It's kinda over, seems to be over, could be over, but...don't hold your breath. As Mike Whitney explains:
Yesterday's report from the Commerce Dept. confirmed that the economy expanded in the third quarter by 3.5 percent, better than most economists estimates. GDP had contracted in the four previous quarters in the longest and deepest recession since the Great Depression. Massive government stimulus, cash for clunkers, and inventory restocking accounted for most of the surge in economic activity. Consumer spending grew at 2.36 percent while consumer credit continued to contract at a near-record pace of 4.5 percent. Unemployment swelled to 9.8 percent, "with nearly nearly [sic] 26 million workers — 17 percent of the workforce — unemployed or underemployed," according to economist Mark Zandi. The economy remains extremely weak and is expected to lapse back into recession if the Obama administration fails to provide a second-round of stimulus.
In other words, the structural problems that produced the crisis remain. That is one reason the economy remains weak and recession-prone. The growth that brought the recession to an end merely expresses the effects produced by the Obama stimulus. This outcome was predicted, as Dean Baker points out. Nevertheless the Obama stimulus failed to implement the kind of structural reforms the economy needs if it is to strengthen as the reforms work their magic. Nor was it meant to effect reform of this kind.
What we are witnessing, then, is a macroeconomic effect produced by Obama's effort to restore to 'health' the system as it existed before the crash.
One benefit of the Obama stimulus: A slight decrease in the rate of unemployment.
Given the political benefits a presidential candidate could expect to gain from an economy that grows during an election season, it is only natural that a sitting president eligible for reelection would want to push hard for another stimulus program in order to dampen the effects of the crisis. Well, not in this case, for "…President Barack Obama hasn't requested more stimulus and recent polls indicate that a majority of people are against more deficit spending." Obama, it seems, faces political constraints:
The administration has done a poor job of explaining the advantages of reducing the output-gap or — for that matter — the overall objectives of Obama's economic recovery plan. Many people heap the bank bailouts (TARP) with the fiscal stimulus. This is a mistake that's easy to make. But the point needs to be clarified so more people don't needlessly suffer. It's up to Obama to articulate the differences in policy so the country can muddle through the tough days ahead. The problem is, Obama is afraid to use his skills as a communicator, because he thinks his message will offend financial industry constituents who wield tremendous power at the White House and on Capital Hill. The bankers and brokerage mandarins are more than happy with the present arrangement, which means that the conveyor-belt connecting the US Treasury to Wall Street will continue to operate at full-throttle diverting ungodly sums of money to broken banks and financial institutions rather than for unemployment benefits, work programs, and state aid.
Placating Wall Street appears to be an Obama priority. Crisis management, not crisis resolution through reform, informs his strategy. The financial elite, not the rabble, make up his constituency. To meet this strategic goal Obama can depend on the fears of the common American who, unsurprisingly, would rather the government put a stop on this deficit spending. Yet their fears and Wall Street's greed should not:
…stop Obama from doing the right thing and making the case for another round of stimulus. His job is to strengthen demand and put the country back to work. The rest is just politics.
Obama, I would add, should also make the case for structural reform. Neither massive unemployment nor widespread poverty are politically acceptable results for an economy as well-placed as the American.