Politics and Money

Obama Begins Referencing Economic Reovery in SpeechesPolitics is money, one way or the other. Whether it’s where the money goes through government programs, where it comes form through taxes and other public revenues, or who is deciding how much of each of those is happening. On the flip side, how money is moving in the economy has a lot to do with the political perceptions of Americans around how our leaders are doing- Obama, rightfully or not- is held culpable for the loss and hopeful rise in manufacturing jobs, and those jobs will only come once the companies are making money again. Stimulus for now, jobs later seems to be the mantra as of late, but that won’t hold indefinitely.

The economy has many indicators, but one of the contributing factors referenced most frequently is how healthy the retail sector is. The thinking being that if people are spending money then they are making it and feel comfortable enough in the near future that they can spend it- and spend it we are, according to a recent article from Reuters.

Retail sales rose this past month at the fastest pace since 3.5 years ago, offering hope in a market full of bad news. Wall Street had expected a 2% gain in retail sales and estimates say that the rise was in fact 2.7%.

"Retail sales show the recovery is here. This wasn't just autos, it wasn't just gasoline. This was the U.S. consumer getting out of their foxhole," said T.J. Marta, a New Jersey- based market strategist. "This is indisputably a good number."

Out of the foxhole! Apt correlation between the battlefield and the economic crisis- the metaphorical fallout of the military-industrial complex, perhaps. Regardless of its literary origins, good news for everybody.

Ben Bernake even said the recession was likely over, not that we will be feeling immediate effects:

"Even though from a technical perspective the recession is very likely over at this point, it's still going to feel like a very weak economy for some time," said Federal Reserve Chairman Ben Bernanke.

And as I said, politics is money. If retail sales are up and strategists and officials are ready to declare the recession technically over, that means Obama can start using it in his speeches- and that’s just what he’s doing.

At a GM plant in Ohio he said that his administration’s approach to the economic recovery is working, but added: “It's going to take some time to achieve a complete recovery."

It’s good to hear that almost $800 Billion in stimulus is working- what would he say if things continued to go poorly? Umm, let’s try that again, everybody? No matter- it’s working.

Next week the Fed will look at the details of what the best next moves are for pulling back some of the stimulus money, dealing with the bigger question at hand:

Now that we have rescued the economy, how do we wean businesses off of the free money they are floating on? Now it’s time to think about inflation, how to nurture the rise in consumer spending, and think about, yes I’m saying it, how we will grow in the future- will it be the same unsustainable bubble model or will we move forward with financial market regulation?

After a sigh of relief, it’s time for politics to take care of its victory.