Bye, Bye, Miss American Pie

"The world is going to be adjusting for years to slow growth from the U.S. consumer," says economist Kenneth Rogoff of Harvard University. "The U.S. consumer has been the engine of world growth for the last quarter century; that engine has stalled." _USAToday

The American consumer can hardly be expected to consume like in the good old days, when real unemployment hovers near 16% -- and threatens to go ever higher! All of the economies who are expected to pick up the slack for a flagging America, are hurting for the lack of American consumption.

The consumer's retreat is making itself felt around the world. The first six months of this year, Americans bought $18 billion fewer German-made goods than during the same period in 2008. For German factories, that meant the loss of more than 35% of their U.S. orders. It was the same story for Japan, which saw $31 billion worth of sales vanish — 42% of its total.

.....Chinese factories shipped almost $21 billion fewer goods to the U.S. during the first half of this year than during the same period last year. _USAT

Jobless claims show no significant slowing as of today, and if not for the expansion of the government job sector and temporary hiring due to politically directed stimulus funds, the real unemployment rate for the US would be well over 20%.

Most economists.... say the jobless rate will keep rising until at least next summer as the economy struggles to mount a sustained recovery. That means household incomes will remain depressed and consumer spending, which accounts for 70 percent of the economy, will continue to lag.

"Firms are still not hiring, and that reflects deep pessimism about the sustainability of the economic recovery once government stimulus programs wear off," said Sal Guatieri, senior economist at BMO Capital Markets. "The lack of job creation remains a big headwind for cash-starved and credit-constrained consumers." _AP

Right. Everyone says that by the second half of 2010, the economy will really be booming again. Because, well, if the economy is in as bad a shape -- or worse -- in late 2010 as it is today, our clown president will be working with a less sympathetic Congress, come January 2011.

Unfortunately for the jolly 2010 scenario, the only part of the economy that Obama is stimulating is the government, and government-connected sectors. He is hamstringing the private sector, and all the potential jobs that could have been forming there. That is one of many great weaknesses that Dear Leader can claim: an utter ignorance of how healthy markets work. And it shows.