Financial Edge – September 2011
How will the 2nd half of 2011 play out?
By David Ulrich, EVP Wray Executive Search
david.ulrich@wraysearch.com
On the eve of President Obama’s most critical speech of his political career, will consumers and the country be motivated enough to place their confidence and trust that this Administration will “deliver the goods” in the form of job creation? Consumer spending had been trending upwards the earlier part of this year, however the summer months proved otherwise.
For consumers, and our nation as a whole, we seem to be caught in a “catch 22” between rising consumer demand leading to rising oil prices, that ultimately lead to higher prices in the marketplace. This cycle is like a dog chasing its tail without any improvement or forward momentum. We saw this action take place in March when oil suddenly rose to over $115 barrel, and speculators were feverishly pushing the potential prices higher. Unfortunately since 2006, we’ve been in this cycle since oil as an “asset class” has been disconnected from the underlying principles of supply and demand.
Another character in the play of endless scenarios of “perfect storms” has come to the forefront of the financial markets, and that is the European Community and Sovereign debt. This Summer’s stock market collapse rests directly upon the financial/investment community’s concern for the EU banking risk, and whether it has the potential disaster that the US went through in 2008.
It seems that the Obama Administration has multiple issues to contend with, however first it must address the long overdue attention to the economy and putting America back to work. As this is being written, “the speech” as it will be known in the future, will either be one of greatness, and instill confidence in consumers and employers alike, or it will be like other past Obama speeches that certainly sound good, but lack the substance that people need in times like these.
My hope is that he steps up to the plate, and delivers the inspiration that people are desperately seeking and needing from its leaders today. Aside from infrastructure projects as a focus on job creation, our country needs an Energy Policy that will break the cycle of oil speculation, thus enabling consumers to support the growth and employment expansion in this country, without the risk of being penalized by unnecessary rising prices in oil.
In light of the current economic malaise that seems to be holding consumer sentiment at bay, I believe that the Administration will finally realize that their future political success rests on their ability to minimize the impediments and policies that have caused employers to remain uncertain and unwilling to open up their coffers and begin to employ people again.
The second half of 2011 will improve because government will finally “get out of the way,” and companies will finally believe there’s a plan of action that will be longer than a short term incentive or political stimulus with an expiration date before it gets going and takes hold.