Rejoice! The Recession Is Over!

That is the message the media and government are sending. It may be true that a recovery cycle has started but the recession is not yet “over”. The depth of the economic decline of this recent recession means the recovery process will be tedious and slow. The tenuous grip on the rope of recovery leaves plenty of opportunities to slide back down before true recovery. As we return to normalcy we must take time to perform a post recession evaluation. At one time the United States was a world economic leader and other countries looked to the United States to lead recovery efforts. That leadership is not quite as evident because the government of the United States has lost the confidence of economic analysts.

Those countries, companies and people who were in the strongest economic shape prior to the recession will be the first to reach nearly complete recovery. There will be segments of the population that will never fully recover what has been lost to the collapse. It has been said that money was one of mankind’s most important and useful inventions. As is the case with all powerful inventions, money is also one of the most powerful causes human suffering.

Depending on their position within the economic structure, economists have different views of the economy. They can see a world economy with international impact or a national economy and focus on one country’s efforts to recover. Very few if any economists look at the street-level people who are the most directly affected and slowest to recover in a major recession. Most economists fail to realize that any recovery must be supported by the individuals whose spending is the foundation of any economy.

A growing economy requires consumer spending in order to maintain momentum. Consumers must have the resources and the confidence to purchase the goods that in turn push the producers to invest and grow. When the people stop buying, nothing can prevent economic slowdown. When the people begin to spend their resources on consumer goods the economy flourishes. Neither the stock market nor the government can deliver the same positive impact as a confident and energetic consumer base.

There are two major philosophical differences concerning the government’s manipulation of an economic recovery. Both of these concepts have some validity and both have some flaws. One side believes the better approach is to promote business investment to drive economic growth. Another side of the argument believes promoting consumer spending is the most effective way to influence the economy. Years of statistics and research still leave the question unanswered. The proper application of both approaches is the best answer. The proper balance of supply-side and demand-side influences by the government requires research and planning.

In this most recent recession the economy was falling precipitously and immediate steps were needed to halt the decline. It was not possible to spend several months in research and planning before acting. Now that the recovery has begun there is a need to do some research and planning. Adjustments are needed to correct for inflationary pressures caused by deficit spending. It is important that adjustments are well thought out and openly explained to the public. Consumer confidence is bolstered by a government with a workable plan. It is important that the public regains respect for the government.

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.

A sustainable recovery and a strong economy cannot exist without consumer confidence. When politicians persist in calling each other liars in the national media, the public soon learns to consider all politicians liars. No one wants to put his economic welfare in the hands of a group of confirmed liars.

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