Obama economy sends Americans to their mattresses
By: Michael Barone
Senior Political Analyst
July 11, 2010
Home mortgage interest rates are the lowest in history, but house sales are plunging. Banks can make money easily because of the Federal Reserve's low interest rates, but they're not making many loans. Major corporations are sitting on something like $2 trillion in cash, but they're not investing.
Unemployment is running at 10 percent, rounded off, for the 11th straight month, but few employers are hiring and a million people have stopped looking for work in the last year. Small-business hiring is at a nine-month low and retail sales are tailing off.
Government policies designed to stimulate the economy seem to be having the opposite effect. Consumers aren't buying, businesses aren't hiring and those fortunate enough to have some cash on hand don't seem to be investing.
I call it the mattress economy.
America has seen this kind of thing before. In the late 1930s, when Franklin Roosevelt raised taxes on high earners, encouraged lawless sit-in strikes by labor unions and took over utility businesses, the response was a "capital strike."
Instead of creating jobs, businesses and investors put their money in mattresses. The result was a stagnant economy and double-digit unemployment-and a 75-seat Republican gain in the 1938 off-year elections.
Back then, the economy eventually perked up thanks to mobilization for World War II. No such mobilization appears on the horizon today. You may need to get a bigger mattress.