January 11, 2011

Lickety-Split Links (011111, Morning)

Filed under: Lucid Links — Tom @ 8:52 am

Ford plans to hire 7,000 more workers in the next two years, including 750 engineers. The jobs are slated for Michigan, Louisville, and Chicago.

I suggest that Ohio Governor John Kasich make two phone calls:

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Last Friday, Best Buy reported that December’s same-store sales dropped 4% from a year ago. That’s on top of a 5% revenue miss (vs. expectations) in the quarter that ended in November.

The Reuters story says that Best Buy is losing business to Target. Target? I think Best Buy’s difficulties represent a symptom of a deeper problem, namely that retail traffic for hard goods, especially electronics, is in the doldrums.

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Hiring is supposed to pick up this year, but “the 2% payroll gains, though healthy, will be about half the additions that followed similarly severe recessions in the 1970s and 1980s.”

That’s because the architects of the POR (Pelosi-Obama-Reid) Economy chose “stimulus” — a zero-impact “triumph of Keynesian wishful-thinking over practical experience” — over tax cuts, which produced the Seven Fat Years.

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Speaking of the Seven Fat Years, policymakers today seem all too willing to accept mediocrity. Here’s an example, from Federal Reserve Bank of Atlanta President and CEO Dennis P. Lockhart:

Lockhart: Economy could surprise in ‘11

Then the economy hit an air pocket in the middle of 2010 as these forces played out and were not sufficiently replaced by sustained private demand. Importantly, though, the economy did not go into a nosedive as the year progressed. The third quarter of last year steadied to a modest rate of growth around 2.5 percent, which is in the range of the widely perceived long-term potential of the economy.

Says who? 2.5% growth was barely acceptable when the economy hadn’t suffered a deep recession (annual GDP growth averaged 2.6% from 2002-2007). It’s absolutely unacceptable coming out of one. If we had the right policy recipes, we should be seeing 5%-plus quarterly growth readings.

During Reagan’s Seven Fat Years, annualized quarterly growth averaged 4.3%. There’s no reason that can’t be replicated; failure to do so explains why the job market is in a 5-year recovery mode, when it should have recovered by now.

Accepting mediocrity has inflicted terrible consequences on millions of workers and their families. It didn’t have to be this way. The Party of Faux Compassion and its statist fixations made it this way. “Party of Compassion” my a**.

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2 Comments

  1. On a related note to Stimulus funds, it was announced today that Maryland is trying to close a $1.2 billion budget gap. The reason for the gap you might ask???? Well, they used the Stimulus funds last year to close that gap without making the hard choices of cutting the budget or addressing their pension problems. This year they now have to make those hard choices with a potential tax increase foisted at the last minute. Of course there will be the drama of the budget theater before sticking it to the taxpayer. Call it Dinner Theater in Annapolis.

    Side note, Virginia is trying to figure out what to do with a budget SURPLUS.

    Comment by dscott — January 12, 2011 @ 9:51 am

  2. #1, Ohio did the same thing as MD, and now John Kasich has to clean up Ted Strickland’s the Ohio RINO’s $8-10 billion mess.

    Comment by TBlumer — January 12, 2011 @ 10:27 am

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