Lawrance G Lux, click
here to update your pages on AuthorsDen.
Blogs by Lawrance G Lux
Current Economic State 9/28/2004 12:17:54 PM
The Recovery, or Non-Recovery as some would put it, has descended into a Recession although the numbers are not yet in. They will not be in until after the Election, as such is forbidden by Administration policy. The Electorate should know, though, that We are in for it again.
The Economy currently exists in a state of suspension, bracing itself for a series of ‘shocks’ it feels destined to endure. The price of light, sweet crude just surpassed $50/per barrel, a record high, while increasing numbers of Oil-producing regions are being battered by production-reducing strikes from Nature and Mankind. Homeowners, shocked by last year’s heating bills, will go positively catatonic under this year’s reduction of reserves and subsequent Price increases. The most startling aspect of the current ‘Recovery?’ remains the consistent level of new Unemployment claims, always more than four times the number of Jobs creations. One must understand at least half of the new Claims are leave-taking from still existent Jobs, but almost half are not, so Jobs are being uncreated about twice as fast as they are being created. Consumer debt grew at a tremendous rate in the first two Quarters of this year, but is tapering of in the Third Quarter. The trouble here is that Consumer Spending is slowing at the same rate as the increase of Consumer Debt.
The bright, or not so bright spot, is that new Housing Sales have again increased. The 'not so bright' aspect lies in mortgage viability in almost all Cases depends upon the existence of a Two-Income household. This has become an increasing difficult state to maintain. It will become almost impossible if new Unemployment claims increase. The mighty Walmart even shows cracks, as it is failing to rehire replacements for Employees retiring or quitting. It can only get worse, as Corporations fail to meet their Quarter Profit predictions, the latter becoming increasingly hard with declining Consumer spending, increased Energy costs, and Supplier Cost increases.
The Supply-Side argument has again been defeated, but always at a cost to the American economy. The entire Bush stimulus package, including the Tax Cuts, did not increase American economic performance as much as did the FDR New Deal programs in any terms. It did not even increase American economic performance in percentage terms, as did the Reagan and elder Bush Tax Increases. Giving the American Wealthy and Business interests a free ride does not enhance economic performance. Government spending under the younger Bush replaced Private Sector spending, except at higher cost and less effect.
The Economists will not agree until they get their prerequisite number of months, but We are in Recession. lgl
