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The Recent Cost of Obamanomics

Lest you think that the downgrade of the United States is responsible for the downturn in the economy and the stock market, let me provide my perspective.

One week before S&P downgraded the U.S., the second quarter GDP report was released. Not only did the second quarter disappoint (1.3% growth vs. expectations of 1.8%), but the original estimate of first quarter GDP growth was revised from 1.9% growth to 0.4%. Over the next two days, we also saw weaker than expected reports on the Chicago Purchasing Manager Index, the University of Michigan Confidence Index, The Institute for Supply Management (ISM) Manufacturing Index, Personal Income and Personal Spending. The Federal Reserve confirmed this weakness earlier this week when Helicopter Ben (Bernanke) announced that it will keep short term interest rates near zero out to mid-2013. The fact that the Fed feels the need to do this when interest rates on Treasuries are below 1% for Treasuries with a 5 year maturity or less, is concerning.

What does it tell you when near historic lows in interest rates can’t revive the economy? I guess Obama’s “Summer of Recovery” was more about Summer than Recovery. It can’t help that we have one of the most anti-free market Presidents in history. With the prospect of higher taxes on individuals (small business) and higher taxes on corporations (already the highest in the developed world), no wonder job creation has stalled. The prospect of the “Employer Mandate” requiring businesses to either offer an acceptable level of health insurance coverage or pay a fee of $2,000 for each full time employee for businesses with more than 50 employees, will also have a negative impact on job creation.

The most recent cost of Obamanomics is the toll of the evidence of economic weakness rearing its ugly face, on financial assets. From the market close as of July 28, 2011 to yesterdays market close, the Standard & Poor’s Index has lost 13.8% of its value. That’s about $1.7 trillion in terms of loss of value.

How is that “Hope and Change” working for your 401(k)?

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Third Base Politics is an Ohio-centric conservative blog that has been featured at Hot Air, National Review, Washington Post, Los Angeles Times, Pittsburgh Tribune-Review, and others.

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