Macroeconomics and the Mailing Industry

The mailing industry is an industry that depends on strong consumer demand.   Whether we are talking about transactions paid through the mail, advertising, or parcel delivery, mail volume will rise or fall depending on consumer demand.   The industry will likely prosper if consumer demand grows and will face even more challenges than it does now if consumer demand falls.  That is why the current debate regarding fiscal policy and the macroeconomic effects of that debate fiscal policy is so important to the industry. 

A recent article in the National Journal nicely summarizes the opposing viewpoints as expressed by the Joint Economic Committee Republicans and the Federal Reserve Chairman  Benjamin Bernanke and a number of economists including Chad Stone of The Center on Budget and Policy Priorities.  

When I first read the Joint Economic Committee Republican report, I was struck by one prescription that the National Journal summarizes as follows:   "The paper predicts that cutting the number of public employees would send highly skilled workers job hunting in the private sector, which in turn would lead to lower labor costs and increased employment. But “lowering labor costs” is economist-speak for lowering wages." Cutting the wages of college educated Americans did not seem like a good way to increase the demand for the products and services that are advertised or delivered by mail especially as the customers of the mailing industry are facing higher fuel and food costs to begin with.

As the National Journal article concludes, "Ultimately, the argument comes down to what policymakers see as the key problem in the economy. Is growth slow because businesses and consumers fear higher taxes or because businesses don’t have enough demand for their products to expand? Republicans are arguing the former, but many economists — and the bond market — believe the latter is closer to the truth. Moody’s bond-rating agency warned on Thursday that the U.K. is in danger of having its debt downgraded due to worries about slow growth resulting from consolidation."


This is not a debate that the mailing industry would normally get involved in.   However, it may be worth the time of industry firms to spend a little time thinking about a very complex economic issue to make sure that Congress chooses the economic approach that best aligns with the industry's interests.  It is my opinion that the industry would be better served by an economic approach supported by the bond market than one developed by politicians.