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The Wright Perspective℠
Social Commentary from the C-Suite to Main Street℠
A Blog by Gary Wright II
Current State of the US Economy - another look
Friday, March 12th, 2010
Last July, I wrote about the state of the US economy and about the fact that 48 of the 50 states have huge budget deficits. Let's take a look at how things are going...
For quite a while, it has been challenging for many families to make "ends meet" as they barely scrape by from paycheck to paycheck. Most of the families in our nation are literally struggling to survive as jobs disappear, wages are stagnant, cost of benefits go up or disappear, health care is becoming unobtainable, and our education system crumbles.
Did the $787bn stimulus package work? That depends on who you ask.... I wish that you could get out of debt by spending more money, but it just doesn't work that way. Even after the huge stimulus package, the FDIC reports that there are 552 banks still at high risk of going broke.
There has never been a better time to have money, as the price of real estate is low and some consumer goods are cheap (especially computers and technology). Unfortunately, the basics (such as food and fuel) are rapidly becoming more expensive. Many people across the world are starving right now, not from a lack of food, but because of the increasing price of food. Even if the price were to remain stable, the United Nations predicts that food production must increase by 70% over the next 40 years in order to feed the growing world population.
How are our personal finances? Many families lost their homes through foreclosure. Of those who kept their home, a 1/4 of the people with mortgages in the US owe more than their home is currently worth. The problem is growing as the property prices continue to decline. According to the National Association of Realtors, the national median has dropped 13% from a year ago to around $178,000.
The states are pretty much stuck in a hole they can't get out of, since their tax revenue is going down and they can't add new taxes without extinguishing growth. As the costs increase, the deficit grows larger. Many states have been forced to reduce costs by cutting services with the public schools being hit the hardest.
In 17 states, they have been forced to cut the school week down to only four days. Our already dysfunctional education system has now underwent school closures, deep program cuts, cancellation of summer school, bus route cancellations, and layoffs of many teachers and staff. The future of our country is dependant upon our education system and right now, our future isn't looking very bright...
Just this week, Kansas City, Missouri leaders made the difficult decision to close 28 of their 61 public schools and eliminate over 700 jobs. I know these cuts were necessary, but as one parent expressed it: "I don't want my third grader surrounded in school by twelfth graders."
I think the freefall of our economy is probably nearing its end, but as a society, we still have some very tough decisions ahead of us. Cities with a diverse mixture of industries (such as Atlanta) will be the first to recover. Areas with only a single industry (such as Detroit) may never recover. The jobs that have gone away have all been moved to other emerging countries (China and India), which means they are probably gone for good.
In the next week or so, I'll be taking a look at what an American worker costs versus the workers in other countries. There is so much more money involved than just your paycheck. You would not believe how much you actually cost your employer!
Our nation is going through some very tough times right now, but if we all pull together as family and friends, I have no doubt that we will make it through these trying times.
Best regards,
-- Gary Wright II
This discussion is related to the following blog entries:
Is the end near for America? It's pretty broken right now!
US isn't alone - UK and Japan are also hit hard!