Dan DiMicco comments on an article that appeared in the January 9th issue of the NYT by Dionne Searcey:
[Reposted from the blog of Dan DiMicco | Dan DiMicco | January 12, 2015]
The following quote is taken from the above article: “The drop in oil prices represents a substantial transfer of income from oil producers to oil consumers, said Kevin Logan, a chief economist for HSBC Bank. While some American oil producers are shutting unprofitable rigs and planning job cuts that could damage oil- and shale-producing regions like Louisiana and North Dakota, the overall economic effect for the nation is positive.”
I wish this were true but it’s not! The energy boom has given us a significantly lower trade deficit in energy and numerous benefits that comes with that. It also created home-grown, good paying jobs and strong economic activity that is focused here, not overseas and the multiplier effect on indirect job creation and economic growth is several times (5-6X) the direct effects.
On the other hand the significant savings for the consumer, while very important, is disproportionately spend on foreign made goods that have little if any multiplier effect in our economy. This is the same problem that plagued Obamas massive government stimulus program of over $1.3 trillion in 2009! The money handed out went overseas not to creating jobs here.
Average wages for most working Americans and Average family income, adjusted for inflation, has fallen from about $57,000 in 2000 to $52,000. Not increased! The number one reason for this is an economy that still depends on “financial and service bubbles” to power the Country’s economy until they DON’T (can you say “Bursting Bubbles”?), rather than on the true wealth creation engine for ALL Americans…Creating/Innovating, Making, and Building things and servicing this sector along with servicing the service sector!
America Wake-Up and demand a focus on the “Real Wealth Creation Cycle” both of our elected officials and Wall Street.