More Conflicting News about the Economy
As the effects of the government stimulus plan are seen, there are more and more signs that the recession is ending. The media is quick to pick up on any changes and report that the economy is recovering. This article at Yahoo Finances is all about the improving housing market. Yet I think that all the positive news is only one side of the story.
The other side is that the fundamentals have not really changed. Unemployment is high, and is rising. There is no evidence that it will improve. All of the improvements in the economy are from government spending: Cash for Clunkers, First Time Home Buyers Plan, etc. These measures are good at getting people who aren’t financially responsible to spend money. It is a short term improvement but will have a longer term negative effect.
How are the people who bought cars and houses going to make payments when they lose their job? How is a few dollars thrown at the American automotive industry going to help when it is fundamentally unable to compete in the global marketplace? Who is going to pay back the trillions of dollars spent in the stimulus?
These nagging and completely ignored questions will have to be answered, sooner or later. And I think it will be sooner, in the next few years. At that time the underlying financial situation of the country will be even worse, and more people will be aware of the deep rooted problems that the stimulus attempted to solve.
Although it is my belief that the stimulus spending did not really help the economy, only time will tell how things turn out. Maybe the fundamental advantages that America has will take hold and companies will begin increasing their profits.
No one can tell the future. The best thing that we can do is look at the different opinions around us and decide what is likely to happen. We get to plan for the best, and at the same time be prepared for the worst.
Related posts:
- More Good News in a Bad Economy
- Is a Bad Economy Really Bad News?
- Are the Country’s Economic Problems too Big?
- Can Obama Save the Economy?
- Is your Financial Situation Controlled by the Economy?
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
