The Coming Recession

David Malpass has an article that echoes what I have been thinking. We are headed for another recession. James Pethokoukis has come to the same conclusion. The reason for the faltering economy is as plain as the nose on your face.

And a well regarded study by two Swedish economists found a negative correlation between government size and economic growth. Where government size grows by 10 percentage points, annual growth rates fall by 0.5 to 1 percent. In 2000, US federal spending was 18 percent of GDP. This year, it’s 24 percent.

The Obama solution to economic woe was to trust government more than individuals and markets. It failed miserably and we are headed for another recession precisely because of Obama’s policies. We never really catapulted out of the last economic downturn. We have proven the multiplier effect of government spending is 0.
ISM Manufacturing Production Index Chart

ISM Manufacturing Production Index data by YCharts

Malpass points out that the only thing Obama’s economic policies have done is turned the nation into gold investors and the banks into Treasury bond buyers. Production is down, and unemployment persists. When you analyze the statistics it is pretty depressing.
US Unemployment Rate Chart

US Unemployment Rate data by YCharts

More and more people are left with no hope, even though we are rapidly making technological innovations that could turn the country around if government would unshackle them. The energy sector could become a vibrant job creator. We could have a lot more manufacturing jobs in the US with a change in tax policy. But instead of putting our faith in people, the proposals on the table increase taxes and spending when we should be cutting both. The incentive to work isn’t there, and people are leaving the labor force. They are frustrated.
US Labor Force Participation Rate Chart

US Labor Force Participation Rate data by YCharts

It makes no sense.

My dog has made more shovel ready projects than Obama.

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Thanks for the link Instapundit.

Tip of the hat to Powerlineblog.

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  • DrDean

    David Govett: The scales of the graphs accurately frame the range and domain of the data. If you don’t like what you see, present an argument about the validity of the data. I suspect you find that a *very* difficult thing to do… Hence the ineffectual poke at the presentation.

  • orbicularioculi

    The recession necer ended. If Obama is re-elected we are going to CRASH into a deeper recession that might take us ten years to recover from.
    God help us; vote for Romney/Ryan in Novermber and rid America of this Marxist ideologue and the Socialist Democrats in Congress.

    • pointsnfigures

      I think in many industries you are correct. Obama will blame this downturn on Europe or China. If you look at the 1930’s, there was a troft in 1937. The government began spending in 1933, and ran out of money in 37.

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  • William T Quick

    Jeff, the point about the recession/depression is a good one. We were not in recession for much of what we now call the Great Depression. And if economic statistics were figured today using the same methodologies used back then, the numbers are closer than many might realize. Not identical, of course, but the point remains.

  • DrDean

    Technically since we exited a recession, we are *in* a recovery… I think it’s safe to say however that measured against historical post-recession recoveries, this one is very different.

    So different that I think we either need to redefine the economic term “recovery” to admit this condition, or we need a new name for the state of the economy that is not technically in recession yet not actually recovering.

    Recoveries happen because of the citizen’s mindset about the economy, and most citizens, in our roles as consumers and/or producers, are curled-up in an economic fetal position waiting for the next boot to drop on us, our families, our employers, and the nation.

    Perhaps we’re in a fetal-recovery…

    We need a big jolt of the mother’s-milk of economic growth: Confidence in the future. However as he’s made abundantly clear, economically Obama is very pro-abortion….

    • DocinPA

      Actually, this “recovery” is worse than the recession that preceded it. And if Obama gets reelected, you can say hello to Great Depression II. It’ll be 1937 all over again. And for the same reasons.

  • jsolbakken

    Never forget that the ruling class criminals knew what they were doing when they effectively prevented people from learning how to think using simple and basic logic. Illogical thinking is very helpful when attempting to foist economic fallacies on people. Stupid people are much more likely to be persuaded that there is a free lunch for all those with the courage to vote for it.

  • rk

    that’s very funny. Please, go ahead an look at the labor participation rate at St. Louis Fed’s Fred….you can graph many things. Labor Participation rate goes back a long way…check it out.

    Please also check out the # of people in the US who are Full TIme Employees.

  • teapartydoc

    I think the Dems and the media are in for a big surprise.

    • pointsnfigures

      Let’s hope. Intrade doesn’t say that.

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  • Steve Baker

    “Technically, we came out of recession”

    Who made that call? NFL Replacement refs?

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