Economic Resuscitation

The US GDP was revised sharply down today from 2.4 per cent to 1.6 per cent and to be honest I was not surprised. The US economy right now for many Americans is on life support and many fear the policies in Washington are going to pull the plug on the economy rather than jolt it back to a strong heart beat.

Even though I have been off for two weeks spending time with my three kids (“camp mommy” as I affectionately called it), I have continued to talk to my contacts and have had a chance to talk with some close friends who are still out of work and on the flip side trying to hire.  Its bad out there and I know you know that. You have to be living in a cave with no human contact to not know someone who is out of work. I have several friends who are professionals that have been out of work for almost a year and their odds of finding a job are still bleak.

This is a great story that illustrates the employment situation in our country. I was at my best friend’s house last week and was talking to her husband who is the HR manager for a Long Island non for profit. He told me on the Monday of that week he put an ad in the paper and online for a comptroller opening and by the next day he had 200 resumes. The candidates he is closely considering for interviews all had controller experience and they were out of work for at least two years. He said the majorityof the candidates that sent in resumes were all out of work for almost two years, some longer.

Youth unemployment is the lowest since 1948 because adults are taking those jobs because they need to feed their families. But what we are greatly lacking here in this prescription to re-energize the economy is the government incentivizing businesses to hire.

Wayne Huizenga has told me as well as countless other CEOs, business and government should work together. The private sector is not the enemy. It is the lifeblood of this economy.  I know there is a hatred towards big business but that hatred should be cast aside becaues it is impacting the small businessperson. How many more people have to lose their jobs before people wake up and realize *both* big and small business are the employers in this great country of ours?

I read an article this morning that Mullen, chairman of the Joint Chiefs of Staff said the ever increasing  US Debt is the single biggest threat to national security. This was no big revelation to me.  One of my great contacts, Jim Rickards of Omnis was on Squawk Box about a year ago warning about this. Why is it making headlines now??

The all important jobs number is out on Friday,September 3rd,  and this number will be an important one for lawmakers with the mid-term elections just around the corner. We all know government policy is reactionary rather than looking forward. Let’s hope the political mudslinging can be set aside and some actionable, real life stimulus can be achieved.  If you don’t like how a doctor is treating your illness what do you do? You fire them and find a better one.

Come November, we Americans will have the economic health of our beloved nation in our hands. What you decide will either help put America back on the mend or send her into the hospital. The vote and economic prognosis  is yours.

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7 Comments

Filed under Business, cnbc, congressional spending, deficit, Leadership, money, politics, Uncategorized, wall street

7 responses to “Economic Resuscitation

  1. Kit

    How would an election of politicians change things? The Feds, with the printing machine and wonky economic theories, holds your nation and the world hostage. The malaise is much deeper than we think.

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    • Thanks for your comment Kit. Totally agree with the wonk machine holding us hostage, but the regulations and laws that stifel business and impacting the US economy comes from Congress. We can’t rely on the Fed and the currency making machine to cure our economic sickness. We need politicans in office who will create incentivizing policy for businesses to hire as well as not raise taxes which will impact every American. Americans need to vote for elected officials who understand capitalism isn’t the root of all evil and who will not crush the small businessman or the malaise will only get worse. Looking at the productivity numbers this morning shows that businesses have squeezed out as much as they can from their present employee ranks. They need to hire to take their companies to the next level or acquire companies which has become an increasing trend which does not help the unemployed or underemployed. Companies rather take the risk in acquiring a company than hire because companies can brace for negative situations, they can’t brace for the unknown and the unknown factors facing businesses right now are huge- cost of health care per employee, the fin reg laws that have yet to be written. Its a mess. Congress created this and that’s why this November is so important. Just like when you build a house you want a strong foundation. The Senate and the House are two fundamental bricks of our economic foundation. The foundation is cracking and it needs to be fixed.

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  2. Lori Ann,

    Nice post. I would throw out some food for thought:

    Has the private sector “worked with” government to set the stage for all the problems we are in now?

    Free trade agreements caused our jobs to get substituted with cheaper labor pools abroad. Wall Street got out of control because they spent money in Washington to establish rules which led to us turning the housing market into a casino.

    IMHO, private corporations are 1/3 to blame, Washington is 1/3 to blame, and the citizenry is 1/3 to blame. The Checks and Balances failed us.

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    • Checks and balances got thrown out the window so long ago. Greed got us into the financial mess we are in because there were no ck’s and balances. Government is reactionary when they create policy, not proactive. They also don’t get the most talented because they don’t pay. Wall Street is always one step ahead of government. They have the money to get the talent and they are brilliant in terms of seeing what opportunities lie ahead of the policies Congress is creating. There needs to be a balance of DC knowing their boundaries, establishing policy that will foster innovation and investing in capital and people. Private sector needs to balance the importance of human capital rather than the all mighty dollar.

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  3. rob nichols

    Lori Ann, first of all, congrats on your blog picking up steam! Frankly, given your insights, and the success of your book, I’m not surprised.

    Second, I could not agree more with the concerns you, Mullen and Rickards noted regarding our national debt picture.

    Given current Congressional Budget Office projections, there is reason to conclude that, unless significant structural changes are made to balance revenues with spending, the U.S. will probably approach a point where global market sentiment regarding the nation’s fiscal condition could change abruptly for the worse.

    This would make corrective action far more urgent and painful than if such steps were taken in the near term.

    Failure to meaningfully address the nation’s fiscal circumstances raises the prospect of dangers that could hurt the U.S. economy. Principal among these is the risk that investors could demand higher risk premiums when buying U.S. government debt.

    At the current elevated debt tally, rising interest rates could quickly compound an already challenging fiscal situation. Moreover, given that Treasury bills and bonds are the basis for borrowing structures in private credit markets, the effect of burgeoning government debt on the cost of capital, economic growth and job creation would be far-reaching and decidedly negative.

    Given the probable impact of higher rates on U.S. economic prospects, another risk associated with further deterioration in the nation’s debt position is that investors may sour on dollar-denominated assets.

    The dollar’s relative value would fall, undermining Americans’ purchasing power and standard of living. A falling dollar also has dangerous implications for inflation.

    Finally, further deterioration in the nation’s debt position would probably be associated with greater financial market instability.

    The threshold beyond which investors would demand higher real yields for holding U.S. debt, or flee from dollar-denominated assets, is not obvious. This inherent uncertainty has tended to make fiscal discipline seem less urgent, or easier to postpone.

    Unless we as a nation make a strong commitment to fiscal responsibility, in the longer run we will have neither financial stability nor healthy economic growth.

    Rob

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  4. Great post. The government has a role to play, but it also needs to know when to get out of the way.

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