Economics Anonymous
If you haven’t noticed, I’m always interested in the future. The more I know about what is going on, the better I idea I have about what might happen. One piece of information might make the difference. I think such information should be available to all. In Silicon Valley, it seems like all the technology is about creating, storing and distributing information to the public. An informed citizenry can make better decisions than an ignorant mob. I think that is why the First Amendment is a great idea. When I show up at an event, I make no secret of who I am or what I am doing there. I am literally wearing a sign around my neck that says PRESS. I’m proud of to be part of the democratic process.
Regular readers know I listen to economists and business analysts. A cab driver can tell you business is lousy, an economist can tell you why. The ones around here are incredibly tuned into what is going on, but I always want to hear another opinion. When I heard an economist from back east was coming out to give a report at meeting open to the public, I had to go. His company wouldn’t let him speak on the record, so here is what I got from my notes. Most of it was from public sources but you might find it useful.
The economist talked about the next direction for the US and world economy. The economy peaked in December 2007 and may have hit bottom in the spring of 2009. It was the largest peak to trough since the Great Depression. Home prices and car sales have declined at rates not seen in more than fifty years. Unemployment is not rising as fast as it was a year ago but hiring has yet to increase. The stock market is rebounding from a low in March of about 6500 to near 10,000. The recovery is expected to be weaker than the historical norm.
The automotive industry and energy costs have an interesting affect on the economy. He thinks that the spike in gasoline prices in the summer of 2009 may have been a tipping point for consumers. They had to decide between filling their gas tanks and buying consumer goods. After the crash, the Cash For Clunkers Program drove auto sales, but GM and Chrysler had shut down many plants and had little inventory. They could not benefit from the sudden demand like Ford or Toyota. Companies need to make sure they are prepared to take advantage a potential recovery as much as a downturn.
Globally the economy varies by region. Europe is showing signs of recovering, Brazil had a short hiccup but seems okay and Asia shows signs of growth. For a sustained recovery, the Federal Reserve must time its decisions carefully over the next year. Consistent government policies on interest rates, health care, the environment and green energy can reduce the effects of an uncertain future.
Apparently the insurance lobbyists’ stalling tactics to delay health care reform are creating so much uncertainty that some companies are delaying hiring people. They don’t know how to calculate benefits and compensation.The moment that is resolved, companies can plan a recovery.
There are other companies starved for capital and can’t hire anyone. They know the banks have money, they just aren’t loaning it out.
Some people still think their home prices are going to return to peak levels. That may never happen in their lifetimes.
On the bright side, lots of entrepreneurs and investors are moving ahead with green or clean tech. They intend to drive on the sunny side of the street.
Copyright 2009 DJ Cline All rights reserved.
Posted by dj in Blumbers, Commentary []