For the sixth New Year’s Eve in a row, we have more hope than confidence about prosperity and growth in the coming year.
Unemployment is still high in the state, and exceedingly high in this region, and incomes aren’t keeping up with rising prices.
A U.S. Bureau of Economic Analysis report this month showed personal income in New Jersey grew 0.2 percent in the third quarter, compared to 0.5 percent for the nation.
But wait — adjust for inflation and N.J. personal incomes actually fell 0.1 percent, while growing 0.3 percent in the U.S.
Manufacturing activity in South Jersey, eastern Pennsylvania and northern Delaware rose sharply in the December Business Outlook Survey just released by the Federal Reserve Bank of Philadelphia, with an index reading of 8.1.
But that’s a rebound from November’s index of minus 10.7, when business activity, new orders, shipments and employment were all down following Hurricane Sandy.
That only brings regional manufacturing back to the level it was before the storm. Since the deeply negative readings during the severe recession from 2007 to 2009, the index has plunged back into negative territory three times and it’s hard to believe it couldn’t or won’t do so again.
Even the housing recovery that is the brightest break in the national gloom seems a bit weak and somewhat questionable, and not even evident in New Jersey.
The hopeful embraced the latest increase in the Standard & Poor’s/Case-Shiller home price index this past week — even though October’s gains were the same magnitude seen in spring 2010, the last time housing was finally going to rescue us from our stagnation.
And Case-Shiller just looks at prices in 20 large cities. Notice that in New York — a place, like New Jersey, in which government delayed the market from working through its foreclosure crisis — house prices are more than a percentage point lower than a year ago.
A separate survey by Lender Processing Services showed New Jersey home prices in October unchanged from the month and year before. The LPS survey, which like Case-Shiller tracks repeat sales of homes, doesn’t include sales of distressed properties.
Even the courts can’t hold back foreclosures indefinitely, and they’re expected to mainly hit the New Jersey market in the coming year. If the demand for houses isn’t strong when they do, home prices will be under pressure again.
Meanwhile, the federal government keeps borrowing money at a rate that no amount of increased taxes can possibly sustain. Yet our administrative and legislative representatives show no sign of being able to put the nation’s interests ahead of their political party’s.
Even the Federal Reserve’s mighty efforts to single-handedly ease the downturn by creating money now seem like they might leave the U.S. as economically hobbled as Japan has been for more than a decade.
This could be that darkest hour before the dawn you hear about sometimes, or the overshoot in pessimism typical of economic cycles. Maybe.
But after five poor years, trying to imagine when the U.S. economy might actually end its lesser depression (economist Paul Krugman’s name for it) and begin returning to normal economic growth has gotten tiresome.
But that’s all we’ve got as another year begins. I’m hoping — perhaps completely imagining — that we might get significant improvement starting next summer.
Out with them
The House of Representatives has scheduled a special session for today, theoretically to be ready to do something about the pitiful state of the federal budget, should the opportunity arise.
That session alone is enough to disappoint David R. Kotok, chairman and chief investment officer of Cumberland Advisors, in Vineland.
Kotok often appears on TV financial news to talk about the municipal bond market, where Cumberland has a significant part of the more than $2 billion in assets it manages.
On Thursday, he released an open letter to House Speaker John Boehner, begging him not to bring the body back for such a year-end, lame-duck session.
Kotok figures this Congress already has failed and now we should focus on holding the new Congress accountable next year.
“We will then start the year in the following condition. Barack Obama will have presided over the largest tax increase in American history. He will have presided over the raising of payroll taxes, income taxes, capital gains taxes, estate taxes, etc. And he will have presided over trillions of deficit spending.
“He did not do this alone. He had help. He was and will have been aided and abetted by the outgoing Congress — Democrats and Republicans, bulldogs and tea partiers, senators and representatives, men and women who were sent to Washington to represent the 325 million citizens of the United States. ... Let us start over in 2013 with the new players in their seats.”
Well, whatever they do the last two days of the year, our politicians surely won’t address the nation’s severe budgetary problems in any meaningful way.
So take heart, Mr. Kotok. There will be plenty of accountability left for next year, when an only slightly changed cast of characters will probably fail again to stop the federal deficit from consuming an ever growing share of our economy.
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