Yesterday, the government released the data on capital goods for September. The most important figures in the report are orders and shipments for non-defense capital goods excluding aircraft. These figures tell us the trends for big ticket expenditures by business which are likely to create new jobs. Shipments in September were down a bit, but orders fell by a larger amount. This is the kind of nitty gritty data that few people ever hear about, but which gives a picture of how a big chunk of the economy is likely to fare in the near term. It is not good news.
Meanwhile, on the other side of the ledger, we have continued good news on the oil price front. With little fanfare from the media, the price of oil has dropped and the price of gasoline has fallen with it. This puts more cash into the pockets of consumers across America and will boost consumer sales.
Of course, we also have the coming price increases for folks who buy their own health insurance that will kick in starting January 1 and thereafter. This will use up the savings from the drop in oil prices.
The truth is that we have an economy right now that is giving off all sorts of contradictory signals. Some people look at the stock market and conclude that growth is coming. That is not the message that one should get from the market. Right now, the only reason that the markets are doing so well is that the Federal Reserve is likely to continue to pump massive amounts of cash into the money supply through quantitative easing. The day that stops, the markets will fall. Just the fear that there would be a reduction in the amount of QE sent the markets into a tailspin earlier this year.
What America needs right now is a push from Washington to get the economy growing again. Let me be clear. This needs to be a push to the private sector. A big government spending spree will not help except on a temporary basis. Oh sure, if there were a major government capital investment, something akin to a new space program, we would see benefits in the private sector with both job and wealth creation. A big new batch of government assistance payments or raises to government employees would be just a temporary help. The time is now to fix the corporate tax code and to remove some of the more onerous and unnecessary regulations from business. There is major pent up demand across the country and unleashing the economy would also bring that demand into play. America could move back to the good old days when a growth rate of 5% was not uncommon. Washington needs to stop worrying about elections and start worrying about America and its people.
Meanwhile, on the other side of the ledger, we have continued good news on the oil price front. With little fanfare from the media, the price of oil has dropped and the price of gasoline has fallen with it. This puts more cash into the pockets of consumers across America and will boost consumer sales.
Of course, we also have the coming price increases for folks who buy their own health insurance that will kick in starting January 1 and thereafter. This will use up the savings from the drop in oil prices.
The truth is that we have an economy right now that is giving off all sorts of contradictory signals. Some people look at the stock market and conclude that growth is coming. That is not the message that one should get from the market. Right now, the only reason that the markets are doing so well is that the Federal Reserve is likely to continue to pump massive amounts of cash into the money supply through quantitative easing. The day that stops, the markets will fall. Just the fear that there would be a reduction in the amount of QE sent the markets into a tailspin earlier this year.
What America needs right now is a push from Washington to get the economy growing again. Let me be clear. This needs to be a push to the private sector. A big government spending spree will not help except on a temporary basis. Oh sure, if there were a major government capital investment, something akin to a new space program, we would see benefits in the private sector with both job and wealth creation. A big new batch of government assistance payments or raises to government employees would be just a temporary help. The time is now to fix the corporate tax code and to remove some of the more onerous and unnecessary regulations from business. There is major pent up demand across the country and unleashing the economy would also bring that demand into play. America could move back to the good old days when a growth rate of 5% was not uncommon. Washington needs to stop worrying about elections and start worrying about America and its people.
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