Monday, March 2, 2009

The worst is yet to come

Since the start of President Barack Obama's administration in January, his primary focus has been on jumpstarting our nation's feeble economy.

Last month, a stimulus package was passed by Congress that Obama hopes will improve the overall situation. Of course, Obama has stated that the package will not be a quick fix, and it will take quite a while to get things moving in a positive direction.

On that, I agree with the president. We did not get in this mess overnight, and we will not get out of it overnight.

So, how bad might it get in the coming months? Last week, the Federal Reserve downgraded its predictions for our nation's economic performance. Late last year, the Fed predicted that national unemployment in 2009 would reach between 7.1 and 7.6 percent, according to the Associated Press.

Only two months and two days into the year, our unemployment is already 7.6 percent. Therefore, the Fed's experts went back to the drawing board and are now projecting that unemployment will settle between 8.5 and 8.8 percent this year.

Additionally, the Fed is forecasting the economy will decrease between 0.5 and 1.3 percent, according to the AP.

So, for those of you optimistic about the nearly $800 billion stimulus package that recently was passed, it is time to come back down to earth. As I wrote a few paragraphs ago, our problems are going to take a long time to fix.

It is admirable that our lawmakers are attempting to reach out to the country and help ease our pain, but I am cynical about whether this package will help that much. Large federal programs often fall short of expectations.

For example, President Franklin Roosevelt is often lauded for the New Deal that attempted to help citizens during the Great Depression. While it did get some people back to work, people often forget that unemployment remained above 10 percent well into FDR's second term.

World War II is what eventually brought us out of the Depression because it required manufacturing needs that forced the creation of new jobs.

Hopefully, it will not require another world war to bring us out of our current problems. If World War III were to happen, the problems we face now would be like one raindrop in the middle of a thunderstorm.

So, how should we approach our current situation? Instead of waiting for our government to solve all our problems, we should do what Americans do best. We need to work hard, save our money, and help our neighbors the best we can.

I know that is not a very sophisticated formula, but it has brought our country more success than failure. In fact, straying from this formula is likely what has brought us to our current problems.

We have worked hard, but we have not saved our money. We have overextended ourselves, and many find themselves trying to maintain a lifestyle they could not afford in the first place.

As sad as this is, maybe this is a lesson our nation needs to learn so it will be better in the long run. Our generation has embraced materialism and what has it gotten us? It has gotten us a lot of nice toys, but also a lot of debt.

If nothing else, we can teach the next generation about our mistakes. We should at least do that because they are the ones who are going to be paying the tab for our excesses.

Let us hope they won't get too mad at us when we tell them.

2 comments:

Joltin' Django said...

I've just started re-reading "Atlas Shrugged."

All you need to know ...

Chris said...

It was announced today that the national unemployment rate is now 8.1 percent. The Fed's experts might have to go back to the drawing board again.