Are we in Recession?

Technically the answer is no, however, practically, I don't think we ever came truly out of the last one.  I saw a headline today, it said "US economy shrinks 0.1 pct., 1st time in 3½ years" and it would seem that the economy is not tracking very well, at least last quarter.  Where will it go this quarter?  Are we headed into another recession?  Is the world coming to an end?  I wish that a poll would track the negatives like just mentioned.  Because, and this is crucial, economics is simply group psychology.  Nothing more, nothing less.

Looking back to the Great Depression of the 1930s, people were so negative that they were jumping out of windows.  One thing after another hit, like the stock crash, banking failure, and the dust bowl.  Farms were being repossess, and people lost jobs.  Even those who stayed employed were thinking that they were a day away from losing theirs.  How likely would it be for someone with that mentality to buy anything but necessities? Nothing government did seemed to make any difference, they even had to face it sober!  It took a World War to end it.

Because of the war and the destruction in Europe and Asia, the US experienced an unprecedented boom in the 50s and 60s as those continents rebuilt.  We didn't think ahead, and the new factories in those places out performed our aging facilities.  Transportation became cheaper, so goods could move easier all over the world.  The 1970s brought stagflation and recession.  Now it was our time to rebuild and retool.  That process is still going on.  If you notice, when Toyota or Hyundai, or Volkswagen open plants in the US, they are new buildings.  Even though there are a number of closed auto plants, they build modern facilities. 

Today, We the People are inundated with bad news on a 24 hour format through CNN, Fox, ABC, NBC, and CBS, along with print and web sources.  That bad news piles on to our already sinking feeling about the economy.  But what happened in the 4th quarter that caused the decline?

Could it be the election in November?  Or the fiscal cliff of December?  Or both?  Think about how you feel, add to it your neighbors, churches, and civic organizations.  Is it positive, neutral or negative?  Is that the reason?  I would contend that yes that is the reason.  Just less than 50% of voters were disappointed by the outcome of the election.  Both political parties were predicting doom and gloom if the other side won.  Is it any surprise it happened?

Our political leadership is lacking.  And I am not pointing the finger at one party, both are equally as guilty.  It is all about them.  How much they get to spend, and their lack of conscience to preserve the economy.  To have the deficits we have is appalling.  Our debt is staggering.  And they fight over what?  Making the rich pay their fair share (and I still don't know the definition of fair share), blaming law abiding citizens for gun violence, and debating whether we should allow 11 million illegal aliens to become citizens.  They fight over which government dole out is to be funded, rather than how can we stay within our means.



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I heard a gentleman say on radio that we can deficit spend at current levels indefinitely, oh really?  Don't try that at home!  Perhaps we can, if we are OK with inflation and economic stagnation.  I think we are better than that.  Why are there illegal aliens?  Because all people in our country are better off than most poor anywhere else in the world.  It is NOT the liberty we espouse.  It is not our system of government.  It is because of our success, they know that they can starve to death in their current country, or walk across the border and maybe not thrive, but they are certainly less likely to die.  We can't fix that, nor should we want to.  But we do need to enforce our laws and belief system within our borders.  Any one who wants to come should have a legal way to come.  Immigration made us great.  My great and great great grandparents were German and Irish, starvation in the potato famine drove the Irish side, and various economic reasons drove the German side.  Now we are Americans.  I feel no connection to Ireland or Germany.  But I love America!  We will survive and thrive.  But only when as a society we all agree to thrive.  That's economics...