The United States is trying to shake off one of the most challenging economies in its history. By most standards for business, it was the worst year since the Great Depression. Annual U.S. Gross Domestic Product (GDP) declined 2.4 percent, while Global GDP declined by 2 percent. In May 2008, the market value of the NYSE (the largest single estimate of wealth in the United States) was just over $28.5 trillion. By March 2009, it had collapsed to $10.0 trillion, erasing $18.5 trillion in market value from the asset base of this country.
Today, the U.S. economy is improving but still faces daunting financial issues, indecisive consumers and investors, unpredictable and unprecedented government fiscal and regulatory policy, record levels of government spending and a mounting record national debt.
On a positive note, U.S. productivity is near record levels while cash balances for corporations are at an all-time high. Private sector employment edged up by 83,000 jobs in June.
A disappointing Conference Board Report on June consumer confidence, lower than initially reported growth in the Chinese economy, and concern over the European Debt Crisis ended the month of June on a low note for U.S. investors and the economy as a whole.
The Conference Board Report noted that consumer’s intending to purchase a new automobile over the next six months sunk to the lowest level since 1967. U.S. businesses are burdened by the second highest average corporate income tax rate in the industrialized world at 39.27 percent with the likelihood of a tax increase in the future better than average. The U.S. unemployment rate is expected to remain at 9.5 percent to 9.7 percent for the near term with 225,000 temporary census taker jobs eliminated in June.
Due to economic uncertainty, companies will continue to cut costs and strive for productivity increases while attempting to hold quality at high levels. Pressure to outsource will continue unless the cost of doing business in the U.S. improves. The need to cut wasteful government spending is at an all-time high and it should be coupled with a Kennedy-Reagan style (across the board) tax cut, which will increase tax revenue to the government and ignite consumer and investor confidence. If we do not, there is a high likelihood of a double dip recession in 2011 or 2012.