Almost three years into the Great Recession, the economy does not look so hot.
The markets continue to solidify Federal Reserve Chariman Ben Bernanke’s assessment that our economic problems are more chronic than we thought. Bernanke held a recent press conference about the Federal Open Market Committee findings. Their assessment that the economy is still in a “moderate recovery” has every one asking some version of an age old question, "Where da' cash at?" Lil Wayne asked all the way back in 2008, and I’m starting to think that no one has the answer. But we have ruled out a few possibilities. Here’s a quick rundown of the places that the cash is NOT:
The US housing market. New home sales fell 2.1% in May 2011, with the first decline in two months after some pretty solid gains. BUT!! We are doing better than we were last year at this time. It’s all relative, right? Read here.
Jobs. Surprise, surprise. The job market is still more difficult to break into than the Bellagio, as applications for unemployment benefits rose to 429,000 last week. Less hiring means less consumer spending, and that is just un-American. Sad face. It’s especially rough for teens, who have seen massive drops in summer employment opportunities across the nation. No more buying fudgecicles from the ice cream man with your summer paycheck, kiddos. Read here and here.
Europe. European stocks slumped this week following Bernanke’s gloomy outlook for the United States. Sorry, guys. Don’t hate us. Read here.
My wallet. Unpaid internships provide a wealth of knowledge and dearth of material reward. But I am getting free ice cream in about an hour. For those of your keeping score at home, that’s Emily: 1, Unemployed Teens: 0. ZING.
But in all seriousness, the economy is hurting. Considering the state of our federal finances and the current economy, it's easy to think that a "slash-and-burn" approach to the budget is the only option. As good ol’ Ben at the Fed reminds us, this is a terrible idea.
“In light of the weakness of the recovery, it would be best not to have sudden and sharp fiscal consolidation in the near term,” Bernanke said. “I don’t think that sharp, immediate cuts in the deficit would create more jobs.” In fact, the most recent CBO long-term budget outlook found that a “do-nothing” budget would be in primary balance by 2017.
You hear that, Congress? All Americans want to do is work (despite a recent Department of Labor survey that finds we’re exceptionally talented at wasting time), so please don’t implode the economy by bickering about the debt ceiling. When considering the budget, think long term savings. Don’t cherry pick small budget items across the boards and quit negotiating because of one specific issue, but look 10 years down the road to fix Medicare, Medicaid, and Social Security. Oh yeah, and I hear there’s some money in the oil industry. So that’s where the cash has been hiding...