Monday, May 11, 2009

Slowly Letting Out the Bad News

Among all the talk of green shoots, the recession bottoming, and the hope that the spending will produce growth, a new headline from Reuters: "White House forecasts higher U.S. budget deficit.”

One gets the feeling that the Obama administration has little choice but to let this kind of bad news out slowly, hoping the market and the psyche of the country can absorb it without disrupting the tenuous nature of the recovery, particularly in the credit and stock markets. Until REAL unemployment recedes deficits will inevitably grow beyond forecasts. The recent unemployment figures include some “gains” because of recently hired government census workers and fails to count workers who have just given up or are working part-time, and does not yet include the 1.6 million college seniors graduating this year.