The “Phantom” Recession

As I’ve said time and time again, I’m of the belief that something needs to be done to get our economy back on track, because I don’t think our economy is headed in the right direction. Granted, our economy has not yet met the criteria to be deemed “in a recession,” but I think – and I’m by no means an economist – that our economy certainly isn’t headed in the right direction. While I believe our economy is still headed in the wrong direction (and I know I’m not alone), Cindy Kilkenny over at Fairly Conservative thinks the worst is already behind us. In support of her position, Cindy cites the following passage from this report:

Trouble is, someone forgot to convince consumers they had to stop spending. Despite consumer confidence readings that are downright awful, “core” retail sales are up at a 10.2% annual rate in the past three months. In other words, consumer confidence statistics may express how people feel, but not how they act. And with all the doom and gloom being reported on a daily basis, no wonder they feel so bad. But consumers have refused to capitulate to the emotional turmoil.

While it’s certainly encouraging to hear that “core” retail sales are up, I’ve read conflicting reports on what constitutes “core” retail sales. According to this article, “core” retails sales seem to include sales of gasoline, so the increase in “core” retail sales is most likely artificially inflated due to the rising cost of a gallon of gas.

In her blog entry, Cindy goes on to say:

Of course, a strong economy is a plus for the current party in office. We’ve talked before about the Democrats need to trash American before they can win in November.

Now sure, there’s some truth to Cindy’s statement, in that a strong economy would certainly benefit the incumbent party, but I disagree with Cindy’s assertion that the talk about our economy not being in great shape is a Democratic attempt to “trash America” in order to win the White House. Facts are facts, and putting politics aside there’s a lot of facts that point to a less than rosy picture of our economy right now.


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