As I See It
by Joe D. Jones
Published: January 20,2003
The Mississippi Business EXPO’s 20th anniversary happens this week. EXPO is a significant opportunity for both buyers and sellers. It’s much easier to walk the isles of EXPO and network with vendors of all kinds of products and services than to visit the companies one by one. We also have an important showcase of achievements through the Salute to Business and Industry, Top 40 Under 40 and Business Woman of the Year awards programs. I hope you’ll take advantage of the opportunities available at the Trade Mart this Wednesday and Thursday and see us at EXPO.
Now, a few words about our economy.
Americans don’t know whether to fish or cut bait. The only problem with the American economy right now is uncertainty. Several major factors are causing unrest in the market place.
First and foremost is the impending war with Iraq. Apart from the obvious humanitarian concerns about loss of life and destruction of property is the reluctance of consumers to consume and business to invest. It’s hard to focus on spending decisions when the daily news reminds us of the ongoing buildup of American military forces in the Middle East. If that’s not enough, the increasing nuclear threat from North Korea is unsettling to say the least.
A second issue of economic significance is the devastation visited on investment portfolios by the stock market crash. Millions of Americans bought their first stock during the 90’s and watched their fortunes quickly rise to untold heights only to have the rug pulled out from under them. We are all now either in the process of reassessing our financial plans or wallowing in our misery. Neither scenario is a positive force for moving the economy forward. Inexperienced investors, in particular, are walking around in a daze.
Last year’s rash of corporate and accounting scandals is contributing to our economic uncertainty. Even though only a handful of the thousands of publicly traded companies were involved, the attendant media coverage made it seem as though the entire financial world was falling apart. The effectiveness of the SEC as policeman for investors is in question.
Traditional pay raises are few and far between. To make matters worse, business is requiring employees to pay a larger share of their health insurance, resulting in a decrease in take-home pay. After the economic euphoria that engulfed our country over the last decade, adjusting to a declining paycheck is pretty unpalatable. Rising unemployment makes it difficult to demand higher wages as more and more people are out of work.
The federal government wants to stimulate the economy to get us going
again. Lower interest rates and budget deficits are the traditional tools of economic stimulation. Interest rates can’t be lowered anymore since they are already at rock bottom and the federal government is already running a huge deficit. Thus, the federal government has fired all its bullets and the monster still lives.
Now, here’s the truth. The economy is actually starting to grow on its own. Growth will be at a more conservative and sustainable rate of two-to-three percent per year. Now exactly a boom, but sufficient nonetheless. The economy is still working off the excesses of the 1990s, particularly in the technology sectors. A further truth is that government has little impact on the economy anyway. It’s the mood of the populace that counts. Until this uncertainty lifts, the economy will doodle along in a lackluster fashion for several years to come. At some point down the road, it’s going to take off at a much faster growth rate.
In the meantime, don’t be caught out of the market. The stock market anticipates changes in the economy months before the changes actually occur. Sitting on the sidelines now is prescription for disaster. For prospective entrepreneurs, this is an ideal time to get something started. Coming out of a recession means that several growth years are ahead before we need worry about another downturn.
Having faith in our country and in ourselves is important in these uncertain times. We have always had problems and always will. Our response to the problems at hand is more important than how the problems are eventually resolved.
Thought for the Moment — Every generation thinks its problems are unique and potentially fatal. And yet every generation has survived to the next. — astronomer Carl Sagan (1934-1996)
Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at firstname.lastname@example.org.
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