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Saturday, September 05, 2015

Who is right about economy?

Reprinted from the Cedar Rapids Gazette
 SEPTEMBER 4, 2015 | 3:37 PM

by Steffen Schmidt

NOTE from author:  Let me share with you the several vicious and ignorant e mails I received from people who disagreed with me. I get that a lot when I write columns for the Cedar rapids Gazette, Des Moines Register, Ames Tribune, Carroll Daily Times Herald and other newspapers. Some of them are so threatening that law enforcement has actually advised me to have a permit and carry my own protection. Wow! We are living in a bilious and divided country. That's largely the fault of politicians and the brutal talk show radio.

MarketWatch reported this week that, “The U.S. economy looks much more vigorous in the second quarter than previously thought, as a report released Thursday showed businesses got off the sidelines and spent some money.” Economic growth was at 3.7 percent annual pace in the second quarter.

The Wall Street Journal reported, “The U.S. labor market continued its long march back from the recession with steady job gains in July.”

Cattle Network reported this week that, “The U.S. average retail price for regular gasoline decreased eight cents from the previous week to $2.64 per gallon on August 24, 2015, down 82 cents from the same time last year.” More importantly for farming and transportation, “diesel fuel decreased five cents from last week to $2.56 per gallon, down $1.26 per gallon from the same time a year ago.”

Nasdaq summarized the U.S. economy this way. “The latest U.S. numbers stand in stark contrast to much of the rest of the world, where growth has been dampened. Other recent readings suggest the U.S. economy is positioned to weather turbulence from overseas. Business investment in July posted its strongest gain in a year, jobless claims have held near 15-year lows through August, the housing market is by some measures back to pre-recession levels, and consumer confidence this month rose to its highest level since the start of the year.”

How many Americans are aware of all this good news?

The answer is almost none.


Because we are headed for a presidential election. Most of the candidates especially the Republicans, and most certainly Donald Trump, are terrorizing Americans with dire gloom and doom about the United States. Louisiana governor Bobby Jindal has said that the future of the U.S. is between the government and the private sector and government is bad.

The truth is that the federal government, state and local governments in partnership with the private sector have done a great job over the past eight years.

Low interest rates by the Federal Reserve made possible the recovery of the housing industry. Yet some want to shut down the Federal Reserve.

Smart energy policies as well as a surge in wind and solar power have made the United States energy self-sufficient as well as a net exporter of energy. Of course, low energy prices are a mixed blessing. Consumers and energy intensive industries such as trucking, farming, and airlines have greatly benefitted. Energy companies and countries highly dependent on energy exports (Saudi Arabia, Venezuela, Russia, Iraq, Nigeria) are suffering and may become destabilized.

Some say we should be celebrating the success in bringing back the U.S. economy for which Democrats and Republicans can take credit we are spreading gloom and doom. They argue that attacks on Mexico, China and other trading partners by politicians are alarming because a return to protectionism in trade is a 100 percent guarantee for a serious recession or a depression.

But there are others with dark and pessimistic views about America none more than Robert Wiedemer the “Darth Vader” of economic forecasting. “In a recent interview for his book Aftershock, Wiedemer says, “The data is clear, 50 percent unemployment, a 90 percent stock market drop, and 100 percent annual inflation ... starting as soon as next year” according to Newsmax. No doubt the national debt, federal deficits, Social Security and Medicare solvency are troubling and persistent problems that need courageous attention.

Are you confused and wondering who’s right?

Therein lies the problem because even economists disagree.

In this upcoming election voters will need to decide whether they should dump the George W. Bush and Obama policies (that’s 16 years of consistency) or whether the nation should “stay the course” and we should not “rock the boat.”

It’s not an easy decision and all the shouting is not helping.

• Steffen Schmidt is professor of political science at Iowa State University. Comments:

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