What does the worst economic recovery in the history of the U.S. look like? Taking a look at the chart below and one gets a glimpse of what has been, and still is, a man made economic catastrophe. While marginally better than last month’s 75,000 jobs, the job numbers for January of 113,000 are still pathetic. If we use last year’s average population growth as a point of reference, the economy needs to add at least 188,000 a month to just tread water. If comparing that to job growth below gives you a sinking feeling, it should.
Much of what has been trumpeted as economic progress has been little more than mirages. In this upside down world of Obamanomics, traditional measures of economic vitality are no longer applicable. As Julia Coronado, Chief Economist for BNP Paribas, told CNN, “A low unemployment rate doesn’t mean what it did in the past.” A rather muted understatement if there ever was one. With a sinking participation rate, unemployment numbers are about as useful as a weather forecast for deciphering the state of the economy. Today nothing really counts for what it use to anymore. For example, rising stock prices are not a reflection GDP growth nor are housing prices linked, whatsoever, to how many people are seeking to buy a home! It is a false world of make believe where reality and fantasy are no longer distinguishable.
The chief architects of this new world are President Obama and the Federal Reserve. The Federal Reserve monetary policies have inflated the stock market and helped create a mirage of housing demand resulting in a false sense that all is well. Mean while, the President lives in an alternate economic universe. His policies are reflective of a world view so clouded with ideology that the sunshine of reality rarely peaks through. How else can one explain his crony capitalism that suppresses job growth in sectors bursting with potential only to redirect billions in capital in unviable economic ventures? Even his chief accomplishment, ObamaCare, has been a failure at all levels. Increasing unemployment and healthcare cost while not even doing what was supposed to do, namely insure everyone. Of course not any of this matters, for him the dream he envisions is so wonderful that he can’t even contemplate it might not be real.
Meanwhile, it is a miracle that the economy is still trudging along at all. Its extremely measured but constant will to move forward is a tribute to the entrepreneurial spirit. Like a man staggering through a desert, driven by shear will, the economy moves along; neither falling down nor really gathering steam. In fact, despite economic headwinds, it has continued to edge forward. Maybe this should not be surprising, an economy is not merely factories, banks and numbers on econometric chart, it is people. An economy, at its most basic, is the reflection of the hopes, dreams and hard work of the people in it.
The natural tendency of a capitalistic economy is to grow. To create more opportunity and to serve humanity by tending to its needs and desires. It is people who make it work, not politicians or central bankers. They desire to improve their own circumstances drives the economy forward. This means growth is an economy’s natural state. Even in today’s atmosphere of uncertainty with businesses being buffeted by storms of regulatory changes, the people behind them are striving to succeed.
As the EU stumbles, Asia is fearing both economic troubles and an aggressive China, and the developing world faces its own financial crisis: it is the United States that still holds the most hope for leading the world into a new period of prosperity. Its people are ready to do what they have always done, create economic miracles. Unfortunately, the walls and roadblocks to success being put in their way are formidable.
If and when the United States again has the kind of leadership that understands and appreciates the economic prowess of Americans, prosperity can return. For certain, there are looming challenges that threatened to shake the country to its core, not the least of which is the country’s deficit. Despite this, America’s economic potential is vastly underrated. Like the economic explosions that took place after the civil war, in the roaring 20’s and after WW II, another boom is possible. One that could even dwarf all that came before. Unfortunately this is all a dream as long as the present Washington coalition is still in power.
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