Macroeconomic Confusion

Every day I read conflicting stories about our economy and our markets in the popular press. Months ago we were worried about inflation, now we are worried about deflation. Then, we thought that Americans were playing a perilous game of roulette by not saving for our futures. Now, we are concerned that increased savings rates could negatively impact consumer spending in an already declining economy. High oil prices this summer spelled doom for consumers; low oil prices today are crippling suppliers who locked in at higher prices. Good news drives the stock market downward and bad news seems to drive it upward. What do we make of this?

It seems to me that we are learning a lot about ourselves and our country during these times of economic turmoil. The historical standards that we used to rely on are no longer prescient, and the new culture of the market has not yet been created. As a result, our economy, our moods, and our markets are subject to wild swings - up 6%, down 3%, up 4.5%, down 5.2% - that are not likely to soften until we come to an understanding of what kinds of reasonable expectations will guide us into the future. What will acceptable rates of saving and spending be? Will the threat of $4 gas create lasting change in our driving habits and how will that affect domestic and foreign automakers? Will high unemployment rates cause the structure of our labor force to change so that workers gravitate to new, successful industries and away from older, troubled industries?

In the meantime, we are forced to have very real discussions about the things that matter to us at the national, state, local, and familial levels. Though the current conditions have caused a great deal of pain in this country, I would argue that the conversations that are happening in my household and yours, in my community and yours, and in my state and yours, are beginning to lay the groundwork for a successful, focused, and more secure future.