November 23, 2010
We have had a recession, a decline in our nation's economy. That is not in dispute. When it started, however, and when it ended (or will end) has been and will be the source of much debate among economists and historians. Also up for debate has been (and will be) the cause or causes of the recession. But is the economy recovering or not?
I am in the first camp: the economy has been recovering for nearly a year. Every month, nearly every week, brings more good economic news. But my title - why do I suggest that we have a political recession? One reason is illustrated by an article in today's New York Times, headline: "Corporate Profits Were the Highest on Record Last Quarter." Does that sound like a recession-era story to you? It doesn't to me, but I'm sure a story like that makes no sense to someone looking for work. Why aren't companies hiring if they are enjoying record profits? There are a number of reasons, not least of which is our increasingly hostile regulatory environment for employers. Take unemployment insurance, for example. At present the qualified unemployed get nearly 2 years of unemployment payments. Some job seekers will not do much seeking if they are happy cashing their unemployment checks. That artificially inflates unemployment rates and equals a political recession.
The recent health care legislation and its unclear impact on commerce and profit is another aspect of our political recession. But with business concerned with an anti-business climate, legislation passed that has an uncertain impact on a huge sector of the economy, and a willingness to keep the unemployed on the dole for an extended period, there's more than just a whiff of politics about this recession.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).