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Happy Tax Day Y’All,
The economy seems to be responding to the “jaw boning” about a recovery. It appears to be strengthening a little bit. As Mr. Bernanke indicated yesterday, the recovery still faces some very strong headwinds, mostly the rising national debt which today, at 10 AM is estimated at $12,832,608,522,000.00 or $42,775 for each man, woman and child in the USA. If we were to raise taxes enough to stop adding to the debt, we’d have to add another $3,387 on top of that for every man woman and child to pay off the current debt in 20 years. For a family of four that would be additional taxes of $13,550 per year for the next 20 years. Does your family have an extra $1,129 per month to give Uncle Sam to reduce the existing debt? Put political rhetoric aside, it doesn’t matter who or which party got us where we are. What matters is where we are and where we go from here. If we won’t step up to pay this down, then our kids are going to be left facing a much larger problem. If it continues we will become like Greece, a country that lenders are afraid to lend money to. That means austerity the likes of which few alive in the USA remember. Is that the legacy we want for our children and grandchildren?
I was at the Wilmington NC Airport this week when the Honor Flight returned from its trip to Washington DC taking veterans of WW II to see their monument. The place was packed with flag waving Americans welcoming home the hero’s of the Greatest Generation. I wonder what will the future generations call us in our twilight years?
On the recovery, it appears that the recovery is getting legs. Car sales are up on average about 8% year over year. While this is substantially below the 2007 and 2008 levels, it is showing the consumer willing to buy when the price is right. Housing is still struggling nationally and I’ve seen a taste of reality in asking prices even here in the Wilmington NC area. The Empire State Manufacturing Survey index jumped a lot in the April report. This indicates that the manufacturing sector is spooling up. The Philadelphia index also was higher, but not nearly as much as the Empire State index. Was the Empire State index jump an outlier? Maybe, but both are pointing toward growth and that is a consistent message.
The retail sector which demonstrates the consumer portion of our economy (approximately 70% of the overall economy) has been signaling strength for the last five weeks, indicating year over year gains well above recent averages.
So, yes the economy is getting better and the pace of recovery will accelerate with time. That is not to say the economy is out of the woods yet. The number of people filing for first time unemployment benefits were 464,000, indicating that the number of jobs continues to contract. We still have tax increases coming and we have higher interest rates coming. These two things alone, if timed poorly, can derail the recovery and send us back into recession. Some economist think that a second dip will happen before a meaningful and sustainable recovery can occur. I’m not betting against Ben Bernanke, but I’m not willing to bet the ranch with the current cast of characters in Washington either. I’m waiting for the November election to see which way the political winds are blowing before I decide where the economy is headed. If the November election slows down the spending, then I believe the economy will rebound. If the outcome in November signals continued growth in the debt, then I think the economy could be in real trouble for awhile.
In either case, until housing problems are resolved, foreclosures and the like are under control at down to normal levels the job market will remain tight. If you don’t have a job now, your prospects of getting one in the near future aren’t very good. If your skills aren’t top notch and you haven’t done much to acquire new skills that are relevant to today’s job market you are in trouble. If you want things to be the way they used to be you are delusional. Change happens. Gramdpa’s way of life is gone forever. If you can, get back to one of the Community Colleges and get the skills you need to secure a job in the near future. As bad as things are, some sectors are growing. Health care and related fields are growing. Some service industries are growing but they require a lot of specialized skills. To be competitive in those areas you must have those skills. Get out and get what you need. Take charge of your life. As a some wise person once said, this is your real life. There are no dress rehearsals. This is it, live from where you are…
