Is the Economic Recovery Real?

John ArmstrongEconomy/Economics

Stimulus The reports of the last economic quarter are now in. Evidence exists that we have experienced a recovery for the first time in four quarters. Anyone in their right mind ought to celebrate this fact. I suppose most Americans do take some comfort in this report, unless of course they so despise this president that they want to see an economic collapse on his watch. I find such people uninteresting and terribly angry, qualities that repel me personally. While I do not agree with a good number of the president's economic policies I pray for him, and us, that he succeeds. The country has always found a way to move back to the center regardless of who the president is at the time. I expect this will happen again over the course of time but the radicals on both sides need to be ignored on the whole. 

The new reports says that the economy rose by 3.5% in the third quarter. That is the good news. But the bad news is that government aid from tax credits for homes, and rebates for auto purchases, are both temporary. Economists generally believe that consumer spending will decline without this federal help. Will buyers back off in the face of rising joblessness and very tight credit?

Look, this recovery is extremely fragile no matter how you view what prompted it. The White House spins it positively, as they should, but there is very little room here for huge cheers. Most Americans, and I am one of them, have yet to feel any real benefit from a recovery at all. I have a job, for which I thank God, but I am making far less than I was 18 months ago and far less, in real dollars, than I was five years ago. It seems that job losses are declining but they are still very real. This is no time for economic giddiness to say the least. The value of our homes remains much lower than before the summer of 2008 but then many of us had hugely over-priced homes during the years just before the recession hit. Anyone who used their home to try to make a profit was using it unwisely in the long run. The last I checked you bought a home to live in it.

The president struck a responsible chord when he said that this report was "welcome news" but added, "We have a long way to go to fully restore our economy.

Chart By the way, the four straight quarters of contracting economic activity is a record streak. Is this the gentle calm before another storm or is a real recovery, albeit a small one? We simply do not know yet. Gloom and doom folks assure us the worst is yet to come. Few are truly optimistic. My greater concern is the way we are spending federal money to try to get out of the recession. Who pays the bills? And now that we are on the verge of a health care bill being passed that reaches nearly 2,000 pages what next? While I welcome health care reform I do not welcome massive speculative spending by the government on a program that is almost sure to make things worse in the end. By the way, I do not work for the insurance companies, own no stock in them and have no rich friends who run them. I have had my own battles with health insurance companies like most Americans. I do not like our present system. This is very likely the one thing massive numbers of us do agree on.

I read the various non-political takes on the health care bill this morning. Here is my amateur take on it all. We don’t know what we are getting in this legislation. Democrats clearly want to get government into health coverage in a huge way. Republicans clearly do not. The Republicans did nothing to fix the problems for six years (2001-2007). The present House bill cuts Medicare over the ten years following 2013. Personally this hits me in the gut but I am frankly willing to be hit if I feel it is truly good for everyone else. This is not about what is best for me personally. I think this is the bigger issue for most of us. It seems the majority of Americans want to know "what’s in it for me?" I honestly do not start with that question though I do ask it when a national debate like this rages.

I said to my wife this morning, after my reading the various non-partisan reports, “It seems this House bill will make things worse for us.” We worked hard to get out of a huge monthly payment for health insurance last year and then set up a Health Savings Account (HSA) in the process. I must tell you the HSA is the best kept secret in the whole debate. It has helped us reduce payments almost by half and in the end we came out with better health coverage. Yet I hear almost nothing about this program in the debate. Is this because it is not what the Democrats created? It sure seems that way to me. So few people use this provision who could and this amazes me personally.

So what do we get with "almost" universal health care? (The Democratic leaders say 96% will be insured!) Medicare cuts do seem obvious. This is why the elderly fear the program. But there seemingly is much that is worse in the details. Who pays and how? Worse yet, who administers and at what cost? And how efficient will the administration be if the federal government is involved? Anyone ever dealt with the post office or social security in any significant way? We have some answers to these questions but again few talk about them. Several states have passed health care bills. The truth is they are still trying to work out the "bugs.” There are positives and negatives. Incrementalism is always to be preferred but Democrats tend to want everything at once, especially while they have the power to do it at their fingertips. 

Economic-hotspots Perhaps it is my lingering fear about federal programs I have known for 60 years but I simply believe the best government is that which is the most local. This is true precisely because it is a government that answers the most directly to the people being governed. As a simple principle, rooted in my Christian worldview, I believe the government that governs the least (from the top down) is the best government. I think history also supports this conclusion. This does not mean the federal government does not respond to crisis and national emergency.

The idea that somehow I am among those tight-fisted conservatives who do not want to help the poor and the weak among us is a myth I ardently reject. My problem here is simple: Is this involvement of the federal government the very best way to help the poor? I am very unconvinced that it is by what I read and understand. And there is a long history of evidence to support my concern.

Either way please do not tell me I do not care about the plight of the poor. What the
poor need, more than anythi
ng else, is a good job, better education and the opportunity to truly advance if they desire it and are willing to work hard and be smart in their actions. They also need the church to become more involved in teaching, helping and serving them. The great gains of the Reagan-Bush-Clinton era may be thrown away in the near future. (Note: I do not include George W. Bush in this point since I do not think he handled the economy well on several fronts.) I have grandchildren. I look at these two precious girls and wonder if they will have the same opportunities that I had. This troubles me.

But make no mistake about it. At the end of the day I am not worried for my granddaughters at all because their parents are giving them what no prosperity in America could ever provide: a Christian worldview that understands how to live for the glory of God in any time and under any government. I ask: Is the church really preparing people to live, in plenty or in want, for the times ahead? I would have to say no from all that I can see. This, for me, is the far greater issue before us now and long after President Obama is out of office.