Photo from TheWeek.com
At 12:45pm Wednesday my Twitter feed was buzzing with news of Obama’s upcoming speech about the economy. (Expected hazard when most of the people you follow are finance #nerds.) Networks tweeted links to watch live feeds while journos tweeted their guesses as to what the President might say – and most importantly – what plans he might unveil. In defense of Twitter punditry, this speech was touted by Obama and the White House as one not to miss – so it makes sense to be guessing what new news would be made in light of all the hype.
As usual, the president was late. But once he found his mark and the sound of “Hail to the Chief” died down, President Obama was ready to lead and inspire.
Kinda.
It’s not that the President’s speech was bad. Regardless of where you fall politically, there’s no denying Obama is an intelligent and powerful orator. It’s just that the speech summarized things anyone with a passing interest in current events already knows. For those who need a refresher:
- Progress stifled by partisan gridlock: Do I need to comment further here?
- The rich keep getting richer: I made my career in wealth management, so believe me when I say, I have no problem with there being haves and have-nots. That said, there is no denying that it does not bode well for our economy when C-suite workers have seen their wages increase by 40% since 2009 while the average worker is earning less than they were in 1999 in inflation-adjusted dollars. Which matters because…
1. “The first cornerstone of a strong and growing middle class has to be an economy that generates more good jobs in durable, growing industries.” Unemployment numbers are misleading. While the commonly cited unemployment rate is 7.6%, the true figure is 14.3%. The gap represents eligible workers who have been out of work for some time as well as part-time workers who are unable to find full-time work. In addition to urging firms to bring jobs to the US, Obama supports initiatives to build our nation’s infrastructure. Think improved highways, railways, and power grids. The short term effect is to provide jobs to those who need them. The long term effect is to incentivize new businesses and communities to sprout up in these revitalized areas.
2. “If you think education is expensive, wait until you see how much ignorance costs in the 21st century.” New businesses only make sense if they’re competitive which is why Obama stressed the importance of cultivating talent at home. It starts with pre-K programs, carries on through high schools adopting more STEM friendly curricula, and culminates at the higher education level. We all know tuitions are rising but what also recently increased is the interest rate on student loans. In fact, it doubled – though this is being debated. In addition to reversing the rate on student loans, Obama suggests that colleges and universities look for flexible ways to curb costs through the use of more online classes and shorter degree programs.
3. “The key now is to encourage homeownership that isn’t based on bubbles, but is instead based on a solid foundation…” Housing was unquestionably a major contributing factor to the Great Recession. Little can be done to return home values to what they were before the bubble popped but Obama vows to make it easier for owners to refinance their homes to make the cost of owning less burdensome.
4. “Today, a rising stock market has millions of retirement balances rising.” Believe it or not, the stock market has recently hit unprecedented highs. This means that if you participant in a 401(k) plan, your account balance likely went up. This is a good thing. However, with real wages being stagnant since 1999 for middle class workers, many people are not willing or able to contribute to their plans – thus missing out on savings and earnings. Obama suggests that we need to create more tax incentives that make it easier for people to save. He also hints that immigration reform would increase Social Security reserves by making undocumented workers pay their full share of taxes.
5. “I will keep focusing on health care, because middle-class families and small business owners deserve the security of knowing that neither illness nor accident should threaten the dreams you’ve worked a lifetime to build.” No Obama speech on the economy would be complete without a plug for Obamacare! There was little in the way of policy in this part of the speech, just a reiteration that the Affordable Care Act will make it cost and quality of health insurance better for Americans in need.
While the speech was strong in its appeals to the middle class achieving the proverbial American Dream, it lacked an attack plan to get there. If you skim again, you’ll notice my repeated use of the following words: suggests, vows, supports. This was a speech of someone campaigning or giving a history lesson – not the speech of leading economic revitalization. Or, perhaps I’ve just been spoiled by the tenacity exhibited by Presidents who live in Aaron Sorkin’s world.
Either way, we need more than rhetoric to rev markets and less promising government shutdown when we should be following through on promises for more jobs.
Carleton English is a Philadelphian working for a medical device start-up and recently launched Belus Capital Advisors, an investment research firm with noted market analyst, Brian Sozzi. She previously worked as a Client Associate for a Seattle-based wealth management firm serving high net worth clients and leading financial literacy seminars for teens and young adults. She maintains her passion for finance by serving as Treasurer-Elect for the Junior League of Philadelphia and writing for Sweet Lemon Magazine, Levo League and other online publications. Carleton enjoys tango dancing, classic movies, and finding good food. Carleton is a graduate of the Elliott School of International Affairs at George Washington University. Twitter: @carletonenglish Website: www.carletonenglish.com
