Sunday, October 30, 2011

State Cuts to Public Employees Feeds Unemployment Rate, Lack of Economic Spending.

I went on a little trip to Green Bay and Door County, and had a chance to read through a free copy of the Wall Street Journal. Besides the obvious right wing slant of the editorial section, the actual stories often tell a completely different story about the economy. Especially when it comes to the word "certainty."

It’s won't be a big surprise when history looks back and wonders why Republicans answered the Great Recession with massive reductions in pubic employment and wage reductions, instead of counting on their salaries as a way to boost local economies and create consumer certainty. Tax increases were off the table on the wealthy, who by the way, didn’t create jobs and still haven’t.

But what about business “uncertainty?” Republicans have reminded us endlessly how their uncertainty is killing us. It’s been the biggest lie.
WSJ: A spurt of spending by businesses on equipment and software, which surged 17.4% in the period, signaled companies aren't paralyzed by uncertainty. Spending by consumers also climbed … If consumers cut back on spending—which constitutes about 70% of economic activity—it would hurt growth.

But this really hit me:
Amid an uneven recovery, companies have been more willing to spend on equipment than on people. Rich Gimmel, president of the Louisville, Ky., equipment maker (said) sales are coming from businesses that want to replace old equipment rather than expand. “It's more of a begrudging, 'Demand may come back but I'm not sure how sustainable it's going to be, so I'm going to spend just enough to keep up.' "

The the reason for the slow job growth...
But budget cuts by state and local governments signal more gloom for employment as well as economic growth. State and local governments subtracted 0.16 of a percentage point from growth last quarter. The government of Maryland's Baltimore County is offering employees early retirement packages in a bid to trim 200 jobs. 

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