One of the painful realities of life as an economist and professional speaker is that the subject matter of economics is typically viewed (with good reason!) by the general public as confusing, intimidating, and boring. As a result, trying to present weekly economic and financial information with an unusual twist can occasionally be a most welcome change.
Warning!! This week's Tea Leaf is my semi-annual economic, financial, and political update … using today's current movie titles. My sincere apology in advance to anyone I might offend.
I am out of the country until July 17 with my bride of 26 years. This piece was written on July 1, so the latest economic data (including the July 8 jobs report) and very recent financial developments are not included.
As Summer Unfolds …
The Debt Ceiling
At the moment, "THE FUTURE" is clouded with anxieties of all shapes and sizes. It could easily take 17 "MIRACLES" to address these anxiety issues.
At the top of the anxiety list is concern about the "MONTE CARLO" gaming approach to increasing the nation's debt ceiling, presumably no later than August 2. Republicans and Democrats are likely to approach "THE LEDGE" of a temporary U.S.default on the debt. Such a default, possibly igniting investor and consumer fears around the globe, could conceivably contribute to "THE HANGOVER PART II" … a follow-up to the painful Great Recession.
As with the near government shutdown last April 8, don't be surprised if a deal to slow future entitlement program spending growth — enough to appease Republicans — is reached with "30 MINUTES OR LESS" on the clock. Also don't be surprised if the President and the Senate Democrats gain some modest "revenue raisers" (none dare call it a tax increase) as part of the deal.
Ideally, the "SUPER 8" negotiators on both sides of the political aisle could be "TRANSFORMERS" of the political process. Hopefully, they could reinforce the notion that at the end of the day the "FINAL DESTINATION" they seek is the nation's fiscal sanity, care for the less fortunate, and incentives for all to succeed. They could weaken THE MYTH that it is all about getting re-elected and destroying the other side.
At the Federal Reserve
"CAPTAIN AMERICA" (Federal Reserve Chair Ben Bernanke) hopefully is done creating a couple trillion BUCKs out of thin air to help grease the skids of American finance. Here's hoping there will be no need for additional "quantitative easing" prior to the end of the year.
The primary issue of the day remains Greece. The band-aid application of another 100 billion euros or so to ease the Grecian debt pain was provided by "GOOD NEIGHBORS" and "FRIENDS WITH BENEFITS," principally Germany, France, and the International Monetary Fund.
Still, anxiety exists that the massive national debts of Greece, Ireland, and Portugal, combined with a similar issue in much larger Spain, could SUBMARINE financial market confidence. In this case, "THE DEVIL'S DOUBLE" … a.k.a. another global financial crisis … could ensue.
"HAYWIRE" performance of global financial markets would no doubt spoil "CRAZY, STUPID, LOVE," an enticing "MIDNIGHT IN PARIS,P and other idyllic events and settings around the globe. Say it isn't so!
Suitors of the Republican Presidential nomination now move like "PENGUINS" from one political event to another, all seeking the CROWNE of leadership and trying to avoid being the latest political "BRIDESMAIDS." Each will seek "IRONCLAD" support from their followers, while all try to avoid being the subject of derogatory "TABLOID" journalism.
A similar focus will be on the President to see whether he embraces "THE CHANGE-UP" of a more centric position to expand his support. After all, adopting "THE CHAMELEON" mentality to enhance voter popularity is tried and true in American political history.
The U.S. Military
Don't forget to remember our fighting men and women In Harm's Way, putting their lives on the line daily in "THE GUARD" of the freedoms we enjoy. Tens of thousands of American and coalition troops find themselves "ON STRANGER TIDES," constantly facing the "DEATHLY HALLOWS" as simply "LIFE IN A DAY."
Their lives are a series of exhausting "POINT BLANK" trips up and down "GUN HILLROAD," battling "COWBOYS AND ALIENS" and other foreign bodies, placing STAKEs in the ground supporting freedom for any and all. Their ultimate search for the "GREEN LANTERN" of peace suggests "THE HELP" we can provide them with letters and kind gestures is much appreciated.
As you come across a member of the military with or without their family in a restaurant, consider discretely picking up their tab. It is money well spent. Military BEGINNERS just out of high school especially need a kind word or a meaningful gesture.
The American Economy
Modest U.S.economic growth during 2011's first half could give way to a more "FIRST CLASS" performance in coming months. Tantalizing tidbits about a stronger manufacturing sector, as well as prospects of "CARS 2" pick up their sales and production pace, strengthen that notion. The prospect of a "NOT BUMMER SUMMER" clearly helped the stock market and "SALVATION BOULEVARD" (Wall Street) to a strong rally in late June/early July.
Stronger U.S. economic growth could strengthen "THE TREE OF LIFE" (jobs), in some cases allowing talented workers to escape "HORRIBLE BOSSES." The "FADING OF THE CRIES" of the unemployed would work wonders in terms of American confidence … American morale.
Stronger U.S.economic growth would obviously provide "A BETTER LIFE" for hundreds of thousands of Americans. It would also allow more people to realistically envision a solid retirement at a desirable age with adequate funding, as they reenter the "CAVE OF FORGOTTEN DREAMS."
Jeff Thredgold is the chief economist for Zions Bank and founder of Thredgold Economic Associates, a professional speaking and economic consulting firm. Visit www.thredgold.com.