The Economic Situation

With hope riding high for a stronger 2012 economy, treating the economy like a Washington-directed marionette is not the way to go.

Highlights from the Economic Situation Report, March 2012


What’s the Forecast for the Global Economy? 

After a dreary winter, there’s good news for the global economy this spring. It’s not happening in Europe or the United States, but in the developing world.

Amazing growth is occurring in countries many of us cannot pronounce and most of us have not visited. High growth countries are small, but two big ones are leading the pack: China and India. The figures show that by 2042, world production of goods and services will be twice as large as the sum of all past GDP generated on the globe.

The U.S. can be part of this great boom by investing in global enterprises, producing high tech products and services required for the booming world, and providing education resources for the growing population of knowledge workers who will be global builders. 

How is the U.S. economy holding up?

The U.S. is still recovering from the wounds of the financial crisis, but with levels of GDP exceeding that of the previous peak, the economy is in its growth phase. But we are not comfortable saying that when unemployment is still above 8 percent. 

How Has the Crisis Affected Manufacturing? 

While politicians  talk  about  bringing  manufacturing back to America, there’s some pretty compelling evidence that it never left. There is also evidence that the idea of the U.S. as the number one global player is being eclipsed by a rapidly growing Chinese economy. But this doesn’t mean we have lost our manufacturing muscle;  it means  manufacturing muscle is growing worldwide. See the top 10 manufacturing economies.

While the US is still in an expansion phase, the labor economy is still lagging behind it seems. The mismatch continues between rising job openings and sustained unemployment. 

Some politicians have begun emphasizing the importance of manufacturing employment to deal with unemployment woes. But it is unrealistic to pen the nation’s hope to the factory floor, and it’s not because we don’t produce a lot of stuff. In fact, it is just the reverse. We products lots of stuff with fewer and fewer workers. 

There is more to the story of declining manufacturing employment than just modernizations and productivity gains on the factory floor. The U.S. manufacturing economy has been disintegrating for years.

Occasionally someone will say: “We cannot create wealth unless we make things or mine things. Services employment won’t get the job done.” Not quite true. The two sectors work together.

How Is GDP Doing?

We should remember that the U.S. has a huge economic engine, that even when running at 92% or so, as measured by employment, this engine produces a lot of income and wealth.

Are Gas and Oil Prices Still on the Rise? 

Interestingly enough, the price of oil is falling when expressed in ounces of gold. Two things may explain this.

A Quick Look at the US Misery Index 

The Administration’s Latest Economic Policy

We received more than a glimmer of this in President Obama's State of the Union Address when he outlined his ideas for top-down management of the economy. The president offered a blueprint for a marionette economy, with the strings pulled in Washington.

With hope riding high for a stronger 2012 economy, treating the economy like a Washington-directed marionette is not the way to go.

Read the full report as a PDF