In his weekly radio address, POTUS Obama reminded everyone that injury happens fast to a body, but healing takes a while. The Czar agrees with his reminder that the economy is not going to be fixed overnight. Frankly, the Czar might have added that speedy recoveries are usually false improvements, resulting in what economists term a bounce, the meaning of which is obvious: bad news, followed by good news, followed by worse news.
The President also made another claim: unemployment tends to recover more slowly than other measures of economic activity.
The Czar agrees with this. In fact, of all economic measures, unemployment seems to take the most time to improve. [Unemployment is a classic lagging indicator. Companies hold off cutting jobs until they’re forced to, and hold off on hiring until they’re really, really sure they can afford it. —Œc. Vol.] However, for the typical American, it is the only measure that matters. If you are unemployed, bills pile up, savings dwindles down, no money comes in, and night become sleepless. If you are employed, each day you dread being next. People, just like you, look at their kids and seriously sicken themselves wondering if there will be enough money next month to cover a medical emergency. Sometimes, they wonder if there will be food. Imagine a mother considering the possibility that they might have to cut to two meals a day, and the parents down to one.
Talk about credit markets, housing starts, gross domestic products, consumer price indices, and mutual funds seem pointless when the job interviews stop and the savings account hits only a few hundreds dollars. Dread and worry are gnawing and overpowering influences.
On the one hand, what is a President to do? Surprisingly, as much as Americans like to blame or laud a President for the economy, he has little to do except encourage confidence. He can certainly say dumb things that scare business, or panic investors. But healing an economy is something he cannot directly do; actually, Congress has a better shot at improving things quicker, but most folks do not understand how or why.
The problem, though, is that a presidential candidate promises solutions to things he cannot control. Talk of stimulus packages, bailouts, and jobs saved and jobs created...spot weld these to a meaningless message of Hope and Change, and that candidate proposes a quick fix that voters lovingly embrace. Under the old regime, you will suffer; under my leadership, America prospers together. Now that the unemployment rate is hitting 10%, the President cannot dismiss it as a mere economic factor to keep an eye on. He encouraged the belief that he would fix things, and Americans are not unreasonable to expect results soon.
Hope and Change become Dread and Worry. This is showing in the polls and approval ratings, and the Democratic party has secret meetings to analyze the situation, the threat to their party. After all, the hardest hit seem to be those who supported the Democrats the most.
Progress on cap and trade, a green economy, GMs emergence from bankruptcy: what does any of this mean to dad who can no longer pay the rent and faces a terrifying reality that in two months the kids might need to live in some relatives basement?
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