Freedom Line Blog

Are Barack Obama’s economic policies sucking oxygen from our precarious economic recovery?  Economic numbers released at the end of last week provide the latest evidence of that troublesome possibility.

On Thursday, the Federal Reserve reported that American businesses were hoarding an all-time record $1.84 trillion in cash and other liquid assets at the end of March.  This inclination to sock away their accumulated dollars rather than spend on expansion or new hiring suggests trepidation regarding the prospects of near-term economic recovery.

Then, on Friday, the Commerce Department reported that consumer spending – which constitutes over 2/3 of our economy – unexpectedly plummeted 1.2% from April to May.  This was the first month-on-month decline in seven months, and prompted The Wall Street Journal to report that, “the surprisingly poor sales cast fresh doubt on the durability of a rebound in consumer spending that had allowed economists to raise their forecasts for U.S. growth this year despite a moribund housing market, a dismal job market and tepid business investment.”

Obama and his allies continue to claim credit for the cyclical end of the 2008-2009 recession, but it appears more likely that their policies are stifling it.  Coming out of our most recent severe recession, the U.S. achieved rapid gross domestic product (GDP) growth of 8%.  Now, in contrast, we’re witnessing lukewarm 3% growth and depressing employment numbers.

With Obama promising even more tax hikes, deficit spending and unpredictable new regulations, it’s becoming increasingly apparent that both businesses and consumers are bracing for an Obamanomics storm, not a spring bloom.