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On the Economy, Obama's Shooting from the Hip

Even a bad marksman can get lucky.

12:00 AM, Sep 4, 2010 • By IRWIN M. STELZER
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The agriculture sector is also adding some strength to the recovery. Exports of agricultural product are at near-record levels, as rapid growth in the developing world, especially China, adds to demand and drives up commodity prices. Droughts in Russia, Kazakhstan, and Ukraine have cut wheat supplies and diverted demand to U.S. farmers, a development that is expected to remain a factor next year. That should contribute a bit to the recovery of demand for consumer goods. Bill Horan, a corn farmer in Iowa, told the New York Times, “It means my wife can go out and buy a new sofa, and I can put new tires on the pickup [truck].” If reports that China is facing a severe corn shortage are correct, Horan might be able to indulge himself in a new truck, to the applause from Detroit’s carmakers.

Then there is that political pariah, the financial sector. The banking industry rolled up profits of $21.6 billion in the second quarter, five times the $4.4 billion one year earlier. Wall Street is again paying large bonuses, which contributed to the 16 percent increase in first-half sales at Tiffany’s Fifth Avenue store.

Finally, there is the housing sector. Positive signs include a slight uptick in prices, a surprising and unexplained increase in construction jobs in August, and record-low mortgage interest rates. Negative signs include a continued high rate of foreclosures, a large inventory of unsold homes, and the fact that the now-expired home buyers’ tax credit probably shifted some buying into the early part of the year, portending a slowdown in the third and fourth quarters. My guess is that lower prices, combined with the low mortgage rates and a gradual increase in incomes, will produce a turnaround sooner rather than later.

Meanwhile, Americans are in the midst of a holiday weekend, marred for some by a hurricane lashing the East Coast and for others by the fact that they will have to wait 58 days to tell incumbent politicians just what they think of them. President Obama says there is “no silver bullet”; his critics wish he would add some certainty by holstering his over-used revolver.

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