Thursday, September 27, 2012
If you follow the release of government economic data, you know that data is released and then is usually revised a short time later as the information is further refined. Case in point: the second quarter Gross Domestic Product (GDP) for 2012 was revised downward from 1.7% to 1.3% Now this doesn't sound like much, but when you are talking about an economy that is nearly $15 trillion, it is a very significant number. Why is this important to you and me? It simply means that as our economy limps along with a miniscule rate of growth, new jobs are not being added that would help reduce unemployment. Our economic malaise is going to continue for a while. Orders for durable goods slumped 13% in the second quarter, and this means that many factories will be curtailing production and the corresponding hours for their workers. There are many reasons that we find our economy in this situation, and the road to recovery will require that Washington loses its antagonism toward job creating businesses and creates an environment that fosters job growth.
Do pyromaniacs wear blazers?
About that environment for job growth... According to a poll of small business owners and manufacturers by the National Association of Manufacturers and the National Federation of Independent Businesses, 69% say that the regulatory policies of the Obama administration have hurt their business. More ominously for job growth, 67% say there is too much uncertainty to expand their business and hire new workers. Why is this ominous? 85% of the new jobs in this country are created by small businesses, defined as companies that employ 50 people or less. When these employers are in a pull back mode, new jobs are not going to be created. By the way, do you think the massive tax increases on small businesses and individuals scheduled to happen January 1 are helping the situation? Neither did I. Here are two other responses from the survey that stand out to me: 55% said they would not start a business today given the current environment; and 54% said China and India are more supportive of their small businesses than is the U.S. Friends, unless we get real leadership in Washington that will work to reverse these negative trends and improve the climate for the business community, our economy is going to continue to shrink. And we will all suffer.
Issues? I don't have issues. I have a full subscription.
As part of the problem with our sluggish economy, consumer spending has been declining. The main reason for that is that personal incomes are falling. Significantly. The latest data from Sentier Research shows that personal income fell 1.1% in August, to a median household level of $50,678. Since the economic "recovery" began in 2009, personal incomes are down 5.7%. Since President Obama assumed office, personal incomes are down 8.2%. Why is this important? Besides having less money in your pocket each month, we are spending more of our income on necessities- food, gas, utilities, health care- and have less disposable income to spend on things like movies or dining out. This is significant, because 70% of our Gross Domestic Product (GDP) is driven by what you and I do with the spending of our income. Since we have less, the economy contracts and unemployment goes up. You can see the vicious and downward spiral that quickly can (it has already occurred) occur. This is why it it so important to realize that high taxes and burdensome regulations that stifle job growth contribute mightily to economic stagnation if not outright decline. January 1, taxes are going up dramatically unless Congress acts. If taxes rise and pull more money out of your control, do you think it is going to foster an environment for growth, or will it further cripple the economy? I think you know the answer. This election is about deciding our future economic trajectory- we can continue to slip to a lower standard of living or we can reverse course and begin to lift the regulatory and tax burdens that are crippling our job creators and in turn put more money in our wallets instead of Washington.
I don't have to worry about going through a mid-life crisis. I have been in crisis mode since I was a teen.
And that, my friends, is my view.