Economic Outlook: How long is recovery in a ‘Humpty Dumpty’ economy?
The U.S. government now borrows more than 40 cents of every dollar it spends, Cornyn noted, adding that “every child born in America today comes into the world as a debtor, to the tune of about $46,000. “Our gross debt is now larger than the entire U.S. economy, which means we are now on the same trajectory as Greece, Italy, and several other nations, and we do not like where that path leads,” he said. (To watch Sen. Cornyn’s speech, go to heritage.org/Events/2011/11/Balanced-Budget-Amendment.)
The question, however, is what form of BBA should be supported: A strong BBA that might now pass the House or a “clean BBA” that wouldn’t incorporate spending and taxing provisions but might be enough to get the two-thirds supermajority vote?
Cornyn holds steadfastly to his support of a “strong bill” and cites two reasons. “First, a strong balanced budget amendment will actually solve the problem. Let’s all remember that the disease in Washington is out-of-control spending,” Cornyn said in his speech. “Big deficits are just a symptom of that disease. As any doctor will tell you, treating the symptoms without treating the underlying cause of those symptoms will likely do nothing to help the patient recover, and could make things worse.
“Second, a strong amendment will reassure financial markets and the American people that we get it. Think about the message that Standard and Poor’s sent us when they downgraded our credit rating earlier this year,” Cornyn added. “The financial markets are looking for a serious, long-term solution to our fiscal issues. They are not looking for more empty promises.”
Go (South)West: Arizona labor market shows modest labor market improvements
The Arizona labor market has begun to show some signs of improvement in recent months, although overall growth remains modest and home prices continue to fall, according to the State Monitor report released Nov. 17 by BMO Capital Markets Economics (Go to bmocm.com/economics for the full report).
The Arizona labor market has picked up recently, with four straight quarterly gains, lifting employment 1.7 percent above year-ago levels in the third quarter. Still, payrolls are a deep 10 percent below pre-recession levels. Manufacturing and construction led the pack with more than a 3 percent increase year-over-year, but after peaking at more than 9 percent of nonfarm payrolls at the height of the 2006 boom, construction now makes up just 4.6 percent of total employment.
According to Steve Johnson, president, Arizona Region of M&I, a part of BMO Financial Group, “We are invested in our clients’ success, and we are continuing to help them navigate this uncertain economy. We provide an unparalleled combination of sector expertise, local knowledge and mid-market focus, all designed to help drive our clients growth.”
The Arizona economy continues to grapple with a depressed housing market. Home sales are continuing to chip away at the housing supply, up 9.2 percent year-over-year in the second quarter. Months’ supply in Phoenix dropped to levels essentially similar to before the downturn – three months in quarter two. Construction activity is extremely quiet, with little sign of momentum.