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THE CORNER

Homilies abound about ‘turning the corner’ but accurate manifestations are often elusive. These days, it is difficult to predict anything with reasonable certainty, but I continue to envision what might be relative to what is. In other words, hope springs eternal, but must be moderated by reason and analysis.

To be sure, we have entered a zone that is rife with swindles, exotic business deals, political jousts, global protests, sectarian conflict, revolution, resource depletion, climate change and unsustainable financial mischief that is leading nowhere. While this may seem negative, just listen to the news or read any sensible journal. Of course, the U.S. housing market is enjoying a moderate rebound, the DOW remains reasonably strong, consumer confidence is beginning to recover, and business is hiring. The central question pertains to sustainability.

Reports conflict over whether there is growing geopolitical harmony or if the fenders are rattling more than meets the eye. Dispassionate analysis indicates little real progress and a growing ‘reality avoidance’ posture. Who knows what the real story is in Greece, Spain, Italy, France, England, and the rest of the EU? Some sources indicate a culture of ‘false positives’ that are being reported to boost nationalism and continental morale. What is really happening and how it may impact this country is anyone’s guess. The same is true with China, Russia, India, Brazil, Mexico and other struggling economies. Are they reasonably healthy and will they contribute to a stronger global economy?

A June 15 New York Times article (Even Pessimists Feel Optimistic about the American Economy) touted “the start of a new era of cheap energy,” in the overblown assertion that the worst is behind us. ‘Cheap’ oil was historically less than $20 per barrel and allowed massive progress throughout the 20th Century. Current prices rarely fall below $90 and can whimsically soar to over $100 (recently $107). Plus, current oil supplies are expensive to extract and refine, so expect prices to escalate. Oil will not be cheap; nor will education. Quoting George Mason University professor Tyler Cowen, that same article blathered on about how learning is being transformed by on-line education, which opens new doors to those without the means to take traditional university courses. However, the value of many on-line degrees remains highly questionable, regardless of the price. America needs technicians, scientists, engineers, doctors, mathematicians, physicists, chemists, and machinists. It’s difficult to produce talent in these fields through on-line courses.

Turning the corner requires thoughtful analysis of various realities and how those realities factor into an uncertain future. The number of U.S. citizens living in poverty is at an all-time high. The cost of living is high and inequality among various social strata is America’s greatest cultural and economic de-stabilizer. While many are doing well, the vast majority is not. Wages have not kept pace with the cost of living, health care is expensive and the best methods of providing affordable care are constantly debated; the U.S. remains far behind other countries in educational performance; our crumbling infrastructure needs a $2 trillion infusion; and the economy remains based on service instead of on value-generating production.

In a recent Charlie Rose interview, co-chairman of Pimco Bill Gross expressed that the headwinds were strongly against wage increases for American workers as the competition between man and machine accelerates. More jobs will be lost unless re-shoring gains momentum and new production facilities are built. Deleveraging has reduced personal, business and sovereign debt but has also reduced the inclination to invest, at least until there are stronger signs that 3 to 4 percent returns are possible.

The remainder of 2013 will be relatively strong, with general stability and cautious optimism. The U.S. will see slightly higher inflation, marginally higher interest rates, around 2 percent growth for the year and perhaps over 2.5 percent in 2014. As with all probability forecasting, there are too many ‘Black Swan’ variables that may enter the equation. In my view, the corner has not been turned and we may not be building enough momentum to generate a robust 2014. For the remainder of this year, the best course is to invest in planning, careful analysis and conservative opportunities, while building a stable platform for a stronger 2014. There are highly volatile forces at play, so stay focused and prepared.

JFL Pic Blue Shirt-Yellow TieWith 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 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). Reprints of his book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders (2010) has sold out three times. 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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