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New Day, New Year

As this New Year dawns, I have taken additional time to sort through a variety of data that provides some insight regarding what we might expect over the next 12 months. As noted in a prior posting, there are numerous reasons to be both mildly optimistic and somewhat pessimistic. After the ‘fiscal cliff’ was temporarily avoided, the DOW rallied to end the week over 13,400, signaling market optimism and a willingness to assume the best for U.S. industry in the months ahead. Unemployment remains around 7.8 percent, but people may finally be grasping that time and pace are the twin keys to a slow, stable job recovery, and we must accept that reality. Once expectations are calibrated to reality, manic calls for drastic action may mellow a bit as we slowly work out of this mess.

It is interesting to note that there were 137,000 new jobs created on October, 161,000 in November and approximately that many in December. In all, 1.84 million jobs were added during 2012, which is about what was created in 2011. This is not the 2.4 million needed for a fully revitalized economy, but the good news is that jobs are being created across several industries; manufacturing, housing, professional services, health care, architecture, financial services, information services, and retail. While insufficient for a robust recovery, it signals positive direction and steady gain, when much of the world is upside down (Italy, Greece, Spain), stagnant (France, England, Russia, and much of the EU) or slowing (South America, China, India). U.S. industry is positioned to recover, albeit slowly, through more careful planning, better data, an inventive spirit and a broader worldview. Panic and overreaction are never signs of good management and certainly don’t reflect foresight. For the most part, the American private sector has remained grounded while Congress and the White House grappled over fiscal ideology and foolish party politics. If anything, this continues to demonstrate that politics at the national level is deeply flawed, leadership is lacking, and the concept of promoting a singular, potent American vision has been lost. At some point I wonder when citizens will seek serious change.

Readers must understand that job growth has been driven by hiring in the private sector. Those who continue to rave about government growth might find it curious that government has shed millions of jobs over the past few years, losing another 13,000 in the past month alone. Whether this is good or bad remains to be seen, but be aware that many states, cities and counties are operating on paper thin budgets, trying to maintain services demanded by the same citizens who want budgets reduced. In my work with state and local government, I continue to see that, after close to five years, there is no fat left to cut. If anything, more hiring and some service recovery may be wise.

U.S. economic growth will be 2013’s central theme. How it is achieved will depend on geopolitical relationships, global economics, social-cultural transformations and the ability of the U.S. Congress to collaborate. We’ll see higher taxes- generally a slow return to the same levels as the 1990s, when the economy soared. This won’t all happen this year, but be aware that there is no possible way to pay for Medicare and Social Security, along with defense, research, education, social services, and all the other services required in a growing, highly complex society. There are too many converging variables that cannot possibly be funded and maintain the fabric of this society. This year will see more triage to determine program value and where the greatest benefit can accrue to the most people. Aging Baby Boomers will be a greater force in every community, demanding services and accommodations; they have money, expertise, connections, and are used to getting their way. They also remain highly competitive and contributory, making them a resource that may just carry America through this transformative period.

A lot is in play this year. The election is over, the economy is slowly improving, consumers are gaining confidence, and the global community is again looking to the U.S. for guidance and leadership. During the next five years America will encounter enormous challenges but has even more opportunity to achieve greatness than it did at the end of WWII. The question remains, Will we lead? Do we have the courage, foresight, and will to do what’s right for the long-term? The signs are mixed. But what choice do we have?

jfl-pic-blue-shirtyellow-tie1.jpgWith over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal government long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His 2010 book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, is being hailed as the best book for public managers and community leaders who are committed to building a sustainable future.  An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at http://www.futurescorp.com).

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