By Jim Watters
Quiz Time:
What turns the national economy?
We had some interesting responses to the quiz ranging from foreign trade to Wall Street to the President. A few answered the question with credit, money and retail. All responses were good and do have an impact on the economy. However, the answer is much simpler. What turns the national economy is nothing more than consumer confidence.
With all the doom and gloom expressed in the news media recently, it’s easy to understand why one’s confidence in the economy is shaken. The natural response to such talk is to stop or slow way down spending on anything other than necessities. Durable good consumption is postponed and people make do with their old refrigerators. Instead of remodeling that bathroom, we’ll wait until times get better. Of course, the waiting only makes the times tougher. It’s kind of a self-fulfilling prophecy. The experts say recession, consumers curtail their spending plans, businesses lay-off workers, income and taxes fall and the recession happens.
When we realize the economy’s structure is still solid, our confidence will increase and business goes back to normal. The actions of the government may help bolster confidence, the election rhetoric probably will be confusing and the economy waits for consumer confidence to kick in.
