Thankfully the government came to a debt deal agreement but there’s no denying that the stalled talks on federal debt negotiations have negatively impacted our economy. Waiting until the witching hour made just about everyone nervous; the US stock market, foreign nations, and the American public.
Many news articles predicted the outcomes of waiting this late in the game to resolve our debt problems as well as what if our government couldn’t come to an agreement by today. Those predictions ranged from Social Security recipients and military personnel not receiving their checks to a less than stellar credit rating for the US.
Yet, in my opinion, the worst part of this whole debacle has been the effects it has had on the perception of our economy. Though the “recession” officially ended in 2009, many people have continued feeling the effects of a sluggish economy. The length of the debt negotiation talks have only supported some people’s opinion that maybe the recession never ended.
If Americans feel like things are getting worse, it will only make them tighten their belts a little more, which means spending less. Our economy is partly driven by consumers spending their money. If consumers aren’t spending, our economy continues to shrink. Business owners, feeling the fragile economy could go either way, have slowed down on hiring. Employees worried about their job security spend less and save more. (There’s nothing wrong with saving money, BTW.)
Our economy is incredibly complex and one thing alone won’t improve it or make it head towards oblivion. However, from a consumers view point, two indicators of a strong or weak economy are unemployment rates and housing prices. Low unemployment rates with a strong housing market equal a healthy economy. In contrast, high unemployment rates with a weak housing market equal a weak economy.
So where do we go from here? For me as a consumer, I’m saving my money, shopping with coupons, and finding ways to live on less no matter what our government’s debt negotiation talks yield. Yet, I’m also diversifying my investments; I’m investing in the stock market and mutual funds given the paltry savings rates that have become the norm over the past decade. I intend to invest in real estate in the near future, but I’m not financially ready for such a large commitment. I also know that I need to be responsible for my own retirement given the hazy outlook for Social Security and Medicare.
If I’ve learned anything during these past weeks it’s that I need to take responsibility for myself.
What has been the most positive or negative thing you’ve learned from our nation’s stalled negotiation talks? Were you concerned our nation would default on its debt? Are you relying on a government check?
17 Comments
The negotiations have also reinforced my attitude of needing to take care of myself. My SO and I have been trying to brainstorm strategies for our careers and investments to make them less vulnerable to a US credit downgrade or other economic issues.
It’ll be interesting to see how it plays out in the long run. I think that politicians across the board are going to be seen as less trustworthy. In the past, time seems to erase the sins and re-election is easy but eventually stuff like this has to catch up with them. These policitians (allegedly) take measure after measure to attempt to help the economic recovery, then almost undo every piece of what they’ve done (and then some) by getting us this close to a default. Sad
@No Debt MBA
That’s a good strategy and I’m trying to do the same. I’ve researched different mutual funds and think my next investment might be something more global. Diversify is my motto!
@Money Beagle
It will be interesting to see how things play out in the future, that’s for sure. Many of the laws that have been approved during the Obama administration will have long-term effects on our economy. I’m guessing we’ll be feeling the effects decades from now.
I’m concerned that we aren’t actually working to SOLVE the real problems. Instead it’s just a bunch of bickering and stop-gap measures…
I agree with Jackie: we are not working to solve anything. Each party is more concerned with being re-elected than with solving out economic crisis.
They do this dance everytime! This time the only difference was I knew all the posturing will end come the deadline. Then the analysis of who won and who lost – never mind what it did to the economy.
I think you took a great lesson out of this – you’ve got to take care of yourself first, or else you will be at the whims of national politics.
It just make me lose even more faith in our leadership. I agree with Jackie about not solving anything.
@Jackie
I fear you may be right. There might not be any real solution in this plan, just more hemming and hawing over what to do. It’s not clear what might happen next.
I can’t say I learned anything besides the fact that the government doesn’t know how to run a business.
A really basic example is the post office is losing millions..hey I have an idea, charge more, or do less. Hell, I’ll pay $1 for a stamp if I need to stop the bleeding but I don’t want my tax money going to interest payments to the post office’s negative balance sheet.
I am still waiting for major change and for someone to come in and clean house but it’s not looking like that’s going to happen anytime soon.
@First Gen American -I’ll also pay a buck for a stamp if that resolves some of our post office woes. To be honest, I don’t use the post office very often since most of my bills are paid online. I’m no longer waiting for major change from our government, I’m beginning to really believe that Ghandi quote: “Be the change you want to see.”
That’s what I really hate about politics. This same issue always happen at every level especially come budget submission.
Glad they agreed, but things are getting more and more nightmarish. Real estate bubble needing massive bailouts and now almost defaulting. I never thought we would come so close to the edge, twice! I’m afraid one day, we will run out of tricks. We really do have to look out for ourselves, but it’s very scary how our government is handling things.
@Buck Inspire – Agreed. I’m not sure what the solution will be, but I think that a lot of the government meddling (ie. bailouts) is making our economy worse.
Indeed! The recession has officially ended last year but then we still feel that the economy is on a tailspin. I’m still on a tight budget and I look for ways to be able to save as a consumer. I usually buy from thrift stores and also make use of coupon codes to get discounts online.
It was a shameful and sadly predictable spectacle. One ironic tidbit I read recently is that a number of Congresspeople who so sanctimoniously preached against a high debt limit carry a high credit card balance themselves. Hypocrites…