Saturday, June 19, 2004
What is the State of the Economy?
While Bush is touting the economy, and we are seeing economic growth numbers, but hearing how bad the economy is by Democrats, the question becomes, what is the state of the economy?
It is true that job numbers are increasing at a solid rate (Heck, 6% unemployment was incredibly low for a recession), and economic growth numbers seem to be in line, but does this tell us everything about our economy? I doubt it quite honestly.
Democrats are right, we are still having a huge amount of jobs going overseas, and the trade deficit is rising. Inflation is rearing its ugly head to about 5% annual rate currently and it is higher if energy prices are factored in, and the fear of them rippling through the economy is significant. While energy prices are in decline again, the odds are that the days of $1.50 per gallon of gas are gone. Greenspan is going to raise rates at least .25 this month, and projections by market analysts predict there will be up to 5 rate increases of .25 to correct the historically too low interest rates that now sit at 1%, leaving little the fed could do if the economy tanked right now.
Congress is running for more tax cuts, but at what cost? Does anyone understand economics? The deficit spending with good growth only means more money must be put into bonds by banks, which means less money to loan you and I for our homes, cars, small and large business investments, etc. And you know who gets priority on those loans... large corporations that are less likely to disappear. It's impact on the economy costs us much more than the marginal impact of $1-300 a year we would have in additional income from tax cuts as interest rates rise and the costs of goods grow.
The only question is... can Kerry take advantage of the economic news that is much softer than it appears if we only look at employment and growth numbers? Inflation, rising interest rates, lower real wages, increased trade deficits... will they impact the economy in time for Kerry to get any gain from it? Most people don't understand economics, can Kerry make them understand to gain footing on GW? Even if Kerry gets elected, does he become a one term President because of the problems GW would leave behind? And can Kerry actually solve those problems with a Republican Congress to prevent him from passing legislation? Only time will tell, but it could make Kerry the second Carter if inflation hits due to energy prices and rate hikes kill the economy while he is in office. Carter's economic woes started before he was elected, Kerry could suffer the same fate of economic factors outside of his control if elected.
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It is true that job numbers are increasing at a solid rate (Heck, 6% unemployment was incredibly low for a recession), and economic growth numbers seem to be in line, but does this tell us everything about our economy? I doubt it quite honestly.
Democrats are right, we are still having a huge amount of jobs going overseas, and the trade deficit is rising. Inflation is rearing its ugly head to about 5% annual rate currently and it is higher if energy prices are factored in, and the fear of them rippling through the economy is significant. While energy prices are in decline again, the odds are that the days of $1.50 per gallon of gas are gone. Greenspan is going to raise rates at least .25 this month, and projections by market analysts predict there will be up to 5 rate increases of .25 to correct the historically too low interest rates that now sit at 1%, leaving little the fed could do if the economy tanked right now.
Congress is running for more tax cuts, but at what cost? Does anyone understand economics? The deficit spending with good growth only means more money must be put into bonds by banks, which means less money to loan you and I for our homes, cars, small and large business investments, etc. And you know who gets priority on those loans... large corporations that are less likely to disappear. It's impact on the economy costs us much more than the marginal impact of $1-300 a year we would have in additional income from tax cuts as interest rates rise and the costs of goods grow.
The only question is... can Kerry take advantage of the economic news that is much softer than it appears if we only look at employment and growth numbers? Inflation, rising interest rates, lower real wages, increased trade deficits... will they impact the economy in time for Kerry to get any gain from it? Most people don't understand economics, can Kerry make them understand to gain footing on GW? Even if Kerry gets elected, does he become a one term President because of the problems GW would leave behind? And can Kerry actually solve those problems with a Republican Congress to prevent him from passing legislation? Only time will tell, but it could make Kerry the second Carter if inflation hits due to energy prices and rate hikes kill the economy while he is in office. Carter's economic woes started before he was elected, Kerry could suffer the same fate of economic factors outside of his control if elected.
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