The unemployment rate held at 9.7 percent, and I frankly think we saw the peak a few months ago when the rate hit 10.2 percent.
Now the question is: How significant will the jobs rebound be in the face of the big-government tax-and-regulatory threats coming out of Washington, especially as embodied in Obamacare? As I wrote in my column, passage of Obamacare will significantly jeopardize future prosperity and health care in the United States.
However, in the shorter run, a cyclical recovery is in progress. I’ve been arguing this for many months. Profits and productivity are strong. The ISMs are strong. The business sector is going to lead us back into growth.
Noteworthy, a report earlier this week showed retail chain-store sales rose a surprisingly strong 4 percent year on year. Corporate credit risk spreads are narrow, and the Treasury yield curve is steeply upward sloping. The bond market expectation of future inflation is about 2.5 percent. Because of the slumping euro, King Dollar has appreciated 10 percent recently. The gold price remains about $100 below its peak -- although $1,131 gold is still a relatively high number, and suggests that prices will rise, not fall, in the months ahead.
We’re not gonna get a barnburner recovery such as we saw in 1983-84 when Reagan slashed tax rates. Obviously not, since Obama’s Washington is moving in an anti-supply-side direction. But strong profits and easy Fed money will yield perhaps a 4 percent growth rate this year for real GDP. Jobs will slowly rise in the months ahead.
That said, it’s doubtful that unemployment will sink below 9 percent by Election Day. And the tea-party revolt against big-government and diminished economic freedoms, along with Democratic corruption, is likely to result in regime change, despite a modest recovery.
Now we’ll wait for the GOP to adopt tea-party, free-market populism -- a.k.a. smaller government and lower tax rates across the board -- as outlined to me by Sen. Scott Brown in our recent interview.
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