Sequester

The “Market” sure seems to like the forced budget cuts even in the face of the “gloom and dune” scenario painted by our President and his so-called “economic” advisors.  The Market is not always correct as an indicator of future economic growth, but the Market’s record when it comes to forecasting is certainly more reliable than the economists serving our politicians.  Keep in mind that those forecasting the coming economic disaster are the same crowd who failed to see the “Great Recession” coming or the failure of the huge stimulus package that was going to reduce unemployment to less than 6% in Obama’s first term.  They are doing the best they can, but it’s a very difficult task, forecasting the future.

As has been widely reported, the spending cuts are such a small fraction of the total federal budget but even these small cuts seem to be having a positive effect on the economy.  Here in South Florida, as I look around, I realize there is a huge construction boom underway.  I was in L.A. a couple of weeks ago and observed the most new construction projects underway in recent memory.  (I am not talking about all the government funded infrastructure projects such as the “405 modernization” or the Port of Miami Tunnel.)

If in fact the economy begins to grow, it will be fun to listen to the “spin” coming out of the White House trying to explain why the disaster scenario did not materialize, and why they knew all along that the sequester was a positive thing for the economy.  That’s fine with me if it shows politicians that real government reforms regarding spending and taxes can do even more to simulate our economy.  If “spending cuts” turn out to be the juice that boost the economy we may see politicians competing to be known as the biggest “cutter” of spending rather than the biggest “spender” of taxpayer money.  Then again, maybe not, but we can dream!