This is a post from Alex Carrick's blog that covers the Canadian construction industry.

Since 1985, Mr. Carrick has held the position of Canadian Chief Economist with Reed Construction Data's CanaData, the leading supplier of statistics and forecasting information for the Canadian construction industry.

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Construction Industry Forecasts

Notes from Alex Carrick - May 12, 2009

Alex Carrick
Obama Nation or Abomination? - The Two Polarities in U.S. Politics

I could not resist the headline to this article. Maybe it has been used before by someone else. But it came to me while thinking about some of the top U.S. news programs. Apparently you are either for Barack Obama or very much against him. The U.S. will either prosper as the new “Obama Nation”, which involves more government intervention, or it will become an abomination as socialist policies lead to rapid decline.

The language can be “pretty out there” and the “talking heads” are more than a little set in their ways. Vested interests are not conducive to rational debate. For a Canadian, watching from just across the border, the extremes on the U.S. political front are mildly entertaining, but also alarming. Somebody is going to pop a blood vessel.

Bland Alert: I’m not about to take an overt or obvious side here. What seems to me disturbing, however, is the knee-jerk reactions that greet every pronouncement by either the Democrats or the Republicans. In Canadian politics, and in the politics of many other countries around the world, there are more than just two entrenched parties. There is a “mushy” middle. The extremes of right and left are a good deal less pronounced and people don’t get quite as bent out of shape if their view isn’t held by the party in power.

What are the Current Circumstances in which to Govern?

I keep being asked if the current recession is the worst that I have lived through. The rise of OPEC in the 1970s was something to behold, if you were around in those days. The world price of oil increased by thirteen-fold. We all thought there was going to be no more gasoline. Drivers in some locations were lining up at the gas pumps for hours.

There have been other severe downturns since then. Some were caused by inflation that saw a sales run on wheelbarrows to cart around cash, followed by interest rates that shot through the roof. Then the dot.com collapse, coincident with 9/11, was an eye-opener about investment momentum, especially since the collapse of many pie-in-the-sky high-tech firms was so easy to predict.

This downturn, however, has certainly had its own unique character. The 80% decline in U.S. housing starts from peak to trough, the global nature of the financial crisis and the collapse of the Detroit auto sector have made it standalone. However, each recession is unique. And comparing the current situation to the Great Depression is way out of line.

I’ll write in a future blog about the myriad differences between now and the 1930s. One of the biggest is the size of government. The public sector has grown by leaps and bounds. It now provides a huge comfy cushion - think air bag for stunt actors - in times of distress. Not many on either side of the political spectrum would want it much different.

 

It’s a Whole New World

What I do know is that the new administration in Washington is facing a whole new set of challenges. More cars are now sold on a monthly annualized basis in China than in the United States. Who would have foreseen that a short while ago? Brazil, India, Southeast Asia, nations in the Middle East, Mexico and several others are completely changing the landscape. As a result, manufacturing in North America is an endangered species.

Somehow, the U.S. dependence on foreign oil has to be lowered. This may go against the interests of Canada’s own Alberta Oil Sands. But I don’t think we have to worry. It isn’t going to happen overnight. And there is the whole issue of staying the course in cleaning up the environment. Add in the promise to provide universal health care and improved regulation in the financial sector and President Obama has an overflowing plate at home.

Therefore, let’s cut the man some slack. Sit back, crank up the Springsteen, knock back a brewskie and sing along to Glory Days with the Boss. It will give us all a temporary feeling of well-being. Even with recovery, unsettling times lie ahead for the United States and Canada. As they always do, some things will stay the same. But others, and that’s where the forecasting gets really tricky, will alter, shift and flip-over in the years ahead.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News. Mr. Carrick also has a lifestyle blog that can be reached by clicking here.


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Member Comments

Posted by Razoir
05/15/2009
I have no patience at all for Obama, who appears to be nothing more than populist thug, bent on exploiting envy and class divisions. I don't believe the size of the public sector is a cushion either. I think monstrous pubic entities such as Fannie Mae and Freddie Mac are major contributors to the economic downturn. I agree, though, that this is no Great Depression.
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