Every day another bit of financial information comes in, and depending on who delivers it — and spins it — the economy is either on the way up or on the way out.
The recent topsy-turvy ride has my head spinning. Are we starting to see light or is the double-dip recession upon us? I’m no economist, but the signals I hear are mixed.
Foreclosures are rising yet again, and not only that, but a poll released Thursday showed that more people think it’s OK to walk away from mortgages they can no longer afford to pay. If that trend continues it will not be good for anyone. With the end of the home-buying tax incentive, it will be harder for the banks to unload these empty houses. And those of us who are holding onto ours will continue to watch their value spiral downward.
Of course, if more people were working, more of them would be able to pay their mortgages. But figures released this week show Georgia’s unemployment rate is up again, which means businesses are still holding on to cash.
A lot of pointy heads think job growth is the biggest key to an economic rebound, so an uptick in joblessness doesn’t bode well. Conversely, I’ve seen three help-wanted signs in business windows in the past couple of weeks, and I hadn’t seen one of those in the past six months prior to that, so at least somebody is hiring.
But to really make strides employers have to get their confidence back before they will start to hire again. Right now, they’re sitting and waiting, presumably on the November elections. And why is that? Two words: tax cuts.
The Bush tax cuts expire in January. President Barack Obama and the Democrats want to extend them for everyone but the wealthy. The Republicans have hunkered down on this, of course, saying they refuse to raise taxes on anyone right now. I think they have a valid point.
I’m all for the rich paying their fair share. But the government can’t tax us out of this economoic gloom. Plus, it’s not just the rich that would be affected. The Associated Press reported Thursday that the expiration of the cuts would affect nearly every household.
That means it would also affect businesses of course, the ones that are reluctant to spend the capital they’re holding onto.
Meanwhile, consumers are holding onto their money, too. Low demand for retail goods and gas has kept inflation in check, which is a good thing. But it also means businesses can’t raise extra cash because they can’t raise prices. So maybe it’s not a good thing.
Is your head spinning yet?
Despite all this, the stock market and precious metals seem to be doing fine. The markets have enjoyed an extended rally this month with quite a few companies seeing annual highs. Gold is approaching a stunning $1,300 an ounce. So somebody is making money somewhere.
Export news is good, too, with a big rise this year. It seems China isn’t the only country in the world that can manufacture and sell products abroad. The president has called for upping that next year, rightly assuming that more exports will help the joblessness problem.
Finally, if you can afford to buy a house, now is the time. Even without the $8,000 incentive, it’s hard to beat 4.3 percent.
What conclusion can we make from all this? I guess we can take solace in the fact that the American economic machine, even though it’s been knocked down, still has some fight left in it. And though the debate will last forever about the extent to which it should’ve gone, the government has taken the steps to stimulate it and regulate it.
Now it’s time to get out of its way, and let it create.
E-mail Nate McCullough at firstname.lastname@example.org. His column appears on Fridays.