Bloom of Doom VIII: US Figures Stronger than Feared

If you think the title is a contradiction, well, not more so than the idea that debt or subsidies could increase wealth. Where truth can’t win by argument it needs to do so by stealth (that almost rhymes). The President of the United States has published a report on the state of the economy which proves how uneconomical the state has become. From that report you can glean two things, the bad and the ugly: the US economy has greatly deteriorated further and it seems beyond the point of no return.

CrisisMaven became aware of the “Economic Report of the President” at Gaertner’s Blog – Die Weltwirtschaft vom Pazifik aus, a blog by a German economic journalist from Vancouver who does impressive graphs and charts under his ECONCHART brand as well.

In a recent post “Schwindsucht, Mr. President! – Obamas Wirtschaftsbericht an den Kongress – offenbart die schleichende Implosion der US-Wirtschaft” (“Phthisis Mr. President – Obama’s Report to Congress reveals the insidious implosion of the US economy”) he analyses ten of the charts from the said report. While the article is in German we list the general gist of his analysis here so that you can then easily understand the charts over there. When you see the curves you will find all arguments quite compelling and self-explanatory anyhow (his illustrations are in English).

The points Mr. Gaertner makes are as follows (following the sequence of charts):

1. The US income disparity is rising dramatically.
2. Home prices are still by and large in free fall (and that is despite state intervention which on the other hand aggravates the state’s financial position so is a mixed blessing anyhow).
3. Despite news reports to the contrary, credit-financed consumption is still on the rise.
4. (Home) loan performance started to decline in 2006, long before authorities saw any concern and still deteriorates, again despite all money thrown at the problem. While at the same time to not have to show the whole truth about the US’ looming collapse they budget with 2% price inflation while the economy is projected to grow at a 5% annual rate up to 2020. Even if these two figures were the other way around the US would be lucky.
5. Home-ownership is in strong decline but still only halfway towards long-term normal level.
6. Industrial investment still strongly contracting across the board with no end in sight (and looking at the preceding bullets – what should industry invest for or in?).
7. Rising deficits now and in the future (despite 5% growth …).
8. Health expenditures sky-rocketing (Gaertner’s comment: “Who’s going to kill the economy first? Government, Health Care, Debt?”)
9. Median real term family income stagnant since the seventies!!!

So let’s sum this up: even though with Greenspan’s loose monetary policies the US has never managed 5% real growth year on year in living memory, and with the economy in the doldrums, they (the president himself!) are projecting the situation to further rapidly and uncontrollably to deteriorate. How much worse can you imagine the situation to be if not presidential sleight-of-hand but sanity would dictate such a report.

Well, that’s why you came here probably (or try to stay an informed reader by following other sources than the mainstream media only).

Here’s an excerpt from the Table of Contents:

CHAPTER 1	TO RESCUE, REBALANCE, AND REBUILD	25
CHAPTER 2	RESCUING THE ECONOMY FROM THE GREAT RECESSION	39
CHAPTER 5	ADDRESSING THE LONG-RUN FISCAL CHALLENGE	137
CHAPTER 8	STRENGTHENING THE AMERICAN LABOR FORCE	213
CHAPTER 10	FOSTERING PRODUCTIVITY GROWTH THROUGH INNOVATION AND TRADE	259

As you can see, everything’s ok – the economy is rescued, the fiscal “challenge” gets addressed, labour force strengthened and productivity growth is fostered.

Of course they’re not outright lies, you only have to be able to translate that Orwellian Newspeak back into plain English:

• The economy got rescued like the Titanic’s passengers,
• the fiscal challenge gets addressed by monetising the sovereign debt and
• the number of unemployed is strengthened,
• while the trade esp. with China puts US innovation in a foster home.

(Nothing against trade – but you must be able to offer something in return, in other words, need to produce yourself so that you have something to exchange; however, the US pays China with worthless treasury bills and US citizens buy these products on credit, until, well see the housing market as an example.)

(Find more statistics and indicators etc. in our References section!)