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  • US Economy Mired in a Sea of Contradictions

    Consumer confidence has plunged over the last month, due in large part to the government shutdown and fear that the US might default on its debt – because of the ineptitude of our leaders in Washington. Normally, when consumer confidence plunges, we would expect a significant slowdown in consumer spending, which accounts for 70% of GDP.

    Yet according to the latest Gallup poll, consumers plan to spend even more this coming holiday season than in the past two years. This would seem to be a major contradiction. However, what this tells me that most Americans have figured out that there was never really a threat that the government would default on its debt, as I opined recently. That’s the good news.

    The bad news is that the delayed September unemployment report was yet another disappointment, even though the headline unemployment rate inched down to 7.2%. New jobs created in September were well below expectations. More importantly, the Census Bureau reported last week that there are now more Americans on welfare than those who have full-time jobs. That is very disturbing.

    Finally, I presume you noticed that our national debt skyrocketed by a record $328 billion in one day following the lifting of the debt ceiling earlier this month. The Treasury had to replenish all those “extraordinary measures” it used to fund the government  since we hit the previous debt ceiling back in May. Our national debt is on-track to nearly double under Obama.

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  • Obama’s New Budget - He Just Doesn’t Get It!

    A Gallup poll taken the week before Obama announced his 10-year budget proposal found that 68% of Americans disapprove of Obama’s handling of federal deficits, the highest disapproval rating ever recorded on this particular question. Put differently, over two-thirds of Americans say they want federal spending cut, not increased.

    Yet on February 14, just days after the Gallup poll, President Obama unveiled a 10-year budget proposal that will add at least $9.4 trillion to our already $14.1 trillion national debt. It was the largest 10-year budget proposal on record. Obviously, Obama did NOT get the message that voters sent in the mid-term election or the latest Gallup poll noted above.

    The question is, what could have Obama been thinking? Why would he propose adding almost $10 trillion to our national debt at a time when over two-thirds of Americans want federal spending reduced? Does he want to be a one-term president? I have a theory as to why he did this, and it may surprise you. That’s why you’ll definitely want to read this week’s E-Letter.