Optimist

While I may not show my emotions when pleasantly surprised or shockingly disappointed, I like to think of myself as an optimist. When thinking or speaking of our future economic outlook I make sure to not sound too gloomy or excited, (at least that is my objective whether successful or not.) This task may seem problematic as we seem to hear economists confidently predict differing views; from a recovering economy to another worsening recession. I will, in layman’s terms attempt to summarize my consistent viewpoints.

The Good: This is a country founded by our great forefathers that is second to none and has the most sound foundational principles ever. We still value freedom and the rights of individuals to pursue happiness and the ability to achieve the American Dream. Indeed, we are the blueprint for other countries who value freedom and economic growth. The Federal Reserve and Government are doing their best at attempting to stimulate the economy and have (so far) prevented a financial economic collapse or relapse. We have, (so far) a proven history that we can solve any problem thrown our way, economic or otherwise. We are a resilient people.

The Bad: We have moved from a manufacturing based economy to a service oriented one. As a result, we tend to spend too much and save too little. We appear to be moving, (ever so slightly or rapidly to some) away from the principles expressed previously. Input prices are going up, which will lead to higher output prices sooner or later. While consumers are, or will soon, experience these higher prices the CPI index or COLA adjustments are seriously hiding (not keeping up) with those higher costs. Unemployment remains at worrying high levels.

The Ugly: In attempting to stimulate the consumer oriented economy our Federal Reserve has devalued our dollar and kept interest rates far too low for far too long. This devaluing of the dollar is causing the higher input costs mentioned earlier. Debt levels are moving through the roof not only nationally but some states, (such as our own) are in serious fiscal crisis mode. Our Government is not willing to cut spending, exacerbating the debt problem. How will we react to another double dip recession? If we continue the current path of debt spending, we will create an ever worsening problem. If forced to fight an inflationary problem down the road, the drastic rise in interest rates will seriously hurt any attempted economic recovery. The dollar may not be the world’s reserve currency in the long run, (although there is no single fiat currency capable of currently replacing it.)

While I greatly respect the ingenuity, intelligence, and grittiness of the American people we are digging ourselves a pretty serious hole. Many things can change quickly and our economy is, and always has been, resilient. Do things truly look bleakest before the dawn? Are we somewhat gun-shy of being overly optimistic after the financial debacle? Are we too distracted by reality television shows and super bowls to pay attention? Should we hope for the best and prepare for the worst? If history is any guide, the worst case in our country’s history, has never actually materialized! Have we been lucky, or is that a testament to the great strength of our country? I prefer the latter but will attempt to prepare for the former.