"Equities are grinding lower"??

Sometimes you have to take the advice of the "experts" with a grain or two of salt. Case in point: Mark Zandi, in written testimony today to the Joint Economic Committee: "equities ... have been slowly grinding lower since mid-September." Zandi, a reliable source for quotes that reaffirm Keynesian economic logic and avoid ruffling consensus feathers, is trying to make the case that Congress should end the shutdown and reverse the sequester in order to boost the economy. That without these actions, the stock market is telling us that the economy is doomed to deteriorate.

Here's what "grinding lower" looks like in fact (as I write this, the S&P 500 is down 1.4% since mid-September):

I'd say a more accurate description of the equity market is just the opposite: equities have been grinding higher for the past four years or so, despite the many obstacles—like the shutdown and the sequester—that have been thrown in its path. The economy has been slowly improving as well, despite a degree of "fiscal austerity" over the past four years that would have led any Keynesian to predict a recession.

The economy's disappointingly slow growth, in my view, has almost nothing to do with fiscal austerity. Rather, it has to do with policies that are smothering the private sector: e.g., higher taxes, increased regulatory burdens, increased subsidies and transfer payments, and Obamacare.

Reversing any or all of these policies would almost surely do more for the economy than reversing the sequester.