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ECONOMIC ANALYSIS:

Thinking About Recovery In The New Year

by Fred Cederholm

A turn-around isn’t going to happen until we see a resurgence of domestic jobs that pay a living wage and offer a full smorgasbord of benefits.

I’ve been thinking about Advent. Actually I’ve been thinking about beginnings, the US economy, Black Friday, Computer Monday, sales, jobs, Afghanistan, health care, hope and expectations. At my home church of St. Johns Lutheran in Creston, we just celebrated the first Sunday in Advent. The first of four holiday candles was lit, and the church year officially began.

As I listened to Pastor Larson’s sermon I couldn’t help but think about a much wider meaning to the holiday season this year. Advent means “coming” (as in second coming) and beginnings. Personally I look forward to 2010 as a year of beginning life with a newly constructed heart. The MRSA infection took me off my feet for a full two months. My body atrophied. I am reprogramming my body to do all the things I had taken for granted, and progress is measured month by month and week by week—NOT in terms of day by day. I’ll get there, but it is going to take awhile.

I wish I could tell you that the US and world economies would be fully recovered in 6 to 9 months. That just isn’t going to happen despite all the smiles and spin we are hearing from our political leaders in Washington D.C. and from Statehouses across America. Our systems are broken (or are breaking down) before our eyes, and the quick fixes of historical “solutions” to past recessions and depressions just aren’t going to cut it this time. In the past we have spent our way to recovery. People then had jobs, or got jobs, that paid a living wage; debt levels were considerable lower; and stimulating the economy was a matter of getting the people out to spend and to consume. This time it is different.

We are now “nose deep” in a “get out there and spend” campaign for Christmas 2009. Last Friday began the make-or-break holiday shopping frenzy. One fifth of a year's sales are made between that Friday and New Year's Day. The figures from Friday are only now coming in—meaning the business community did not get what it desired in terms of shoppers, or spending. This could be terminal for many local shops after the first of next year. Not to worry... the wunderkinds of advertising and marketing have conjured up a new day for redemption if Black Friday didn’t generate the necessary sales. This is “Computer Monday,” which this year falls on November 30th. On this latest addition to the holiday shopping season, gaggles of shoppers stay home and huddle around the family computer(s) to make the “all-salvation” purchases. I will be on-line most of the day, but to research—not to shop. Besides... I like to visit stores. I may use a credit card, but I pay off the balance in full every month.

A turn-around isn’t going to happen until we see a resurgence of domestic jobs that pay a living wage and offer a full smorgasbord of benefits. Every item I‘ve seen (or picked up) was made elsewhere. Such purchases may help China, Mexico, Honduras, Belize, or Korea; but they will do squat in helping the American worker. We have been losing a net 250,000 full time jobs a month since early in the summer of 2008. I predict that such losses will continue for at least 18 more months before we start to see the beginnings of any turnaround. Unless US households are earning decent money, Uncle $ugar cannot expect shoppers to execute a spending recovery. (The next jobs report is due out this coming Friday. The figures should prove quite interesting.)

Any good news we've seen on the jobs front has come from our expanded warfare or the healthcare industry. Many high school graduates have joined the military because they just can’t find a local job, or can’t afford to go to college. Tuesday night we will get the Obama decision on Afghanistan. Expect him to authorize an additional 30,000 to the land of poppies and heroin. This will bring our troops there to just over 100,000 young service men and women. Each will cost US/us a reported ONE MILLION DOLLARS per year. The costs of related support contracts in the private sector are astronomical and will make up a significant chunk of our GDP in 2009 and 2010. I mean, Uncle $ugar is paying an estimated $600 a gallon for fuel there. War may be good for select segments of our economy, but it is killing US/us with a burden of debt which defies all logic and will never be repaid!

Pastor Larson talked of Advent as a time of hope and expectations. I hope and expect to regain my faculties and use thereof in 2010. I wish and pray for the same for the US and world economies. Most especially, I wish us all Peace.

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.


Copyright 2009 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.




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This story was published on November 30, 2009.