The vital signs of the economy are perhaps best described as one with pernicious anemia: the gastrointestinal condition that makes a body unable to absorb the vitamin B12.
Likewise, with respect to the economy, the Keynesian economic stimulus based on government spending has not revitalized the economy. There is some argument that it did prevent further economic decline, but the economy data still reflect anemia.
Employment remains at 9.5 percent nationally, with local unemployment at least one point lower. The private sector has not added employment and within the next few months the local state deficits will bring further cost cutting.
The GDP growth rate was revised in August down to a mere 1.6 percent. Personal spending, which drives 68 percent of the GDP, has only increased by 1.38 percent. The trade deficit has declined 3.37 percent. Inventories increased 0.63 percent, meaning that demand has increased over supply, further denoting a slowing economy.
The economic solutions to the Great Depression in the 1930s were very different than today. The new banking system corrections worked, but became forgotten in the 21st century. The economic recovery programs focused on creating major improvements to infrastructure. The right priorities on transportation, education, agriculture, manufacturing and energy production became the musts. The federal government invested 19 percent of the GDP in this long, let us not forget, recovery.
Much is different 70+ years later. Government expenditures have continued to be an average 19 percent of the GDP. There is not another 19 percent of the GDP available. The US and local governments cannot borrow further to make payments to current budget shortfalls. The underlying principle behind any increased borrowing is the ability to service the debt. Hebert Research continues to find that there is no public willingness for increased taxes to support deficit spending.
The solution is investing in the solutions – both immediate and sustainable. The Eastside and local economy have so many of these, if policymakers are willing to discover them.
The green economy is about business as well as environmental necessity. PACCAR delivered its first hybrid trucks to Costco this summer.
Foss Maritime set a corporate goal of leaving “zero trace” by converting ultra low sulfur diesel and the first and world’s only diesel-electric hybrid tugboat.
The Gates Foundation has $28 billion in endowment funds to address the solutions to global disease and other humanitarian needs.
The Center for Advanced Manufacturing (called CAMPS), headed by Eastside leaders, is developing manufacturing solutions to build wind turbines, solar panels, and inverters.
There are solutions to education such as the Issaquah-based College Success Foundation (formerly Washington Education Foundation), headed by one of the former founders of Costco, Bob Craves. Other education solutions in education include Bellevue-based Dream Box Learning. Clear produces 4G wireless Wi-Fi solutions for increased mobile use. As the solutions are developed, so will go the economic recovery.
Jim Hebert is the president and founder of Hebert Research, Inc., an international real estate, land use, and statistical research firm in Bellevue.
