Home » Money » It’s All Good (except the bad stuff)

It’s All Good (except the bad stuff)

The economy added 118k jobs in November, if you go by the ADP report, or 146k jobs if you go by the noisier official number.  Let’s call it 118k because we’ve consistently touted the value of the ADP report.  By any measure, it was a lot more than was expected, given the landfall of hurricane Sandy at the end of October.

Now that the election is over, there is growing optimism that the economy is indeed … growing.  It’s not a lot, but it’s there.  And that’s where we stand as we move into the next phase of the political season – the part defined by getting down to work and making use of the mandate given by voters.  That mandate is clearly defined by a divided Congress and a Democratic President who are at odds over how to either avoid the Fiscal Cliff or, perhaps, go over it.

Even if the election didn’t tell us much, the economy is.  We’d be wise to listen to it.

optimismThere is little doubt that economic optimism is on the rise.  This Christmas season, a lazy way of gauging economic health, is up as much as 26% over last year.  We’ve added over 1.2M jobs since then, making a decent dent in unemployment, and consumer surveys are improving.  What could possibly mess things up?

The answer, of course, comes from government – where uncertainty over the Fiscal Cliff and its potential impact has been weighing heavily on the stock market.  Make no mistake, the economy is growing but fragile right now, and even a small mis-step could reverse what has been just enough strength for those of us who follow it to predict an end to the Depression by 2017.

Those of you who follow Barataria will know that we have been optimistic for nearly a year now.  There has been a gradual up-tick that started in the dark days of 2010 and started to gather steam in 2011.  This was the year when it became clear that the worst was over – and it was good enough to garner Barack Obama a solid re-election win.

That’s where we stand now.  The stakes are quite high for 2013 because this should be the year in which the growth sinks in and real progress is made.  You can see it in the latest job reports.  Even a hurricane didn’t stop employment from expanding in a reasonably dramatic way as we enter the bizzy holiday season.

The only threat that remains is political instability, coming either from Europe or from our own congressional crises.  You may want to add tax increases at the state level if you want to be critical of Barataria’s recent analysis of Minnesota (and that would be fair).  Those of you who think there is nothing to lose as we enter the negotiations should take stock of how well things are going right now.

And that’s the real problem for government as we know it.  We have yet to talk about what the next economy is going to look like, let alone how we will restructure government to meet whatever challenges lie ahead.  Just as we spend a solid $100B or more on military bases in Europe, government is always fighting the last war.  The fight over the budget has little to do with the economy that is growing around it other than to be a potential threat.

As Alan Simpson has said, “The deficit is so big that we can’t tax our way out of it, we can’t cut our way out of it, and we can’t grow our way out of it.  We have to do a combination of all three.”  Simpson, the Wyoming version of Solomon for our time, is exactly right.  But the budgets that are being considered generally trade-off cuts and taxes in equal measure.  Growth?  We’re just hoping that continues pretty much as it has been.  Thanks!

There are other ways, of course.  Infastructure development is the best way to encourage growth, as are a number of other ways of promoting the restructuring to the next economy that we have trouble defining even now.  If we really paid attention to Sen. Simpson, we would include what we can to promote what is already starting to happen around us – solid, reasonably growth in economic activity and jobs.

Then again, right now the best thing that government can do is not mess it up.  That’s about all any of us are really hoping for.  But there is a lot to mess up if they do this wrong.  The economy is indeed rebounding very nicely.  Let’s avoid that “Fiscal Cliff”, shall we?

10 thoughts on “It’s All Good (except the bad stuff)

  1. “Growing optimism”

    Maybe among some people.

    What would you say to the Hispanic American, the African American and the Asian American who is unemployed?

    “Fiscal cliff”

    Your argument for avoding the fiscal cliff is that that is the responsible thing to do.

    –Senator Patty Murray had suggested it would be okay to go over the fiscal cliff.

    –Yesterday Rep. Pelosi said changes to medicare should not be considered.
    She repeated words of Paul Krugman and said that medicare changes don’t save a lot of money and entitlement cuts are just a trophy for Republicans.


    “I am not going to budge on inflation.”

    I had a comment many months ago saying that political philosophies of Lyndon Johnson vs. Ronald Reagan would help determine the votes of some the electorate. You responded you don’t think people think in liberal or conservative terms. At another point you claimed not to know the what liberalism is.

    It is difficult to bridge irrreconcilable differences. It is time Democrats and Republicans ask for a divorce from each other. There is a time for love but also a time for bitterness and disagreement and endless fighting.

    • “Growing optimism” should make it clear that optimism is not already universal, yes. There is a lot of hurt out there.
      And, as I tried to make very clear, there are irresponsible people on both “sides” – and quite a few responsible people in both parties, too. The debate right now is far, far less along the supposed party lines – it’s developing as pragmatists versus ideologues.
      And yes, there is a time to fight. A really good fight can be a wonderful thing, as I have said many times. A budget is a reflection of values, and without consensus on our values we will continue to not have a budget. That will take a pretty solid fight to get done.

  2. If things are getting better it’s not sinking in too quickly, that’s for sure. I see what you mean in the numbers and you were right that it was good enough to get Obama re-elected, but it is still very weak. Maybe that’s your point and if it is I agree.

    • Yes, that was my point. 🙂 2013 is a very important year because that is when people should start believing in the positive momentum – and the fear/hope gauge should swing over to the bullish side. (crossies!)

    • I think that pragmatists will win, too, but it’s coming way closer to the wire than I’m comfortable with. Perhaps this experience will build some friendships and alliances that will be important later.

  3. There is still a big difference between Republicans and Democrats. You can’t ignore the most important part of the fight just because its mostly behind closed doors.

    • I’m not saying there isn’t a difference – of course there is! But what’s new is always more interesting to me, especially if it looks like a developing trend that will be around for a while. A pragmatic centrist alliance seems like a longshot at best, but I’ll keep looking for it just in case.

  4. Pingback: Nothing Stupid. Right? | Barataria – The work of Erik Hare

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