The economic news these days continues to be depressing. It’s hard to write about it week after week without starting to lose hope. I recently read a report in USA Today (on line) and it started off on an upbeat note, “…consumer confidence index stands at 53.5 up from 51 in July. The increase comes after two months of decline”. And I was thinking wow, a piece of good news about the economy. Then I read further and apparently a figure of 90 or more indicates a healthy economy, a level not seen since December 2007. I should have known it was too good to be true.
Then more good news, the home price index rose in June for a third straight month. Then the bad news, the new home buyer credit has expired, demand is down and home prices are expected to fall for the remainder of the year. Then the good news, “expectations about future business and labor market conditions have brightened”. Then the bad news, “overall consumers remain apprehensive about the future”.
After opening on a high note the article rolls up and down like bumps on a road and it finished on a low note. I guess this is appropriate because that’s the way the economy has been for the past two and half years. The comments at the end were rather bleak, “the economy is weaker than expected, non-farm payrolls to decline by 100,000 jobs in August and unemployment is expected to increase from 9.5% to 9.6%”. This is a very depressing, but probably a realistic outlook for the balance of the year.
If you recall from a prior blog of mine, 70% of our economy is based on consumer spending and when consumers lose confidence because their banks begin to fail and their neighbor is unemployed we all suffer. So, how do we smooth out the bumps in the road, let’s get the neighbor a job. Who hires first coming out of a recession? Historically, it’s been small business. So, now that banks are a lot healthier let’s get them lending to small business again, let’s have the regulators loosen up a little, let’s not let tax incentives expire, let’s not increase taxes, let’s focus on jobs, jobs and jobs. Health care, immigration, Mosque building and hurricane’s are all important topics and if we let them they will distract us from 10% unemployment and a 1.6% GDP growth. Stay focused and don’t forget to vote this November.
