“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…” – Charles Dickens, A Tale of Two Cities
In the iconic opening lines of a Tale of Two Cities, Charles Dickens describes pre-revolutionary France, but he could just as easily be discussing the United States economic climate. Despite the fact that the nation is speeding towards the fiscal cliff, an unemployment rate over eight percent, shrinking economic growth, and a slew of other troubling economic indicators, polls show that Americans are feeling optimistic about the near-term economy.
Although Obama voters are overwhelmingly more optimistic, even independents see sunny skies on the horizon, leading to the highest rate of consumer confidence since October 2009. This is due in part to positive developments in the housing market, where home equity prices are at their highest levels in four years, strong stock performances (despite losses in recent days), and revised jobs numbers that show employers did more hiring than previously expected.
Yet this increased optimism is more likely explained by the fact that we are living in what Dickens called “the age of foolishness.” With 39 days until election day, the race between President Obama and Mitt Romney is dominating the news cycle. One would imagine that the nation’s dire economic situation would be center stage, but in the age of foolishness, things like the fiscal cliff are far from the agenda.
Rather, this week’s political coverage has focused on the presidential debate set to take place on October 3. How is Romney preparing? Is Obama preparing enough? Is Romney going to win? What’s Romney’s strategy for winning? What happens if Romney doesn’t win? Is Romney’s campaign finished? Is Romney Michael Dukakis? Is Obama the Democrat’s Ronald Reagan?
Absent from this nonsensical discussion of a what is ultimately an inconsequential event is the fact that the country is 95 days from the fiscal cliff. With a combination of $440 billion in tax increases and $200 billion in spending cuts, going over the cliff almost certainly means that the country would enter a second recession. Research done by the Forum found that the U.S. could lose between 2.8 and 10 million jobs if action is not taken. And given that we live in the age of foolishness, of course none will be taken until at least after the election.
Meanwhile, there are a multitude of other troubling economic realities that are hardly discussed. The Federal Reserve holds the largest percentage of the nation’s $16+ trillion debt in history. Interest rates are so low that the Fed has hardly any room to maneuver in the event of another crisis. Electronic deposits to banks are in the magnitude of $1.5 trillion. Consumer spending is up, but its up due to escalating gas and food prices.
Yet instead of discussing these problems and, gasp! offering solutions, President Obama and Mitt Romney are each stoking the flames of class warfare, with Obama decrying the greediness of the wealthy and Romney bemoaning the dependency of the poor.
It’s a truly Dickensian drama. And we all know how those usually end.