A week like this I’ve never had… 7 flights and 5 hotels in 6 days. Gee, its hard to know where I am at any one time… but this is not really what I was going to muse about today. Rather…. I saw a report yesterday that showed the middle-class in our country shrinking by 4.5% from 2000 to 2016. The astonishing thing is that this includes a reduction in the minimum income to qualify as middle-class by about 8% … so the bar is lower to entry, and yet the numbers of middle-class households have declined as a percent of the total households in the USA. If we think of all the threats to our national security, this maybe the greatest threat. The backbone for a strong country is its economic engine, and the backbone of this engine is a strong middle-class. Productive output comes from our middle-class. These statistics are a symptom of a greater illness in our country’s economic health, and it is further backed by an average GDP (gross domestic product) from post WW2 till 2001 of about 8% (7.95%) yet a 2001 to present of less than 4% (3.78%) … this is a dramatic reduction in work output. Yes, GDP is a measure work output in the form of the dollar value of all goods and services produced by our country. These numbers are not inflation adjusted, so when inflation is high it results in $ value of goods and services to be elevated. As inflation has been low lately these numbers are a little less alarming, until you realize that inflation is low because of artificial adjustments deployed through Federal Reserve monetary policy. Its complicated, but the bottom line is we really need to see a pick up of about 2% in growth for the middle-class to become healthy again.
Our focus on all things internationally, and our boarders are not our biggest issues. Our national security concern is the economic health of our country, and we’ll know that we are healthy when the households in poverty start to decline and the households that are in the middle-class begin to grow again. Its my belief that this will happen when government becomes more business friendly. Regulations placed on businesses today are extensive and growing and as they are changing all the time, the uncertainty creates havoc for business. Its more difficult today than ever for a small business to start and grow. It is also more difficult for mid-size businesses to make growth investments. We must get back to a more business friendly regulatory environment, as well as legal environment. Nuisance lawsuits take energy out of the system and contribute to slower growth (unless you’re an attorney). Employment income is what drives middle-class America. I believe we can and must do better. Our federal government must be more business friendly. Wall street matters, but Main Street America needs a booster shot!