- The job situation around the country is not improving in a meaningful way, no matter how you count it. In fact, the share of population employed - around 58% - is the lowest since the early 80’s and long-term unemployment is the highest since the 30’s
- The Consumer spending has been slowing down again for the last 3 month and our retail sector small and large are really hurting.
- The Factory’s have slowed down again across the country according to recent data - and the Euro exchange rate Vs USD is not helping our export businesses at all.
- The Fed recently downgraded the outlook for GDP growth for the year to 1.9 - 2.4% and a great deal of economists are now saying this may be optimistic. This level of growth does not even account for the population growth and the inflation - which means we are in recession territory.
- The National Debt is on its way to $16 Trillion by end of year, having grown from $9 Trillion over the last 4 years - and is now at the highest level vs GDP since just after World War II
- Federal Spending is now at 25% of GDP - the highest level since World War II and the Federal Budget deficit at 10% of GDP - also the highest level since World War II
- The next “Debt limit increase” is right around the corner promising one more standoff in Congress
- And we are all looking at “the financial cliff” where Federal taxes go up for everyone on top of all the increases included in “Obamacare” and across the board cuts as agreed last year. Republicans and Democrats in the Congress don't agree on much, but they do agree on this: the combination of increased taxes and spending cuts will likely cripple the economy further.
And the businesses in this country see all these signs as well. Facing the uncertainty of the immediate future as well as the longer term, the businesses - like most consumers - have decided, now is not the time to invest.
I am no economics genius but I do not really think it takes one to figure out that something has to be done!!! And it really isn’t much of a ideological debate - some of the needed actions are very basic and should be easy to agree on. As a matter of fact maybe we need an “ideological armesti” for a couple of years and get the base fixed.
I know, won’t happen. The debate about the ideology is much too important to put aside, even for a little while. So, no matter what happens, we are all heading into a couple of years of really rough waters and the people of this country are not going to see things getting much better for a while.
But - do we really have to wait 110+ days before our President and the Congressional leadership drop the “elect me” retorick and start working on the issues? And maybe prove they deserve to be our leadership??????
I don’t think so.
Couldn't agree more! It seems elections have gotten the better of the recovery of the global economy. Hollande winning in France will play havoc with the European economy, and Denmark will fare no better with the bunch of inexperienced socialists currently playing government. Actually it seems that the inability by socialists to grasp basic economic principles is the real scourge of the global economy. Adam Smith help us all!
ReplyDelete..., sad part; "facts don't matter"; this is politics and as such ideology, which one knows is easily swayed for ..., yes, political gain. good part; it's a pendulum exercise - it will go as far to one side in its current motion until gravity (or otherwise introduced resistance) will halt directional movement and inflict course correction.
ReplyDeleteHi Per - agree with the argument, now let's move on to the solution. Thinking we need to start in two places. First is to simplify and overhaul the tax system. Second, and related, is to practice the art of Win-Win negotiation, or as Washington Pols used to say, compromise. Sadly, everyone has backed themselves into 'principled' corners, preventing progress. This is where leaders are supposed to shine. So, who will be the one to take a bold step forward toward the other side?
ReplyDeleteI agree Rick. The really sad part is that it is not that hard to spot what needs to get done. A few moves could make a lot of difference short term as well as longer term.
ReplyDeleteOne of these is the tax system. It obviously must be overhauled and generally modernized, including removing all of the thousands of provisions making it complicated and difficult to administer. It is long overdo. So what I would do: tomorrow I would announce the current tax rates will continue for the year 2012 and 2013. At the same time a commission is announced with the task of coming up with the new overhauled tax system. First draft due by end of 1Q 2013 and designed for implementation starting in 2014. This would fix the sentiment problem in the country in one go. Consumers would consume again, small business owners would hire people again etc, etc..... Easy!!