The first-quarter number presented a political and PR problem for the White House, coming just as President Obama appeared to be trying to burnish his own legacy overseeing the economy since the global financial crisis of 2008.
Two stories of Keynesian ignorance and the consequences, one in America and the other in Australia.
First the US. Obama will look long and hard for a positive legacy but the only one I can think of is how good it will feel when he leaves office so that we can finally stop knocking our heads against the wall. An incompetent narcissist means he screws things up but believes he’s a policy genius. Which now comes to this: White House struggles to explain weak economy as Obama boasts of job growth.
The White House labored Thursday to explain a first-quarter economic report showing the weakest growth in two years, even as President Obama was trumpeting his mastery of the economy in a New York Times Magazine interview.
The Department of Commerce reported that U.S. gross domestic product rose 0.5 percent in the first quarter of 2016, the third straight sluggish start to a year. Consumer spending and business purchases both fell, continuing trends that could have ominous implications for Hillary Clinton’s presidential campaign as she tries to claim the mantle as Mr. Obama’s successor.
But this at the end is really the pièce de résistance:
The president told a group of college journalists Thursday that his record on the economy is among his proudest achievements.
Delusional beyond imagination. No one, absolutely no one, will defend Obama’s economic management, least of all any Democrat who wishes to hold onto their office or Hillary in trying to become his successor. If you want more on his pathetic efforts to get others to see the world in the same deluded way you can try this.
And then there’s the Australian story, told today in The Oz. Treasury forecasts have been complete nonsense for years on end, because they are made by Keynesian who really believe, bless their naive souls, that public spending leads to faster growth and increased employment even though it never has. From the story:
In May 2011, the economy had emerged from the global financial crisis growing rapidly.
Commodity prices had surpassed pre-crisis levels and were on their way to new highs, while investment in the resource sector was rising rapidly.
Treasury predicted in that year’s budget that the economy would expand by 24.5 per cent over the next four years, or by almost $350bn. Had it done so, by now there would be massive surpluses with enough left over for big tax cuts.
In reality, the economy has grown by only 14.1 per cent or $200bn, with about a third of that flowing to the government as tax.
They, of course, believe that the part of the rise in GDP between 2009 and 2011 caused by stimulus spending is the same as economic growth. Can’t be helped; that’s how they think. But they are WRONG and the damage they are doing will be immense and lasting. But they will never understand why because they will never understand the pre-Keynesian theory of the cycle.