Economics – Confusing As Ever – RantAWeek
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Economics – Confusing As Ever

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Posted by Tyler Miksanek on June 10, 2013 at 3:00 am

Lately, there have been two main viewpoints regarding the American economy, and they are pretty much polar opposites.

The first viewpoint is the optimistic way of looking at things.  Proponents of this glass-half-full belief can cite financial markets, which have rebounded from 2009 lows and have recently hit new all-time record highs.  Moreover, the U.S. economy has consistently added jobs each and every month for the last two years, showing that the days of rapid job losses appear to be over.  The unemployment rate has dropped from a scary 10% to a much more manageable 7.6%.  And even though the current unemployment rate is higher is not as low as it could ideally be, America’s 7.6% unemployment is still much better than the eurozone’s 12.2%.

However, all this good news avoids the less-than-pleasing economic indicators that the pessimists focus on.  Even though the U.S. economy has been gaining jobs, the rather slow rate of job creation means that the unemployment rate is likely to remain stubbornly high.  For example, the U.S. gained 175,000 jobs in May, but that did not stop the unemployment rate from actually increasing by .1%.  Not only are new workers entering the workforce, which is why the number of available jobs must grow just to keep a relatively stable level of unemployment, but the U.S. still faces a huge problem with both discouraged workers and workers who are stuck in low paying or part time jobs.  Worse, government cutbacks from the sequester combined with ineffective legislation from Washington makes our economic future murky at best.

There’s information to support both fields of view, but it seems like many people are quick to align themselves with one side or the other.  The one viewpoint that gets lost in the optimist versus pessimist battle is also the most sensible one – a realistic take of all forces affecting the U.S. economy.  This realist take on the economy celebrates the economic gains of the last few years while also recognizing the corresponding weaknesses of our current economic situation.

Would markets have rallied to record highs if the economy still had an imminent threat of a precipitous drop into a double-dip recession?  Should a healthy economy have 7.6% unemployment even after 4 years of fairly consistent GDP growth?  Both of these questions deserve an emphatic ‘no’ as an answer, showing that things are neither as dire nor as cheery as many are apt to argue.

Politicians and pundits need to take a more moderate stance on American economic progress.  It’s hard to plan the right path forward if you disagree on your current position.  Instead of bickering about what the current economic facts mean for our economy, the U.S. must accept its economic strengths along with its weaknesses, and use this realist viewpoint to help spur the economy into a truly healthy state so no one can disagree.

Filed under Domestic, Economy
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