We have been warned over and over again that sequestration would be really bad for the economy. The Associated Press began a recent article declaring that, in fact, sequestration had severely hurt consumer confidence: “Americans are less confident in the economy than they were last month as massive government spending cuts have stoked economic uncertainty.”
So I was expecting a story that would show how consumers were saying that these “massive” reductions in planned increased spending (amounting to less than three percent) were causing them concern.
“The Conference Board, a New York-based private research group, said Tuesday that its Consumer Confidence Index fell in March to 59.7 from a revised reading of 68 in February and the 68.7 that analysts polled by research firm FactSet expected. Confidence is still far off from the 90 reading that indicates a healthy economy. The index is closely watched by economists because it makes a monthly gauge of how Americans are feeling about their jobs, incomes and other bread-and-butter issues. That’s important because consumer spending accounts for 70 percent of U.S. economic activity. Anxiety about $85 billion in across-the-board government spending cuts that took effect March 1 caused the decline in the index, the group said. The spending reductions, which were triggered after Congress and the White House failed to resolve a budget impasse, have “created uncertainty regarding the economic outlook,” Lynn Franco, the Conference Board’s director of economic indicators, said in a statement.”
There is no indication in the story that the conference board actually asked about what consumer thought about the spending cuts. No evidence is offered at all that the spending cuts are the reason that consumers named for their reduction in confidence about the economy. The Conference Board, as far as I can tell from the story, just declared it is the cause.
News stories are written with the expectation that many readers will never bother beyond the first few paragraphs. After declaring that consumer confidence has plummeted because of the alleged “spending cuts,” the story more or less casts doubts on what it has just declared as fact:
“Congress and the Obama administration reached a deal on Jan. 1 to prevent income taxes from rising on most Americans. But they allowed a temporary cut in Social Security taxes to expire. For a worker earning $50,000 a year, take-home pay will shrink by about $1,000. That has a more direct impact on most Americans than the government spending reductions, noted Scott Brown, chief economist at investment firm Raymond James. The March drop in the confidence index “likely reflects the impact of higher gasoline prices as well as the higher payroll tax,” Brown said. Although the payroll tax increase kicked in three months ago, its effect may just now be sinking in for some people, he suggested.”
Duh. Of course people are more likely to be affected by cuts in their own take home pay than by miniscule cuts in the expected growth of government. But people did get to hear their politicians show no concern at all about their impoverishment while they attempted to manipulate them with fear to protect an increase in debt and spending.
The problem is not the massive cuts in government spending. The problem is that everyone sees once again that we are ruled by criminals and narcissists who plan to hit the gas as they drive us all over the cliff.
They don’t know what the brake pedal is for. No wonder more and more people are pessimistic about where the economy is being driven. The media is just trying to deflect blame from the political class in the driver’s seat.