Bill Sykes' Newsletter
from America.
(Summer 2003)
An ex-Brit gives his views-(without fear
or favor)---of the American Scene
The American Economy.
 The
American economy is currently looking at a bleak future
regardless of what the political cheer-leaders are predicting.
Inflation may have been stemmed by "Greenspan economics"
which reduced interest rate to a meagre 1.25%, but that
measure has not stemmed the growth of the budget deficit,
(which is sky rocketing at an alarming rate), or reduced
the unemployment problem.
United States wholesale prices recently posted their
largest drop on record, which has Wall Street worried
that the falling producer prices will stoke the fears
of deflation. Falling oil prices, (due to the end of the
Iraqi war), and the drop in automobile prices should be
a good sign. Yes - well no, as apparently this also may
cause deflation, which for reasons way beyond my comprehension
will be just as bad or perhaps worse than inflation.
United States manufacturing is operating at 74% of capacity---the
lowest rate in twenty years.
 Will
some leading economics guru out there please put me out
of my misery by explaining the intricacies of Economics
101 and more importantly where the American economy is
going from here?
To quote the Tennessee Ernie Ford ditty about coal miners
of yesteryear, "Sixteen tons and what do you get,
another day older and deeper in debt" No wonder those
poor individuals were said "To owe their soul to
the company store".
The job market is very weak and we have a 6% unemployment
rate, which means that when the troops come marching home,
(especially the military exits), they will be surprised,
nay horrified, when confronted by the fact that not only
are there any jobs available, apart from minimum wage
jobs, but this years graduates, who could have commanded
a starting salary in many industries a couple of years
ago of $40,000 a year, will be lucky to be offered a starting
salary of $20,000 a year.
 President
Bush recently pushed through the House and Senate a bill
that would give Americans a $350B tax cut over the next
four years by a slim vote in the Senate of 50 ayes and
50 nays, with Vice President Cheney, (acting as President
Pro Tem of the Senate), providing the casting vote.
President Bush actually wanted a $726B tax cut over ten
years, which he said would stimulate the economy and produce
jobs, but was thwarted by the more sensible people in
government who recognized the slippery slope that the
American economy is facing in the next few years.
The American economy appears to be following in the
footsteps of the Japanese economy, which has been in the
doldrums of stagnant economy for the last ten years, (with
three recessions in the last five years), mainly due to
the decreasing percentage of youth and the increasing
percentage of elderly.
Do I know what I’m talking about? Fundamentally
yes - although I was an aerospace engineer, not a PHD
in economics even I can evaluate the trend by just looking
at the current unemployment rate, the lag in the manufacturing
sector, and the budget deficit figures. Of course figures
can be made to look either good or bad, by what one includes
or more importantly what one leave out.
We welcome feedback about any of the contents
of these newsletters. Please send all correspondence to
bill_sykes@huddersfield1.co.uk
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