The Fundamentals of the Economy

John McCain gave a speech yesterday where he said "The fundamentals of the economy are strong." He was immediately excoriated for that remark.

"How out of touch is that guy? Wall Street is collapsing! People are losing their homes to foreclosure! Gas prices are up! I found a double yolked egg when I went to make breakfast this morning! Damn Bush and those neocons!"

You know what? All of those things may be true (except for the double yolk egg part. I usually eat cereal for breakfast). But I happen to agree: the fundamentals of the economy are strong.

This is not to say that things are booming, because they're not. I work for a company that makes subassemblies for the major appliance market. We've taken a big hit this year, both in sales that are off because of the slowdown in the housing market, and in our costs, because commodity and energy prices are up so much this year. I've had to conduct several rounds of layoffs to get our company's workforce down to the right size for our current volume of business.

But we're still selling product, still meeting payroll, still investing for the future in both people and equipment. Just as you can have slow sales, but a fundamentally sound business, so too can you have a recession, even a severe recession, and still have a fundamentally sound economy.

I don't want to make light of the real suffering going on out there right now. People are losing their jobs and their houses, and that has just got to suck. High gas and food prices are taking a bite out of my income just like everyone else's. But I went out jogging the other day, and I noticed a funny thing: there was no blood in the streets. I would have noticed too, becuase it hadn't rained for several days.

Layoffs are up, but 94% of us still have a job. Foreclosures are up, but over 97% of homeowners are still making their mortgage payments. The stock market is down, but it is not shut down. You can still buy and sell stocks. At a personal level, it easier to get a table at the local Outback Steakhouse, but only after 8:00 at night. The dollar doesn't go too far if you're in France for vacation, but it still spends just fine in Wal Mart or Target.

At least, I think it still spends fine in Wal Mart or Target. I haven't bought anything at either store in months. Gas prices are up, so I compensated by cutting back on the amount of Chinese made crap I buy.

My point, however, is that the economy is still functioning. People are adapting and adjusting to tough times, and when this deleveraging process we're going through runs it's course, we are going to get back to growing and creating businesses. We're going to do this without a lot of help from the government, by the way.

The people who work for my company are coping with the current economic environment in a variety of ways. Some are carpooling to work to save gas. Some are finding second jobs to replace the overtime they've lost. Some are cutting back vacation plans. One thing they are not doing is cutting back on helping each other. When a coworker or family member hits a rough spot, they chip in to help to the same extent as in better times. At a fundamental level, they are muddling through this rough patch. So, yeah, I think John McCain is right when he says that the fundamentals of our economy are strong.

Tough times never last, but tough people do. At the core, Americans are tough people.