Savers' refrain for January: Wait'll next month
February 20, 2013
"Wait'll next year" is a time-honored cry of baseball fans for whom last season brought disappointment. After all, they always have the optimism of a new season ahead of them. The current economic recovery has become something like the Chicago Cubs -- widely followed and rooted for, but persistently disappointing.
January's economic developments brought nothing to cheer for, leaving people no choice but to wait for better news next month:
- An incomplete budget deal. The agreement to avoid the fiscal cliff was initially cheered, but it soon became apparent that the deal simply delayed confronting some key issues. The problem of how to address the deficit without decimating the budget was simply delayed for a couple months, and the need to regularly raise the debt ceiling has become a recurring soap opera.
- News of a shrinking economy. The first glimpse of fourth-quarter 2012 GDP revealed that not only did the economy fail to follow through on the promise of the third quarter's improvement, but it might actually have begun to shrink as the year neared an end.
- Mediocre job growth. January's new job creation once again showed a complete lack of momentum in the employment market.
If this were a sporting event, the fans might not be booing at this point -- they would simply be sitting in silence, wondering how long they'll have to wait for something to cheer for.
An invested fan base
Those hoping for more encouraging signs from the U.S. economy are not just casual fans. They are heavily invested in the results. Here are some examples:
- The unemployed. For 12.3 million unemployed people in the U.S., the economic contest is anything but a game. Getting back to work is an urgent necessity for most of them, and for millions more, a stronger employment market would mean more significant pay increases.
- Depositors with savings accounts. Savers have been the most overlooked victim of the troubled economy. Many cheered when mortgage rates drop, but it is savers who are paying for that attempt at economic stimulus. Rates on savings accounts and other deposits are a fraction of what they were five years ago. For people who depend on interest from savings accounts, money market accounts and certificates of deposit for income, this has been a serious blow.
- An anxious world. Beyond the many people in the U.S. who would benefit from an improved economy, there is also an international contingent hoping for signs of growth from this country. The global economy is in fragile condition, and needs the U.S. to return to its traditional role as an engine that helps drive global growth.
Will February be the month when the economy finally breaks out of its rut? The signs will be closely watched, but with today's backlog of skepticism, it may take a sustained run of positive developments before anyone is ready to declare victory.