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How much influence does the Oval Office really have over the US economy?
2:41 PM MDT | October 17, 2012 | By LAWRENCE SLOAN, SOCMA PRESIDENT AND CEO
While the economy is growing – although somewhat anemically – darker clouds are on the horizon, according to economist Brian Beaulieu of Institute for Trend Research. Currently, US banks are lending again, residential construction (accounting for 9% of the economy) is on the rebound, and automotive manufacturers are citing strong sales – albeit under the specter of continued deficit spending. But Beaulieu warned SOCMA’s 2012 leadership conference that the growth will be short-lived.
The big question is: Could the election and a change in the White House help this economic outlook? Beaulieu says no. It really does not matter which candidate wins on 6 November. The die has been cast. The economy will putter along and, he claims, taxes will increase – regardless of which party is in control. Let me repeat that – regardless of which party wins.
I tend to agree; the forces that drive our economy are much more global in nature these days. When Greece sneezes or Spain coughs, the European Union (EU) is affected. And when the EU, one of our biggest trading partners, suffers, so do we. Whoever occupies the White House has only limited influence over the course of the US economy. Sure, the President appoints the heads of EPA and other regulatory agencies who interpret law, and Congress certainly can (and must) modify the US tax code. However, we are a global economy these days, and with slowing growth not only in the EU but in China and other major trading partners as well, this affects the manufacturing sector in particular, which the chemical industry is so dependent upon.
Beaulieu also commented on the US debt (at its highest level since World War II), which he felt will temper growth starting mid-next year, and we can expect a full-blown recession in 2014. Paralleling this, he projected the stock market will peak in the middle of 2013, and then begin to decline.
Longer term, Beaulieu believes a recovery will occur in 2015, but yet another recession looms in 2018 and 2019. I found it interesting that he felt confident enough to project out this far. I’ve never seen anyone go beyond a year or two.
What really hit the audience hard was a bold statement from Beaulieu.“If you are 43 years old or younger now, life is going to get a bit more difficult in the future….if you are over 43, then 2017 would be a good time to retire.”
If not, he told the audience to make sure they retire between 2025 and 2030. Now, while I admit to being over 43, I am in no place to retire in five years. Plus, many of us have kids whose economic futures we worry about. Do we really want our kids living under our roofs when they are in their 30s like we see happening in Spain? I don’t think so.
Beaulieu left the audience with the premise that “Washington doesn’t drive your business; you do…your business doesn’t depend on what government does.” Business must “get more creative on how to make a buck.” While I agree that we all can exercise free will over the course of our businesses, I must disagree with the premise that government doesn’t matter. Tell that to the company that received a surprise visit by an EPA or FDA official that shut them down.