No matter how many times the White House tells us recovery — real recovery — is just around the corner it never quite pans out.
New government data released this morning showed the economy expanded at an annual rate of 2.5 percent during the first three months of the year — slower than economists expected. Many have already begun warning that the recovery has cooled even more since then.
The disappointing report reveals that the economy did not have as much momentum as was hoped. And it’s likely to make it even more difficult for the country to shake off any hits from higher taxes and the federal spending cuts known as the sequester that are beginning to eat away at household budgets. Economists expect those factors to pare the rate of growth during the second quarter to between 1 and 2 percent.
This comes as no shock to conservatives. The administration has not changed its policies; we have not been able to shake off the Obama slump. Is there some mystery here?
You will not get robust economic growth and significant job creation with the world’s highest corporate tax rate, reducing take-home pay (via payroll and other tax hikes), Obamacare and other regulatory weights on business, huge debt and undeveloped energy resources.
Jay Feldman of Credit Suisse sums up: “Growth averaged 1.4% over the last two quarters, and 1.8% over the last year. All in all, growth is persistent, but decidedly underwhelming. At this trajectory, achieving a labor market recovery beyond the fits and starts progress of the last few years will be a challenge.”
And things could be getting worse, as the Wall Street Journal reports:
If consumer demand eases amid signs that hiring is slowing, that could be a significant drag on the economy later this year.
“Growth will be slower in the current quarter, featuring a pullback in consumer spending, the imposition of federal spending sequestration, and no positive inventory contribution,” said Alan Levenson, chief economist at T. Rowe Price.
The economy has now grown for 15 consecutive quarters, but the average pace—just above 2% annually—is weak by historical standards.
I’m tempted to point out that while the economy languishes, the president has been devoting himself to a failed gun-control effort and meandering through another fruitless budget standoff. But then again, he could be making matters worse via more tax hikes, further regulations and more useless government spending.
There is an agenda to pump up growth: Put off Obamacare until unemployment gets to 5 percent; reform the corporate tax code; work on long-term debt reduction via entitlement reform; and move forward on domestic energy development. That’s a program with items that some Democrats can accept. In any event, the Republicans should put forward a growth agenda and run on it in 2014. What is the president going to say — “Just be patient“?