Sequester Headlines Have Been Scarier Than Reality—So Far

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from The Wall Street Journal,

It has been three months since the onset of the across-the-board cuts in federal spending known as the “sequester.”

“These cuts are not smart. They are not fair. They will hurt our economy,” President Barack Obama said in February. “They will add hundreds of thousands of Americans to the unemployment rolls. This is not an abstraction. People will lose their jobs. The unemployment rate might tick up again.”

Since he spoke, unemployment has inched down from 7.9% to 7.5%. Employers have added more than 635,000 jobs, not counting May, numbers for which arrive Friday.

In a Washington Post/ABC News poll, 63% said they hadn’t been touched by the spending cuts; half of those who had been said the impact was “minor.”

So what happened to the pain that the dreaded sequester was supposed to bring?

It is biting, but only those affected directly notice.

For the U.S. economy, a rebounding private sector has offset some of the federal belt-tightening.

The pain may get worse from here.

For the rest of this year, expect a continuing a tug of war between the federal fiscal policy pulling the economy down and, provided housing and stock markets cooperate, the private sector pulling it up. Hope the latter wins.

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