Maybe I’m out of touch (after all, I am getting on in the years), but I seem to have an old-fashioned notion of what a „recovery” is. To me, it’s when private economic activity acquires a self-sustaining momentum, where people are spending and investing and businesses are growing.
To our our leaders in Washington, however, it seems to be a time when relentless propaganda temporarily drowns out the cacophony of a pessimistic reality; to Wall Street, it’s that transcendental moment when investors decide that easy money is forever (and all that really matters); to corporate America, it’s the point at which orders and revenues mean far less to a business than cost-cutting and earnings management.
And to a great many people, it seems, a recovery is when households have become unusually dependent on the government for income support. In „U.S. Households Getting More from Uncle Sam than They Pay In,” The Fiscal Times details the new economic reality:
For the first time since the Great Depression, households are receiving more income from the government than they are paying the government in taxes. The combination of more cash from various programs, called transfer payments, and lower taxes has been a double-barreled boost to consumers’ buying power, while also blowing a hole in the deficit. The 1930s offer a cautionary tale: The only other time government income support exceeded taxes paid was from 1931 to 1936. That trend reversed in 1936, after a recovery was underway, and the economy fell back into a second leg of recession during 1937 and 1938.
So how much proof is needed that the so-called recovery is a fraud? Here it is, courtesy of a post at the Wall Street Journal‚s Real Time Economics blog, in a post entitled „CFOs: Revenue Surge Needed to Boost Hiring”:
Despite double-digit gains in corporate earnings over the past six quarters, it would take much stronger-than-expected revenue growth for businesses to be comfortable adding employees, according to a new survey.
Chief financial officers at large North American companies polled by Deloitte LLP said it would take a 20% surge in revenue before they felt comfortable adding to their payrolls.
The quarterly survey released Thursday found that nearly half of respondents would seriously consider adding employees if revenues rose 20%, but few would be moved by a 5% increase. A 10% bump in revenue would only be a major hiring consideration for 11% of CFOs.
Worse yet, perhaps, actual growth isn’t expected to reach such heights: respondents estimate top line growth at North American companies will be just 8.2% this year. (This is, however, a rosier picture than the fourth quarter when respondents forecast 6.5% for the coming year.)
“There’s a huge delta around what CFOs are expecting it to take for hiring to come back and what actual growth is,” said Sanford Cockrell III, national managing partner of Deloitte’s CFO Program.
In my view, the news also proves a few other things: many of our leaders are incompetent or liars, tabloid astrologers have more forecasting ability than most equity traders, and corporate America is oblivious to the pain that their greed, selfishness, and short-sightedness will soon bring their way.