Where Is The Economy Heading? - Is this the new norm until 2024?
In observence of the holiday and because I am another commitment, there will be no blog post on July 4th, 2022. I wish everyone a safe, healthy, and Happy Indepence Day.
INTRODUCTION:
First, let me say that I am not an economist and have no formal education in economics other than the business courses I took in college. However, I am no different than you. I live each day and have to pay bills and deal with the rising costs of food, gas, utilities, and other commodities.
Also, I believe what is economically occurring in our country is that you do not need to have a degree to figure out that costs are rising at an alarming rate. Worse, there seems to be, nor does our President give us any hope, nor is he taking steps to lower the prices. The housing market is out of control. Inflation is at an over 40-year high. You all know this. You all see it on the news. The question is, where is it going?
You don't need a degree in rocket science to know the only way to stop and reverse inflation is to raise interest rates. Once interest rates reach a level that no one can afford to buy a home because they cannot afford the payments, the housing prices would start to drop to a more reasonable level. Or, once your interest rate gets so high on your credit cards, you can't make the payments, you HOPEFULLY stop spending. The process downfall is that it hurts business, and people can lose jobs. Often times to solve one problem, another is created.
WHAT REALLY IS THE PROBLEM?
It saddens me to say this, but there is an underlying problem. One that did not exist up until 2020. We were enjoying reasonable gas prices, energy independence, reasonable housing prices, and a profitable stock market. That has all disappeared out of spite and revenge. This form of spite and revenge only falls on the shoulders of the citizens of this country. In the end, we pay the price. Government cannot spend without tax money from our wages and what we purchase. Every state that has experienced financial problems was always due to fiscal mismanagement of funds and overspending. As a country, it is no different.
The problem always sits in the lap of the leaders. Where do you turn when our leaders are NOT willing to do anything about the problem, and yes, some of these problems can be quickly fixed. You are helpless and feel helpless. SHould it bet that way? Should personal political agendas rule what is best for the people or a country?
The almighty dollar is used for the wrong purpose. People have to cut back on their spending, go without a vacation, or maybe take their children out of dance school or other activities to pay their bills. However, government NEVER takes from itself. They have their business lunches at our expense, travel at our expense, waste money on things that are not needed at the time at our expense, and are not addressing the immediate problems. Do they actually believe we will just forget about it? Ignore it, and it will go away?
Our President has come out and told us on national TV IT IS GOING TO GET WORSE. Why?
Because he is determined on a new green deal by a specific time frame. We are nowhere near close to being able to sustain our energy needs with electricity alone. I do believe we need to address climate control, however, in reasonable stages. Most people cannot afford to replace their broken down cars, yet alone buy a new electric vehicle. What about taking money from American businesses and dealing with China to produce solar panels? When our own government does not have our backs, we are right up against the wall. That, my friends, is our economy as it stands today. The value of our dollar is at a historical low. Meaning your buying power becomes less.
CAN IT BE FIXED?
Maybe I am an optimist, but I believe when the proper steps are taken, most things can be fixed. However, are the proper steps being taken? Better still, will they be taken. Many in the present administrations appointees hold positions they are NOT qualified or experienced in holding. They, in various interviews, are coming forward and saying they underestimated the problem and made mistakes. Anyone can make mistakes, and they are acceptable when the steps are taken to correct them. That is what is not happening to our economy. The steps to fix them are not taking place. Actually, they are making it worse.
We have a pipeline that was stopped. If finished, that would have avoided the oil pricing that we are experiencing today. IF it needed to be phased out in time as we developed more reliable sources of sustainable energy, fine. That would make sense. If the United States is the only country addressing climate control, it won't work. The oil produced in the middle east and Russia contributes to some of the direst air in the world. Dropping to our knees in the Middle East to buy oil from them will put us back years. We will be dependent on them once again. This allows them to hold some of the cards to our future, as China is also attempting to do.
If we allow Iran and North Korea to have nuclear weapons, in that case, it is estimated they will have missiles capable of direct nuclear strikes to the continental United States in four to six years. What happened to our national security? Where does that concern come into play when we allow known terrorist nations to have this capability.
All of this affects our economy and global standing as both a strong nation and a strong economic nation. The following chart is not an official chart, but it represents that everything is on the rise. The most accurate part is that we went from a higher cost level to a lower one, and now we are heading upwards to the highest cost levels in over 40-years rapidly. It is a run-away train.
When does it end, and when will it end. How far can you stretch your dollar? I said earlier that I am not an economist, and neither are most of you. However, we do not need to be to see what is happening. We are living it each day. To see where we came from and where we are headed. The direction is not promising. How many of you remember, not that many years ago, when we were rationing gas. Filling our gas tanks on odd or even days. Only being able to get ten gallons at a time. But, it wasn't that long ago, and those days appear that they could be coming back should we hit a recession. A recession which most economists say will occur if something doesn't change. Whether it is this year or next. A recession is NEVER good.
Our GDP, and for most of you that do not know what that is, stands for Gross domestic product (GDP). This is the standard measure of the value added created through the production of goods and services in a country during a certain period. As such, it also measures the income earned from that production, or the total amount spent on final goods and services (less imports). Rising GDP means more jobs are likely to be created, and workers are more likely to get better pay raises. If GDP is falling, then the economy is shrinking - bad news for businesses and workers. If GDP falls for two quarters in a row, that is known as a recession, which can mean pay freezes and lost jobs. Our GDP is moving in the right direction.
Yes, the pandemic placed us in the shortest recession in history which we recovered quickly, and our GDP was healthy. Not so much now. Read this article.
HOW DO YOU SURVIVE IT?
That is the number one question. Like in all bad economic times, you save as much as you can, only buy what you need, and try to reduce your debt as much as possible. There are no other answers to this question. At election time is when we have the most powerful tool to change the course of our future. The power to vote. Electing those to office that will fix the problem. I do not believe in using names such as Trump, Biden, etc. I look at the period of time when an individual led our country. Is their name really relevant? Is the party they are affiliated actually relevant? Or, is it what they accomplished or did not accomplish that matters?
Most reasonable people will agree that our present administration has caused more harm than good. But, people can debate for years why, and frankly, does it matter? The damage is done. What matters is repairing it. Everyone will have different views and opinions whether we agree or disagree with them. However, they have the right to their opinion. But when things aren't working and getting worse, that is the accurate tale of the truth. Because opinions are just that. Opinions. Facts and reality that matter because those are the things you need to know to survive.
No one wins in a recession. Everyone loses. Everyone's life changes. Medical issues go on the rise. Suicides increase, anxiety, depression, divorce rates, and more increase. These are NOT mentally healthy times. There is a big difference between being progressive in your thinking and being stupid. We have all seen the videos on all news channels regarding the crime and violence taking over the streets in many major cities.
I read an article a week or so about how many people were leaving southern California to move to Mexico. Those people are flocking through our open borders, and our people are moving there. Something about that doesn't make sense to me. A vicious cycle that does not seem to want to end. At least many people in certain cities of California are finally taking action and getting some of these intelligent prosecutors recalled. Once again, there is a difference between progressive thinking and stupid thinking.
IN CLOSING:
The purpose of the post was to give you something to think about. The issues that are facing us as a nation and a society in layman's terms. Did I tell you anything you didn't already know? Probably not. However, so many have the thought process of just ignoring it and hoping it will get better.
If you stand on the train tracks in front of an oncoming train and ignore that it will hit you, you will find yourself run over by the train. Ignoring a problem does NOT make it go away. Educating yourself about the situation and figuring out what you need to do to get through will make you survive it. Lastly, I will repeat what I always say. We have the ultimate power by having the right to vote. That is when you have the most say to institute change. God bless you, and God bless America.
Stay safe, be happy, and be well,
Caesar Rondina
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