Bears, Bulls, Chickens and Pigs: wOw’s Wall Street Weekly with Liz Peek (Week of 10/26) 

The stock market cheered the resurgent economy yesterday, after losing ground for four days in a row. The 3.5% gain in real GDP was welcome but, since nearly half of the improvement came from the Cash for Clunkers program, I wouldn’t break out the bubbly quite yet.

ISI Group notes that economic recoveries historically mirror the extent of the downturn; the worse the falloff, the faster the bounce-back. They say that, given the recession-caused 3.8% collapse in GDP, the quarter should have jumped 10%. No one was looking for that kind of pop, given the debt load and job anxieties still weighing on Americans. Indeed, today’s report that consumer spending sank 0.5% in September (the biggest drop in nine months) underlines the fragility of the recovery. For further proof, just ask the 530,000 newly laid-off Americans that went looking for unemployment insurance last week.

HSBC’s economists had forecast 4% growth for the quarter. They were too bullish because they overestimated the government’s stimulus spending. The shortfall was in outlays from the cities and states, which unexpectedly turned down. This raises an interesting question, no doubt being asked by the 26 million Americans looking for full-time jobs. What ever happened to the stimulus program?

If you’re wondering where our $787 billion went, visit the Recovery.gov website. The quick answer is … nowhere. Out of the entire program, only $173.2 billion has been paid out. Of the $14 billion in federal contracts awarded so far, for example, only a little over $2 billion has been received. There are some terrific projects that have received funding, though. My particular favorite is the $219,000 spent on a study of the sex lives of freshmen women at Syracuse University. You might prefer the "Week Mapping Radioactive Rabbit Feces With Detectors Mounted on a Helicopter Flying 50 Feet Over the Desert Scrub," which cost $300,000. If you’re a golfer, you’re probably thrilled with the $5,500 tax credit being applied to the purchases of golf carts.

Some of these projects make me chuckle, but the failure to create jobs for Americans is no laughing matter. A story in today’s Financial Times points out that "more than 8 out of 10 U.S. stimulus dollars spent on wind energy farms have gone to foreign companies." Cash that has gone to wind farms has funded 4,500 jobs overseas. Oops.

Well, after all, it’s the government, and no one expects perfection, or timeliness, or accountability. Then why in heaven’s name are we about to allow the government to interfere in our health care? It is inconceivable to me that Democrat leaders in the House and Senate and the Obama administration are bulling ahead with health-care legislation that Americans do not want, that we cannot afford and that is likely to detract seriously from the most pressing issue before us: putting people back to work.

Harry Reid, Nancy Pelosi and President Obama have reinvigorated the so-called "public option" based primarily on a couple of recent polls that say that Americans favor a government-run insurance program. Everyone should look up the actual WSJ/NBC poll that supposedly "green lighted" the public option. Early on, respondents are asked if the country is headed in the right direction. Over half (52%) say no, up from 43% in April. The sixth question asks people whether they approve (43%) or disapprove (48%) of the way Obama is handling health-care reform. In answering question No. 10, 48% of those surveyed say the government is doing too many things, while 46% say it is not doing enough. Responding to question 26, 42% said they think the president’s health plan is a bad idea, versus 38% who think it is a good idea, and in the follow-up 40% think that the legislation will make their health care worse (vs. 21% who think it will get better) and 47% think the cost will go up, while 13% think it will go down. Does this group sound enthusiastic about more government involvement?