Thursday, February 2, 2017

Economic Forecast for 2017 and Beyond

Regular readers know that these brief essays often have something to say about economic affairs.  During the Obama administration, they were frequently in response to complaints about the downhill trajectory of the economy in the face of solid growth, or the size of the debt without relating it to the size of the economy, or any number of misconceptions that allowed significant numbers of people to assume the worst when things were looking pretty good and getting better.  What is the federal budget and how does it work?  What is the difference between deficit and debt?  Why are such big numbers not necessarily scary?  Why is consumer spending important but consumerism is bad?  What role does the Federal Reserve Bank play?  Things like that.  Now and then I wrote on the absurdity of the business community complaining that economic uncertainty was keeping them from investing more, as they retained trillions and boosted stock value through buybacks.

To the latter point, uncertainty in the market place is what business thrives on.  Without some degree of uncertainty there is not room for competition between producers, or adequate incentive for entrepreneurial inventiveness.  The Obama administration produced uncertainty in modest quantities.  Would Republicans ever allow anything through congress?  When will the Feds deem it time to raise rates?  Is there a way I can skimp on domestic labor costs and still find a market of buyers?  Is is easier to jack up quarterly reports through accounting gymnastics than actual sales?  Simple stuff.  Well now they have uncertainty in abundance, a new kind of uncertainty, one created by a president who plays by his own chaotic rules dictated by the needs of his short attention span ego.  Between the economy and the blizzard of tweets and semiliterate soundbite speeches he is fond of delivering stand reasonably competent subordinates gifted at working the system for their own benefit without regard for the welfare of others.  With a few exceptions, they are men accustomed to winning by making others lose, who do not suffer fools gladly.  Working for a fool and against others of nearly equal rank, it remains to be seen whether they can forge anything like cooperative, coherent economic policy for the nation as a whole.  Talk about uncertainty!  Which, as it turns out, almost no one has.  The complaint about uncertainty has somehow become silent.   Was it always a bluff?  Probably.

What about the former questions, the more basic ones?  Not a peep.  People who used words they didn't understand to ask questions about the scary economic news they saw reported on FOX, or heard on talk radio, are silent.  Some claim to be comforted knowing that a tough, smart businessman is in charge so they can relax and let the good times roll in.  Some figure whatever deficit and debt mean, they no longer have to worry about it.  The anti tax gang, that has never understood the function of taxes as investments in the public good, is salivating over the prospect of paying less of them.  In any case, the important questions are off the table because their only value was to hammer away at Obama, and he's gone.  What was it about Obama that made him such an attractive target?  We all know the answer, but we dare not use the word race. They are so sensitive about it.  It hurts their feelings to be called racists, or anything like it.  I shall not bring it up here.

So what do I have to say about the economy now?  I have no idea.  Not a clue.  Will the deficit soar, as some expect?  Will anybody care if it does?  America cannot be both isolationist and engage successfully in a global market place, or can it?  Can well paid jobs be restored to the old working class by leaders who have spent their lives getting rid of them?  If the lost jobs are no longer needed, what would their replacements be?  Anyone?  I'm listening.  If unions have ceased to be useful representatives of worker interests, who will represent them in the future?  Executives and politicians who made it their business to destroy unions?  Can they be trusted?  I have no idea.
Among my conservative friends who howled for eight years about the economy, it's no longer of interest.  What is?  Securing the border.  Making America strong again by telling foreign leaders where to get off – yes, they love it.  The promise of freedom to discriminate in the name of freedom – yes, they love that too.  Lower taxes for everyone, yes, everyone.  And the ever vague value of less regulation, whatever that might be.  Just the sheer joy of seeing the Eastern Ivy League elite get what's coming to them is enough.  Hit'em again!  I live in a rural conservative part of the country with a strong tea party bent.  Local wheat farmers are an interesting case study.  The greater part of their harvest is exported to China where it's made into noodles.  For some reason prices have plummeted, exports are down, and costs have risen, but they remain loyal to a tea party agenda and the election of a sociopath who, in two short weeks, has offended every world leader he's talked to, but one.  And that one plays him like the ill informed gullible person he is.  Well, who knows, maybe I've underestimated the ability of our wheat framers to rapidly shift products and markets.  A few farmers, and all the orchardists and vintners, are investing in vertically integrated agriculture engineered to sell to a more diverse market.  Maybe they will be the survivors.  We shall see.

What of the economy as a whole?  I don't know, but as one whose income depends on the performance of the stock market, I am not without interest.

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