Growth Q3?

We noted in the July/5 sketch that the recovery this time has been retarded due to real and perceived burdens on the private sector, as manufactured in Washington. In other words, why hire? This explains a good part of the prolonged pain. Recoveries from past recessions were much speedier because they were accompanied by real tax cuts, unhampered by massive government programs.

Yet there is no denying that the US economy’s powers of rejuvenation are beginning to show. Last Friday we received the July employment report. The workweek was a tad longer, rising from a record low. This is a good thing. Next, jobs fell in July but by the smallest amount since Aug/08 (just before the free-fall). The recession started Dec/07. Since then 6.6MM jobs have been lost; however, over the last three months the pace of job loss has slowed dramatically. This is a very good thing. The worst of the labor market deterioration is over. Next thing we know there will be talk about positive growth, Q3!

Washington will naturally take credit when the sun rises. Most of us understand that they deserve none, certainly not as a result of the government heist known as the stimulus bill (which we saw as a boondoggle from the start, now having plenty of company). Much credit belongs to the Fed for expanding its monetary base at an average yearly rate of nearly 100% from Dec/08. The rest, to the remarkable tenacity and inventiveness of US free enterprise.

Robert Craven