Econ 2.0 (percent, that is)

The world has been nervously eyeing the U.S. economy lately, wondering if it’s winded, dead, dying, or just playing possum. Saipan, as a card carrying member of the world, is linked to the U.S. both directly and indirectly, visibly and invisibly, and our Uncle Sam’s financial health is always a matter of importance on our fair shores.

So what’s the deal with Uncle Sam? Is he winded from his 10-year economic boom?

Yes, he is.

Will he fall on his face?

Energy shocks notwithstanding, no, I don’t think he will.

He hasn’t even fallen to his knees, but the labor force is sure wobbling a bit. My last tally showed about half a million job losses, via either layoffs, work force reductions, or similar bummers. Of course, some of these jobless will find other jobs.

Some, however, won’t. Not for a long time, at least. If the old rule of thumb of one-month-per-ten-grand-in-yearly-salary still holds, somebody making, say, $50K a year at his last job will spend five months hitting the bricks in search for the next. That’s not a scientific rule of thumb, by the way, so don’t hang your hat on it, but it’s sort of a handy guide nonetheless.

Meanwhile, economic growth for the first quarter of the year rolled in at 2 percent. Hallelujah! Most of us–or at least the crowd I hang with–was projecting pretty grim numbers; I was saying 0.8 percent growth.

What the heck, I’m going to roll that number over, and stick with 0.8 percent for the second quarter, since I don’t think the energy shock has really manifested in the economy yet, nor do I think the household sector can continue to spend money like a boozed-up sailor in Garapan. In summary, both the supply side and the demand side might have some slowing activity in the second quarter (and we’re already in the second quarter).

Two percent isn’t much growth, but it was a pleasant surprise, since many of us had lower expectations.

In the long run, I’m not as optimistic about the United States economy as a lot of people are. Government will continue to grow, and will keep claiming a larger share of resources, while an aging population is going to find itself trying to live on the shoulders of a very different socio-economic reality. There is an economic generation war brewing, and it is going to be ugly.

But that’s a topic for a different day. For now, Saipan, like everyone else in the world, is relieved to see that at least the U.S. tallied some real economic growth at the start of the year. Meanwhile, the CNMI economy is still in dire straits, and there’s no relief in sight.

Ed Stephens, Jr. is an economist and columnist for the Saipan Tribune. “Ed4Saipan@yahoo.com”