I do not claim to be prescient, but every once in a while even Chicken Little has just cause to worry. And that economic slowdown I’ve seen coming and been fearing for more than a year (and first wrote about in this space last October) seems decidedly upon us.
Just to refresh, on Oct. 15, 2005, I wrote the following: “The Bush recession we fiscal conservatives have feared for years is finally fashioning a persuasive impersonation of a jetliner on final approach. It’s about to land. The question is will it land softly, crash, or be shot down?”
OK, so I was a bit early, but they say people with arthritis can predict rain when they feel pain in their joints. In fact, according to the Farmers’ Almanac Web site, 93 percent of arthritis sufferers surveyed say incoming wet weather increases their pain and 68 percent report incoming wet weather severely affects their pain level. Seemed like folklore for centuries. Now scientific studies confirm that certain weather conditions do indeed cause swelling and inflammation of arthritic joints, which stretches inflamed joint lining, thus heightening arthritic pain. I can’t predict rain in my joints. But I can see a recession coming way before it hits.
In case you still believe I’m Chicken Little-ing it on the economy (to wit, seeing a problem where there is none), Reuters and other major media authorities have finally seen fit to agree with me. In a June 4 dispatch, the business news agency reported:
“U.S. investors this week will watch the latest employment numbers to see if they temper inflation expectations, without sharply dimming the outlook for corporate profit growth, giving stocks a chance to bounce back from May’s sharp sell-off. For stocks to rally, analysts say the economy needs to slow enough to calm the Federal Reserve’s worries about inflation so it can end a two-year campaign of hiking interest rates.”
The question no longer is when we’re going to crash, but how hard.
The latest report from the Commerce Department last week informed us U.S. factory orders fell in April, their biggest setback in three months and another sign of slowing economic activity in the spring, down almost 2 percent from March. And March marked the largest decline since a 2.7 percent fall in factory orders in January. And so it goes.
If only that were the end of it. Consumer confidence is teetering on the brink of downright shaky. We all know high gas prices are forcing middle- and lower-class Americans to spend unacceptably high portions of their disposable income on fuel. The one economic sunspot is retail sales.
But in other ways, companies are pulling back.
Take job creation, as one example. The Labor Department reported last week the economy added a feckless 75,000 jobs last month. That was down from April’s weak production of 120,000 new American jobs and way fewer than the 170,000 level economists had predicted. America lost 14,000 factory jobs in April.
What’s causing all this? The economy has actually been incredibly resilient given the wanton fiscal leadership delivered by the Bush administration and the Republican Congress.
We’ve been bailed out by technological advances. The Internet has increased the speed of commerce and has allowed our economy to continue to thrive despite hardship scenarios that would have buried us economically only decades earlier. Before the Internet, could we have survived $3-per-gallon gas, a doubling and tripling of real estate prices, and high interest rates simultaneously and run this smoothly? No.
But even the Internet and consumer spending can’t bail us out forever. War spending must be reined in. Pork-barrel legislation and “bridges to nowhere” have simply got to be reined in, too. If not, the chances of this being a soft-landing recession won’t be much higher than those of finding Osama bin Laden anytime soon.
(Bonnie Erbe is a TV host and columnist. E-mail bonnieerbe(at)CompuServe.com.)