Our shaky economy appears to be grinding to a halt — not that we have ever truly recovered from the devastating recession of a few years ago.
Although the economic recession ended in 2009, there will be a new normal with minimal growth for years if not decades to come. As a CNBC story once eloquently put it: “This is not what recovery is supposed to look like.”
The fragile U.S. economy gained some steam in 2014, but the most recent numbers released last week showed gross domestic product grew at an anemic 0.2 percent. The fact that the economy is growing instead of shrinking may be the sole bright spot in a painfully slow recovery.
Despite signs of life in the final quarters of 2014 — employers added an average of 260,000 jobs every month during the final nine months of the year, and unemployment continued to fall. Many of the numbers are sobering. Many Americans simply haven’t reaped the benefits of the limited recovery.
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Wage growth was stagnant in 2014, and the unemployment rate for Americans in their 20s continues to be in double digits. It will take years at the current rate of job growth to recapture the jobs lost to the recession, and even longer to grow enough to account for the rising population.
Financial analysts suggest it will take up to a decade to absorb excess commercial vacancies. I know I write about this topic frequently. Call it my midnight ride.
I’m no Paul Revere. But when he mounted his horse to ride from Boston to Lexington on April 18-19, 1775, he did so to warn our leaders that the British were coming. That’s not the alert we need today, but we do need to be on alert.
We need to be taking measures to ensure our survival as the best and brightest hope for freedom and prosperity the world has ever known. We need to protect our grandchildren and great-grandchildren from the crippling debt we’re piling on them.
And to do that, we need to take off our rose-colored glasses and truly see the world we’re living in. It’s not sunshine, ponies and rainbows. We’re not going to suddenly turn the corner and come roaring back to where we left off before our economy started circling the drain. The new normal will be meticulous and slow growth. And if it’s to occur with any certainty, it will require a sound fiscal policy.
Unfortunately, our political leaders appear to have some sort of rose-colored Lasik that doesn’t allow them to see the economic landscape as it really is. Look no further than Topeka, where some officials theorize a gaping budget hole can be partially filled by raising cigarette taxes.
Gov. Sam Brownback has proposed raising the tax on cigarettes from 79 cents per pack to $2.29 per pack to fill a $422 million budget hole. First, many legislators, mercifully have promised not to raise taxes, and adding taxes to cigarettes is, in fact, a tax increase.
More importantly, it’s a laughable solution to a serious problem. The smokers of Johnson County aren’t going to just suck it up. The nicotine addicts will simply run across the state line to Missouri. This will in turn lower tax revenues elsewhere. Those smokers will likely fuel up, buy sodas and do other shopping while over the state line, further limiting Kansas sales tax revenues.
No. The solution to the budget hole is cutting spending, pure and simple.
Almost weekly, I attend a meeting of some local governing body, and they talk as if sunny days are right around the corner. Public officials talk as if they can just hold on another year or two, the economy will come roaring back and we can build the next park, hire the next three dozen employees and grant massive raises to everyone.
For those in power, I have bad news: It’s not going to work that way this time. The federal and state balance sheets are off, and as evidenced by recent economic growth numbers, taxpayers don’t have extra money to cover the deficit.
We shouldn’t be buying it. And they shouldn’t be selling. That’s not the world we live in right now.
Everyone agrees that fuel in the private sector is what will send the economy into overdrive again. But every dollar spent in the public sector is a dollar taken from the private sector.
There is no easy fix for the mess we’re in. Viewing the economic realities through clear lenses is a good start.
Freelance columnist Danedri Herbert writes in this space once a month.