New President. New Problems?
If anyone has been left wondering at this point whether the economy is getting better, it’s time to lay that issue to rest. Make no mistake: the US economy has made a substantial recovery and is continuing to improve further.
During the course of our business we spend a lot of time gathering data on the economy, which includes anecdotal evidence from business owners and executives. At this point literally everyone we talk to is busy, especially those with industrial and manufacturing companies.
At present this country is on pace to see more than 14 million cars produced and sold in 2012. All that production means steel is in high demand. Homes are being built; just the other day Toll Brothers announced a 46% increase in profits last quarter. Tool and die companies are so busy they don’t know what to do.
In fact, a lot of business owners we talk to say that they’ve been quoting business like mad. They tell us that if they get all the business they’re quoting, they’ll have to turn half of it down.
Of course, none of this helps anyone looking for a job since no one is hiring, save for skilled labor. The reasons why have been studied ad nauseam, but suffice it to say that business owners simply don’t know how much a new employee is going to cost them. Between payroll taxes and now the “Affordable” Care Act (irony in the truest sense of the word), every new hire is a massive potential liability for employers.
To some extent this is understandable; the job market is always the last thing to benefit during an economic recovery. This time has been particularly slow; and we have every incumbent – not just Obama – to thank for that.
Nevertheless, a lot of people are gearing up for November. There’s a lot of energy and rhetoric around this election; many see this Presidential race as a fundamental turning point in American history – and they’re right in some respects.
Will Americans reelect President Obama and continue following him down his path towards communism? And rest assured – that’s exactly where he wants to head. Or will he be replaced by a pure-blooded capitalist, now with an enthusiastic fiscal hawk in his corner?
It’s true – this election does have the potential to solve a lot of problems in America. But it isn’t going to fix the economy. Even if Romney and Ryan beat Obama, Americans are not going to wake up one morning in January and find everything fixed.
Anyone old enough to remember Reagan (I am not, but I do study history) will recall that when he was elected there were a lot of a big changes in the economy – but they took several years. Plus, we ended up trading one set of problems for another.
“Like what?” tea partiers will ask. Like 15% prime rate that effectively dried up lending markets and lead to a recession in the later part of his second term.
Let’s be frank: If Obama wins in November, come January we will have economic problems. If Romney wins, we’ll still have problems – they may be different problems, but problems nonetheless.
Like anyone else, we have our own political leanings. However, it’s important to separate those feelings from the investment world and remain objective. This election cycle will surely make that process exceedingly difficult, but all the more important.
Dock David Treece is a partner with Treece Investment Advisory Corp (www.TreeceInvestments.com) and is licensed with FINRA through Treece Financial Services Corp. He provides expert content to numerous media outlets. The above information is the express opinion of Dock David Treece and should not be construed as investment advice or used without outside verification.
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