2010 U.S. Political and Economic Outlook

By all statistical measures, the U.S. economy has done nothing over the past decade. The 2000 to 2010 time frame is identified with the September 11^th terrorist strikes, warfare, and economic bust. Of course, the 2003 to 2007 expansion and housing boom has been written off as a façade-fueled by the smoke and mirrors of cheap credit. Further, the shocking collapses of Lehman Brothers and Bear Stearns effectively called into question the Western model for high finance. This historical model relies upon a freewheeling culture of debt and risky investments from the top-down.

Interestingly, the roller coaster ride of this recent era has neutralized itself at a standstill. The Dow Jones Industrial Average has remained unable to move well beyond the 10,000 benchmark during the course of eleven years. The stock market, however, is but one piece of evidence indicating that Americans are running in place. According to Bureau of Economic Analysis data, real disposable personal income per capita has stalled between $27,000 and $32,500 over the latter part of the decade. The small uptick is more so in response to government stimulus, rather than productivity growth. Further, personal savings rates have collapsed, while debt levels skyrocketed as a prelude to the recession. I see little evidence to indicate that the Lost Era has run its course. In fact, 2010 is shaping up to be another extension of this listless economic period-only with a slightly different cast of characters.

2010 Political Outlook: More of the Same

The Democratic Party emerged fresh from the 2008 elections riding high. Our new President and Congressional leaders promised sweeping economic and social reforms. Indeed, Barack Obama's Administration and economic agenda have provided for creative tax cuts, economic incentives and jobs creation programs to jumpstart the economy. Still, Bureau of Labor Statistics unemployment figures remain dangerously north of the psychologically important ten percent reading. Obama and the Democrats will begin to lose political capital in the face of ten percent unemployment. Health care reforms cannot be installed amidst the partisan wrangling that is sure to take place amidst a stalled U.S. economy. The Democratic Party may become fractured, as its base becomes disenchanted with the true-to-life footprint of "Change."

The onus lies with the Obama Administration to convert charisma into actual action, rather than political theatre. The Nation is still at war, while Treasury continues the gift-wrapping of stimulus packages to our citizenry. In exchange, the American taxpayer is confronted with staggering debt levels that are approaching $2 trillion, or more than ten percent of our gross domestic product. Alarmingly, Federal deficit projections are accompanied with rosy forecasts for the U.S. economy that may never materialize. I do feel that the shock therapy treatment is necessary. However, I lack confidence in government officials to bear down and cut spending amidst any economic rebound.

2010 Economic Outlook: More of the Same

The Lost Era continues into 2010-irrespective of stock market activity. Americans have begun to save more, as personal savings rates have climbed from zero to six percent. Ironically, increased saving rates are not good for this economy. These savings are being used to pare down debt, rather than purchase investments or durable goods. The economy can only spend itself out of recession. However, the consumer refuses to buy and banks refuse to make loans. Although United States commerce has avoided total collapse, sustained economic stability is out of the question-without jobs. Expect choppy growth and inflation going forward. Yes, more of the same.

2010 U.S. Political and Economic Outlook, Sources:

Bureau of Economic Analysis, Real Disposable Personal Income, http://www.bea.gov/briefrm/dpi.htm
Barack Obama - Organizing for America, Economy, http://www.barackobama.com/issues/economy/
Barack Obama - Organizing for America, Issues, http://www.barackobama.com/issues/