Written by David Shivers
Albany, Ga. – Even while some indicators point to slow improvement, with the debt ceiling and talk of the impending fiscal cliff the economy continues to be a question mark for many people.
With that in mind, Vic Sullivan of the Albany office of Wells Fargo Investments offered Kiwanis Club of Dougherty County members some insights into the situation during their November 26 meeting.Sullivan compared the national debt to a family with a household income of only $21,000 a year with a standard of living that’s costing them $38,000 annually. Because of their spending, they’ve amassed tens of thousands of dollars in credit card debt and maxed out the equity on their home.
“As a country, we have become used to doing certain things,” he said. The basic question is, “Can we continue this?” The answer is no. At some point it has to stop.
There are risks to the debt situation. A major concern is what will happen to the national defense budget. Beyond the national security issue, defense cutbacks will impact at local levels if military bases are shut down or contracted manufacturers have to cut back or close plants. Also, interest rates could rise, making it more expensive to borrow, and printing more currency will lessen the value of dollars already circulating in the economy, leading to inflation.
Can the situation be fixed? Sullivan believes it can, if certain steps are taken.
“We have to get our fiscal house in order,” he emphasized. There is a need for a long-term economic policy, revenue, and lowered spending.
The revenue side needs to be addressed, he said, citing three areas: getting industries back on track, energy, and job growth.
Housing is already showing an upswing, and Sullivan believes that in up to 18 months, it will be back to pre-2008 levels as current inventory dwindles down.
Energy holds much promise, with “energy independence a real possibility” thanks to the advent of “fracking”, the extraction of oil and natural gas from shale deposits. This also means an increase in jobs and tax revenues.
U.S. manufacturing is becoming competitive again, Sullivan cited. Companies are finding it more difficult to operate in places like China and wages here are more competitive, in the range of $14-$17 an hour. Sullivan pointed to plant openings such as NCR in Columbus, Airbus in Mobile, Ala., and the I-85 corridor in South Carolina (between Atlanta and Charlotte) where plants have sprung up.
It’s traditional for presidents to seek to leave a legacy, Sullivan noted. He said he believes the legacy of Barack Obama could be the economy, if the president harnesses the economic advantages and provides the necessary leadership.