It’s the big question on everyone’s mind right now - “Are we on the road to economic recovery?”
The short answer is, I really do not know. No one knows, BUT that doesn’t stop people from thinking they have all the answers (“Often wrong, but NEVER in doubt”, as I like to say).
The economic indicators are starting to look positive in certain areas while other areas lag behind. I do believe we’ve navigated the worst of the economic storm and are out of the path of the financial tsunami that turned our markets upside down 18 months ago. However, we may be in for a long wait before things, whether real or perceived, return to pre-crisis levels. In fact, it may take years before we are truly recovered.
The reasons for my pessimistic stance are outlined below:
1) Consumer Spending
Lack of employment is creating a jobless recovery, particularly among working class families, young adults and teenagers. Consumer spending represents 70% of the economy and Americans are not spending either because they 1) do NOT have the money, 2) are trying to pay down debt or 3) are just trying to save for the future.
Also, the defaulting and variable rate increases of commercial properties and home mortgages will provide a drag to spending in the near term.
2) Federal Government Spending
Government spending is currently helping to prop up the economy, but this type of spending can NOT continue indefinitely. Deficit spending has reached apocalyptic proportions. I realize times of recession call for deficit spending. But, consider this - interest on the debt and entitlement programs (Social Security, Medicare and Medicaid) represent close to the entire amount of REVENUE that the U.S. government receives.
This leaves NO room for defense spending, roads, bridges, national parks, administration, cabinet posts, etc. etc. Congress likes to point fingers at the other political party, but someone needs be the grown-up, take the political heat and propose REAL reform, not just little bits of cost containment around the edges.
The budget need amputations, not minor cosmetic surgery.
My opinion is that IF President Obama wants to take the “hope/change” platform back, he needs to be honest with the American people and tell the truth – WE ARE IN DEEP TROUBLE AND HEAVY SACRIFICE needs to occur from every sector of the economy (no group or industry can be off limits). It may be death politically, but it may be the best thing that could ever happen to the country. If he pulls it off, he could go down as one of the greatest presidents ever. Many pundits say it is impossible to reduce the budget, especially entitlement spending, but isn’t that what true leadership is all about?
