Sunday, December 4, 2016

ECONOMIC REALITY

The media provided an overly generous outlook on the American economy, heading into the transition of power. Improvements in employment statistics and housing sectors of certain markets fuels the positive outlook. While the economy is much improved, there is still much more work ahead and corrections needed. 

Many economic statistics, such as unemployment, point to an improved economy. There is no question the economy is in much better shape than 2009. But, looking at statistics alone doesn't provide a clear picture. While the 4.6% unemployment rate appears normal, employment overall is not sufficient, given less proportions of people in the United States are working. The unemployment rate should be considered along with workforce participation to get a broader picture of all Americans seeking work, regardless of expiration of benefits.


Image result for Workforce participation
Based on workforce participation, job creation is not keeping up pace with population changes. Ideally, a high workforce participation rate and normal unemployment rate provides confidence that policies work and the economy is healthy. Currently, many people, whose federal and state benefits expired, are still out of work. Furthermore, many college graduates leave campus to return home without employment. There are still challenges in employment that need to be resolved, but will be missed with our narrow focus on one metric.


Image result for Manufacturing
Another aspect to consider is how well the economy projects into the future and fares in a competing global economy. Fortunately, our economy appears positive, compared to the current condition of many industrialized and emerging markets. But, under the current tax and regulatory environment, our economy is vulnerable, as it is cost prohibitive for many industries that many of our communities rely on. Moreover, the condition favor multinational corporations, who can leverage scale to offset diminishing profit margins, which harms small and mid size businesses.


Image result for coal workersThe economy has come along way, but more needs to be done. Good paying jobs need to be created and economic diversity needs to return. Policymakers need to put America on a path of continuing to be the world's premier economy and market. That requires making our markets attractive for investments, innovation, and new ventures.