The Cato Institute’s Chris Edwards has penned a highly informative analysis of a recent report from the Bureau of Economic Analysis. We begin with two charts included in the BEA publication:
And in real 2005 dollars:
Edwards’ take:
[The second figure] shows that private investment is stuck in a rut at about 17 percent below the lowest level reached at the bottom of the last recession.
…The third quarter GDP numbers show that the economy is only starting to “recover” because of growing government and expanding consumption, which has been artificially inflated by large government transfers.
Business investment continues to be in a deep recession. Companies are simply not building factories or buying new machines and equipment.
Why not? I suspect that many firms are scared to death of higher taxes, inflation, health care mandates, increased labor regulation, and other profit-killers coming down the road from Washington. That is speculation, but I haven’t heard a better explanation of the death of private investment in America.
So, absent continued government priming of the economy (which will not occur while public approval of a second “stimulus” remains so low), the growth we saw in the third quarter will not persist. And since government has no resources of its own, the money used to prop up consumer and capital spending comes directly from the very entities we need to fuel a true recovery: consumers and businesses.
October 30th, 2009 at 6:25 pm
Excellent post, Anthony. Thanks.
October 30th, 2009 at 6:26 pm
Thank YOU, Marksal!
October 30th, 2009 at 6:34 pm
Ditto!
October 30th, 2009 at 6:56 pm
Ironic that the Dems sowed the seeds of their own destruction with the stimulus.
The media now trumpets that Obama has turned the tide and that we are out of recession. So the next recession, which is on it’s way, will be the “Obama Recession.” Just in time for 2010, probably.
It’s too late enact pro-growth policies for the Midterms, but Obama still has a chance to “pull a Clinton” in time for 2012.
October 30th, 2009 at 6:57 pm
Kavon,
Well said, brother!
October 30th, 2009 at 7:01 pm
This was a great piece Anthony. I had to post it on Facebook.
October 30th, 2009 at 7:06 pm
Well, thank you for the nice complement! By all means, spread the word!
October 30th, 2009 at 8:14 pm
Why are you guys rooting for America to fail?
Bizarre.
October 30th, 2009 at 8:33 pm
Heath, where did we do such a thing?
October 30th, 2009 at 8:39 pm
Heath, nobody here is rooting for America to fail. Anthony posted an article with extremely illuminating facts and charts. They imply strongly that once the stimulus spending slows, the economy will too. That’s useful analysis.
October 30th, 2009 at 9:00 pm
This will be a ‘W’ not a ‘V’ recession, the economy will continue to tank, bottoming out in 2012.
October 30th, 2009 at 9:11 pm
Well said, Anthony.
The stimulous was doomed from the beginning since Obama did everything possible to not put money in the hands of capitalists, who happen also to be employers. (Giving money to capitalists in anathema to socialism.) Without building both cash flow and confidence in the public sector, there was never going to be private sector investment or spending. The private sector recovery was neutered by design. The only possible outcome was government sector recovery, with Obama as the object of their appreciation.
At the risk of violating Godwin’s law, do you think it was wrong to hope for the NAZI’s failure? As long as they successfully created jobs and identity, as long as they promised increased security, German citizens were increasingly willing to surrender liberties.
October 30th, 2009 at 9:21 pm
“Why are you guys rooting for America to fail?” Hello, it is called reading the tea leaves, which your camp is not doing to well at lately.
October 30th, 2009 at 10:49 pm
The only question is whether or not Obama is sinking America on purpose or not! It’s no longer a question that his is sinking it.
October 31st, 2009 at 2:01 am
Heath, this is not rooting for America to fail – this is trying to get people to see reality over rhetoric in order to prevent America from failing further. Wake up and smell the DNC propaganda!
October 31st, 2009 at 5:11 am
“The only question is whether or not Obama is sinking America on purpose or not! It’s no longer a question that his is sinking it.” BINGO!
October 31st, 2009 at 7:33 am
Not one word of relief that you posted awesome growth figures.
Just excuses that it really wasn’t as good as it sounded.
Says it all.
October 31st, 2009 at 12:36 pm
Heath, excuse us for telling the truth.
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