Who Really Fuels Our Economic Recovery?

According to the Feds, the last recession ended in 2009. We had a pseudo recession due to Covid over 2021-22.

The definition of a recession is two or more consecutive quarters of negative growth in our GDP (Gross Domestic Product).

In other words going broke slowly.

And while the recent levels of GDP growth since 2009 have been up and down due in part to the Middle East and Covid, it’s still considered a positive economic sign.

Jobs or Work?

It’s the old chicken and egg question.

Does economic recovery mean jobs or work? You might ask, “Aren’t they the same thing?” Here’s the difference.

We always have work but there are not always jobs. For example, in Montana, with our low population there is great difficulty of many companies to find employees with the experience they need.

We’re the fourth largest state with just over one million in population.

We currently have an unemployment rate of 2.3 percent. At a labor force participation rate of 62.1 percent, Montana ranks 27th in the nation.

The reason we’re 27th is due to shortages in electricians, experienced construction workers, machinists, and other specialized workers.

So, the work is there but there is a very small, qualified workforce available for certain types of needed jobs.

Consumer Demand

Doesn’t consumer demand come into play somewhere? Sure, it does. But customers rarely created product demand. That’s marketing’s job.

How much demand was there for the hula-hoop the day before it came on the market? The Pet Rock? Virtually none.

Once people saw the hula-hoop, through marketing and advertising, a demand was created.

Anyone who’s ever been Christmas shopping for a kid’s toy knows that each year there’s that one impossible to find toy.

Entrepreneurs Are the Movers and Shakers

Many of our greatest innovations have come from single individuals with a vision and a dream.

Whether it’s Henry Ford making cars or Mark Zuckerberg connecting people, the economy is the big winner.

Additional dollars to pay employees are created out of thin air.

There weren’t billions of dollars just sitting somewhere waiting for Zuckerberg to come along and scoop them up.

He created those billions with an idea. It’s the great thing about the US.

The right idea can pay off big.

Lifestyle Adjustments

Rich and poor all contribute to the economic conditions we experience.

I’ve lived through eleven recessions and the one similarity in all of them is that consumers kept spending.

Medicine, food, transportation, mortgage, utilities still must be paid.

The worse conditions become the more discretionary income must be diverted to necessities.

But after each of those recessions the economy came back stronger on the other side. Most of them lasted about 18 months.

The Covid lockdowns and school closings skewed those numbers dramatically. It will be hard to judge the length of the recession I believe is looming ahead of us.

Even with gas over $5.00 in some parts of the country people still need to get to work and goods and services must be delivered.

With every price increase there’s an adjustment in the household income that must be made.

That weekly pizza will have to go. That’s one gallon of gas.

If you’re working at the federal minimum wage of $7.50/hr. it would take 40 minutes of work to buy one gallon of gas.

By advanced calculus you’d need to work 20 minutes per gallon at a $15.00 wage.

At the $15.00 pay rate it would take 6 hours of one 8-hour workday just to fill a 20-gallon gas tank.

Six hours out of 40, 12 hours out of 40, 18 hours out of 40? How often do you have to fill up each week?

Can you feel your paycheck shrinking?

Some Final Thoughts

We’re constantly adjusting our lifestyle to changes in the economic conditions around us. Recession or not.

Currently we’re in a recession in some parts of the country already and will be in a full blown one by summer in my opinion.

No one can accurately predict the top of future gas prices. What was the last thing you bought that didn’t get to you by truck?

We don’t buy at the same levels we did before the recession, but we still find ways to live the best lifestyle available to us.

The more money that changes hands the stronger the economy.

Who really grows the economic recovery? You do. Spend smart — but spend.

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