Econo-Thoughts

Some thoughts about the good economic news that came out this week.

Job numbers are really good.  The economy is creating jobs at a steady rate in the private sector.  Unemployment, while still high, is coming down.  We can't really say that the economy is booming, but we can say it's recovering.

• If things keep going like this through the year, Obama would be very likely to be re-elected.  Elections can usually be predicted by the economy, and when it's good the incumbent generally gets the credit.
• That doesn't mean that Obama deserves the credit for the economy, of course.  All recessions end, and recoveries always happen eventually, even when the government screws things up.  One fear I've had is that the economy would continue to stink through 2012, leading to a Republican sweep, and then things would improve right on schedule in 2013, just in time for the GOP to claim credit.  Of course, that would have meant that Obama had not succeeded in getting things moving fast enough, so in a sense he would have deserved it.
• In another sense, however, he wouldn't have deserved it, since he's been successfully stymied by Congress from implementing any jobs bills.
• On the other other hand, though, that's a good reason to say that the President doesn't really deserve credit now, since he's been stymied by Congress- one can argue that Washington's inaction has worked out a lot better than proposed actions would have.

Economics is frustrating this way, as good experiments are hard to come by in the real world.  So I return to the standard I've been talking about for a few years now- the one experiment we could identify.  That's the US vs. Europe.  Both went into recession at the same time for similar reasons.  The US did significant stimulus (though not enough according to liberal economists), while Europe did relatively much less stimulus.  Thus far, the US recovery has been quicker and better than just about anywhere in the Eurozone.  Now in fairness, they're dealing with a sovereign debt crisis there, which we don't have here, so it's not a perfect experiment, but nothing is.

Another way to look at it is to note that the Right has been forecasting Doom due to the huge budget deficit and loose money policy of the Fed.  It's clear that we haven't seen that come to pass.  I guess it could still be coming, but I don't think so.

Photo is of Panama Canal workers.  I'm reading the David McCullough book about the canal now, which I highly recommend!