Syria to Europe to China to the U.S.

Syria gives (slight) cause for hope today — the guns have fallen silent.  It is likely only a tactical pause by Assad, as his tanks and snipers remain in place.  Still, any day without further bloodshed is a good thing.

Elsewhere in the world, silence is not so good.  A hush is falling over global markets — China’s imports and exports growth has been sluggish, and home prices there keep falling, despite an uptick in inflation; Spain and Italy’s bond rally has reversed; and the latest job report in the U.S. shows tepid growth at best, disappointing compared to the previous quarters.

The U.S. recovery simply cannot gain steam when most of the population is in the same place, in terms of purchasing power, as it was in 2007.  According to recent reports, wages remain flat, labor market participation remains flat, and home prices have only recovered where investors are scooping up foreclosures by the bushel, not because ordinary homeowners are back to keeping or buying homes. The recovery has only benefited those who hold stocks and bonds, or who draw executive salaries — meaning that over 90% of the economic growth in the last 3 years has gone to the top 1%.  With no expansion of general purchasing power, it is hard to see how the US recovery can do anything but stall out this summer.

This may hurt Obama if Romney can make it seem that Obama’s policies are responsible for the slow-down.

 

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About jackgoldstone

Hazel Professor of Public Policy at George Mason University
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