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Monday, October 24, 2016

The Commerce Department reports that the U.S.’s gross domestic product shrank by .1 percent in the fourth quarter of 2012. Initial reports are often revised, but this unexpected decline in the economy is a sharp reminder that the recovery — if it exists at all — is fragile and threatened by impending cuts in government spending.

Despite this shock, other economic indicators suggest a mixed outlook.

The day before the GDP report, the Dow Jones Industrial Average tested 14,000, a height not seen since 2007. Wednesday morning, ADP reported that the private sector created 192,000 jobs in January — analysts expected 175,000. According to The Conference Board, consumer confidence dove 8.1 percent in January following a decline in December. But according to Gallup, consumer confidence has surged to a five-year high.

What caused the shrinkage of GDP growth? The White House blames Hurricane Sandy, which disrupted and destroyed $44 billion in economic activity.

But cuts to government spending, a.k.a.”austerity,” also played a major role.

“A decline in government outlays and smaller gain in stockpiles subtracted a combined 2.6 percentage points from growth,” reports Bloomberg‘s Shobhana Chandra & Michelle Jamrisko. In particular, Defense spending erased any growth that the private sector racked up in the last three months of the year. “Government outlays dropped at a 6.6 percent annual pace from October through December, subtracting 1.3 percentage points from GDP. The decrease was led by a 22.2 percent fall in defense that was the biggest since 1972, following the Vietnam War.”

“Austerity, it turns out, detracts from growth,” writes The Daily Beast‘s Daniel Gross.

The Guardian’s Heidi Moore laid the blame for the shrinking economy on the budget standoff in Washington, D.C. “Washington’s idiotic battle over the fiscal cliff is what [made the economy shrink],” she writes. “The automatic tax hikes and government spending cuts set to go into motion would have hurt a wide swath of American people. CEOs were particularly loud about the need for Washington to come to some kind of decision.”

However, reports suggest businesses didn’t cut back as a result of the “fiscal cliff.”

Cuts in government spending, which Republicans insisted would lead to economic growth, have led to shrinking economies across Europe. The U.S. had been able to maintain growth with the federal government making up for the cuts to state and local governments. However, with the impending sequestration looking more likely to happen and the payroll tax cut expired, more austerity is on the way.

However, some, including Bank of America’s Michelle Meyer, are still very optimistic about growth and think that the GDP number was actually good, given the defense cuts and reduced farm inventories due to drought.

Business Insider‘s Joe Weisenthal was even more upbeat, noting that the “bad” number is largely the result of war drawdown, while consumers and business continued to spend.

“So, less war, more business investment. This was a good report.”

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  • Progressive Patriot

    Austerity is the debt crisis solution of the 1%. They would be sheltered from the devastating effects on the economy, and the conversation about entitlements and government spending distracts from the massive amounts of “elite,” and corporate welfare they have given themselves. Talk about takers!

  • There is no question that some of our greatest periods of economic expansion occurred when we engaged in warfare, and spent large amounts of money – often borrowed – to do so. Bill Clinton proved that was not the only way to accomplish economic prosperity and, instead of lamenting the effects of reduced spending on “defense”, perhaps we should try to determine how Bill managed to accomplish the same without putting the lives of our young at risk to advance the interests of a few.
    How about investing in infrastructure? Repairing our roads, replacing antiquated and deteriorating bridges, bringing our power grid to 21st century standards, building levees similar to those in the Netherlands, protecting our coastal cities against the ravages of nature, improving and investing in public education and other such initiatives would do more for our economy and our country than warfare…and we would have something to show for it, instead of blowing money and sacrificing our young in countries where we are not welcomed and our values are rejected.

    • Good writing Dominck wish the reps would read your replies.

  • Lovefacts

    I don’t know why anyone’s surpised. All they have to do is look at what’s happened to Europe’s economy under their auserity program.

  • montanabill

    What is this ‘stunned’ thing all about? I’d have been stunned if it hadn’t happened. You can’t break the laws of economics without consequences.

  • dtgraham

    Ever notice that any time government spending cuts threaten to touch the Pentagon, the political right suddenly become defence Keynesians? They then turn around and make the diametrically opposed argument towards all other government spending. Then they become classical economists.

    For gawd’s sake, just say that you believe in a military of virtually unlimited size for various reasons, but don’t fake it and completely contradict the whole economic theory your party is based on for just your pet item. Exactly how stupid do they think people are? That party has lost all sense of shame, irony, and perspective. They just don’t care.

  • johninPCFL

    It was interesting that O’Reilly latched onto the contraction last night and lauded it as proof that Obama’s economic policies weren’t working. I wonder if he read the part where the decline of our military spending was a major driver of the decline?

  • ObozoMustGo

    Economists stunned????????? You mean all economists named Paul Krugman are stunned. The rest are getting what they expect out of the socialist, big government, big debt policies of B. Hussein Obozo. He is a failure. His policies are failures. The evidence is mounting. You leftist freaks simply do not wish to confront the reality that government cannot deficit spend endlessly, nor can it confiscate wealth from the private sector to make the economy grow. It simply does not work.

    What’s funny is that Obozo’s own government said about a month ago that 4th Quarter GDP growth was +2.1%. Odd how they could be soooooooo wrong, isn’t it? Yeah right. Sure, sure.

    Have a nice day!

    Sen. Barack Obama’s Floor Speech, March 20, 2006 — “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

    • rational101

      Trust me, Paul Krugman is anything but stunned. This exactly what he predicted.

      • ObozoMustGo

        Krugman is such an idiot that he should be stunned that he makes it through the day without wandering out into traffic.

        Have a nice day!

        “Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.” — Frederic Bastiat, French economist (1801-1850)

        • Replying to ObozoMustGo –


          Calling Paul Krugman an idiot.

          You can’t even see that the reflection in your mirror is actually you, not Paul Krugman.

          • ObozoMustGo

            Jimmy… Krugman IS an idiot. It’s almost universally agreed among anyone that can think for themselves.

            Have a nice day!

            “There is all the difference in the world, however, between two kinds of assistance through government that seem superficially similar: first, 90 percent of us agreeing to impose taxes on ourselves in order to help the bottom 10 percent, and second, 80 percent voting to impose taxes on the top 10 percent to help the bottom 10 percent — William Graham Sumner’s famous example of B and C decided what D shall do for A. The first may be wise or unwise, an effective or ineffective way to help the disadvantaged — but it is consistent with belief in both equality of opportunity and liberty. The second seeks equality of outcome and is entirely antithetical to liberty.” – Milton Friedman

    • You just don’t get it. Paul Krugman and Joseph Stiglitz are the economists who are NOT stunned, you idiot. If you had done any reading to back up your idiotic opinions you would know how wrong you are. Krugman has been saying all along that austerity would do exactly this – continue to depress the economy.

      • ObozoMustGo

        Austerity??????? bwaaaaaaaaaaaahahahahahahahahahahahahahahaha ROFLMAO

        Good one Dot. hehehehehehehehehehehehehehehe

        Cut it out… Your killing me….. bwaaaaaaaaaahahahahahahahahahahahahaha

        How in the hell do you call annual spending of $4+TRILLION and budget deficits averaging about $1.5 TRILLION under Obozo “Austerity”? What the hell are you smoking? You CAN”T be that stupid.

        Have a nice day!

        “Giving money and power to government is like giving whiskey and car keys to teenage boys.” — P.J. O’Rourke, Civil Libertarian

    • Replying to ObozoMustGo –

      And just like SO MANY of the TURD PARTY “Conservatives”, deficit spending is only a problem when Democrats are in power.

      National Debt when Ronald Reagan took office – One Trillion Dollars. When He left office, Three Trillion Dollars. (WHAT A SAINT!!!!)


      President Clinton added 1.7 Trillion Dollars. And managed to BALANCE the budget before leaving office.

      HE ALSO MANAGED TO DRAG US INTO TWO, OFF BUDGET WARS, RUINING OUR REPUTATION THE WORLD OVER, all the while telling us that he sleeps just fine at night.

      AND, WHY SHOULDN’T HE? He will never have to live with the consequences of his actions.

      And don’t forget the mighty WARRIOR, “Dick” Cheney. “Ronald Reagan taught us that Deficits don’t matter!!!!”

      So, don’t get all uppity on your high horse. The mess we are in REALLY started with President Reagan, and is largely the RESPONSIBILITY of the so called “Conservatives” who followed him so blindly for decades.

      And now that we have over SIXTEEN TRILLION DOLLARS of National Debt, somehow it is all President Obama’s fault.


      Democrats had a label as the TAX & SPEND party. And rightly so.

      However, the Republicans are the party of “SPEND BABY, SPEND.”

      But do not dare ask for taxes to pay for it.

      • dtgraham

        In some ways Conservatives are the same everywhere Jim. They’re just bad news. From 1984 to 1993 the Progressive Conservative government in Canada ballooned budget deficits to record levels and drove the national debt to nearly 100% of GDP. The incoming Liberal government had 11 straight surplus budgets and got the debt down to about 35% of GDP from 1993 to 2006. The Cons were recently given another majority gov’t and Canada is back to deficit budgets and rising debt due largely to tax cuts that did nothing for the economy…..surprise surprise. Sound familiar? There were only two Conservative majority governments in the history of the country until 1984 and maybe we’ll finally be through with them.

        In Britain, David Cameron’s Conservatives engaged in needlessly steep austerity measures that threw them into a deep recession from which they still haven’t emerged. Conservatives seem to be bad news everywhere any more.

      • ObozoMustGo

        Jimmy… what kind of useful idiot are you? How many times have I told you that your statements about “Off Budget wars” are an absolute distortion, and in fact, likely an intential distortion that borders on outright lie. Your implication in saying “off budget wars” is to give the impression that all the spending on the wars was somehow placed on Obozo’s back and he got tagged for all of it. You repeat this lie because you are attempting to hide Obozo’s outrageous profligacy and blame his own record on Bush. Too bad, loser. Just because spending is “off budget” (a lot of spending is off budget) does not mean that it is NOT counted for on the books and reflected in the year’s financial summaries. Of course it is, you dope. And you know it. All “off budget” means is that a particual bill for funding a particular need is NOT voted on as a part of the annual Omnibus Budgeting process. It does not mean spending is hidden. Congress still must vote on the spending bills.

        Obozo has NEVER passed a budget. He actually doesn’t want to and nor does he give a damn. By NOT passing a budget, he is able to continue blaming his spending on others. He is able to avoid all responsibility for his spending. This is classic Obozo tactics. Only real idiots like you, Jim, actually buy that crap. That’s because you are mostly a fool, Jim.

        Now, having said that it is true that Congress holds the power of the purse. But the President authorizes the final deal. In Obozo’s case, he controlled the entire kt and kaboodle for 2 years. He jammed through an OFF BUDGET “stimulus” package of nearly $1T and then baselined that spending into future continuing resoluti0ns. He scared the hell out of America resulting in Nov. 2010 and Nov. 2012 with the Repubs getting and then keeping the House. America likes Obozo to be restrained, clearly. And that’s the House’s duty.

        Reagan was lied to by Tip O’Niell about spending cuts. O’Niell is widely known to have admitted that he snookered Reagan on this matter. But you leftist freaks love to lie and distort about Reagan just like you do about your claims that Bush 2’s wars were “off budget” as I have laid out above. Funny how you leftist freaks fail to ever mention how fast the economy grew under Reaganomics and how fast revenues to the Treasury flooded in in record amounts. Your distortions about Reagan are either intentional or are outright lies. Like everthing else out of a leftist freak jello head.

        Bush 1 was not a conservative. Enough on him.

        Clinton’s happiest day was the Republican takeover of the House in 1994. Clinton is a radical leftist like Obozo, but what Clinton has that Obozo never will have is common sense and some pragmatism. Obozo is a committed lefist ideologue and will NEVER compromise. Clinton was smart. Obozo is an idiot. That was apparent at that sheet show you morons put on in Charlotte last summer.

        The housing crisis was 100% created by you leftist freaks in your attempts to distort the housing lending market so that you could accomplish your leftist freak social goals of increased home ownership. This was a stated goal of Clinton’s and he used Jimmy Carter’s 1977 Community Reinvestment Act as the vehicle for forcing banks to reduce their lending standards and lend in previously designated areas of blight. That was called “Red Lining” and guess who was a lawyer that sued Chase Manhattan under the CRA? A lawyer working for ACORN as a hired thug…. that’s right….. Obozo was personally involved in forcing banks to lend to bums. But it did not stop there. Congress had to do it’s part. Barney the fag and his Chris “Friend of Angelo” Dodd had their whack at the pinata, also. Barney was banging a dude at Fannie (pun intended) Mae and Dodd was getting sweetheart deals at Country Wide Mortgage all the while both were blocking legislation that would have reigned in Freddie and Fannie. Instead, Fannie and Freddy were the onese telling banks that they would guarantee their bad loans. Also, Frank Raines, a leftist appointee, stole over $100 Million from Fannie by cooking the books for his bonuses. His skin pigment and political party prevents Holder from prosecuting him. And don’t leave out the Fed. Greenspan’s easy money policies fuled the lending that the banks did. It all worked out in the end. Banks were forced to lend to people that could not pay. Politicians looked like heros because home prices exploded with the demand, and this in turn drove home builders and the construction industry. Everyone’s a winner until the house of cards comes crumbling down. You leftist freaks don’t like the truth, but Bush actually supported stronger oversight of Fannie and Freddie and the growing housing bubble. But that doesn’t fit your narrative of lies and distortions, does it Jimmy my boy? I agree that Bush should have been more outspoken about it and pushed harder, but he did not. He’s not without fault in my mind, but he did not start the housing bubble and did not have anything to do with the groundwork that was laid in causing the crisis. That was Clinton. Clinton also repealed Glass-Steagal. You leftist freaks forget about that one, too.

        Have a nice day, Jimmy!

        “The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.” – Milton Friedman, Capitalism and Freedom

  • WOW!!!!

    Paul Krugman appears to be right. Who would have thought.

    Certainly not the TURD PARTY and their backers.