What Lies Ahead
To counteract my fuddy-duddyism, the fools at the Motley Fool (what else would you call them?) suggest that there may be a “Coming Boom:”
After five years of collapse and stagnation, we could be on the cusp of a new economic boom. Not like the mid-1980s or late 1990s, mind you. But the odds that the next five years will be markedly better than the last five years are good, and growing better by the day.
I guess it would be hard to be much worse. And the next five years may take a while to begin:
The boom is supposed to be driven by “a rebound in housing construction, the rise in domestic energy production, and the end of consumer debt deleveraging.”
Housing is the scapegoat for the Great Recession, so it’s odd to see it hailed as a potential savior. The argument is that the rate of new household formation exceeds the current rate of new homes built, and so more new homes will have to be built to meet demand. This overlooks that 1) there still may be a glut of homes built prior to the recession that people and developers have been forced to hold onto but would want to unload when given the chance, and 2) increased demand for homes doesn’t mean more new homes necessarily will be built. The price gets pushed up, and so existing homeowners may be more likely to sell.
The article next discusses the increase in domestic oil production, driven mostly by natural gas and fracking. Call me skeptical but I can’t see a large majority of Americans, as increasingly environmentally conscious as we’re becoming, embracing the idea of fracking. What I can see is the Obama administration and its EPA putting up roadblocks, regulations, and red tape. (No, I’m not an economic nationalist; I couldn’t care less if domestic natural gas helps us to be “energy independent.” I prefer trade barriers to be removed and people given the freedom to buy energy from wherever it’s cheapest.)
Lastly, “consumer debt deleveraging” means that consumers have been reducing their debt obligations, either through paying it off or defaulting. Clearly, one of these two options is preferable to the other. The Fools argue that the end of deleveraging is what will fuel the new boom, meaning that the economy will improve once people start accumulating debt again. It’s hard for me to see the benefit of increasing debt burdens, but I’m no Keynesian.
My other reasons for economic pessimism? The Conference Board’s Leading Economic Index has been trending upward the past few years but appears to be slowing down.The Philadelphia Fed’s Survey of Professional Forecasters don’t see annual economic growth rates above 2% until 2014 and don’t see unemployment rates below 7% until 2015. Obamacare is still in place (thanks, Chief Justice Roberts!), and entrepreneurs are none too happy that it is. Obama is still in place, and I can’t recall the U.S. having a Chief Executive with a stronger anti-business philosophy whose solution to every ill seems to be to tax the rich.
But I’ll give you a treat: you can stop reading my thoughts and read why the ever-insightful George Weigel is bearish:
- “the progressive campaign to turn ever-larger numbers of citizens into wards of the state has been given a tremendous boost.”
- “A war in the Middle East is now almost certain, and sooner rather than later.”
- “The children and grandchildren of November 6’s voters have been condemned to bear the burden of what is certainly an unpayable mountain of debt.”
- “The American culture war has been markedly intensified.”
- “Religious freedom and civil society are now in greater jeopardy than ever.”
- “a critical mass of Americans are now so dependent on government (either directly or through public-sector unions) that any appeal to a larger national vision, much less a vision of personal responsibility, is impossible. “
The political and economic scene makes me pessimistic, but overall I’m optimistic. Why? If this election teaches us nothing else, it is that we cannot look for or expect happiness to come as a result of elections. The reason we participate in politics is to influence our society and culture; again, this election reveals very starkly that we can and must influence our society and culture at the personal level. If a majority of Catholics voted for the most pro-abortion President (again?), then the opportunities for evangelization, especially during this Year of Faith, are plentiful. Let’s make sure the number of laborers are more than just a few.