At long last, the Obama campaign is finally beginning to capitalize on what could be one of the most important and underreported facts to his tenure. The rate of growth of Federal spending has fallen significantly during the Obama presidency.
Federal Government Spending Slows Under Obama
Most Americans, both right and left, would probably be surprised to learn that Dwight D. Eisenhower was in office the last time federal government spending grew this slowly.
This is important for two reasons. First, it highlights the aggressively misleading tone of the Romney campaign’s efforts to mischaracterize the President. One would have to think there might be some pushback among reasonable people who feel they’ve been tricked.
Second, the public might be more accepting of additional stimulus measures to grow the economy.
As any economist would tell you, Gross Domestic Product is calculated with the following equation:
C (consumer spending) + I (investment) + G (government spending) + Net Exports (exports – imports).
Forcefully slowing on of the primary drivers to GDP naturally makes growing the economy at an increasing rate considerably more difficult.
If the economy grows for 10 quarters, and the public fails to notice, does it really grow?
Some good news came by the way of a Gallup poll yesterday. Unfortunately, the same poll also provided disappointing news about Americans’ understanding of the economy. According to the poll, over 40% of Americans now think the economy is growing.
Recessions refer to periods of reduced economic activity including the contraction phase of a business cycle, with two or more consecutive quarters of negative GDP growth. The U.S. economy has grown for 10 consecutive quarters, and the U.S. recession officially ended in either June or July of 2009. Not only has the majority of the public failed to notice, but worse, many feel we’re in a depression. What? How is it that such a broad swath of the American public hasn’t gotten the news after nearly three years? Apparently, the Pony Express could deliver the news faster than new media has.
China reported better than expected GDP growth of 8.9 percent for the Q4 of 2011, and 9.2 for the year. However, economists are concerned the the robust growth won’t last, and expect a slowdown to approximately 8% in 2012.
A decline in construction starts could foreshadow the expected slowdown. Credit has been tightened and property investment and sales have been hurt. The Chinese government recently replaced guidelines on tax sheltered housing to make it easier for homebuyers to purchase new properties.