Wells Fargo (NYSE:WFC) Senior Economist: “Growth is going to be much more dependent on the private sector”
The recent disastrous economic reports for the U.S. Labor Department and Commerce Department confirmed the economy in the U.S. is far from turning around, and in fact the data show it’s struggling to wean itself form government stimulus, according to Wells Fargo (NYSE:WFC) senior economist Mark Vitner.
Some of the data just released include new first-time claims for unemployment have risen by about 22,000, equipment orders from factories have plunged (confirming replenishment was behind the exuberant economic numbers of December), and new home construction has dropped off the cliff to their lowest level in history. This of course was mirrored by the fall in consumer confidence numbers in February, as people learn we are in fact in no recovery, but are continuing on in a recession that has never abated.
Why some of this seems contradictory is because of the temporary mirage created from throwing hundreds of billions at the economy, which has done absolutely nothing in job creation, which many knew it never could.
While the Obama administration makes the assertion things would have been much worse without the stimulus, that is in fact an unproven and unprovable assertion based on the reality that government has never been able to stimulate a market historically in any sustainable manner.
The stimulus in the United States was always a measure used in hopes of buying time. If the economy did recover, government officials could point to themselves being heroes and remind people how the government saved them.
Now that the recession is being discovered to be a lot worse than admitted by the government, the weak underlying fundamentals are struggling to get a foothold as the stimulus programs falter and reveal they had no effect on the economy at all.
In other words, there hasn’t been any growth, which is why unemployment continues to grow, and the data confirm many of the more important economic sectors of the country continue to falter.
As Vitner says, we need to start looking to the private sector for growth (as we always should have), and in that regard, we’re on hold until consumer demand begins to pick up.
This is why government stimulus programs never work, as it is people taking action to buy goods and services which are the foundation of a healthy market, not throwing a bunch of money into activities which aren’t in demand. Again, sustainable economic growth can only come from people ready to spend money on goods and services they want. Nothing else can do it.
So when the government tells us the economy is growing but no one is hiring, they’re admitting to their failure, but they aren’t obviously going to say it that way.
In a real market not interfered with by a government, real economic growth emerges from spending, and that will always generate more jobs. Government spending doesn’t.
Growth defined by the government is based on fake numbers, as it’s people taking a bunch of taxpayer dollars and spending it because it’s there, rather than because they’re searching for something the want or desire.
Only the private sector can lead the way out of the recession we’re still in, and until consumers again open up their wallets, we’re going to continue on in a recession that has never stopped, even though people attempt to describe the upcoming economic weakness as double-dip, even though there has never been a real upwards climb based on real market conditions.
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