It's the Economy! (Stupid)

"A most timely book and one that every American concerned for his country should read and think about. Patric Hale may be a voice crying in the wilderness but those who fail to heed it will pay a terrible price."

Hugh Menzies
Former Assoc. Editor, Fortune
Former Int'l Bus. Editor, BusinessWeek

In 2008, the American people will be barraged with claims and counter-claims during our quadrennial presidential elections. In the process there will be the usual myriad of issues facing Americans presented by the candidates, from which the common citizen will have to determine our next leader. The most important ones that always face Americans, however, are those of war-and-peace and "pocketbook" issues. But of these two, everyone knows that the economy is the most important daily issue that faces us all. Despite this nothing exists in America that gives the people a guide to the US economy so they can better understand these issues in a more intelligent, informed way. This is the fundamental reason why I've written this Guide.

This Guide is not meant to be polemic in terms of the data. As Joe Friday from Dragnet used to say: "Just the Facts, Ma'am." That's what this Guide is meant to provide - just the facts. "Ah, facts," you say, (I hear the skeptics amongst you), "but one man's fact is another man's opinion!" There's also the other saying: "There are lies, damn lies, and statistics!" Both are witty, of course, but mostly untrue. I say mostly because the world is never stagnant enough to fully achieve perfection in the accumulation of statistical information; invariably the world has moved on and the statistical snapshot becomes history. Nonetheless, there is a body of statistical information that policy-makers in Washington, and indeed those around the world, accept as benchmarks to help them truly understand the economy in as unbiased a way as possible. These are the sources that are used in this Guide. Most of them are readily available as public information on the internet. Unfortunately, if you really want to know the information it will literally take you months to find it, and more to put it together in a useful form. That's also why I've written the Guide - to save you the time and trouble to put it in a useful format that helps make you a better informed citizen.

Facts and figures by themselves, however, don't provide enough perspective on the US economy. The American Heritage dictionary defines "perspective" as "the relationship of aspects of a subject to each other and to a whole". That's what this Guide will also provide the reader. The first perspective required is for every reader to remember that the United States is only one of almost 200 countries in the world, and although it is the largest economy it must be seen in perspective to the global economy to properly understand its role. Indeed, issues like our deficits - either short-term or long-term - only truly matter in a global economy relative to America's global competitors and to its own GDP (see Chapter 9). The second perspective of importance is that of time; so I've provided historic data where appropriate to explain the development of the US economy over time.

Why is perspective important, especially in an election year? A friend of mine, for example, once made the pronouncement that "under Bush we have the largest deficit in our history". This is true in absolute terms; but compared to what? Deficits are not absolutes; they are actually relative terms, particularly to our competitors because it affects our global competitiveness, and relative to our own GDP and to our past. So part of the guiding light in understanding the US economy and some of the polemic subjects that always arise in an election is to always keep the question "compared to what?" in mind. This Guide provides this perspective, too.

While there is narrative in each section, I have endeavored to keep this to a minimum. It is my belief that all Citizens can look at the statistics, if properly presented (which I hope I've accomplished here) and truly understand our economy in perspective. Economics and statistics are dreary sciences for most citizens, and I, too, was personally disinterested in these subjects. But the problem with this disinterest is that it overlooks an undeniable fact: Economics rule! Or as a business professor once said: "If you don't know your numbers, you don't know what you're talking about!" Another professor once said: "If something is knowable--know it!"

In the past several years I've found, sadly, that, along with most of us, few journalists or politicians actually take the time to dig for the numbers before making all too often wild claims in the press. And we, the citizens of the United States, normally take their information on face value because we don't have the time either to dig for the numbers, thus accepting these bold statements as fact instead of opinion (and all too often badly formed opinion). Before the internet, there was good reason for this: There was little opportunity for the private citizen to seek out the numbers by him/herself without essentially taking a sabbatical from everyday work to camp out in Washington DC, and New York, and go from office to office to find out the information for ourselves. And, of course, few amongst us could afford to do so or truly would want to. Thankfully, the internet is a liberating medium because all of this information is now there to be found in the comfort of our own home - but it still requires digging! I've found it shameful, however, that many of the most reputable news organizations don't seem to do more than a modicum of research via the web to find out the veracity of economic claims, particularly when the internet is so accessible and easy to use for this purpose. So I've taken the months to dig, and worked diligently to put this information in a useful, easily understandable form to help our fourth estate, too, because an informed press also leads to an informed citizenry, and thus strengthens our democracy.

The Guide will be unwelcomed particularly by polemicists who seem to be out there in abundant numbers spouting off figures that are either not true, or without a proper perspective that would explain the economy better. But this Guide is truly for them, too. Despite all the numbers and statistics in the Guide, these still only frame our political economic debateas a society moving forward. Past performance is never a predictive guarantee for the future - but it can certainly help us better understand the parameters of the debate. Santayana's admonition about those who fail to learn from the mistakes of the past are condemned to repeat them should continue to guide us moving forward as a nation in the new global economy.

An advanced word of caution. Although I have endeavored diligently to present just the facts in their non-polemic form, inevitably these color my narration, and I, too, have my own opinions which I occasionally interject based on these facts. This I consider an author's prerogative and even responsibility since interpreting the information herein is as important as actually presenting the data and facts. The reader is, of course, free--and welcome--to ignore my opinions and form his/her own views. I hope, nonetheless, the data and facts will be the formative basis for these views. At the end of the day, the numbers are the numbers--at least you have them here.

Finally, this website has a blog section where you can see updates and discussions on these issues, so feel free to join in. I also intend to update this book on a regular basis and would welcome your input, comments, and suggestions. Please contact me at:

Patric Hale
President
Capital Markets LLC
PO Box 347
Cos Cob, CT 06807-0347
pbhale@itstheeconomy-stupid.com

NOTE: STATISTICS DON'T BITE!
Some people have a problem "relating" to charts and graphs, and "statistic-rich zones". There are many in this book as you will see. Don't let all of the numbers force you to overlook the information in these charts--I've taken the effort to color code the charts to make it easier for you to read, too. If you take as much time reading them as you would a normal page of text you will begin to understand them with increasing ease. And when you take the time to patiently understand these charts it will permit you to make your own analysis without listening to anything I have to say.