News media and government spokespeople are telling us the recession is over. They have been saying it since before the economy actually turned around. Most indicators are pointing to a recovery trend but it is slow and tedious – almost as painful as the initial downslide has been. Several opportunities still exist for backsliding and the recovery will be slower than historical norms. As the recovery gains momentum it is time for some post recession evaluation. Across the world, countries are looking to the United States to lead the recovery but that leadership is being questioned by some analysts.
People, companies and countries that were economically weak before the recession will be the slowest to see recovery. Some strong companies and well organized people have been able to tighten their belts and recover nicely. Other segments of the world economy may never recover what was lost to the recession. It has been said that money is one of man’s most important inventions. Just like most inventions money can be blamed for much human suffering. People at the lowest economic levels suffer the most direct and personal effects of an economic recession. As part of any post recession evaluation the plight of the less fortunate should be examined.
Economics is a “soft science” to a certain extent. Unlike hard science where the rules are well established and everyone accepts the same standards, economics has a large opinion-based component. Economists commonly disagree on cause and effect factors. Their opinions are often influenced by individual focus. Some economists look at a global economy while others see only national economies. Very few economists are willing to look at the economic plight and the economic influence of the street-level consumer. Consumers feel the pain of recession more acutely. Many macro-economists fail to remember that any economic recovery must be supported by consumer spending or it can sputter to a halt.
An economy does not exist solely in the bank accounts of top banking executives or in the stock market. The economy has its foundation in consumer spending. Without the continued growth of consumer spending a recovery can sputter to a halt. When consumer confidence supports increased spending the economy will flourish. The stock market and the government together cannot match the positive influence of an energetic consumer base.
Government intervention in ways that encourage consumer spending is the most effective approach any government has. Governments are notoriously short sighted, and can amass considerable debt while stimulating consumer spending. Government debt contributes to inflationary pressures which in turn dampen consumer spending. Careful planning and research is required to determine the resources a government can use to attack a recession without driving the economy into a heavy inflation cycle. When an economy is falling precipitously as in this recent recession immediate intervention may be more important than months of planning and research.
The precipitous collapse that marked the most recent recession required immediate and dramatic intervention by the government. Taking time to do the research and planning to establish a systematic plan was not possible. The recovery trend now allows time for adjustments to the steps that were taken. There is time for research and cooperation in developing a long-term plan. The biggest concern is that the government spending that halted the collapse will bring on inflation. The government must be careful to simply tweak the economy and not take additional dramatic steps that can reverse the recovery.
Finger pointing and accusations among government officials can dramatically erode any consumer confidence. Conscientious disagreements can be discussed without causing public distrust. A government that is working to improve the economy even while disagreeing about methodology promotes confidence that that becomes a powerful recovery tool.
This type of mature and intelligent discussion promotes confidence and confidence promotes success. A cooperating government can accomplish much more than a group of party-centered individuals jostling for the microphone or Television news camera.
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