Government consumption expenditures and investment fell at the fastest pace in 28 years in the first quarter of this year. That largely contributed to the sharp slowdown in growth. If that 1.8% growth rate is not bad enough, consider this...more spending cuts are on the way...big ones!
Where are the Republicans showing us how spending cuts lead to growth? They're silent. What's worse, where is Obama? He is silent when he should be all over the Republicans now, pointing to these results and saying that the worst is yet to come.
This is just another glaring example that spending cuts and austerity will kill growth. The Eurozone, Britain and now us. But the dogma rages on.
It looks like the developed world is doomed to follow this path over the cliff. Reducing the deficit in the face of depression level unemployment, plus a housing double dip, will be the coup d'grace for the economy — unless we get WWII instead if MENA blows up and the oil supply is threatened. And the US is arguing over the president's birth certificate and scholastic record, while the world is watching the royal wedding. Crazy times.
ReplyDeleteYou said it, Tom!
ReplyDeleteHow shocking that reducing a major component of macro spending led to a fall in GDP growth. But wait, I'm sure it's just a matter of time before the private sector rushes in to fill this void.
ReplyDeletePhew, I feel better already!
I'm beginning to wonder if the super class isn't trying to hit the reset button on the industrial revolution by destroying 1st world progress beyond that age and hopping over to these 3rd world nations and running the same 20th century model they "know and love" over there as well. Isn't funny how the best way to play emerging markets seems to be to invest in Ford and Coca-Cola?!??!! Hmmmmm....
ReplyDeleteIt's so "interesting" that S&P downgrades the US too...does anyone forget they are also the guys that ranked Enron, Lehman, and Bear Steans all at top ratings right up to their collapse...HELLOOOO!! Can anyone say corruption!!!
Mario,
ReplyDeleteI've stated this a million times on Fox about S&P and now they're like, "okay, let's move on."
It may be truth, but it's old news so they don't care.
By the way, look at the huge spike in government spending during the Clinton years in 1998. Stock boom anyone? Then look how it collpased in 2000 and, guess what? Stocks did too!
ReplyDeleteAnd with the exception of one brief quarter in 1983, there was nothing to equal the huge and sustained growth in government spending during the Reagan years. Nothing since has even come close.
ReplyDeleteBut, wasn't Reagan against big government?!?!??!?! Say it's not so!
ReplyDeleteIs this a decrease in congressional spending or is it the treasury delaying payments in anticipation of a prolonged debt ceiling battle?
ReplyDeleteis that net spending?
ReplyDeleteThe reason why the Republicans want to tank the economy is that the endgame in a deflationary spiral causes a transfer of real hard assets from the bottom to the top. Real hard assets can be acquired at throwaway prices! Working people need the money to survive, and the only way to get the money is to sell real assets when earning money any other way is difficult or impossible.
ReplyDeleteSo from their (Republican clients) perspective, the deflationary spiral has to continue until the wealth transfer is complete.
yes Clonal...great point...I agree that's what they have their eyes on...Marx said year ago...property is the power. Blinding government just like justice is the way to protect individual property ownership and a more "communal" or opportunistic distribution of real wealth and assets.
ReplyDeleteIf those hard assets were to change hands like that the USA would transform into something not too dissimilar to feudal and/or 18th century Europe. Dear Lord help us to not let that happen.
Thanks for point that