It’s the Louisiana two-step
as officials at all levels of government dance around the
blame for the disaster still unfolding in New Orleans. Then
of course, the press has to put in their biased two cents.
All of this is counter-productive at this point. The productive
portion of our country is already moving ahead with rescue
and re-construction efforts. Then there are those that have
to play the race card and the political card. Hey, there are
no ethnic groups or political groups down there – those
are Americans. We are all Americans, and Americans have opened
their hearts as well as their wallets. Americans realize that
those are fellow Americans down there, and they need help.
That is why New Orleans and Mississippi will survive and grow
again because the true spirit of the American people will
make it so.
Besides, New Orleans is too important to let die. It’s
not just the port and the oil refineries. It’s also
the culture that has been such an important part of America.
It will take time, but it will happen. Remember, San Francisco
was literally destroyed by an earthquake and fires in 1906
and has actually been rebuilt several times since then. Chicago
was destroyed by a fire in 1871 and came back. And on that
same day more people lost their lives in the fire that consumed
Peshtigo, Wisconsin. Americans as of this writing have donated
over $500 million toward the relief effort. Kuwait alone has
donated $500 million (what goes around comes around –
we helped them fend off Hussein). Other countries are pitching
in and last week twenty-year-old Kyle Busch donated his entire
winnings ($241,000) from Sunday’s NASCAR race. We expect
some oil producing nations to step up their production to
help out also. This is not to diminish the individual tragedies
faced by those who lost their home and their loved ones. We
grieve along with them and pray that they have the strength
to move forward and capture a better life.
While politicians and major government agencies are garnering
most of the headlining, it is private enterprise that is quietly
spearheading the recovery. Debris is being cleared away, levees
are being repaired, electricity is being restored, phones
are being reconnected and infrastructure is being repaired.
This is private enterprise at work. This is the constructive
element of America moving forward and getting things done.
So, how will all of this play out in the economy? Gas prices
are likely to remain high. Even though the government will
release some oil from its reserve, and even though we expect
oil producing nations to increase their output, this oil must
be refined. We have had a shortage of refineries before Katrina,
and now that shortage is greater. The heating season is coming
on, and consumers can expect continued high prices. Consumers
will tighten their belts in other areas to offset the cost
of gas. SUV sales will drop, and retail stores will see sales
slow. Discretionary income will drop so we can expect to see
a slow down at restaurants, movie theaters, theme parks and
over all vacation travel. People will basically spend more
time at home. Growth in Gross Domestic Product will slow from
a 3.5% current annual rate to perhaps 2.5-3.0%. A slowdown
but not a recession.
On the other hand, construction spending will increase as
the south coast rebuilds, and new jobs will be increased along
with it. This will also encompass related businesses –
plumbing, electrical work, carpeting and general infrastructures.
The Fed next meets September 20th and it would be cruel
and unusual punishment if they were to raise rates. Instead
we see them increasing the money supply to meet demand for
rebuilding. This will create an increase in inflation but
not significant, and they can deal with that later as events
unfold.
Random thought for September 2005:
"Although the world is full of suffering, it is full
also of the overcoming of it. "
- Helen Keller
|
