Virginia Beach –
Ocean waves break naturally on the beach at 78th Street. Temperatures are moderate – so far…one can walk in sand without the fear of burn.
A grotesque, sad drowning of a 14 year old boy happened in front of us last Saturday; it remains seared in tragic memory. Restaurants are moderately busy; waiting lines, if existent, are short – and convenient. Vacationer numbers seem down. “A slow season”, murmured a restaurateur to me, in passing…and so it is.
“Scary Economics, 2013”, published in The Farmville Herald, and Jefferson Policy Review, brought reactions hardly benign. Enjoined by a commonality of disgust, depression, and hunkering down for economic survival, readers grappled: “In 2008, I was doing the best I’ve ever done – now I am barely hanging on. We now have one half the employees, and our contribution for health benefits has increase $140.00 a month.”
John Moss wrote, “All the happy talk is not supported by the fundamentals. The middle class has little discretionary income; job growth and job quality are both flat. The chattering heads are trying to talk us into recovery – cheer leading is not the solution.” But, in addressing the true challenge, a slow walking bedevils, yet it may keep a story-line down.
A beleaguered middle class’ thirst for economic hope remains unquenched. For many, it diminishes one’s faith in government, negating even rudimentary confidence in Washington to face stark economic realities. Most economists agree the U.S. economy cannot successfully elevate without a growth of 3 to 3.5 per cent minimum. Currently we’re hanging around 1.8 – 2 %. Now, the Second Quarter, 2013, just reported a 1.7 growth. “Taint funny, McGhee”, said Molly, admonishing Fibber in the old radio days.
Take the housing market. Retails sales and housing starts marked low points in releases of recent weeks. Failing to meet projections for June by growing only 0.4% – less than May’s (downwardly revised) rate of 0.5%, the forecast of 0.8% may be a stretch. Weaknesses appear in building material and garden supply sales (-2.2%).
Housing starts hit its lowest point in a year. Median estimates called for at least 160,000 more units than were booked, with building permits dropping 7.5%. Worse, construction for single-
family homes declined 0.8%. Hope is consumer sentiment might change – from 83.9% this past June, to 84 in July. Tell that to a damaged middle class, who has the daily bitter draught to drink.
Then there’s growth of a “debt-denial” industry.
From middle class agony – to national debt realities, the circumstances seem jaw-dropping. At first, there was encouragement in the Congressional Budget Office’s (CBO) revised numbers – the national debt looked less menacing than earlier feared. But a closer examination of America’s debt shows a much different – and alarming – reality.
In mid-May, the CBO said the federal deficit in fiscal 2013, which ends in September, would be 642 billion – down from the one trillion-plus of the previous four years. Generously, the President recently assured, “for the next 10 years it’s going to be in a sustainable place.” Not so fast, says Veronique de Rugy, a senior research fellow, at the Mercatus Center at George Mason University.
The money that the federal government owes to domestic and foreign investors – is almost 90 percent higher than at the onset of the financial crisis in 2008. Public debt is now 75 percent of GDP, the highest level since 1950 – and that excludes debt the government owes to Social Security, and other accounts. Good luck with that.
The CBO projects the public debt is scheduled to grow to 19 trillion by 2023, or 73.6 percent of projected GDP – up from 36 percent as recently as the end of 2007…and not an official acknowledgment in sight.
Since World War II, the main drivers of each recovery have been federal spending, technical innovation, residential housing and / or consumer spending. History will not judge the treatment of the middle class, and the “debt-denialists” kindly….nor should they.
Raymond B. Wallace, Jr. is a former CEO, classroom History teacher, and Trustee of the Virginia Retirement System (VRS). He can be reached at firstname.lastname@example.org.