A Positive Post on the US Economy!!

I've been accused of being all about doom and gloom. I think I just call things as I see them...I'm probably wrong! Here is a positive economic post to try to right the balance. The focus, as always, is on the economy that matters the most.

What is going well?

1. Employment Growth: The USA has created millions of jobs in the last few years. In 2015, the economy created a net 2.5 million new jobs. These are not the heavily manipulated seasonally adjusted figures ("Manipulated" I say?  If you take the seasonally adjusted numbers out of the most recent US jobs report, the net new jobs created in December was not the headline figure of 292,000, but only 11,000!)

In December 2014, there were about 147,200,000 employed people in the USA.  Last month there were 149,700,000 employed persons. There is no question tat the USA is finally creating a significant number of jobs after the recovery took almost four years to get started. The jobs are mostly second-rate, but that is a separate issue.  With 3 - 4 more years like this, the USA will make significant inroads into the 45 million people who are now living on Food Stamps (NB - in 2008, there were 28 million people living on Food Stamps in the USA. This number rose through the recovery to 46.5 million in 2012, and to higher than 47 million in 2013, but has finally eased back by about 2 million to just over 45 million today.)

Personal Debt Levels: The Americans have been paying off personal debt for the last five years. From a high of about 130% of net income in 2009, US personal debt is now down to about 105% of net income. This is in stark contrast to the Canadian situation, and has much to do with the fact that the Canadian housing bubble has yet to burst. American consumers are much better position to participate in a recovery than they were five years ago.



Personal Savings Rates: In 2008, Americans were saving about 2.8% of their net income.  Today they save about 5.5%, in spite of the lowest interest rates in history, and a concerted effort on the part of the US Federal Reserve to discourage this saving.  Increased savings coupled with debt repayment has put the average American in a much better financial situation five years after the recession than they were in 2009.

Productivity: While it has been negative from time to time since 2009, and while its growth has slowed, US productivity, which with population growth is the long term indicator of economic growth, is still growing. Americans have been and continue to be the most productive people on Earth. Constantly growing US productivity strongly suggests much better days ahead for the US economy. There are significant challenges here, but the story is still positive.


Federal Budget Deficit: The American financial house is getting back in order, largely because the USA has stopped fighting wars in Afghanistan and Iraq, reducing the number of military personnel deployed from over 200,000, to about 20,000.  From a deficit of almost $1.5 Trillion in 2009, the US budget deficit is now about $450 Billion. If Obama had been willing to force some tax increases and cut spending, I think he could have left a balanced budget as a significant personal legacy. The USA is now much better positioned to respond to another crisis than it was in 2009.



The next post will outline the policies that can be implemented TODAY that will have a very significant positive impact on the US economy, putting millions or people back to work while raising real income levels that have not really gone In in 25 years, and also causing some inflation so as to make Federal Reserve policy relevant and effective again. Stay tuned.

See!  I'm not all doom and gloom after all!!