American Spring Causes Anguish in Politicians in the US

Signs of rebound are confirmed so regularly in the U.S. that the expansion this time is officially back. Yet the White House is not prancing, its Republican opponents do not dare talk about it, and finance analysts around the country are showing their concern. Here is an explanation.

At the end of summer 2011, the U.S., drained by several months of disappointment on the growth front, was bracing itself to face a violent fall in a recession that had only given them a few moments of respite. “If history is a guide, the odds that the American economy is falling into a double-dip recession have risen sharply in recent weeks and may even have reached 50 percent,” wrote David Leonhardt, analyst for The New York Times. Another analyst, Joshua Shapiro, said it could even be 100 percent, based on the same observations: insufficient job creation, unemployment at 9.1 percent culminating in the southern states of the U.S. going over 11 percent, low morale in households and a credit freeze, to quote a few. The rebound is anemic and largely insufficient to allow the patient to get back on its feet. In such a context, the systematic obstruction of most of the measures of Obama’s administration by the Republicans in Congress was threatening to paralyze the country in the face of the disease contaminating all sectors and tetanizing consumers.

Six months later, the catastrophe did not occur. Like Steven Pearlstein, who claimed on March 3 in The Washington Post that there are “signs the economy has shifted in the right direction,” a consensus now emanates that confirms that the U.S. has solidly rekindled its growth. “Yes,” he writes, “it’s been painfully slow in coming as we continue to tack against strong headwinds coming from Europe and the Middle East as well as the strong ebb tide created by the wind-down of fiscal stimulus. … But the recovery has reached a point where it looks to be self-sustaining, that magic point when growth begets more growth, hiring begets more hiring, spending begets more spending.”

Is this optimism out of proportion after pessimism without hope? In reality, no. Job creation actually defies the most optimistic prognosis. On Friday, the American Bureau of Labor Statistics published the number of new jobs for February at 227,000 versus 200,000 in the month prior. It was a good surprise that includes the important sectors of business, services, health, tourism, automobile and mining: Translated, it says that this concerns most states of the country, instead of focusing only on the strongest. As for welfare applicants, they have been at their lowest numbers in the past 4 years.

And if all the signals are not green, they have changed from red to orange. Very badly affected by the subprime mortgage crisis and the extreme drying out of consumer credit, the real estate market seems to be in a position to come out of its cleansing phase thanks to the release of millions of files that will allow a resolution of litigation and a way out of a situation unbearable for all households concerned. On the one hand, owners who have been dispossessed will finally be able to mop up their debt, thanks to the placing on the market of assets that they had had to abandon. Thus credit should be there for investors who until then had been waiting for these good deals.

The U.S.’s gross domestic product has had an increase of 3 percent over a year and has not stopped consolidating month after month. Consumer confidence is at its highest since 2008, and income has increased by 5 percent before adjusting for inflation in one year. On Wall Street, the Dow Jones culminates at heights once reached 4 years ago, and the Nasdaq has rekindled with its highest scores in 10 years, which has the double significance of record profits and renewed confidence for investors. As for fiscal returns, they have improved, continuously exceeding government expectations, and households are regularly pursuing the reduction of their debt with a savings rate of 4.5 percent.

In summary, the twelve key indicators of the first world economy have nearly all turned green. This is a quasi-miraculous situation that most Western nations would dream of at the present. Yet it is not time to rejoice, and it is in this that the revolution of American mentalities in the last 5 years has unveiled its extent.

In other times not so long ago, the good old slogan “America is back” would have already been chanted by the president and echoed by its party particularly in this electoral year. And his counterparts, crossing shots to eject him out of the White House, would have shown point-by-point that his economic policy had nothing to do with the American spring the hard-hit people had not expected.

But this time, it’s quite the contrary. Because the door that slams onto the apocalyptic certainties of yesterday shuts harshly and painfully onto the right wing of the Republicans and the left wing of the Democrats, tackling them to the ground, those very ones who capitalized so much during the 4 years spent on the recession which the finest analysts claimed would last at least 10 years. They all kept depicting a Dante-like landscape for tomorrow’s America, as Steven Pearlstein summarized it: “…the country was teetering on the brink of bankruptcy, businesses were barely getting by under the weight of excessive taxation and regulation, and most of the middle class was standing in bread lines.”

Exasperated by the work of the American Congress, which has never been so unpopular in the history of the country, Americans are no longer willing to hear, particularly from the Republicans, that what has been done “could have been done better.” On the opposite side, the Democrats cling to the fact that the U.S. is always trapped in a depression, lest their critiques against the insufficiency and inadequacy of the measures taken by Obama turn against them.

This is why the candidates, including President Obama, must emerge rapidly from their soft discourse about the enormous thorn that pierces the stomach of the nation and threatens to send it to the ground very quickly. Their staff are currently following the declarations of the highest economic competencies in the country. People like Treasury Secretary Timothy Geithner forewarned in The New York Times this weekend that a policy that would place in the center of its preoccupations the reduction of the deficit would constitute a major risk for the U.S.

Yet until now, it is the total disappearance of the bipartisan spirit that has led to the standstill of the U.S. on this topic and others that are dependent upon it. In an editorial rare by its orientation and that caused a sensation on the day after the last speech on the State of the Union by Barack Obama in front of the entire Congress last January, The Wall Street Journal violently criticized the President, accusing him of lacking courage when he looked at the Republican congressmen and congresswomen while speaking of the problem of the deficit in the U.S. It asked how far a president could decently go in his or her willingness to search for a consensus and how he could not be speaking of the $3 trillion engaged by his predecessor George W. Bush for the military operations abroad, with its majority in Iraq: a figure to compare with the $50 billion in deficits left by Clinton when he left the White House. The newspaper pointed more specifically to that; although it is not inclined to support the Democrats, it is indeed the price of madness that no one today dares say the name that one tries to sweep under the carpet.

A few months are left until opponents on both sides draw a minimum consensus on the question of the deficit, which is like a “super volcano” that, like the dormant one in Yellowstone National Park, can explode at any time and disfigure for longer than the 2008 recession did — the face of America today a little more serene. To do this, Barack Obama; his future adversary, the still probable Mitt Romney; and their respective parties will have to lead their own revolution in high speed to catch up with the people’s confidence.