While Obama has spent the summer bragging about his “Recovery Summer” and the “Obama Boom”, most of us have noticed that things don’t seem to be getting any better. They aren’t necessarily getting any worse. They are just cuhurning. Unemployment is stuck at 9.5%+, the housing market isn’t getting any better, and so on. We aren’t the only ones noticing this. What if this is it? This is the Recovery, such as it is? That is the thesis of this interesting article from the Fiscal Times (H/T Instapundit):
By this stage of the recovery, the longing is almost palpable. We want to get back to normal. It’s time to shake off this nasty recession and get back to the serious business of getting richer. We always have in the past. As the investment thinker William Bernstein put it in an interview with The Fiscal Times, “Since the birth of the republic, we have been through mishaps much worse than 2008: a revolution that nearly wiped out our credit, a civil war, the libertarian valhalla of the 19th century that saw several depressions as bad as the thirties, the Great Depression itself, and two world wars.”
Over those tumultuous 200 years, the trend in per capita economic growth has been remarkably steady, and so has the return on capital. Stocks have averaged 6 percent a year over inflation since 1802, according to Wharton professor Jeremy Siegel, or 9 percent a year since 1927 according to the oft-quoted Ibbotson survey. American history, in other words, favors optimists.
But what if history is bunk? The America of 2010 — aging, indebted, overextended and under-educated — is not the fresh-faced republic of 1802, with a continent to exploit and a population surging from immigration. Nor is it the victor of WWII, the only developed nation that escaped the war’s destruction. Economic win streaks do come to an end. Just ask Britain. Or Japan.
Washington and Wall Street are coming around to the idea that the economic future we’re stumbling towards will be far less generous from the normality we long for. The “New Normal” — a disarmingly benign term coined by Mohamed El-Erian, co-chief investment officer of the big California investment firm Pimco — envisions a future of sluggish growth, international discord, increased uncertainty and minuscule returns on capital. Government revenues shrink while spending remains high.
This latter is the Obama Economy. “Stimulus” has produced precious little in the way of “response”, and we don’t have the money for another. There is little that Obama can do at this stage to make things better (short of resigning and taking his Administration with him). Obama has brought instability and uncertainty to the market, and businesses understandibly don’t want to hire new people when they aren’t sure they can pay the ones they’ve got.
Read the whole article. It isn’t very long. In short, we may be stuck here for the foreseeable future. Electing Republicans in the Fall may help a little, as gridlock will guarantee we won’t have another ObamaCare-like bill pass, but most of the damage is done. The Republicans can’t begin to undo it as long as Obama is in the White House, and likely as long as there are 41 solid Democrats in the Senate. Elections have consequences. Sometimes, like this last one, those consequences last for generations. And it isn’t over yet. We have two more years of Obamanation left at a minimum. He could win another term. The Republicans might not even take the House this time around. Things can get worse, but it looks like they are unlikely to get better for the foreseeable future.
Tags: Economy
