Good News - Recovery Now Ahead
J. Randolph Evans
Column No. 1043 (11/19/10)

Economists have been perplexed about the current state of economic
affairs.  After all, there have been pockets of positive economic news
for months, but no sustainable growth capable of producing jobs.
Instead, the economy has limped along, sapped of economic energy, even
as the President and Democratic leaders insisted that happy days are
here again.  Voters became impatient and families struggled to hold on.

Like they always do, businesses and entrepreneurs adjusted to the
dynamics of the electronic age of the internet and the shopping channel.
As they did, they have also had to adapt to an increasingly globalized
economy with competition for goods and services from India, China, and
the rest of the world.

Businesses today live in a world of the "new normal" with high federal
deficits, tight credit markets, and reluctant consumers hesitant to take
on too much risk.  Is it any wonder that the economy remained sluggish
through it all?  Month after month the news has remained sobering, with
foreclosures, bankruptcies, and high unemployment numbers.

Amidst it all, however, there were signs that something good could
happen.  Inventories stabilized; workforces bottomed out; and consumer
spending trended upward.  Yet, there was something missing.  Growth
should have happened, but didn't.  As a result, the reality of recovery
remained quite elusive, with millions of Americans waiting for change.

Well, change came - just not the change anyone expected.  And now,
Americans should buckle their belts because an economic surge is about
to arrive - in a really big way.  On November 2, 2010, Americans added
what most will soon regard as the missing ingredient for a robust and
growing U. S. economy - the election of a Republican U. S. House.  This
single event will signal the beginning of an explosion of economic
growth.

Three dynamics will be at play - none of which will actually involve
anything that the Republican House will do, and all of which will
involve things that it will not.

First, the election of the Republican House will supply certainty.  More
than any other dynamic, businesses thrive when there is certainty.  Of
course, no one is certain of what this new Congress will do.  After all,
it is split with the Republicans in control of the House and Democrats
in control of the Senate.  But, everyone is certain about what it will
not do.

Small businesses will not get ambushed with new taxes, new regulations,
or new burdens.  This "not" thing is no small matter.

Before November 2, 2010, big things like "Cap and Trade," implementation
of Obama Care, rising deficits, and higher taxes on successful
entrepreneurs constantly loomed on the horizon.  No business was
prepared to set sail on such stormy seas, no matter how much capital
they had stored up.

Well, those days are over.  For at least the next two years, House
Republicans will say "no" to Cap and Trade, implementation of Obama
Care, unrestricted government spending, and higher taxes.  This is a
situation where a "no" actually translates (for purposes of the economy)
into a big "yes."

Second, there is enormous pent-up demand, capital, and resources.  This
is not a situation where businesses are just now catching up.  Instead,
reports from around the country point to a business environment hungry
for growth.  Corporations and businesses have paid off or restructured
debt, accumulated capital, and tightened operations.  These lean but
well-funded operations are primed for expansion.  All they have been
waiting on appears to be the right political environment.  Well, that
moment has arrived.  The new business watchwords will be "early and
often" as businesses loosen the corporate checkbooks for acquisitions,
expansions, and jobs.

The really good news is that the early reports of rapidly improving
economic outlook come just in time for Christmas.  The result could be
an explosion rather than a surge.

Third, there is the time pressure.  Voters have proven just how
demanding they can be.  As a result, there are no "givens" and certainly
no long-term leases on power.  Republicans know this.  Democrats know
this.  And, most importantly, businesses know this.

Within this context, they all know that political power is a fleeting
concept and that a Republican House could be as short lived as two
years.  As a result, businesses banking on the predictability of a
Republican House have just two years to accomplish whatever they plan on
doing, which means . . . do it now!

So, put all three dynamics in motion - the certainty of  "no"; the pent
up demand; and the limited time for action - and, Bam - now those are
the seeds of real economic growth.  Finally, some much needed relief for
American workers who have suffered through one of the worst economic
recessions in decades.  Americans can now say of this recovery "Bring it
on" and really mean it.