Upbeat, but ...: The U.S. economy is a mix of contradictions
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The American economy is sending contradictory signals, but in general its state is upbeat.
In January 157,000 jobs were created, even though unemployment rose from 7.8 percent to 7.9 percent. The overall job figures for 2012 were also readjusted, showing greater growth of 335,000. Home prices in 20 cities rose by 5.5 percent in November over the previous year, another positive sign.
On the basis of the January jobs report, the Dow Jones industrial average closed above 14,000 Friday, for the first time since October 2007.
On the downside, the gross domestic product shrank by 0.1 percent in the fourth quarter. The drop apparently was based on fewer exports and spending reductions by government, including the Defense Department. The military-industrial sector plays a huge role in the overall performance of the economy, an unhealthy dependence that America has fallen into over the years. Prosperity should not depend on the military, with the costs in lives and expenditures involved.
America is in a sad state if it cannot end wars in places like Iraq and Afghanistan without damaging its economy. The ends of World War I and World War II did not result in recessions, but in economic growth.
The other element at play is what the White House and Congress intend to do about sequestration, the budget cuts set to kick in March 1. The threat of it was intended to force those two feckless bodies to reach agreement on sensible reductions and revenue enhancements, including tax increases, that would stifle the annual deficits that fuel the national debt.
So far they haven't reached agreement, and Republican conservatives seem to be enjoying the impasse and the impending doom, which they think they can blame on President Barack Obama and the Democrats. The drop in the GDP may be the first snowflakes of what could become a longstanding cold front in the economy. There is no excuse for the White House and Congress and Republicans and Democrats to impose that fate on Americans, who have been long awaiting an economic spring.
First Published February 5, 2013 12:00 am