An Inconvenient Recovery

by: Tom Evslin

The U.S. economy is improving. This improvement is inconvenient for both major political parties, so it isn't getting much attention or credit. The improvement is slow – but might be faster if it got the recognition it deserves since improvement depends on consumer and business confidence.

The facts are that unemployment is coming down at an accelerating rate despite continued reduction in the government sector. The significant four week average for new unemployment claims is down. Consumer sales are up over last year. Inventories are still lean. Personal balance sheets are much more balanced than they were before the recession. Housing prices may finally have stabilized with the needle pointing right at affordable – especially with prevailing very low interest rates. The balance sheets of large corporations are stuffed with investable cash. The price of oil – always important to the American economy - has slid way off its highs and may have further to fall. Meanwhile, abundant American natural gas is keeping a lid on electricity prices and creating jobs in both extractive and energy-dependent manufacturing businesses. Some jobs are even coming back from China. Farmers are making scads of money. The rest of the world has apparently decided that the U.S. is the best of a bad lot and is parking its money here, keeping our interest rates down and potentially making more capital available to invest.

So how come this isn't good news?

Well, if you're a partisan Republican, it means that the Obama Administration hasn't completely wrecked the economy and he might even be able to run for reelection in an upturn – perish the thought. He'll certainly take credit for it if it happens. Moreover, how can you say you won't close tax loopholes for the very rich in this "struggling economy" if the economy isn't struggling?

If you're a partisan Democrat, how do you argue that even more stimulus and government spending is needed when the economy inconveniently began to recover once the stimulus had run its course? How do you argue against tighter restrictions on collecting unemployment insurance if jobs are again available? (Although I know that they're not readily available for everyone at every skill level everywhere.) How do you argue that we can't cut public sector jobs when the private sector is doing such a good job of taking up the job-creation slack?

If you're at the Federal Reserve, what is your excuse for continuing to manufacture profits for too-big-to-fail banks when a recovery is happening- despite the fact that these banks are also too big to lend to small businesses and that large businesses have plenty of liquidity of their own.

It must be that I imbibed too much holiday cheer. How dare there be a recovery now?