Restoring Consumer Confidence Should Be Job One

We can talk about job creation all day among ourselves, but virtually every CEO and senior business executive I know is either in a wait and see posture or is still planning further employee reductions. Business is not the leader in the economy, nor is government. The engine and driving force of the economy remains the consumer. The Consumer Confidence Index (CCI) is once again retreating. Congress had talked it down for two years, it took a short upswing after the election, but the public is again becoming skeptical. The CCI has always been the best predictor of the economy and correlates nearly perfectly with the production output. Jobs will not return to the nation until the public's confidence in the country returns. As long as the media, politicians, and other pundits constantly chant the negative and convince people of the terrible dilemma they are in, the CCI will stay down, consumers will retreat from spending, and business will continue to layoff, not invest, or hire.

Political leaders must put aside their political objectives and take every opportunity to talk about the positive potentials for recovery. It is not possible for government to tax and spend its way into prosperity. The numbers don't work that way. As most economists know, 60% of the economy is consumer spending and 10% is business spending which is also entirely dependent on the consumer portion. That is 70% of the economy. All levels of government represent the remaining 30%, but even with deficit spending these onetime discretionary portions cannot change the economic direction. Government spending requires extracting money from the 70% consumer and business sectors, leaving them with less to spend or invest. Congress is trying to follow a nonsense scenario.

The focus of leadership must first be to encourage our citizens and find ways to give them more to spend. Taxing more and talking of gloom and doom will only prolong this recession. We can all do more to encourage leaders to be more encouraging. One of our biggest problems lies with state legislators who have become complicit by accepting federal money, sacrificing state sovereignty, and not standing up against federal intrusion into all of our lives.