America - Buy to Recover

In the last year of the Bush Administration back in the early 90’s with the economy in a recession, President Bush Sr. went to a shopping mall in Florida and bought a pair of socks and illustrated that if every American bought even a small extra item on a regular basis that the economy would improve. President Bush was ridiculed for that and it was probably one of the reasons he lost the presidency to Clinton.

At our TCN National Convention last month in New Orleans, one of our guest speakers pointed out that recessions are ended by innovation or by consumer spending. Innovation occurs when lenders and investors are willing to support new ideas. Given the state of uncertainty of the capital markets, lenders and investors have retrenched waiting for a positive turn in the economy. Therefore, we probably will not see an economic recovery through innovation but most likely from consumers “buying” us out of these bad times.

One of the things that any economist will tell you is that the government really does not have much ability to truly effect economic conditions. With low interest rates already in place, lowering interest rates further will probably not have much positive impact. Tax cuts could help, but not if the consumer used these tax cuts to pay existing bills rather than purchase something. The benefit becomes a major liability instead of a benefit because this increases government debt.

Governments could create jobs and stimulate the economy through job works projects, but again at an increase to government debt. Also, government projects can take years to develop and implement, which again will not offer an immediate boost to the economy.

This leads us to President Bush’s comments about the socks. If each American today bought one extra item that they did not intend to purchase, however small the item, the economy will improve. President Reagan took over the White House from President Carter in the middle of a recession. President Carter lost the presidency when he stated that America would never be as good as it once was. Reagan answered no way; America could and would be better than it once was. He promoted loyalty and honoring the flag and he spoke of how great this country is. America responded by once again feeling good and started to “buy”, leading us into the greatest sustained economy boom in the history of the country.

Each politician should promote supporting American businesses and American jobs by telling us all to ‘Buy Today’. So far, politicians have been silent.