by David Dawson

Bloomberg reported last week that the gap between the US gross domestic product – the measure of our country’s overall economic output – and the $13 trillion debt is narrowing.  President Obama is building a “debt super cycle” as described by many economists and money managers.  He is borrowing record amounts from our future to fund spending programs to help the economy recover from its longest recession since the 1930s.  How can you make sense of these kinds of numbers?  And how do you prepare for what’s coming? Or, in more unpleasant terms, for what’s not coming?

The Keynesian policies being put in place by our current government has slowed the economic growth to a 2.4 percent annual rate in the second quarter from a 3.7 percent pace in the first three months of the year.  After factoring in the rate of inflation at approximately 1.5 percent, estimates are that we will have to manage the economic pain for the next three to five years.  Ouch!  The Congressional Budget Office whose Long-term Budget Outlook released in June reveals an even greater issue.  We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security and Medicare that will exceed the value of goods produced per person.  The yearly costs of these entitlements will total somewhere in the neighborhood of $4 trillion in today’s dollars. 

If viewed in simple arithmetical terms, the fiscal gap could be construed as the government’s credit card bill: each year’s 14 percent of the GDP is interest on that bill which will compound to the next.  If this year’s bill doesn’t get paid, it will be “gifted”  to our children.   Obama’s American Dream will have to produce tangible evidence that he can do more than orate his way into the hearts of citizens.  Americans will want an accounting of what those billions, indeed trillions, of dollars produced.

So, where’s the silver lining in all of this doom?  It’s critical to invest in your personal financial literacy and take control of your portfolio, one with lower volatility and the stability to generate attractive yields.   You can prepare for your future and, with the help of people who understand the precarious nature of the current economic climate, make educated and beneficial choices.  Promus Equity Partners have investments within your reach.

David Dawson is CEO of Promus Equity Partners, a boutique investment firm offering a range of services for private clients, small businesses, partnerships, and corporations. He can be reached at 858.336.2112 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it