Economists and the unemployed have discovered that the recovery is not much of a recovery. GDP expansion may have died in June and there are very few signs that it is improving this month. And August is traditionally slow for business so companies probably will be doing much expanding.
The July 2010 NABE Industry Survey shows that “Profit margins expanded for a fourth consecutive quarter, but growth slowed to a crawl as the NRI (Net Rising Index) slid to 4 in the July survey from 13 in April.” The research also shows plans for capital spending barely increased compared to a year ago.
The core message from the NABE report is that the recovery the organization saw in April died in July. The data begs the question, when taken with other similar signs from other private sector sources, of whether the economy can expand at all without government intervention to help the unemployed, keep interest rates low, and foster job creation. Elections in November will increase the rhetoric about deficit spending as an enemy to the nation’s long-term financial health.
It is occasionally worthwhile to admit that the least popular course is the right one, and that re-election should not trump efforts to heal the economy. Politicians will say that is the proper way for public officials to view their fiduciary responsibility to the constituents. But they will not do anything about it.
What is increasingly clear is that the point of view that without stimulus the very modest economic recovery will run out of steam — and perhaps already has — is probably correct. Without government help, the deterioration will accelerate, and the money spent on stimulus last year and early in 2010 will nearly be wasted.
Poker experts say that it is almost always a bad idea to double down, but what the rule does not take into account is what is a stake. The recovery of the economy is, in this case.
Douglas A. McIntyre
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