US 2013 Economy Begins to Take Tentative Shape

As the first quarter lurches along an even but sustainable path, the outline of the rest of the year to come is beginning to create the basis of a “survivalist” economy. The solidity of America’s natural resource development, both agricultural, as well as fossil fuels, supported by renewables, plus a solid global export sector, are sustaining a gross domestic product rate that will likely equal, but not exceed the 2.5% upturn reached in 2012.

With a minimally tolerant relationship existing between two combative political parties, unwilling to wage open warfare, none of the major economic obstacles of opportunity— debt, deficit, unemployment, and traditionally dynamic growth factors— will be able to manifest themselves before the 2014 mid-term elections.

The following factors reflect the driving forces behind the 2013 results:

1) Unemployment. With close to 25 million people out of a potential workforce of 150 million, either working part-time, temporary, or totally out of the job-seeking sector, the real percentage of fully, partially, or totally unemployed is mired solidly in the double digits. With an average monthly employment addition in the 170,000 range, when 250,000 are needed to turn this economic malignancy around, means little if any solid improvement throughout the year.

2) Debt-Deficit. Without the political will to decisively up the retirement age of participation for Medicare or Social Security from the current mid-sixty age level, the nearly 25% of the federal expenditures which sustain these programs, the annual deficit will continue to exceed the annual one trillion dollar mark or more. This will cause the debt to reach $20 trillion before President Barack Obama’s second term comes to an end in early 2017.

Adding in Defense, with another 20% plus, and close to 20% for the expected higher interest debt payments awaiting us, even the current annual trillion dollar deficits will have a tough time being reined in. It will require continuous purchase of U.S. Treasury debt by domestic and international investors, plus maximum involvement by the Federal Reserve.

Assuming that no breakthroughs will be accomplished to rectify this impasse, the expected “survivalist” economy will subsist on the basis of America’s natural resource development, together with this nation’s superior conversion capability of finished goods. The continued American consumer goods demand of 70% of GDP, primarily generated by the 120 million plus gainfully employed, will do its part to keep the U.S. economy on a positive course, even as it struggles to stay above the breakeven point.

The sequestration alternative, which sends shudders throughout both Houses of Congress, is slated to take $500 billion each out of Defense and the government agency sector. But spread over 10 years, it will do little to force America back into anywhere near a breakeven point, especially when it’s likely to be heavily back-loaded.

Under current top government leadership, America will find itself swamped by a population that has doubled to 320 million in the past 65 years. With breakthroughs, such as all aspects of modern technology enhancing corporate bottom lines, the U.S.’s unemployment bulge will not improve. This in turn will mean a continuation of indefinite unemployment rates, and an entitlement octopus that could wind up encompassing one-half of the U.S. population that is due to reach over 350 million a year by mid-century.

Only the incredible development opportunities inherent in America’s natural reserve riches and the revenues generated by America’s successful independent businesses, large and small, will keep America from again slipping into the rigors of recession. This would be sure to beckon without such a vital core base of natural riches.
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