

From Wash Post:

Nearly six months ago, my administration took office amid the most severe economic downturn since the Great Depression. At the time, we were losing, on average, 700,000 jobs a month. And many feared that our financial system was on the verge of collapse.

The swift and aggressive action we took in those first few months has helped pull our financial system and our economy back from the brink. We took steps to restart lending to families and businesses, stabilize our major financial institutions, and help homeowners stay in their homes and pay their mortgages. We also passed the most sweeping economic recovery plan in our nation’s history.

The American Recovery and Reinvestment Act was not expected to restore the economy to full health on its own but to provide the boost necessary to stop the free fall. So far, it has done that. It was, from the start, a two-year program, and it will steadily save and create jobs as it ramps up over this summer and fall. We must let it work the way it’s supposed to, with the understanding that in any recession, unemployment tends to recover more slowly than other measures of economic activity.

As to his overarching point of rebuilding the economy on more solid footing, he’s right. We’ve built an unsustainable path and it nearly took us down last year. And let’s be clear, it wasn’t just the banks. Soaring health care costs was a big part of why the car companies failed and why numerous big businesses will continue to fail in the coming years if something isn’t done about it. We all know that’s true, but some prefer to kick the can down the road.

Still, do I think he’s taking on too much too soon? Yes. It’s overwhelming and seems too rushed to be reasonable. And my guess is this is why he’s seeing Independent support continue to slip.

More as it develops…

Last night, at a major Republican fundraiser, GOP leaders had some of their harshest words yet for President Obama and his agenda.

Newt Gingrich said the president’s stimulus plan has already failed. And:

Senate Minority Leader Mitch McConnell of Kentucky said Obama has a “radical agenda.” Republicans have “watched them take over banks, insurance companies, auto companies,” he said, “and now they want to take over your health care.”

“We’re going to need some wins next November to slow down their agenda,” said McConnell. House Minority Leader John Boehner of Ohio said Democrats are using their control of Congress “to bury our children and the middle class under a mountain of debt.”

While I never think defeatism is a great political strategy, I’m not sure the Republicans have a another political option but to hope the economy fails to rebound before 2010. The party is too weak in Congress to push through any alternate agenda to the president’s and supporting Obama’s economic plan does nothing to differentiate the party from its opposition.

Unfortunately for Gingrich et. al., there’s a bit of a gap between claiming something has failed and that something actually failing. I’m quite worried about the mountain of debt we’re creating and the precedent we’re setting with the government’s part-ownership of GM, but it’s far too early for me to believe Obama’s measures won’t give the economy a boost. If you want to call it a failure of principle, that’s one thing. But it’s quite premature to say the raw result is failure.