Within the last few months, there have been big wigs talking about how much the economy seems to be improving. However, is this politics or true economic expansion?
According to a news story from the Associated Press, Treasury Secretary Timothy Geithner, the economy is growing much faster than expected. Even though, unemployment remains around ten percent, he claims that the economy is improving more quickly that initially thought.
This statement to me seems troublesome. During the last quarter, most of America’s GDP was driven strictly by government spending. Growth was almost exclusively in the public sector. This, to me, is not a sustainable model for growth. However, if Secretary Treasurer Geithner believes the economy is growing, where are the jobs? If the private sector is expanding, why is unemployment still as high as it is?
The way to sustained job growth is by real tax cuts on small businesses. If business owners have the money to hire more employees, they will. However, the government still feels it necessary to tax that very demographic. As I described in another blog, the recently passed Health Care Reform bill will tax individuals who make $200,000 or greater per year and couples who make more than $250,000. Back in 2006, the average income for small business owners was $233,600, as I cited in the same blog entry. So clearly small businesses are indirectly being taxed by the health care bill. In the long run, how can this series of spending and taxing by the government be sustained?
However, on the other side of things, according to the same article, consumer confidence is up, and people are spending more money. If this is true, then there is more money circulating within the economy. This is indeed a good sign.
If, though, the economic growth is coming from the public sector, it is not a true sign of real growth – just the government throwing money at a problem. If the economy were improving as drastically as the pundits like to tout, jobs would be increasingly present. Even if all the other numbers were going where they need to be going, at the end of the day, almost one in ten people in the country are out of a job.