During the last week in September, I was having another conversation about the economic ailments of the global economy with a long-time client. It seems that these conversations always turn depressing, so I promised him that I would write a cheerful commentary this quarter.
Then the U.S. government shut down.
Hmm, well that threw a wrench into the whole plan. We can’t talk about unemployment claims dropping because we’re not getting any government reports during the shutdown. We can’t talk about the projected GDP because we won’t know the impact until it’s over (forecasters are predicting a 0.1% drop in GDP for each week of the shutdown).
But then again, the day before the shutdown, the President signed a law that the 1.4 million active duty service members would continue to get paid. Then Hagel ordered back just under half of the 800,000 furloughed federal workers who are civilian workers for the Department of Defense while the House voted to provide back pay to furloughed workers once the now partial government shutdown ends. So, are we really shutdown or just giving a paid vacation to half a million Americans?
By the time you read this, we’ll have hopefully wrapped up the showdown on the debt ceiling and the budget impasse. If not, we have good news for wine drinkers. California is having a bumper crop of wine grapes this season.
If Congress was functional, we could celebrate the resiliency of the economy in the face of the sequester and end of the payroll tax holiday. During the third quarter, marginal revenue growth was strong, inflation low, the Fed accommodating, and personal net worth hit an all-time high. If we ignore for a moment the unwieldy Fed balance sheet and the eventual unwinding of one the largest financial experiments of our time, there would be enough good news to ring in the holidays with more cheer than we’ve had in over six years.
There still appears to be a big elephant in the room though…Obamacare. The time has come for the red headed step child of employee benefits, group healthcare insurance, to have her day. There are rising insurance rates, imploding exchanges, a new individual mandate, and questions about adverse selection. All of this is much more riveting than GDP growth and inflation hovering around 1.9% or the measly yields on cash. But then I regress…it’s still not cheerful.
So here is my top 5 list of reasons to be cheerful this holiday season:
- The return of Snooki and JWoww
- Thanksgiving, football, and beer
- We’re not Greece, yet.
- Tax on pot, unemployed stoners finally have to pay tax
- And yes….Denver has Peyton.
Hope you have wonderful holiday season!