People whose opinions I value unanimously agreed before last month’s election that the economy–particularly here in the U.S.–would improve no matter who won the presidency.
The consensus was that a Romney victory would immediately boost confidence in the private sector, but that the economy would also grow during a second Obama term, though maybe not as quickly as it would under Romney. The reason: businesses have kept billions of dollars on the sidelines during Obama’s first term and simply cannot wait another four years to put these assets to work. We shall see.
Meanwhile, I think one take-away from the election is the value of well-executed branding. The campaigns underscored how critically important it is to tell your own story, the way you want to tell it. Romney clearly did not tell his story with enough force. Early on, he allowed Obama to tell it–in Obama’s terms–and by the time Romney got on track, it was too late. Obama has a fantastic marketing machine, as he proved when he beat Hillary Clinton in the 2008 primaries.
But enough on politics–let’s get to the important stuff, like when are we going to get out of this economic mess?
Still Slogging Through…
As I’ve noted, billions of dollars of investment capital are just waiting to be deployed to help the private sector grow. My hope is that this will start happening now that the elections are behind us. If it does, maybe the U.S. will see a more robust growth rate than the 2 to 3 percent per year we’ve been witnessing. That current rate, while a step in the right direction, is simply inadequate. If there is not much change in year-over-year growth, we will continue to see a slow climb-out for the next two to three years.
On the global front, last year I predicted that the European Union would resolve its debt problems in 2012. I have already graded myself an F on that forecast. Surprisingly, while the Greece/Spain/Italy problem clearly has not helped the European economy recover, its impact has not resulted in calamity in the financial markets.
We certainly need to continue to keep an eye on that European situation–and also monitor some of the uncertainty coming out of Asia, and of course here in the United States with the looming “fiscal cliff.” Let me try to counter the F on my 2011 report card by predicting that our politicians will come to their senses and figure out an acceptable tax/spending solution. The U.S. will not fall off the fiscal cliff, and we will not go into sequestration mode. Count on it.
But back to the global economy: with so many unanswered questions and potential negatives out there, it is hard to imagine a robust recovery within the next few years. Maybe we should be thankful for that 2 to 3 percent growth rate here in the States…
For sure, I believe we are in a new world order when it comes to the economy–at least with regard to the spending habits of both corporations and individuals. This may not be a permanent change, but, even on a short-to-near-term basis, it is a significant one.
Companies just do not spend the way they did before this Great Recession, and consumers here in the U.S. are saving more. They will spend to acquire items they particularly value and to replace necessities, such as automobiles, that are simply worn out. But they will not spend on big-ticket items without careful consideration, exhaustive comparative analysis and/or negotiation.