A significant trinity of bad economic news has come to light as April winds to a close. GDP growth is grinding to a halt, gross job gains have decreased, and the rate of homeownership has fallen again, hitting a 48 year low. Add to those numbers the news from early April that the American balance of trade worsened by $47.1 billion, and there can be little doubt that the U.S. economy is in a serious downward spiral.
The Bureau of Economic Analysis announced that growth in the already depressed real gross domestic product — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes, came to a near halt at a 0.5% annual rate of increase in the first quarter of 2016.This follows the dismal rate of 1.4% in the final quarter of 2015.
The employment picture presented its own bad news. According to the Bureau of Labor Statistics latest release, “From June 2015 to September 2015, gross job gains from opening and expanding private sector establishments were 7.3 million, a decrease of 262,000 jobs from the previous quarter…Over this period, gross job losses from closing and contracting private sector establishments were 6.9 million, an increase of 149,000 jobs from the previous quarter.”
Although the White House readily discusses the unemployment statistic known as the U-3, which has been reduced, the more accurate indicator, known as the U-6, is far higher at 9.8%. Even this number doesn’t present a thorough picture, since there are factors it excludes, as well.
The labor force participation rate has fallen from 65.7% in January, 2009 when President Obama took office, to the latest figure of 63%. Of the comparatively few jobs created, far too many are in low-paying occupations. Many White House policies will make that problem even worse. President Obama’s scientifically unsound environmental policies to sharply reduce the use of some forms of energy directly impact a source of well-paying jobs. The Bureau of Labor Statistics notes that “Manufacturing industries with the highest wages for production occupations included petroleum and coal products manufacturing ($62,140) and basic chemical manufacturing ($55,230).”
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The U.S. has the highest corporate tax rate in the developed world. Bloomberg notes that “The U.S. corporate income tax rate, 35 percent, is the highest in the developed world. The U.S. is also one of the few countries that makes its companies pay that rate on all their worldwide income…More than 50 U.S. companies have reincorporated in low-tax countries since 1982, including more than 20 since 2012.”
Ed Rogers, writing in the Washington Post, notes: “I don’t think there has been a president in my lifetime who has been more hostile to business than Obama. I could be corrected, but I don’t think anyone in the president’s Cabinet has ever started a business, and I would doubt that many of his senior staffers have either. At the end of the day, Obama doesn’t seem to have much respect for what it takes to start a business. And this cratering in the number of start-ups under his administration reminds us of the gratuitous smackdown he gave business owners everywhere during the 2012 campaign when he pointedly said, “If you’ve got a business, you didn’t build that.”
The U.S. has declined in the Index of Economic Freedom which notes: Americans continue to lose economic freedom. Following declines in seven of the past eight years, the United States this year has equaled its worst score ever in the Index of Economic Freedom. Ratings for labor freedom, business freedom, and fiscal freedom have flagged notably, and the regulatory burden is increasingly costly… America’s historically vibrant entrepreneurial growth is significantly hampered by intrusive, expensive, and often ineffective government policies in areas ranging from health care to energy to education. Government favoritism toward entrenched interests has hurt innovation and contributed to a lackluster recovery and stagnant income growth… The regulatory burden continues to increase. Over 180 new major federal regulations have been imposed on business operations since early 2009 with estimated annual costs of nearly $80 billion.”
Finally, The Census Bureau reports that home ownership rates have dropped to a 48 year low. In 2009, when President Obama took office, home ownership stood at 67.3%. The latest figure is 63.5%.