The outcome of Tuesday’s midterms signals some big changes ahead. Or does it? Well, if I tell you, I’d have to kill you (which means I don’t know!) However, if nothing else, the fear that both Congress and the President could continue to roll on, oblivious to the sentiment of the electorate, has been pointedly diminished.
Above all, the thing that’s holding back recovery for our boating industry is fear. Consumers have been afraid to spend their money. Their debt has been in a nose dive for nearly two years now. They don’t even want to borrow money these days. And, even if they did, they’d find banks afraid to lend.
Banks have more than $1 trillion in excess reserves parked at the Federal Reserve because they’re afraid to lend it, experts say. A stagnant money supply has resulted. It’s left small businesses unable to get loans, order new products, bring back employees and move away from a keep-your-head-down posture.
As the same time, untold trillions in cash are reportedly being hoarded by big corporations because they’re afraid of unknown future tax and regulatory burdens, the latter already coming down like rain in a tropical storm. So, corporations avoid hiring or calling people back to work. Thus, the circle of fear is complete.
Fortunately, all is not as it appears. Actually, there have been important economic bright spots even before the midterms. For example, the New York Times recently reported the agricultural industry is doing well, exporting more than $100 billion in food last fiscal year, the second highest year on record. There’s similar good news in the manufacturing sector. Contrary to appearances, companies have been increasing output and hiring. The Institute for Supply Management’s Factory Index of production has been rising. In August, it hit 56.3, up from 55.5 in July (over 50 signals growth.) Caterpillar, as an example, expects to hire 9,000 this year.
More positive news: The Index of Consumer Confidence rose to 53.5 in August, reflected in a reported increase in retail sales. Moreover, a 3.4 percent increase in wages may be going a long way to reducing fear about the future. And, most notably, the talk of a possible double-dip recession has all but disappeared.
So, if the midterm shake-up is to have a positive impact, it will be to boost an upward economic swing that’s already begun but needs a goose! It should include action on priorities like extending the Bush tax cuts for everyone as a way to stimulate business creation instead of punishing it. Add to that the elimination of “hidden” tax plans like those in the cap and trade or EPA greenhouse gas proposals. And, while repealing the entire health care debacle seems politically unrealistic, onerous provisions must be removed and viable plans to reduces health care costs to employers and workers alike must be promulgated.
What’s more, great oversight will be required as an unprecedented number of new regulations on taxes, health care, financial services and environmental issues are still to be written by agencies throughout the federal government.
Nothing will be automatic, of course. While a large group of freshman lawmakers who appear responsive to pro-business issues will arrive in Washington in January, we must expect to be engaged, along with our national associations (NMMA, MRAA, NMDA, NMBA and others), in lobbying for positive actions that directly affect our industry.
Rolling back policies that have created uncertainty and fear will be the positive result of the midterm shakeup. If that’s accomplished, economic growth will become self-sustaining as it always has been in this country and that will include our boating industry.