REO Capital - What Happened to the Economy

REO Capital -  What Happened to the Economy

The election year was dominated by talk about jobs and the economy, but neither the administration nor Congress seems to have any grand ideas for jump-starting a still sluggish recovery — and they're not even talking about it much.

President Obama sought to turn attention back to economic issues with a speech last week in Texas on manufacturing, but that's already long since been forgotten. A cascade of scandals has driven the issue entirely off the Washington radar.

Even before Benghazi, the IRS and the Department of Justice controversies started heating up, the economy had consistently taken a back seat to issues such as immigration and gun control.

"The economy is by far the most important issue for voters," says Karlyn Bowman, a polling expert at the American Enterprise Institute. "It's not unusual for Washington preoccupations to be different than those of the public."

She says that the public is skeptical that Washington can provide economic answers at this point. The two parties remain far apart on economic issues. The type of debt reduction Republicans seek through overhauling entitlement programs is gaining little traction among Democrats, while the GOP-controlled House will never approve further stimulus of the type Democrats would like.

"We've moved away from proposals for big changes and toward piddle policy," says Stephen Weatherford, a political scientist at the University of California, Santa Barbara. "My impression is both the president and the people around him have ratcheted back their expectations, so they've ratcheted back what they're willing to send to Congress."

The Economic Picture

If you looked only at Wall Street, it would seem that happy days might be nearly here again. The Dow Jones average passed a milestone last week, closing above 15,000 for the first time — nearly double its value at its trough early in the Obama presidency.

Looking at Main Street, however, the picture looks entirely different. "We're just sort of worn down by this subpar recovery that continues but doesn't ever seem to accelerate, and if so, not for very long," says Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness.

Wall Street cheered last week's jobs report, which showed more people found work in April than expected. But it was still far from enough to take up much slack in the labor market.

"That level of growth will not get us up to pre-recession levels of employment until 2020," says Heidi Shierholz, an economist at the Economic Policy institute. "We are still in a massive crisis in the labor market."

REO Capital has been focusing on the Economy with our Blog since the beginning of 2013. The general public has been given a false sense of progress in this economy with the stock market rising but, with no real positive economic news. Unemployment is still high, the job market has shown little progress, Taxes both corporate and personal are increasing, and the Feds are holding the Bond Market from falling by purchasing over $85 billion in Treasuries per month and keeping interest rates low.

But once the Federal government stops supporting the Bond Market it will collapse and Interest Rates will rise and the Dow Jones Industrial Average now over 15,000 will tumble back to the 10,000 to 12,000 range!!! Then when everyone's 401k and IRA's will tumble in value and we will see that False sense of security disappear quickly and finally anger with this current administration's policies will rise!

John Denes

CEO

REO Capital, LLC

johndenes at reocapitalllc.com