With all the turmoil in the Middle East in the past few days bad economic data that came forward has not gotten the attention it deserves. Our economic situation is in as big a meltdown as Obama’s foreign policy.
For instance, industrial production was down 1.2% in August. That’s a lot. In fact, the largest drop since March 2009. How can the job market improve with this big a plunge?
Then, the US median income fell again, to its lowest level since 1995. According to annual data from the Census Bureau, median income adjusted for inflation – a closely watched measure of the financial health of average Americans – fell to $50,054 in 2011, or 1.5 per cent below its 2010 level and 4.1 per cent below its score when Mr Obama took office in 2009.
On top of that, consumer prices have soared which means your money, which isn’t growing, will have to pay for prices of goods, which are. ZeroHedge explains:
Food inflation which is already spreading through the economy courtesy of the record drought, is about to be supported by some brand new Fed-generated inflation. Luckily, as yesterday, nobody uses gas or food. And in other news, retail sales posted yet another very disappointing print, when despite a better than expected headline print of 0.9% in August advance retail sales, a number which included gas and auto sales, retail sales excluding these very volatile components, rose by only 0.1%, on expectations of a 0.4% rise, and a downward revision from 0.9% to 0.8%. This was the 5th miss in 6 months, and ugly all around. In other words, the US consumer, revised consumer credit data notwithstanding, is levering up and not generating any real new sales. Expect yet another round of GDP revisions.
Then we, the United States, got a downgrade of our credit rating by Egan-Jones. This company downgraded us for the first time last July, two weeks ahead of S&P doing it. They note:
From 2006 to present, the US’s debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8%. In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5%.
This will weaken the dollar, which means you will – again – be paying higher prices for commodities. That presses business profitability who won’t be able to pay for the higher energy and commodities costs. So what do they do? Lay off more people.
The much heralded QE3, or as some refer to it, QEternity, was rushed in by Fed Chairman Ben Bernancke last week. At least – yes, at least – $40 billion a month will be used to help the housing industry. Eternity because he has put no time limit on it. How do we continue to put out so much money without having it on hand? We are at the highest povery level in decades, with entitlement spending increasing monthly as many unemployed go to disability payments.
Are Americans so stupid as to excuse Obama from this economic disaster as well? We’ll find out November 6.