It's fitting that the stock market is closing the year out near the same level it did a year ago. That pretty much sums up the economy of 2011….flat.
It wasn't bad. But it certainly wasn't that good.
The new Congress prevented bad mistakes from being made -- like the insane notion of raising taxes while we're suffering 10% unemployment. But we weren't able to get any reform of our terrible tax code or of our out of control spending. And the regulations -- well, they just keep on coming, making life for businesses more confusing than ever.
So business managers are left without really knowing how to plan for 2012. They're still trying to figure out how to calculate their companies' payroll tax deductions for the next two months. With this kind of uncertainty, it's hard to make any firm commitment to expand operations or hire more workers.
That's why our markets are flat. We're just coasting. And when you're coasting, you're going downhill. The Obama Administration likes to point out that our economy is growing at 2% -- to which we say, big deal.
Coming out of recessions, we usually grow at 5, 6, or even 8%. We had an 8% growth rate in 1983 coming out of a two-year recession. So you can't really call this a recovery at all. Even Ben Bernanke admits that.
So, if 2011 was the year of the big yawn, will 2012 be the year of the big break out? Will this be the year when corporations start investing the $2 trillion of cash on their balance sheets and when banks start lending out the money they've been hoarding?
For what it's worth, I'm thinking things won't change much until folks have a clearer idea of who'll win the election in November.
And if folks see a major change coming in policy direction that will clear away the uncertainty and make life easier for producers, this economy and these markets will take off like a rocket.
Happy new year!