Whether it is shoeshine people, taxicab drivers or truckers, they all indicate that the economy just doesn’t feel quite right. After listening to Dr. Ed Seifried, Professor of Economics, in Spokane, WA, it may appear that there is credence to their perspective.
With the exception of Southeast Asia and China, the world economy is quite soft. For example, Japan is in its fifth year of deflation. Also, real estate valued at $1 million in 1988 is now worth $188,000. European economies are struggling with productivity and social programs that are a drag on the economy.
The main problem with our economy is employment. The U.S. has lost 2.3 million jobs since the official end of the recession in November 2001. The U.S. is now in the 26th month of economic recovery. Historically, at this time during a recovery the economy would be experiencing a 5% growth in jobs. However, we continue to lose jobs.
Productivity is increasing as we replace labor with technology. For example, if you plan to check in at the airport, you will use a computerized check in system.
The U.S. continues to replace high paying $20/hour jobs with employment opportunities that pay 27% less, according to the February 15 Atlanta Journal-Constitution Sunday newspaper. The professor indicated that this will be a key issue in the fall elections, and I agree. Also, high non-wage compensation, such as healthcare, workmen’s compensation, which is being influenced by lawsuits and regulation, makes firms reluctant to add staff. Depending upon the pace of job loss and redistribution of wages, this will eventually impact consumer spending. Yes, the economy is not feeling right, and I think we know why.
Economic Watch
Caution: Oil prices are above $35 per barrel. This is a danger sign if it lasts!
Side Note
It is amazing how much more entrepreneurial and business-oriented farms and ranches are outside the government payment belt!
My e-mail address is:sullylab@vt.edu
Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He recently completed a sabbatical working with the Royal Bank of Canada. He is now back at Virginia Tech with his academic appointment, which is teaching, extension, and applied research.
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