Fed Chairman Ben Bernanke told Congress today that America will continue to see a recovery, sort of. It won’t be enough to bring down unemployment much or refill the Treasury. If that’s a recovery, then I lost weight last night because I didn’t eat a second plate of cheese enchiladas at Mama’s.
He also warned again about the federal deficit, leaving it to our system of political paralysis to do something…or not. The reality is that, short-term, major federal government cutbacks will hurt the economy. The private demand simply isn’t there. Meanwhile, even returning to 1990s tax levels, much less those of the Eisenhower era, is off the table. So, too, is the issue of how long we can sustain wars without end. The result is sure to be combustible. If Americans are expected to endure what new British Prime Minister David Cameron said of his country — “decades of austerity” — then inequality of incomes, opportunities and sacrifice will simmer. Using the dreaded deficit as an excuse to cut growth-generating investments will be self-defeating.
Bernanke doesn’t dwell on the biggest causes of the deficit: In addition to overseas military commitments and ill-advised tax cuts, there’s that wee matter of spending vast sums to “save” the toxic, risky financial system. A red-ink spill to rival BP, of which he was ringmaster. In any event, we should hold the hysteria. Demand for Treasuries is high and the rates investors are accepting is low. Inflation is low. The dollar remains the world’s reserve currency. The deficit is high, but nowhere near that of Greece. That gives America time for a sober conversation and make some sensible, balanced choices. Can we do that anymore?
The Back Story: Experian, the credit-information company, ranks Seattle No. 1 among metro areas in its debt burden, but adds, “its residents are managing credit well.” Our average debt per consumer was $26,646, about $2,000 above the national average, followed closely by Dallas, Denver and Atlanta.
It’s easier to manage credit well when you have much stronger-than-average median household income and wages, as Seattle does. What’s startling is the number of low-income/low wage metros in the top 10: Phoenix (5), Tampa (8) and Orlando (10). Also interesting: How little consumer debt has fallen despite the Great Recession.
Today’s Econ Haiku:
Chinese exports surge
And what of U.S. imports?
The check’s in the mail