We won't be well till we get it back
Whose Got A Centrifuge?
The “Fair Weather-All Is Well” prognosticators are spin, spin, spinning away like a mama orb spider in a new location. In fact, if they get much more bad news to spin into good, they may need a centrifuge. The 2nd Quarter advance GDP report came out this morning only 0.10% lower than projected. However, the revised data for earlier periods presents some real cause for alarm. 1st Quarter GDP numbers were adjusted upward a full 1%. That made the 1st Quarter look pretty good. But boy, that switched the 2nd Quarter numbers from OK to bad, if not dismal. To add to the turmoil, the 2009 GDP was dropped from a -2.4% to a 2.6% loss, the 2008 was lowered from +0.4% to unchanged, and the 2007 was dropped 0.2%. All worse than we were told.
What this means is the economy has not been growing as fast (I use that term with trepidation) as claimed, and we are not in nearly as good shape as the Administration pundits claim. I question whether even this poor news will be enough to wake up the markets, and make the “rah, Rah, RAHers” understand that until the housing market quits bouncing along on the bottom (if it is even at the bottom) and the consumers leave the sidelines and start to spend, the economy is going nowhere. We need businesses to start creating jobs, but no businessperson in there right mind would go on a hiring binge, or even think about it with a future so clouded by tax increases, healthcare uncertainties, and banks that won’t lend. Why wont the banks lend? Because they don’t know what sucker punch the administration will throw at them next.
The Gains Are Not Sustainable
The gains the equity markets have been enjoying have been fueled by positive corporate earnings. Problem is those earnings have been predicated on massive cost cutting by companies. They’re reducing costs and slicing R & D budgets, preparing for the draconian increase in regulatory costs that will start hitting next year. 2010 hasn’t been fun, but 2011 just may be horrendous. Even Bernanke is pushing full recovery off till 2015 or 2016
How Long Till Recovery?
The last two years have seen America’s wealth peeled away like the skin of an onion. The constant flow of double-talk and even lies from inside the Beltway has both businesses and the consumer confused. Wealth in America was in our homes. This fact seems to have come as a surprise to the Beltway insiders and even the geniuses on Wall Street. It is going to take several years to recover from the excesses of the past few, and the government is doing everything in it’s power to push the date of full recovery farther down the time line.
IMNTBHO
Dave Skibowski
Friday, July 30, 2010
Wednesday, July 7, 2010
The worst of both worlds . . .
The Economy, apprehension because there’s indecision or indecision because of apprehension.
Everyone can agree that we need jobs so we can earn our way out of the recession. Jobs in the government, any governmental jobs, don’t do anything to help the situation, they just suck up the tax dollars which are paid by the people who have “real” jobs, those which add to the Gross Domestic Product. Only the private sector creates such jobs, and small business is the component of that sector that produces the majority of all private sector jobs
A Small Business Administration, Business FAQ, sets forth the following:
• Small businesses represent 99.7 percent of all employer firms.
• Over the past decade, small business net job creation fluctuated between 60 and 80 percent.
• Small businesses generate more than 50 percent of the nonfarm private gross domestic product (GDP).
• Two-thirds of new employer establishments survive at least two years after start-up, and 44 percent survive at least four years.
• Small businesses employ half of all private sector employees.
• Very small firms with fewer than 20 employees spend 45 percent more per employee than the largest firms to comply with federal regulations.
• Minorities own 4.1 million firms that generate $694.1 billion in revenues and employ 4.8 million workers.
• Women own 6.5 million businesses that generate $950.6 billion in revenues, and employ 7.2 million workers.
These facts, and common sense, should lead one to the conclusion that we should be doing everything possible to encourage small business. So, what’s happening?
Apprehension
Small business owners are very apprehensive about the business outlook. For small business to expand, there needs to be a reasonably stable economic outlook, or at least one that is fathomable. No one is willing to expand their business if there is a reasonable suspicion that they will not be able to meet the additional expenses, to say nothing about making a profit. There is little doubt that Small Business will be hit by significantly higher taxes and fees in 2011 and beyond, as the Obama Administration struggles under the oppressive weight of the newly expanded Budget Deficit which is greatly adding to the girth of the, morbidly obese, American Debt.
Indecision
The malaise of indecision hangs over the American economy like the cloud from the Eyjafjallajökull volcano hung over Europe. No one knowing how bad it would get and no one, seemingly, able to do anything about it. The only body with the potential ability to lift the gloom hanging over the American economy is the U. S. Congress. They have the power, but obviously not the will to set the economy back on the track and get it moving again toward prosperity. There is no drive, and in reality, no ability in the members of today’s legislature to act in any bipartisan manner; no matter the dire straights of our once great Republic. A simple act, such as reinstating the Bush Administration’s business tax cuts might be all that is needed to kick start the economic engine. There are other simple actions which could be taken, but they won’t happen as long as those inside the Beltway continue derailing any and all things which might keep the economic train rolling down the track.
Until apprehension turns to enthusiasm and indecision becomes decisiveness, the light at the end of the tunnel is the Chinese Economic Express screaming directly at US.
Everyone can agree that we need jobs so we can earn our way out of the recession. Jobs in the government, any governmental jobs, don’t do anything to help the situation, they just suck up the tax dollars which are paid by the people who have “real” jobs, those which add to the Gross Domestic Product. Only the private sector creates such jobs, and small business is the component of that sector that produces the majority of all private sector jobs
A Small Business Administration, Business FAQ, sets forth the following:
• Small businesses represent 99.7 percent of all employer firms.
• Over the past decade, small business net job creation fluctuated between 60 and 80 percent.
• Small businesses generate more than 50 percent of the nonfarm private gross domestic product (GDP).
• Two-thirds of new employer establishments survive at least two years after start-up, and 44 percent survive at least four years.
• Small businesses employ half of all private sector employees.
• Very small firms with fewer than 20 employees spend 45 percent more per employee than the largest firms to comply with federal regulations.
• Minorities own 4.1 million firms that generate $694.1 billion in revenues and employ 4.8 million workers.
• Women own 6.5 million businesses that generate $950.6 billion in revenues, and employ 7.2 million workers.
These facts, and common sense, should lead one to the conclusion that we should be doing everything possible to encourage small business. So, what’s happening?
Apprehension
Small business owners are very apprehensive about the business outlook. For small business to expand, there needs to be a reasonably stable economic outlook, or at least one that is fathomable. No one is willing to expand their business if there is a reasonable suspicion that they will not be able to meet the additional expenses, to say nothing about making a profit. There is little doubt that Small Business will be hit by significantly higher taxes and fees in 2011 and beyond, as the Obama Administration struggles under the oppressive weight of the newly expanded Budget Deficit which is greatly adding to the girth of the, morbidly obese, American Debt.
Indecision
The malaise of indecision hangs over the American economy like the cloud from the Eyjafjallajökull volcano hung over Europe. No one knowing how bad it would get and no one, seemingly, able to do anything about it. The only body with the potential ability to lift the gloom hanging over the American economy is the U. S. Congress. They have the power, but obviously not the will to set the economy back on the track and get it moving again toward prosperity. There is no drive, and in reality, no ability in the members of today’s legislature to act in any bipartisan manner; no matter the dire straights of our once great Republic. A simple act, such as reinstating the Bush Administration’s business tax cuts might be all that is needed to kick start the economic engine. There are other simple actions which could be taken, but they won’t happen as long as those inside the Beltway continue derailing any and all things which might keep the economic train rolling down the track.
Until apprehension turns to enthusiasm and indecision becomes decisiveness, the light at the end of the tunnel is the Chinese Economic Express screaming directly at US.
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