EconAmerica: Why the American Economy is Alive and Well... And What That Means to Your Wallet

226 Pages·2007·1.16 MB·English

by  Jeff Thredgold

A
ECON MERICA
Why the American Economy Is
Alive and Well . . . And What that
Means to Your Wallet
JEFF THREDGOLD
John Wiley & Sons, Inc.
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A
ECON MERICA
Why the American Economy Is
Alive and Well . . . And What that
Means to Your Wallet
JEFF THREDGOLD
John Wiley & Sons, Inc.
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Copyright © 2007 by Jeff Thredgold. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Thredgold, Jeff, 1951-
EconAmerica : why the American economy is alive and well . . . and what that means to your wallet /
Jeff Thredgold.
p.cm.
Includes index.
ISBN 978-0-470-09698-7 (cloth)
1. United States—Economic conditions—2001- I. Title. II. Title: EconAmerica.
HC106.83.T47 2007
330.973 —dc22 2007007056
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
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Contents
Preface vii
Acknowledgments xi
CHAPTER 1 The Economy 1
U.S. Economic Growth 3
Goods and Services 7
The Misery Index 9
State of the States 11
CHAPTER 2 Employment 15
U.S. Employment 17
A Minimum Wage 25
Outsourcing 29
Small Business in America 33
CHAPTER 3 Government 37
Taxes 39
Government Spending 43
Budget Deficits 45
The Politics 48
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iv CONTENTS
CHAPTER 4 Entitlement Programs 53
The Entitlement Issue 55
Social Security 57
Medicare and Medicaid 63
CHAPTER 5 Inflation, Money, and
Interest Rates 67
Inflation 69
The Federal Reserve 72
Other Central Banks 80
Interest Rates 84
Gold 88
CHAPTER 6 The Consumer 91
Consumer Incomes 93
Consumer Spending . . . Consumer Debt 96
Housing 98
CHAPTER 7 The Changing Workplace 103
Demographics 105
Education 109
Immigration 116
CHAPTER 8 American Retirement 121
Bridging 123
Defined Benefit Plans and the PBGC 125
401(k) and Defined Contribution Plans 128
CHAPTER 9 Guaranteed American
Growth Industries 133
Health Care 135
Financial Planning 138
Leisure and Entertainment 140
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CONTENTS v
CHAPTER 10 Savings and Investment 143
The Stock Market 145
Savings 151
Net Worth 153
CHAPTER 11 Major Global Issues 157
Energy 159
Currencies 162
Trade 166
CHAPTER 12 Major Global Players 169
The Pacific Rim 171
Europe and Russia 177
North America 183
CHAPTER 13 The Intangibles 191
Competition 193
Emotions and Confidence 195
The Power of Incentives 199
CHAPTER 14 The Future 201
The American Century . . . Again 203
Index 207
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Preface
I learned a long time ago that I cannot have a useful discussion
about “the economy” with a purely academic economist. To these
university economists, almost everything fits into a mathematical
equation. In the real world, it does not.
Consumer attitudes and human emotion are as powerful as any
other forces impacting the world in which we live. Economics is
simply “the study of life” and the choices we make.
Economics—also known as “the dismal science”—gets a bad rap
too frequently as being vague and unscientific. To quote a friend,
economics should get the respect it deserves alongside the other
occult sciences.
Every decision people make is an economic decision. Critical
choices about education, employment, earnings, and investing can
contribute to a successful career and stress-free retirement, as opposed
to a working life and retirement based on pinching pennies.
The American economy has performed well in recent years despite
the painful shocks of global terrorism, sky-high energy prices, rising
short-term interest rates, and volatile housing markets. Even as solid
growth has occurred, the national media has led millions of Americans
vii
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viii PREFACE
to believe that the economy is merely limping along, creating few
quality jobs, and on the brink of disaster.
Such negativity dominates the economic writing found in the
nation’s bookstores. Books focusing on the demise of America; the
coming debt crisis; the coming oil crisis; and the imminent domi-
nance of China, Europe, or India are far too prevalent.
I served many years as chief economist of one of the nation’s larg-
est financial services firms and now enjoy a thriving business as a
professional speaker and economic consultant. I have also been writ-
ing a weekly economic and financial newsletter for the past 32 years.
Whether in writing or speaking, I have always tried to present a bal-
anced and optimistic view of the global economy and America’s role
within it.
This country has a bright future. The American people have a
bright future. This book, e conAmerica, reflects my view of the way
things are—including the good news and the bad news—and the
way I think they should be.
econAmerica includes discussions of many critical areas within the
U.S. economy, including government and taxation, the entitlement
issue, the Federal Reserve, education, immigration, “bridging” to
retirement, the stock market, currencies, global competitors, and the
power of incentives in the economy.
This book can be of value to both novice and seasoned practition-
ers of economic study. It focuses on four key factors, or Silver Bul-
lets, that combine to create a strong American economy in coming
years.
Opportunities abound as much as ever before. An extremely tight
U.S. labor market in coming years will lead to enhanced employee
compensation and benefit programs offered by those companies that
wish to keep their best and brightest on the job for years to come. In
addition, I expect the stock market to perform well.
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