This is the perfect example of how biased the media is. Take these two snippets from the recent GDP news:
The economy grew at a faster-than-expected 5.7 percent pace in the fourth quarter, the quickest in more than six years...The ... performance closed out a year in which the economy contracted 2.4 percent, the biggest decline since 1946...
Now, if you were the mainstream media, which would you use as your headline? If George W. Bush is President, you pick the second one; if Barack Obama is President, you pick the first. Naturally.
Anyway, the quarter growth was so positive because businesses were apparently cutting back on their inventories less than expected. This number will likely be revised downward in the next few weeks, and this sort of inventory adjustment isn't exactly a repeatable event...but hey, let's celebrate whatever growth we can see for what it's worth, right?
Of course, we can also expect to see the White House trumpet this as evidence that the recovery is over, or at least progressing nicely. Don't buy it (emphasis mine):
Arthur Laffer, creator of the Laffer Curve that showed how low tax rates boost economic growth, is warning anyone who will listen that the economy is headed for a "train wreck" in 2011 that will make the current recession look tame by comparison.The famed economist, whose supply-side, tax-cutting policies enacted by President Reagan in 1981 put the economy on a record-breaking, 25-year economic trajectory of growth and prosperity, is telling Americans not to be lulled by sporadic signs of growth this year, because the economy is headed for a sharper decline next year when tax rates are expected to jump sharply, sending the economy into a new tailspin."It will make the decline in U.S. output from 2010 to 2011 worse than the decline in output in 2008 and 2009 which will catastrophic," Laffer said in an interview with HUMAN EVENTS.In a wide-ranging discussion about where the economy is headed, and the fiscal, tax and monetary reasons why, Laffer gives a bleak forecast of where President Obama and his administration are taking the country in the next three years -- which he predicts will end with Obama's defeat in 2012."Obama is a fine, very impressive person. He really is. Unfortunately, everything that he is doing in economics is exactly wrong. He is a crappy president," Laffer said."Whenever a country is in the throes of spending too much and raising taxes, it's a fiscal catastrophe in the making and this is what is happening now," he said.
These tax rates that he's talking about 'jumping sharply' are those that George W. Bush enacted in 2001 and 2003, which dropped the income tax rates on all Americans across the income board. These are the tax cuts that Barack Obama is planning to let expire. He's been quite up front about his plans to raise taxes on 'the rich', but he hasn't exactly broadcast the fact that that increase will also hit everyone else, too. Not exactly a small detail, huh?
We've talked before about a double-dip recession, and that's what Laffer is predicting if these tax cuts are not made permanent, or at least extended. You have been warned; it might not be a bad thing to pick up the phone and call your elected reps. Let's hope that even Obama opens his eyes to the fact that such a large tax hike will cause big, big problems during such an economically unstable time.
Nah, I don't think he will, either.
There's my two cents.