Wednesday, October 25, 2006

Is the economy good or is it bad

When you listen to Democrats they claim it is terrible, when you listen to Republicans they say it is great. Neither is being 100% honest with us. I am going to analyze the US Economy short term and long term and tell you what I think.


The first fact I will consider is myself. That is right, I am going to look at my economic situation. I am neither better nor worse off then I have been for the 11 years I have been married. I have always been middle classed, I have always been able to afford the things I want, and I have always been able to save for retirement.

The second fact I will consider is unemployment. The national unemployment rate is 4.6%. I turned 18 years old in 1985. Since 1985 the average national unemployment rate has been 5.7%. The government is currently over-spending and is creating a lot more jobs then they should be; however, I think we have to consider the unemployment rate good or even great. I would like to see it closer to 4%; however, that has proved to be almost impossible...

The third statistic I will consider is the national Debt. The national debt is the money that our Government has borrowed (Some from itself in the case of Social Security) and that we are currently paying interest on. The current National Debt is 8.56 trillion dollars. This is the highest debt we have ever had as a nation and is a serious menace to our children, grand children, and all future generations. The 3rd highest item in the Federal Budget is interest on the National debt. The national debt is abysmal and a disgrace.

The fourth statistic I will consider is the unfunded liabilities of the government. The Federal Government has an approximate unfunded liability of 75 TRILLION dollars. This means that we would need to have 75 trillion dollars invested to pay for the benefits our government has promised over the next 75 years. Instead we have a debt of 8.56 trillion dollars.
Awful (I would rank worse if I could think of a better term...)

The fifth statistic I will look at is the stock market. The Dow is currently at an all time high. It is at 12,135. This is a good think. I find it interesting that the market has gone up so much in the last few months. I think investors are looking forward to Congressional gridlock.

The sixth statistic is Federal tax receipts. Federal tax receipts have risen by 11.8% this fiscal year. This shows us that the tax cuts have worked well and have spurred the US economy.

The seventh statistic is Federal spending. Unfortunately for us our government officials like to spend money we do not have. Federal spending jumped by 7.4% this fiscal year. That is far too high with our massive national debt and our huge unfunded liabilities. There is nothing Conservative about Congress today.

The eighth stat is household debt. Household debt measures the necessary payments that American households have to make on their debt. Their are two statistics that are commonly used:
DSR, Debt Service Ratio, this includes mortgage payments and consumer debt. This ratio is now at an all time high of 14.4%.
FOR, Financial Obligation Ratio, this includes auto lease payment, rental payments for housing, home insurance, and property tax. This ratio is now at an all time high of 18.06%.
There statistics bode poorly for our future. They show that we are falling further and future into debt. This means that Americans will have less money to spend on consumer goods in the future. This means future consumption will go down and this will hurt the economy.

The ninth is interest rates. When interest rates are low it is easier for those in debt (all levels of government and consumers) to make their payments. Interest rates have been very low for a long time. This is helping us deal with the debt problems we have in this nation. Interest rates are still currently low. This is going to change in the near future, it has to.

I could go on and on and on.

There are both good things and bad things about the US economy. In my overall opinion:

Short Term our economy is doing very well and is something to be proud of.

Long Term we are in very large trouble and neither Democrats nor Republicans care as long as their Party is in power and they themselves are re-elected...

Mike Sylvester
Fort Wayne Libertarian


Tim Zank said...

Mike I'm curious...why does the national debt freak you out so much? I would think as an aspiring CPA you would value the practice of "using other peoples money"....

As for the rest of your critique, I agree with some of it. I think the unfunded liabilities and the debt are a manageable balancing act. The most disturbing and maddening fact you mention is spending. That is CUREABLE and it pisses me off the most because it is what fosters all the other problems. If we could STOP the spending the rest are MORE than manageable.....

LP Mike Sylvester said...


The National Debt is not as big of a problem as our unfunded liabilities...

The National Debt bothers me because we are FORCING future generations to pay for our spending. I do not think it is fair.

You really think that the unfunded liabilities can be handled? How?

Lets say The Heritage Foundation and USA today are correct and that our Federal Government has accumulated unfunded liabilities of 75 TRILLION dollars today.

That means that we would have to have 75 trillion dollars in the bank today to pay for the promises Dems and Reps have made...

Instead we have a large debt.

The ENTIRE US economy is just over 11 trillion dollars.

It is impossible for us to pay for what we have promised. Impossible.

That irritates me...


Tim Zank said...

I think the term "unfunded liabilities" conjures up the picture (and therefore the fear) that those programs must be paid for in a "lump sum". While it represents a huge committment, by tweaking other programs, and replacing the morons currently spending like drunken sailors we can still rearrange our financial future in a more responsible way.

I don't think the sky is falling yet....