29 Oct 2004 America’s Quadrennial Revolution
Take the most contentious and bitterly fought election in modern history and blast it ubiquitously over satellite radio, regular radio, internet news and chat forums, your home phone, television with their endless supply of ‘spin-meisters,’ interlaced with ads uglier than yesterday’s, and you wind up pretty sour. Try to take a break from it and you will be reminded once again by yard signs, public banners, and conversations in churches, clubs, barber shops, salons, coffee shops, delis, bars, and sporting events. The election by its nature has reminded us of the country’s problems, the information age, but its nature, has made it virtually impossible for us to reflect without distraction.
The toll is showing up in the advance reports such as Consumer Confidence. The report out this past Tuesday showed that confidence fell for the third straight month to the lowest level since March of this year. The University of Michigan report, just released, echoed the same sentiment.
What happens after the election? It’s difficult to say when ‘after’ the election will be, given the number of lawyers already lined up for battle. But once it is over and a president is elected or re-elected some things will be different regardless of who wins.
The militants in Iraq will no longer be playing their cause to the American voter. One-and-a-half-year-old news stories about ammo dumps (empty or full) released at politically opportune or inopportune moments will cease. Oil prices will likely decline faster without the political forces to drive them. The ugly political rhetoric will ebb (not disappear) and consumers and business managers’ moods will improve.
The U.S. economy, which pays for all the politicians argue over, remains remarkably and defiantly resilient. Barring a major attack on our soil, the president of 2004 will continue to preside over or inherit a broadly growing economy. A quick look at the table on the next page reveals just how positive the economic news is.
GDP was reported today to have increased by 3.7%, less than expected, but better than the second quarter’s 3.3%. Dragging on the measure of our economy’s growth was a record high trade deficit, primarily the result of record-high oil import prices. But the report contained some excellent news as well. Consumer spending, more than 68% of our economy, was up 4.6% almost three times the pace in the second quarter. An important measure of inflation in the report dropped to a FOUR-DECADE low.
The major trends remain positive, though less than compelling overall. There are no clear signs to indicate what the Fed will do with interest rates, but the latest news of growth without inflation certainly keeps alive the hope that they will be ‘patient’ with rate increases. With interest rates near record lows, inflation once again proving to be a non-starter, oil prices declining, fresher information airways, and the year-end season of consumer-overspend fast approaching – better markets are likely ahead.