An improving job outlook helped the Consumer Confidence Index soar to the highest level since April and near a post-recession peak, according to a monthly survey by The Conference Board.Combine that with the news from earlier in December that according to the Household survey (as opposed to the employer survey), 1.28 million jobs were created in the last four months along with a lower cost of financing the US debt (we are drawing more bids for every dollar sold in bonds and treasuries than ever thanks to investors flocking to US treasuries as the safest investment), and the economy might indeed not be heeding the dire warnings of the Republican party and falling off a cliff due to the infamous "spending problem."
The second straight monthly surge coincided with a decent holiday shopping season for retailers, though stores had to heavily discount to attract shoppers. [...]
The Conference Board, a private research group, said Tuesday that its Consumer Confidence Index rose almost 10 points to 64.5 in December, up from a revised 55.2 in November. Analysts had expected 59. The level is close to the post-recession high of 72, reached in February.
Much of the holiday consumer spending spree can be tied easily to the deal the President made last December with the Republicans to pay the price of keeping the Bush tax cuts for the rich in place for a couple of years in order to extract economic stimulus measures such as a payroll tax cut, a yearlong extension of unemployment benefits, and kept in place President Obama's other targeted tax cuts for working families and the middle class: the American opportunity tax credit for students, the expanded earned income tax credit, and the expanded child tax credit. When direct spending isn't legislatively available, the next best stimulus is tax cuts targeted to people that will most readily spend it: namely to the poor, the middle class, and students - all people who have a relatively low level of discretionary income to begin with.
I said it back then, and I will say it now: the President got a second stimulus from the Republicans by paying the price of their dear tax cuts for the rich. The result? Read up.
I have been hearing on TV that the year-end economic news is good for President Obama. And it is. But it misses the point. The news is good for the American people, for American businesses, for American jobs, for the American consumer. And President Obama is not simply the beneficiary of this good economic trend. He is the architect of it. He held the economy from falling off the cliff with the American Recovery Act, he relentlessly pursued and extended unemployment benefits and preserved the jobs of teachers and firefighters; he fought hard for the middle class and got the payroll tax cut and other targeted measures to inject consumer demand; he brought a 35% tax relief to small businesses for providing health care; he gave the fragile economy some breathing room even as the Republicans were trying to choke it off.
If anyone has any doubts about why the Republicans wanted to eliminate the payroll tax cut for middle class and working class Americans, there is your answer. They do not want positive economic news in an election year. After all, Barack Obama has already taken away national security (see: Osama bin Laden dead), fiscal responsibility (see GOP logic: tax cuts do not need to be paid for except the payroll tax cut), and damn nearly every other issue. Their only hope was to demagogue the economy, and the President's efforts seem to be paying off there too. Darn.
And if these trends continue - if jobs keep being created at a good pace, consumer confidence keeps heading north, new unemployment claims continue heading south, and so forth, there isn't much that will stand in the way of President Obama and a second term.