Commentary

The Economy: Just Limping Along

Less than swell news came from the bowels of government bureaucracy this morning. The Commerce Department reported that the US economy grew at an annual rate of 1.9 percent in the second quarter, which was less than predicted by economists, and it actually contracted by 0.2 percent in the final three months of 2007.

It appears that the sources of growth in America’s sputtering economy are fueled by this country’ lack of political will and our flagging currency. Stimulus checks totaling $100 billion were doled out in April and May, making mall cash registers ring in June, and the terminally ill dollar helped boost exports during the quarter.

Consumption (of goods, not thoughts or ideas) is what drives this nation’s economy, accounting for close to 70 percent of gross domestic product. The government’s largess provided temporary life support to this vital economic cog, but new handouts are not expected for quite some time. This means that the next quarter will undoubtedly disappoint Wall Street as it pummels Main Street.

Exports are swell, but they cannot be expected to keep America afloat on their own. (Just ask the Japanese, their economy never races ahead because they rely too much on exports while domestic demand limps along.) Tourists from around the globe come in droves to scavenge cheap consumables in America’s glittering retail districts- which, by the way, usually feature goods made elsewhere. And the few companies left that actually make things are successful selling them overseas. But those Americans not peddling to tourists or overseas markets are left to swelter in the sun.

This year has seen job losses each and every month, and tomorrow’s numbers from the Labor Department will most likely show more of the same. The American economy cannot survive on government handouts and exports alone. The bursting of the housing and credit bubbles is taking a serious toll on jobs and overall economic activity. Instead of handouts, the government should fund programs that rebuild our crumbling infrastructure and help establish energy independence.

I am NOT a socialist- nor do I wish to play one on TV – but if our worthless political class is determined to spend their way out of this mess, why not focus on productivity enhancing investments instead of merely funding pointless trips to the mall?

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