The Economy Is Worse Than You Think

Which is bad, bad news, as I think it’s really, really bad. Via the Wall Street Journal:

Expect more bad news until someone enacts a plan to bring deficits under control without raising taxes.

The policies of the Obama administration have led to the weak condition of the American economy. Growth during the coming year will be subpar at best, leaving high or rising levels of unemployment and underemployment.

The drop in GDP growth to just 1.8% in the first quarter of 2011, from 3.1% in the final quarter of last year, understates the extent of the decline. Two-thirds of that 1.8% went into business inventories rather than sales to consumers or other final buyers. This means that final sales growth was at an annual rate of just 0.6% and the actual quarterly increase was just 0.15%—dangerously close to no rise at all. A sustained expansion cannot be built on inventory investment. It takes final sales to induce businesses to hire and to invest.

The picture is even gloomier if we look in more detail. Estimates of monthly GDP indicate that the only growth in the first quarter of 2011 was from February to March. After a temporary rise in March, the economy began sliding again in April, with declines in real wages, in durable-goods orders and manufacturing production, in existing home sales, and in real per-capita disposable incomes. It is not surprising that the index of leading indicators fell in April, only the second decline since it began to rise in the spring of 2009

Even the dim-bulb Arianna Huffington gets it:

Now the numbers are so bad — and November 2012 so close — that the Obama campaign has decided it must, as Politico’s Carrie Budoff Brown and Glenn Thrush put it, “temper some of the Morning-in-America optimism he’d hoped to run on.”

This is truly shocking. Not that the president’s team realizes its “Morning-in-America” parade is getting rained on, but that marching under that banner was ever considered in the first place. Even if the jobs numbers had come in as expected, at 150,000 — or even if they’d come in higher than expected at, say, 200,000, and stayed there for several months, we’re nowhere near Morning in America. Unfortunately, too much of the country appears to be closer to a Permanent Midnight.

As our Business Editor Peter Goodman puts it, the conditions underlying these numbers are “already familiar beyond the realm of professional economists and policymakers.” This is what most Americans, Goodman writes, “know in their bones, not from government reports and the abstract musings of economists, but from the everyday fears that accompany glancing at their checkbooks and their latest credit card bills: There is no relief in sight.”