The Wright Perspective℠
Social Commentary from the C-Suite to Main Street℠
A Blog by Gary Wright II
Is Atlanta chaos an economic bellwether?
Friday, August 27th, 2010
It was no surprise that the fed announced that our economy growth is less than was expected. We have to be careful to look at the economic indicators in the proper context, or we can be easily misled about the current state of affairs.
The first time jobless claims in the unemployment rate don't reflect those who have ran out of benefits, or account for those who have completely given up on their job search. The rates reported have also been skewed by the temporary jobs created by the census. The national unemployment rate is around 10%, but in many places the rate is much higher. In many job markets, the jobs lost are never coming back to those areas.
Many workers have been forced to cash in their 401Ks in order to make ends meet in this tough economy. The national credit card debt level is less now only because of the charge-offs from where credit card companies have given up on trying to collect on many delinquent accounts.
Despite the huge bailouts for the mortgage companies, there are still way too many families losing their homes. Many home owners owe more than their homes are worth, and 1 in 7 mortgages are in the process of foreclosure.
I'm afraid the recent chaos in Atlanta may be an economic bellwether and the images were truly shocking. If you missed it, when the East Point housing office opened a waiting list for Section 8 housing there were over 30,000 people who showed up. There were no housing openings available, just the waiting list. Many people had camped out for days in the 100 degree just to get a chance of being on the waiting list. They only expected a few thousand to show up and the city was quickly overwhelmed by the massive amount of people clamouring to get one of the forms. Many people were nearly trampled to death, fights broke out everywhere, and many were hospitalized with heat stress and other injuries. Again, all of this wasn't for getting into the public housing - these folks were fighting just to have a chance of getting on the waiting list.
The fed only has four more methods left to influence the recovery, and two of those would have very little impact on the overall economy. As the government balance sheet grows, eventually someone is going to be stuck with the bill. This isn't something we can handle in just a few more years, it may take decades for our country to become somewhat stable again. There are a lot of international markets that carry a lot of baggage as well. The length of their market recoveries will have an impact on our own.
Not every country of the world is having financial troubles. The BRIC countries (Brazil, Russia, India, and China) are actually experiencing economic growth right now, and all of our markets must adjust themselves accordingly.
We must focus on growing our own markets in areas that have growth potential, such as alternative energy, technology, and medicine. The greatest risk to those future markets is going to be our failing education system. Without great minds to develop those sectors, we simply can not compete at the global level. With each of our states having huge budget deficits, it will be a great challenge for us to fix these basic systems of our society.
We are all in this mess together, and if we work together we can make it through these tough times. Our country is about to go through the toughest period in our history, but we can make it through this. It won't be easy - but we can do it.
-- Gary Wright II