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Resilience & Stability

My first blogs of 2013 were cautionary but generally optimistic, citing recent oil discoveries, job growth, growing consumer confidence and a stock market that at the time hovered around 14,000. As the year began, there were many conflicting variables, some promising a strong year, others indicating emerging options that could tip either way. And, of course, the global economy was struggling, with some doubt whether the EU could sustain itself or would spin out of control like some ill-conceived South American junta. War, political and sectarian conflict, famine, drought, floods, tornados, and just about every other conceivable calamity were part of our daily lives. Even with all the drama and turmoil available to dampen optimism, on the whole, 2013 began well and seems to be ending reasonably well.

As I write, the DOW is well over 16,000, around 2,000 points higher than a year ago indicating, at least to some degree, returning optimism. The reasons for this are diverse, but business has done reasonably well, savings have increased, consumers are cautiously spending, home sales continue to rebound, and the economy has grown around 1.7%. More importantly, the economy has gained momentum during the 2nd half, which, if continued, should carry us to 2.5% growth in 2014. While not a huge boost, it reflects a level of stability and caretaking America must have to rebuild its base.

Based on recent Kiplinger reports, we may see unemployment continue its downward drift to around 6.9% in 2014, along with a significant decline in the federal deficit, down to 3.3% of GDP from 4.1% in 2013. These alone are good signs, indicating to the observant and rational that at least some federal policies are working as intended. Of course, if you reviewed the March 25, 2011 Kiplinger Letter, you would see a growth prediction of 3.1%, which proved to be overly optimistic for 2011, 2012, and again 2013. The difference going into 2014 is that new oil reserves and supplies are driving down the cost of crude, and if some estimates prove accurate, prices will fall to the $85 range, providing a significant economic boost. Even at $90/ barrel, there will be a positive ripple effect across the economy that was not available two years ago.

The Fed has shown remarkable prescience and restraint in not only formulating a coherent fiscal strategy but in its implementation. While the financial and health care industries seemingly remain outside the bounds of rational control, there are signs that people have had enough. Whether Congress will act is another question, but monitoring is underway and new legislation, if implemented, may begin to curb the grotesque predatory practices that plague certain elements of banking and healthcare (for those inclined, read Elisabeth Rosenthal’s article, As Hospital Costs Soar, Even Stitches Cut Deep, New York Times News Service 12/3/13).

From all accounts, Europe will continue to struggle, hurting U.S. exports and continuing to limit our economic growth. This will be the third year in a row that we have not had much support from our largest trading partner and, with global economies struggling, the prospect for any more than moderate (3%-4%) export growth is slim. Overall, not dismal but below desired levels.

From my vantage point, there is reason for optimism, but only if tempered with understanding. Clearly, growth will be less than robust. However, keep in mind that the U.S. and all world economies are still undergoing a major decade-long transformation, with multiple converging variables. Powerful forces are at play and many are uncontrollable in the short term (climate change, poverty, famine, deforestation, ocean degradation, sectarian conflict, territorial disputes, etc.).  Business and government must form stronger coalitions to forge sustainable strategies and a new foundation for long-term prosperity. While desperate, ill-conceived interventions harm private enterprise, so does the proliferation of rackets, scams, accounting fraud, and avarice that are hallmarks of uncontrolled capitalism. Balance, vision, planning and mutuality are the keys to strength. They are also the keys to a future that is not characterized by destructive private or public policy but by collaboration, commitment and equality.

2014 is dawning relatively bright. Though guarded, there is optimism mixed with prudence- a good thing for a consuming public used to an endless cycle of spending, acquiring, and discarding. The prospects for a fairly strong year are growing. Janet Yellen should keep the Fed on track, business will invest as opportunities emerge, Congress may see the light (doubtful), and the public will begin to demand greater progress in the areas of health care, banking, education, infrastructure and the environment. I believe in self-determination and resilience. The Futures Corporation remains committed to achievement, to helping others fulfill their dreams and to contributing to a bright, sustainable future. It won’t be easy, but good things can happen if we stand together.

jfl-pic-blue-shirtyellow-tie.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 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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One Response

  1. Nice re-cap of last year and useful peak in to 2014 — thoughts regarding the Middle East — still a ‘thorn in the side’ of those who prefer a quick and permanent departure of U.S. troops.

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