The more rhetoric I hear this election season, the more I’m reminded just how little the government can do to fix the economy in the short term. It can pour money into shovel-ready projects, but those don’t seem to be long-term fixes, and they won’t right the ship in time for the midterm elections.
A unique wrinkle to this economic recovery has been the stark contrast between unemployment and corporate earnings. The unemployment rate stays stubbornly where it is while corporations report significant profits. Why aren’t they hiring? It’s because growth prospects are so gradual that there’s no need to ramp up the headcount just yet. What company would hire hundreds if it can count on only very gradual economic growth over the next few quarters?
“A jobless rate hovering close to 10 percent is shaking consumer confidence and shackling spending, the biggest part of the economy.”
After reading that statement in a Bloomberg article on manufacturing last week, I paused. Why exactly is consumption such a huge part of the American economy? How did we get here?