Small businesses drive economy
Although America’s corporate multi-national giants captured most of the mainstream media’s attention, extensive research and historic business tradition emphasize the U.S. independent business entity as the dynamic heart of the unique American initiative. It is a progressive and reactive driver, which has constantly upgraded the economic vitality of the country.
Even though independent businesses are left to their own devices at times of stress, such as the recent financial recession, their staying power in the face of governmental dominance and competition with the financial dexterity of giant conglomerates, has been exceptionally remarkable.
What many pundits consider as economic vulnerability is the main source of strength that has assured independent businesses’ survival and growth. It also is the reason leadership in industrial technology, communications and progressive economic ideology emanates from the millions of independents, large and small, that have proliferated in America to a far larger extent than the rest of the world combined.
In fact, much of America’s accelerated economic expansion in the 1980s and 1990s emanated from the bank-supported leveraged buyouts that brought the genius and innovative talent of independents under the umbrella of major corporations.
Much, if not most, of the talent driving America’s Fortune 500 to its global leadership position emanated from the talent acquired through the multiplicity of the LBOs. While the unmatched versatility of America’s vast resources of all types represents this nation’s future upward potential, the spirit of individualism of the independent business builders assures such vital input and new ideas will not be lost by the greater restraints of the corporate makeup.
It is not by accident the business sectors of distribution, installation, and maintenance and repair are still dominated by the individualism of the independent business approach. This is true, no matter what sector of America’s world-leading gross domestic product is considered.
The American spirit of individualism over inflexible policies continues to separate U.S. business success from the rigidity imposed by most other nations.
Desalination for California?
With a multiyear drought endangering California’s preponderant mainstream of America’s fruit and vegetable agriculture segment, it is perplexing that the state’s power structure has taken no overwhelming remedial action to confront the resultant water shortage.
While Gov. Jerry Brown has recognized the urgency of the drought’s continuity, the water-saving directives issued by the governor and the California Assembly seem puny and inadequate in light of the catastrophic results that lack of remedial action could affect not only America’s most populous state, but the country as a whole.
Since the unanswered reaction to the problem is nowhere in sight, as aquifers beneath the surface dry up and melting snow from California’s mountains disappears, desalination (the “de-salting” of the world’s massive liquidity) is the only logical answer.
Israel, which is hardly larger than the state of New Jersey, has successfully solved its water shortages through a combination of recycled and desalinated water. While critics of a much more gigantic approach to solve California’s water problems admit desalination would be needed, they seem to reject this alternative due to the “horrendous” cost, despite the fact that Israel’s desalination technology has been proven to be effective.
It is ironic to note that fracking, which was finally put in motion to solve America’s need for crude oil, existed for 60 years but was rejected in the past because of its high cost at a time when world oil prices were low. Modern technology helped bring the cost down.
Such a similar combination is facing California and America’s large and necessary agricultural segment simultaneously. Like fracking, intensive improvement to desalination processes could bring the cost down considerably.
The answer lies in the will of the state and federal government to make a major commitment to move desalination forward, even if it means water bills to commercial and private users would be substantially higher than today’s prices. Only a combination of these factors, technically ready to be implemented, will initiate a move in the right direction.
Only such a determination will assure the growth of the economic agricultural infrastructure of California, while revitalizing the reactivation of America’s most populous, communicative product-developing and thought-leading state of the union.
Consumer demand slows down
While U.S. consumer demand at previous times of reawakening gross domestic product growth approached 70% of its world-leading total, U.S. buyers are proceeding more cautiously at this point in time. In fact, the current household savings rate of near 6% is the highest level seen at previous points of recent recession recoveries.
The Federal Reserve Board’s near-zero fed funds rate has not acted as a stimulus for taking on additional debt, especially in the mortgage sector. Even a record-low downpayment of 3%, sanctioned by the Fannie Mae and Freddie Mac U.S. government-backed financial institutions, has not acted as a stimulus for new home purchases.
With the exception of new acquisitions and trade-ins by automotive purchasers, the bulk of America’s previously vibrant consumer sector, unmatched percentage-wise by any other developed nation, seems to have taken a tone of wariness. Although still early in the realm of long-term recovery periods, payment of outstanding debt seems to have replaced the assumption of additional amounts, despite the record-low interest rates available in almost all categories.
Unquestionably, the unsettled financial and geopolitical climate in Europe and the Mideast, respectively, have played a large role in the consumer attitudes of American households. Also playing a role in this hesitancy is America’s overall employment situation, hard hit by the energy sector’s setback, which accounted for the bulk of well-paid new jobs available in the past five years.
This uncertainty is also reflected in the greater number and percentage of part-time jobs, partially incurred by the incremental health-care benefits many independent and publicly held corporations have made available to full-time employees.
With a vital 2016 presidential election already making strong waves, the anticipation of the winning candidate’s economic direction is already a matter of great concern by the bulk of the U.S. voting public.
Of all the flurry of statistics emanating from U.S. government agencies, as well as professional analysts, the Consumer Confidence Board report seems the most intangible, but simultaneously influential, guideline regarding consumer trends.
While being trumpeted as well by a prestigious monthly University of Michigan study, the optimism/pessimism range of American consumers comprising 70% of the nation’s world-leading ($17.8 trillion) gross domestic product holds the key to the monetary expenditures of the vast American population of 320 million.
This is confirmed by this year’s consumer expenditures, as the consumption sector’s most frequented industries provide a clearer insight as the year wears on:
- While single-family home construction starts are steadily improving, a substantial proportion will wind up being rented or long-term-leased. But despite all-time-low mortgage rates and minimum downpayment requirements by Fannie Mae and Freddie Mac, there is no chance the country will achieve the home construction records of the 1990s and early 2000s.
- On the other hand, new and used car purchases are benefitting by low gasoline prices and the extended need of replacement after a multiyear drought. This shows no signs of slackening and we could see 17 million new car purchases by the end of 2015.
- Upgrading of homes, apartment buildings, office complexes and commercial buildings are on a roll. Repair and maintenance also are at an all-time high, as owners structurally aid and abet longer-term buildings to maintain their value and make them more marketable in the long run.
- While nationwide infrastructural development of highways, railroads, bridges and dams has hardly gotten off the ground, and oil and natural gas piping systems are lagging far behind, they represent a major potential for employment and construction expansion, if the Washington, D.C., power structure eventually comes to a unified decision to move forward.