Imagine you are the owner of a massive business. The business can be anything you want it to be. Your business generates $18 million in sales every year. However, most of this money goes to pay expenses. In addition to those expenses, there’s interest payments on $20 million of debt that is bleeding the company dry. At the end of the day, there’s no money left and your debt is increasing.
Now, add a few zeros to these million dollar numbers and you have the U.S. economy. This is the reality facing America today.
This article is not meant to cause fear. Rather, it is a wake-up call. It is a call to action. You must decide. Will you do something today about the challenges ahead? Will you make correct decisions? Will you take action and move forward?
Will you change the direction you are going today for a secure and predictable future?
This is a call to action. You can choose to thrive despite the outlook.
Last week Gallup released their analysis of U.S. productivity, a measurement of how well the U.S. is doing economically as a country.
Their discovery? No Recovery!
Jonathan Rothwell, a Gallup senior economist led the study. Top Gallup experts and esteemed external senior scientists reviewed it to ensure statistical and theoretical accuracy and objectivity.
In other words, these guys are the rock stars of economic analysis.
Conventional thinking — as reported in many major newspapers and media — tells us the U.S. economy is “recovering.” But this is not the case.
Well-meaning economists, academics and government officials use the term “recovery” when discussing the economy, implying that growth is getting stronger.
The study finds there is no recovery. Since 2007, U.S. GDP growth has only been 1%.
The Great Recession may be over, but America is dangerously running on empty.
Jim Clifton, Chairman and CEO of Gallup, puts it this way, “Think of our country as a company, America Inc., which has more than 100 million full-time employees, with about $18 trillion in sales and $20 trillion of debt. The most serious problem facing it is no growth. In addition, America Inc. has three soaring expenses threatening to bankrupt the company and its shareholder-citizens: healthcare, housing and education.”
He continues, “My own opinion is that America Inc. is too big to “turn around” like one would a company or any organization. There is no quick fix to something this huge and complex. But there is a long-term fix, which is to get GDP increasing to 3% and higher while slowing the increasing costs of healthcare, housing and education.
When real growth returns, productivity will increase, and America Inc.’s empty tanks will refill.”
The study goes on, “The tech sector and professional services of the United States are world class; they draw skilled workers from every country, akin to professional European football teams. The same could be said of top universities in the United States. But the rest of the economy — especially the U.S. healthcare and education sectors — are not world class, and the country’s top universities serve just a tiny fraction of the U.S. adult population. These sectors — as well as housing — have racked up tremendous expenses for consumers, businesses and taxpayers but provided relatively little value in return…As a result, the great strengths of the United States are offset by great weaknesses.“
The Gallup study goes on to state, “The U.S. has now seven years to recover from the worst of the Great Recession…Leading politicians and commentators reassure the public that everything is getting better.
And yet, there is a pervasive sense that the economy is not working, as documented in Gallup survey data and many anecdotal media accounts. The people are right. The economy is not working well.”
Despite the grim reality and outlook of the U.S. economy, this doesn’t have to be your reality.
There are financially sound principals, such as control and guarantees, that when incorporated into your financial life, will enable you to thrive in the coming years.
Reviving Growth Will Require a New Strategy
As in the Gallup study, in order to revive growth, a new strategy is required. This is what we teach clients. You must think and act differently regarding your money.
A new strategy is necessary when it comes to your money and finances; your own personal economy. A shift in thinking must take place.
For me and our clients, we’ve planned to be safe from the possibility of a slow and bleak recovery. You can choose to thrive in your own personal economy by implementing sound financial principals. What would these principals do for you?
Ask yourself these questions:
Am I really earning compound interest on my investments? If your answer is, “I think so.” or, “My financial adviser said I was”, then you better do some homework and really be sure.
Am I leveraging my money? If you’re not sure, you might be leaving millions on the table and slowing down the growth of your money.
Is most of my money in the tax-deferred bucket? If your answer is “yes”, then do you know how much of your money will be eroded by taxation? Have you planned for higher taxes if they go up or you lose your deductions? Have you positioned yourself for future tax-free income?
Do I have velocity of my money? You can get more than one turn out of a dollar. Your money can be used over and over again to grow even more wealth. This is your money. No one will take care of it like you will.
You can build lasting wealth by incorporating these principals in your financial plan. If you’re unsure how, reach out and let us assist you.
Written by Barry Brooksby, Optic Financial