So, employment is ticking up again in January. That's nice. But forgive me if I don't break out the champagne just yet. You see, we've seen this before. Twice now.
At the end of 2009 and the beginning of 2010, the economy began looking up, jobs began climbing and unemployment began falling. Then around March or April the economy began losing steam. By summer people were talking about a double dip. By August or September, it looked all but inevitable.
But at the end of 2010 and the beginning of 2011, the economy began looking up, jobs began climbing and unemployment began falling. Then around March or April the economy began losing steam. By summer people were talking about a double dip. By August or September, it looked all but inevitable.
But at the end of 2011 and the beginning of 2012, the economy began looking up, jobs began climbing and unemployment began falling. But once again economists doubt that this looks sustainable. The main reason for their doubts is the recovery of the last few months has been based more on inventory growth than actual orders. Once inventories are adequately restocked, the momentum for recovery will end. That means expect the economy to begin losing steam by March or April. Why, by summer people may be talking about a double dip. But don't worry, by late 2012 and the beginning of 2013, I'm sure things will get better.
In all seriousness, what is going on? I don't know, but I have heard at least one plausible suggestion (alas, can't find link). Someone suggested that what may be happening is that the government is failing to properly smooth out seasonable factors. Given the marked seasonality of the economy we have seen thus far, I am inclined to suspect this is what is happening.
Of course, I hope I'm wrong.
Does anyone else see a parallel between today and the the "Clinton" presidency. Clinton realized that he needed to balance the budget and so he took the moderate road and both increased taxes and reduced spending. By the end of his presidency the USA was running a balanced budget (Actually a surplus). We had high unemployment back then and Clinton's efforts worked. Americans went back to work and the increased revenues of a strong economy solved our deficit problems.
ReplyDeleteSo let's have another Ground Hog Day (One of my very favorite movies). Let us increase Taxes to the Clinton Presidency Levels and reduce spending.
Finally, I believe that SS is unsustainable in it's current form. I believe that SS as well as all governmental and private retirement funds should be self sustaining without the influx of "new" money. That would mean that SS and indeed all retirements would be based on the money that was in the fund. If the fund can only pay out 50%, then so be it; pay out 50%. In other words, the amount of your retirement will not be a guaranteed amount; it will be what it will be.
This would not be simple. We would have to phase into this over the next 20 years.