Snowballing economic pain hitting home
What had been a political exercise in using intentional pain against innocent citizens to score party-points has now fully devolved into an economic conundrum as we turn the Great Recession into something more closely approximating a second Great Depression.
Don’t forget that a recession is what happens when your neighbor loses his job; a depression is what happens when you lose yours.
With 400,000 unpaid direct furloughs in the greater Washington, Maryland, Virginia economic region, the federal shutdown's impact is hugely magnified, as private sector contractors associated with these positions, as well as support functionaries, fall like dominos.
Department of Defense contracts remain unfunded; the Departments of Agriculture and Health and Human Services, and the Food and Drug Administration workers sit idle; and Veteran Administration Hospitals turn away patients. As the associated salmonella outbreak enlarges, consumers have become paranoid.
The people are now clutching their money as consumers, withholding payment of bills, and deferring capital purchases, even ones that are necessities. Consumer debt is spiking as compared with cash purchases, and the average American has but $200 credit card “open to buy” limit available as economic buffer.
I know this as a professional retail manager currently touring Maryland and Virginia locations for a power retailer in the big box business. I speak to hundreds of sales pros and customers in a single day. My personal polling is in “real time.”
On a larger scale, businesses do not trust the unmanageable and bloated federal government to equitably solve our long term economic woes, and this also kills recovery, let alone needed growth.
As former Office of Management and Budget Administrator Sally Katzen opined in The Washington Post on Sunday:
“No business would tolerate the uncertainty and needless costs imposed by a shutdown. And though federal employees probably will, eventually, be paid for their lost work, millions of dollars were wasted in planning for this shutdown and will be incurred for starting back up. Questions remain about what happens to work in process, time and schedule commitments and orderly planning.”
Just as this is no way to run a business, it is no way to run a government.”
First a “sequestration” was invented to harmfully chop out spending – as opposed to managing it – and now a series of self-imposed legislative and financial deadlines loom in a form that has decimated consumer confidence. Lawmakers in both branches of government, all jockeying for advantage, could learn a lot from the first law of medicine, “First do no harm.”
Tragically, the people who represent us have missed the point of the Hippocratic Oath above, and are inseminating the population with Obamacare in a simultaneous effort.
And, as we mistakenly combine healthcare reform with budget deals, the worst is yet to come.
Wait until the banks feel enough pain – because of defaults to obligations – to begin to make the cost of borrowing more expensive for consumers, and see the terrible impact on consumer spending that will certainly cause. The service sector, most heavily comprising our economy, will wag the dog to a bloody pulp.
The people are angry, the people are hurting, and the people living paycheck-to-paycheck are at the edge. This will continue to ripple upwards. Good news is that despite national polling distractions, I hear both parties getting a deserved piece of the joint blame, and know this will result in voting out incumbents on both sides in 2014, and I suspect we will gut leadership in Congress. This, of course is the best form of “term limits.”
It is heartening for me to frequently now hear, “I’m not a [Democrat/Republican] any more, I’m an independent voter.
‘Bout time we began to think!