Dr. James Hussman, of the Hussman Funds wrote recently that he sees a possibility of a second recession in the offing. (I have no connection to the fund.) He writes that “[b]ased on evidence that has always and only been observed during or immediately prior to U.S. recessions, the U.S. economy appears headed into a second leg of an unusually challenging downturn.” (Hussman observes a correlation between the ISM Purchasing Managers Index and the ECRI Weekly Leading Index, and describes his conclusions at the article to which I’ve linked.)
I don’t know if Hussman’s right; there’s much debate among economists, politicians, and laymen about the direction of the economy. Should Hussman be right, his forecast is preferable to a recession without forewarning. To be forewarned is, often, to be forearmed.
A community needn’t sit passively while a recession (or a second one) approaches. I’ve proposed before the current recession a significant reduction in the size of local government, including an end to many regulations, fees, and permit costs. Combine with an end to wasteful, ineffectual tax incremental financing schemes, we’d be on a better footing to face come what may.
Even if we’ve no recession (immediately) ahead of us, we face slow growth and anemic job creation. A small town like Whitewater, Wisconsin can weather even hard times through a comprehensive reform, and by restructuring of the relationship of local government to the community. A return to the principle of truly limited and restrained local government will save taxpayers’ money, and keep earnings in the hands of working citizens who can spend and invest tat money more carefully and knowledgeably than presumptuous officials.
(Reform of government toward more openness, with better access to public documents and recordings of all public meetings, is part of a general reform effort, too. A local government that’s aligned truly with the best principles and practices of Wisconsin and America will be a more successful one.)