Welcome to the Fiscal Badlands

On one hand, we’re breathing with uneasy relief that the Federal Government’s game of Chicken did not result in a “Rebel Without a Cause” fiscal fireball.

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To be sure, Congressional Republicans would’ve loved to have played the part of James Dean and rolled to safety as the President plunged into the abyss. On the other hand, not reaching a long term solution only proved that both parties are too chicken to lead our country towards sound fiscal footing. Unfortunately, the losers of this game are the People, not our elected officials.

So where are we now and what does this mean for the well-being of our economy? From our perspective, Government dysfunction narrowly avoided the cliff, only to veer onto the fire road and end up bouncing through the fiscal badlands.

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How long we’ll have to pick our way through rocky terrain is unknown. Instead of finding a path to smooth pavement, leaders of both parties seem only able to focus on navigating through the rocks. In the meantime, a new normalcy has started to develop. It’s as if the private sector has realized that while their parents are driving them nuts, they’ve got to get on with life. So while mom &amp; dad are yelling at each other in the kitchen, the Dow Jones Industrial Average went and had its best yearly start since 1997, employers continued to add jobs (averaging approx. 181,000 new jobs per monthly in 2012) and the Gross Domestic Product chalked up solid growth. That’s right, the -0.1% 4Q2012 GDP was actually good news. The year-end negative GDP was driven by the government shrinking, primarily due to less military spending. The sustainable part of our economy grew at a respectable 2.1% in the 4th quarter, and 2.5% for the year.

The moral is that in spite of the failings of political leadership, business leaders in the US continue to find a way to survive and thrive. If the federal government can’t find its way out of the fiscal badlands, hopefully the private sector will be allowed to compensate and find efficiencies that’ll make them run more like the Baja 1000 than a rock crawl.

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Richard McBride Jr.