We're living through the third installment of a depressing annual tradition: the summer slump
Summer is the season for blockbuster sequels. But even with millions of dollars in CGI and marketing, nothing at your local movie theater can match the country's most closely-watched repeat performance: the spectacular explosion of the US recovery.
In the first installment, the lights go on 2010. The economy has been growing for nine months. The stimulus act, boosted by temporary Census hiring, lifts job creation to a whopping 516,000 in May. But one month later, we lose 167,000 jobs. We lose 58,000 more the next month, followed by another 51,000 in August. By the end of the year, the stimulus is nearly exhausted. As the year enters its final frames, something strange happens. The economy shows signs of lasting life. We did it everybody. Roll credits on the Great Recession ...
... not so fast. Lights up on 2011, and we're greeted with a flourish of optimism. Jim O'Neill, Goldman Sachs's celebrated Asset Management director, sees 2011 as "the year of the USA." Economic forecasters are doing can-cans on cable TV. Corporations are swimming in cash, they proclaim. Home prices have nearly hit bottom. The real estate recovery is right around the corner. But, with the Census long gone, the role of summer spoiler is played by oil prices and petty politics. Revolutions and supply disruptions sweep the oil-producing world while oil demand steadily pushes up gas prices $4 a gallon. Congress, locked in a fierce tragi-comic debate over whether the United States should default on its debt, does less than nothing to help the weak private sector. For the second straight year, monthly job creation falls from the mid-200,000s to below the rate of population growth by summertime. But wait ... as the year enters its final frames, something familiar happens. GDP picks up. Job growth accelerates. The consumer is back!