Discovering early on that our downturn was primarily due to the lack of consumer demand I came up with the Davis Deficit Neutral Job Creation Plan. Consumers represent 70% of the economic activity of this economy. Thus any recovery program which will genuinely affect unemployment has to involve the consumer. Think of it this way, the fuel used in your car is gasoline and ethanol. The gas comprises about 90% of the mixture. Take away the gasoline and the car does not move. Your car is not designed to just run on ethanol. That is the way the American economy functions, also. If you reduce the amount of money the consumer spends in this economy, the economic engine of this economy stalls. This is why our economy is sputtering, due to the reduced purchasing activity of the consumer. Wall Street is doing great, due primarily to the Federal Reserve keeping interest rates low.
Most American corporations are in great shape financially with solid balance sheets and products ready to sell. THEY JUST DON’T HAVE CUSTOMERS! If they don’t have customers, it is hard to make long-term hiring decisions, thus unemployment rises. Demand starts with the consumer! Our nation needs a national job creation plan that will re-engage the consumer, and create 250,000 to 300,000 jobs a month. With national, state and local governments reducing their budgets, thus leaving gaping holes where their spending provided employment through government services and purchases, the issue of addressing the missing purchasing power of the consumer looms even larger.
The facts are the facts; the consumer represents 70% of the activities of this economy. Either the consumer will re-enter this economy as a purchaser of its good and services through slowly acquiring jobs over a period of time or through an economic job creation plan initiated by the federal government. Economists predict, the former will take at least 5-7 years or more for the economy to create enough jobs at its current pace to match consumer spending prior to the downturn of 2008.
“The Fix This Time,” lays out a specific and detailed path of how to re-engage the consumer. At the end of the day there must be a means by which money can be effectively distributed to the consumer that is logical and acceptable to policymakers.