The New Math

by Steve on June 16, 2009

We’re all waiting anxiously to hear something positive regarding our economy. I know I wake up every morning hoping for change. After all, that’s what the man promised isn’t it? (I’m not a believer just in case there is any doubt creeping into your mind.)

Well this little gem has a spark of hope in it:

The US economy should emerge from recession by the late summer, according to economists from some of the country’s top banks.

Which economists from what banks? Inquiring minds want to know. Just when there’s a glimmer along comes the fire-hose to put it out:

The bankers also said US unemployment would hit 10% early next year.

Turns out that our collective spending habits are what’s been driving the economy. Problem is sustainable spending requires a paycheck (or stimulus bucks) to pay the piper. Our economy is driven by our own spending – there is a fundamental problem here.  Doesn’t anyone actually make anything anymore? We should be manufacturing the best damn widgets the world has ever seen, ones our trade partners can’t live without.

US consumer spending, which accounts for about two-thirds of economic growth in the US, should increase in the second half of the year and help to moderate lay-offs and cuts in investment spending, the Economic Advisory Committee said.

Seems that there are a few Americans that still actually produce something tangible and the ones building homes were a little busier last month but the guys and gals building our widgets were getting laid off.

Earlier on Tuesday, figures showed that the number of new houses being built in the US in May bounced from record lows in April.

But separate figures showed that industrial production fell by more than analysts had expected.

Now for the punchline: all the above quotes came from the same article.

So, are we starting to climb or still spiraling downward? I suppose it depends on which statistics you watch and who you get to interpret them.  What to do? I’d tell you to buy American but ever since Sam Walton’s successors started shopping China, “Buy American” has lost its luster.  In fact, buying American has become nearly impossible for all but specialty consumer durables.

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