Thousands of Americans will rally for jobs in some 150 American cities Wednesday, including Louisville, imploring lawmakers to focus on jobs, not cuts. The timing could not be more critical.
Demand for goods and services in the United States still remains trillions of dollars less than our economy is able to produce. Hence our stubborn 9.1% unemployment rate and trillions of dollars of capital just sitting idly by in bank vaults and US Treasury notes.
Some estimates as to the impact of the debt ceiling "plan" last week are that it will cost some 1.8 million Americans their jobs.
Across the pond in Europe, home to many vital export markets for our goods, the picture is no better. Italy and Spain appear to be following Greece down the financial rat hole and its anybody's guess whether the rest of Europe has the financial strength, or the resolve, to save them.
Here at home the stock market reacted poorly to the debt ceiling "plan" and all indications are that it is going to react no better to the credit downgrade by Standard & Poor's. Middle Eastern markets, the only markets that trade on Sundays, opened down between 4% and 7%.
Sadly, stock markets are leading indicators of economic performance. Since they represent the sum total of what everyone expects corporate performance to be in the future, they are often the harbinger of bad news. They also create, to a degree, a self-fulfilling prophecy. As soon as markets crash, many companies immediately start retrenching. They cancel projects, lay off workers, and hunker down. Thereby validating the markets' predictions. Even more sadly, while unemployment goes up in anticipation of slowing demand, employment lags far behind as companies hold off adding to their workforce until they have absolutely no choice.
In the face of this likely jump in unemployment, whether it is economically justifiable or not, it seems pretty clear that Congress is not going to have the political will to provide significant economic stimulus via government spending.
If ever there was a time for lawmakers to heed the people... Wednesday is going to be it. They don't have to stimulate the economy with government spending. There are other ways to do it. What they cannot do is nothing.
Full Disclosure: The author is a volunteer leader with MoveOn Civic Action.
