Reflecting on U.S. politics, the sharp-witted entertainer Milton Berle is reported to have declared: "You can lead a man to Congress, but you can't make him think."
This week we have a classic example of that observation. A few days after the U.S. Congress approves scaling back federal spending to reach a controversial accord on the debt ceiling, a Bank of America/Merrill Lynch (BOA/ML) analysis, yes, one of the banks that helped create this economic mess in the first place, issued a new report out to shareholders warning that another recession may be fast approaching since Congress adjourned without addressing an unemployment benefit extension for the long-term unemployed.
Yes, you can lead them to Congress but you can’t make them think. Or listen. This is a time for more federal spending to stimulate the economy, and the analysis appears to agree with leading economists such as Paul Krugman and others. Failure to extend those benefits for the nation’s 3.7 million long-term unemployed may send the country into another recession, the report warns, adding that the chances of a second downturn are more than 1 in 3.
Perhaps, recession is already here and we don’t know it.
What we do know is the so-called “99ers” (those on unemployment for 99 weeks or longer) are struggling to find work, and they’ve relied on unemployment extensions just to survive.
"We do not expect them to get extended," BOA/ML economist Joshua Dennerlein wrote in a note to clients, which was reported today by CNBC. "This will act as a hit to income, hurting consumption growth in the first half of the year."