US Recovery…Is it real?
Over the last three months we have seen the price of oil double and the international stock markets have seen significant upward movement in their indicies. There is a spirit of optimism growing that the USA is well on the way to recovery and that things will soon be back to normal. But is this optimism justified, is America about to return to the good old days?
We need to look at the facts behind the optimism to see if all is well. The first fact is that oil is now above $70. At this price that will significantly restrict the amount that the economies of the world can grow. If we are going to have sustainable growth we need oil prices to remain low for the short term (1 – 2 years).
Although the rate of job losses in the USA has slowed the unemployment rate is the highest it has been in over 50 years and is expected to go higher over the next 6 months. This of course means that the number of persons who can afford to buy consumer items is also at its lowest level in years.
The level of consumer confidence in the USA has risen with people being more hopeful. However, when one examines the retail numbers it is discovered that people are still buying only what they consider to be the critical items.
Even if the economy of the USA starts to recover early next year it would be unrealistic to expect the economy to return to what it was 3-5 years ago. The main reason for this is that much of that consumer spending was based upon investment gains that were not real thus leading to the collapse of the financial sector.
So what is really happening? Once again the speculators are out, talking up the market and trying to manufacture profits that are not achievable. It seems that we never learn our lessons when it comes to money and I wonder if it is going to take another collapse to get the message home.
Feedback Question: Is the Obama administration doing a good job of handling the American economy.
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4 Responses to “US Recovery…Is it real?”
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He is trying buta wound takes time to heal. Medicine has to be applied, but the body has to be in shape to respond. A recession takes time to play out. Obama, the Feds and the proposed new regulatory bodies are working but the workforce must have jobs to spend disposable income, borrow to start businesses and equity to invest. This takes time at least 6 months to a year.
The Obama Administration could do a better job in handling the US economy. The ‘economic growth’ the US experienced under the Bush (43) Administration has turned out to be an illusory one as has now become evident but since becoming president, Mr. Obama has chosen to try and play nice with Republicans to get things done. The problem is that, for the most part, the Republicans are not in the mood to return the favor and it appears that he’s prepared to accept watered-down measures in order to get things done. So far, the only true bold and decisive leadership I’ve seen President Obama demonstrated is his handling of the domestic automakers GM and Chrysler.
I personally believe that President Obama has not fully utilized the bully pulpit that is the presidency to get things done the way FDR did during the Great Depression. I find this rather baffling as President Obama has described himself as a student of history.
Recovery is but a rumor. They are hoping the actual recovery will materialize from actions initiated by the rumor. sort of a circular dependency with a positive end result.. Hold on to what you have b4 you begin to spend, and if you do so, you are holding back the recovery.. confused?
The unemployment figure for June is not encouraging. Madoff’s Ponzi scheme will take time to play itself out. (Remember Key players who could jump start the economy lost millions of dollars.) The banks are sill not lending and stimulus money is not creating jobs as it should. This recession is going to last a while.