The game is going badly.
Although the recovery has picked up recently, the economy has averaged GDP growth of less the 2.5 percent per year in the 10 quarters since the recovery began. This makes it one of the weakest recoveries in recent history and especially weak considering the fact that recoveries have generally been much stronger coming off a sharp downturn.
It is also the longest period of sustained high unemployment since the Great Depression. And, by the way, the country is still going broke. The fiscal 2011 budget deficit came in at about $1.1 trillion, the third straight year of trillion dollar plus deficits. The current pace of spending and debt along with the promises made on entitlements has been called by all sane economists on both sides of the aisle "unsustainable."
But, it's not just us. Look at Europe.
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Several European countries can no longer generate the private sector tax revenues to pay for their bloated governments. Unless the U.S. gets religion fast and turns things around, we will surely go the way of the more poorly run European nations. Unless we limit spending, reform entitlements and get the economy on the fast growth track once again we are in big trouble.
In fact, unless this country can turn things around, it could well mean the demise of the West in general. The epitaph of the West could be that rich Democrat nations ultimately became corrupted and lazy. Special interests laid claim to the wealth generated by the productive elements the country and eventually bankrupted it.
This is how the game looks at this point. But it's not over. It's just getting late. We need a game changer.
It's like a football game. We're a team that is losing late in the game. What we need is a turnover or a huge break to alter the course of the game. It's like recovering a fumble on the other team's five yard line that can set us up for an easy touchdown that puts us right back in the game.
We may well have gotten this big break or turnover in the energy industry.
New technologies have led to recent energy discoveries in this country that will enable us to become energy independent in the not too distant future.
The high price of oil along with technological advancements such as fracking and horizontal drilling has vastly increased the amount of fossil fuel that can be found and extracted profitably.
The degree to which these recent events have changed our energy situation is enormous.
A report issued by the Congressional Research Service (CRS) in November of 2010 estimated America's fossil fuel resources (which include oil, gas and coal) to be larger than those of any country on earth. In fact, the study concludes that US fossil fuel resources eclipse those of Saudi Arabia, China and Canada combined.
The CRS estimates that the US has enough oil to replace what's imported from the Persian Gulf at current rates for 50 years, enough natural gas for 100 years and enough coal for 200 years at current consumption rates.
There are some powerful reasons why embracing energy development could change the game.
Millions of jobs could be created. Good jobs are already being provided in places like North Dakota where the unemployment rate is just 3.2%. These jobs also provide opportunities to those without a college degree, particularly hard hit group.
Revenues generated by a booming energy industry would help with the out of control deficits.
• Trade deficit
No longer sending hundreds of billions overseas every year would be a huge advantage to our balance of trade and reduce huge deficits. It will also help strengthen the dollar.
Dependence on oil from the Middle East has led us to enriching the coughers of dictators and we are vulnerable to a disruption in supply at any time. As a matter of fact, we are dangerously close to a confrontation with Iran over the safe transport of oil.
• Cheap energy
According to the International Monetary Fund, a $10-a-barrel increase in the price of oil reduces U.S. GDP growth by 0.5 percentage points. Rising oil increases the price of everything. A large amount of additional supply would likely lower the price of energy, making it cheaper to do business and increasing economic growth.
Our new found energy riches are a fumble recovery on the five yard line.
Developing these sources in a big way would be like taking the ball in for a touchdown. It may not in and of itself win the game, but it might just get us back in it.
About the Author: Tom Hutchinson
Tom Hutchinson is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of The High Income Factor. Discover more by Clicking Here Now.
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