OT: Somber Moods & Economic Recovery
I was at an auto repair shop today doing some needed work on my car to keep it on the road until such time as the economy peps up a bit and I can confidently consider buying a replacement vehicle.
There was a couple at the shop quibbling over the price of an oil change. This is not an expensive place to start and the couple wanted to know why an oil change (after coupon discount) was above $15.00. The owner explained the small oil disposal fee is in addition to the quoted cost of the oil change. That’s standard pricing practice in California.
I’ve never seen someone quibble over the price of a low-cost oil change before.
I don’t get to much shopping lately. I work about 60 hours a week. Like a lot of people in today’s economy I’m wearing more hats at work than I did before and my work extends well into the evenings and much of the weekend. Recently my shopping trips due to time pressures have been confined to Home Depot or Lowe’s, gas stations and an occasional trip to the grocery store.
But everywhere I go I’m not finding lines and I’m seeing fewer shoppers than at any time I can remember. The only lines I see are at a particular gas station located at a heavily trafficked intersection between 7 am and 8 am. That station’s business has been constant.
Before some radicals dump on me claiming I’m somehow taking a shot at the president, I’m not. No matter who might have occupied the White House at this time the going wouldn’t be easy and I do take a neutral stand on the president and his economic policies. I’m taking a “wait and see” approach.
In my work I deal directly and daily with issues such as homelessness and with people experiencing tragedies of all kinds. Even in the midst of these tragedies - which occur no matter the state of the economy - I’m see more somber moods (and people receiving layoff notices) than before.
My guess is this recovery will take quite awhile. While the stimulus plan(s) may help, I don’t think playing on sentiment will be as effective as in downturns in the past. In other words, jawboning won’t have the desired effect. I haven’t seen consumers this frightened since the inflation shock during the Carter years.
It will take much more than talk to get consumers back to the stores. I see the expected economic recovery requiring the investment of far more dollars than have already been planned and for additional stimulus appropriations being needed well into 2010. I also see the tax consequences (and the increasing taxation demands) working against the recovery as we move into 2010.
Just my two cents.
I’ve been thinking through the implementation and outcome of the current economic stimulus plan. What I don’t see are any real structural enhancements that will impact the poverty equation for those living at or near the poverty line. I don’t see this plan improving the prospects for unskilled labor and I see an unsustainable pace of spending that relies too heavily on the forecast benefits of a “federal jump start” to fuel continued economic expansion.
I expect an uneven recovery with an increase in institutionalized poverty as a result. Again, I’m not attacking the president nor calling him names. But I don’t see at this point how the plan will create much more than a short-term stimulus to the economy and the tax receipts gap at the state and local governments continuing to grow. While the stimulus plan and its payments to the states to cover current budget gaps will help, I suspect we will see more than the current omnibus stimulus package needed to keep priming the economic pump.
I do expect the stock market to begin a sustainable recovery this spring and the housing market to show clear signs of recovery by next spring. The question is how the necessitated increases in taxes at the federal, state and local levels will impact job creation and small enterprise investment.