The nation has made strides to recover from its near-decade of policy errors, but much work remains. Accordingly, then, here are three economic wishes for the United States for the second half of the year:
Net job creation -- It's asking a lot, given the restructuring occurring in the U.S. economy, but if the economy can end the second half with no net jobs lost -- i.e. adds as many jobs per month as it loses -- that would be a big plus. It also would imply stronger GDP growth and increased demand -- good news for stockholders -- but the task ahead is enormous: most economists expect the economy to continue to shed jobs at least through Q4, perhaps longer.
An oil price decline -- This would provide a nice tailwind for the U.S. economy. Most energy market veterans say oil's supply/demand fundamentals require just a $45-55 per barrel price for crude. Nevertheless, oil stubbornly hangs near $70, despite high inventories and low demand in the U.S. and abroad. The reason? Institutional investors, who have bought oil as an alternative asset, and as an inflation hedge, in the event of a weakening dollar. High oil prices act as an extra tax on consumers and businesses. Economists say there's a decent chance that oil prices will moderate in the next six months, and the sooner they do, the better, from a GDP growth standpoint.
Passage of heath care reform and national energy policy legislation -- Each Obama administration initiative will benefit the economy by: 1) addressing major, high-cost areas in the U.S. economy, 2) more-effectively deploying both health and energy dollars, and 3) eliminating uncertainty in the private sector regarding the shape of public policy in these two critical areas.
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.