CNN calls the oil price drop a "crash." It is not a crash. It is a downturn that has been going on for some time. The stock market has also not "crashed." Words have meaning. The more exaggerating words are used the more fear is fed into the market. We need to take a deep breath and listen to the words we are using. Fearmongering may get viewers and votes, and sell ads and newspapers, but it is harming the economy and, more importantly, the people who are part of that economy.
The fundamental macroeconomic aspects of the U.S. economy are not perfect, but are fairly strong. Unemployment is not high at about 5-7 percent depending on how you measure it. People are getting jobs. Maybe not the jobs they had hoped for, but there are jobs out there for those willing to go for them. There are some communities in the country where jobs are harder to find, but with the proper leadership and proper training and education those jobs will happen also. Inflation on average is quite low. Economic growth is slow, but is better than many other developed countries. We do have significant debt, but the actual debt held by the public, not the government, is $12 trillion, not the $18-19 trillion often mentioned in the press. Our GDP is the largest in the world at $18-19 trillion.
Frankly, the biggest threat to the U.S. economy is political dysfunction. All of our economic problems could be solved with proper leadership with the political parties and parts of our government working together a lot better and for the people of the country, rather than for themselves and their parties.
Indeed there are risks emanating from a slowing and transforming China and from a slowing and transforming European Union. There are risks to our energy industries from the very low oil and natural gas prices. There are risks from massive debt overhangs in the U.S. and globally – and this is likely the greatest risk out there. Risk is part of the U.S. and global economies. How we handle those risks and lead our economy and people to handle them have greater import than personal and political gain.
This is the time for realistic assessments and explanation of the strengths and weaknesses of the U.S. and global economies. This is not the time to panic and use panicky words, especially amongst our leadership. The people of this country deserve better economic, political and thought leadership than they are getting. The nastiness and kneecapping has to end.
Yes, we are entering a new period of national and global economic transitions - and this is the time we need real leadership more than ever.
Sullivan is professor of Economics at the National Defense University and adjunct professor of Security Studies at Georgetown. All opinions expressed are his alone.