Over the last five months the strength of the United States economy has surprised on the up-side. America posted its strongest quarterly economic growth since the end of 2006 and U.S. corporate profits hit an all-time record high. But with the end of 100% “bonus depreciation, government spending shrinking for the first time since the 1940s and rising tax rates”; I project America is falling into a recession that will drive up unemployment to a new highs during the 2012 election.

Although the U.S. economy officially emerged from recession twenty-six months ago, most Americans report that they believe there has been little or no growth and 75% believe the nation is headed down the economic wrong track. The “Great Recession” of 2007 to 2009 was the longest since the Great Depression and was the first time U.S Gross Domestic Product actually fell in any year since 1948. Unemployment according to the Labor Department peaked in October 2009 at 10.1% and then declined to 9% last month. But this statistic does not include those unemployed who have been out of work for so long they no longer “participate” in registering for unemployment benefits. As shown below; labor force “participation” shrank by 2% since 2009. Add in these jobless and real unemployment rate is at a record 11% right now:

The stimulus that has recently been driving GDP growth is a provision contained in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This tax incentive allows businesses to book 100 percent “bonus depreciation” for any qualified capital expenditures purchased and taken delivery by December 31, 2011. This explains why the industrial production index has jumped back up to its average level for the last 40 years. The good news is businesses substantially increased capital investments in everything from $25,000 new Ford cars to $335 million Boeing 747 airplanes. The bad news is that business investments are being pulled forward into 2011 and 2012 suffer an off-setting fall in demand. Next year the U.S. economy will surprise on the down-side and unemployment will be on the upswing.

To fund spending increases on salary and pension benefits during the Great Recession; state and local governments raised taxes so much the effective percentage of all taxes paid by the average household in America jumped from 17.5% to 17.9%. This $247 billion tax increase more than off-set the stimulus effects of the last year’s federal payroll tax cut stimulus; but was not enough to prevent the lay-off of over 900,000 workers. But with voters in revolt and tax collection falling; state and local governments will cut spending this year for the first time since 1944.

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When I hear this famous Texas saying, I immediately think of President Obama and how he feels about Texas.  All talk.  No action.  Then again, the action of denying Texas federal disaster aid for wildfires raging over million acres speaks volumes.

Last month, President Obama spoke with a Dallas reporter about the federal budget and denied politics were in play against Texas when shuttles were awarded to other states.  Our President says he loves Texas, despite losing by approximately 10 points in the last presidential election and even professes “You better believe I’m not going not going to write off Texas … we’re going to compete” when discussing his reelection campaign for 2012.

So, riddle me this: Why was Texas’ federal disaster aid declaration request denied?

Wildfires have raged since November 2010 with over 2.3 million acres charred igniting 9,000+ wildfires across our great state. Two people have been killed and hundreds of homes burned to the ground. Texas families are losing their homes and their businesses and yet federal disaster aid is denied that could help citizens obtain low-interest loans and tax breaks to help with rebuilding.

Yes, everything is bigger in Texas and we are loud and proud on how we can take care of our own, but let’s put things in perspective. The Texas Forest Service says this of the current wildfire situation:

• Red flag warnings have been issued across much of West Texas today with critical fire weather conditions predicted.
• Texas Forest Service responded to two (2) large fires yesterday.
• We are currently working on seven (7) major fires that span 586,624 acres.
• 207 of the 254 Texas counties are reporting burn bans.

That’s 81% of Texas under a burn ban.

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At the Thanksgiving dinner table we sat back, sated with turkey and all the fixins’. And as is our custom, we began reminiscing of times gone by, family members who have passed on, and others we’ve not seen for a time.

The discussion around the dinner table this year was no different. Over coffee and pie, we talked of old times, fond memories, laughter, wistfulness, future prospects, and hope mingled with thanks for our blessings, past, present and future.

The conversation turned to news of an elderly relative, a self-made man whose manner and behavior had changed markedly over the past few years. Now well into his years, this man had always been a rugged sort, a man of the earth who made a living by the sweat of his brow and the brawn of his muscle, tending his large farm and considerable holdings. His thriftiness is legendary among relatives and friends who joke that he still has his first dollar. He worked long hours from sun-up to sundown, so his financial conservatism was understandable and in many ways laudable.

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