Thursday, April 20, 2006

It's the Economy

It's the economy that the media does not want to talk about. That is why poll numbers indicate that a majority of Americans consider the economy to be fair to poor when, in fact, economic indicators look really good. The stock market is at a 6 year high, interest rates remain at record lows, despite the much hyped increases over the past couple of years. Unemployment is lower than the average for the past 30 years. More Americans and a higher percentage of the population now own their own homes than ever before. So why do most Americans think the economy is not good?

That's right, the media likes to play on the fears of the people. They like to paint a picture that makes people think things are bad because they have political agendas. Anything is fair game for the spinmeisters, including portraying a good economy as bad. What has been the focus of media reports on the economy? It has been high gas prices, rising interest rates, outsourcing and lay-offs at GM.

Gas prices are high and I don't like it, but the fact that the economy is booming in spite of the high cost of gas is another indicator of its strength. Besides, the percentage of income that Americans spend on gas is virtually unchanged because incomes have increased as well. This is just one more sign of a strong economy.

Interest rates have gone up periodically to control inflation, but remain incredibly low. Interest rates are lower now than in the much heralded economic "boom" of the nineties, when apparently everybody was being fanned with palms and spent their days eating grapes. Everybody but me, I guess, my industry was hit by a wave of layoffs and benefits cuts in 1999.

Outsourcing has been another big item in the news. This is always a good political tool, nobody likes jobs and money going overseas. Nobody likes the economic security issues of having a labor force in a far corner of the world. Here is the reality; outsourcing has been happening for decades. The first round came from when Americans became more focused on the service industry and less on manufacturing. Now some service industry jobs are going overseas. This is portrayed as lost jobs by the media. The reality is that, yes, some people lose their jobs but they are typically finding new work quickly, as represented by the low unemployment figures.

Layoffs at GM topped the news recently. This is certainly a big deal to those GM employees but not really a barometer of the economy. Regardless of the economic conditions at any point in time, there will always be businesses that are in trouble and layoffs will occur. Focusing on one business or even one industry that is in trouble is like labeling one case of measles an epidemic. Good for propaganda to scare you into thinking the economy is in the toilet, but irrelevant in the bigger picture.

Here is the real kicker. I have already mentioned that the economy's ability to withstand high gas prices reflects its good health. We must also consider that we are involved in a very costly war and that we had a major port city wiped out by a storm only 8 months ago. Any of these could be harmful to a weak economy, yet the economy has weathered the storm, no pun intended.

While there are some who have fallen on hard times, and things are not perfect, economically things are very good in the USA.

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