ONE important indicator shows a positive in our current economy. The U.S. stock market, as measured by MSCI stock indexes, has returned to record territory. The New York Times reports that on Aug. 25, the market was back to the previous peak it held before the Financial Crisis/Collapse of 2007. It took the U.S. almost five years for the market to regain the same high numbers it held on Oct. 31, 2007. According to reporter Floyd Norris, in the same NY Times article, the only other countries that have recovered are: Mexico, Singapore, and Sweden. None of the Euro countries have yet made it back.

The 2009 Recovery Act, often referred to as President Obama’s “stimulus,” was the first step toward mainstream recovery. It was a $787 billion spending law; it included a transformative energy program, the largest middle class tax cut since the 1980s, and is the biggest new business policy since the New Deal of FDR. Remember, in January 2009, the U.S. banking system had collapsed and credit was frozen, consumer confidence was at its lowest point ever, and the economy was decreasing at about 9 percent per quarter.

The Recovery Act meant GDP increased from 2.1 to 3.8 percent at its peak and some 2.5 million jobs were created or saved. Also, there was the separate bailout program for General Motors and Chrysler. And, for two years (2009 to 2011), private sector jobs increased every month. However, government jobs in the public sector decreased. Some have said this is bad for the economy, especially local government service jobs for public school teachers and nurses, etc.

Economists Paul Krugman and Robert B. Reich have repeatedly argued for more aggressive government spending which is at the heart of economic revival. They believe the feds must assume even a more active role in the economy. They advocate further spending at the risk of criticism from the conservatives of the Tea Party Republicans. This criticism would also include the stated policies of the Republican presidential ticket of Mitt Romney and Paul Ryan.

Krugman – in several of his most recent writings – strongly argues for more federal stimulus. He points to the past lessons from the Great Depression; austerity versus spending. With the emphasis on job creation, Krugman effectively argues that demand will automatically increase. More people with jobs means more income is spent on the goods and services produced by American business firms. The cycle is complete. If stimulus provides for increasing the number of jobs (building roads, bridges, damns, schools, etc.), then a demand is created by those workers as they spend their paychecks. The same is true when salaries are raised; people who have the jobs and earn more money, spend their money.

The President and Congress must leave ideology out of it and stop focusing, for now, on deficit reduction. The full recovery comes from increasing business and focusing on the future for a strong and productive economy. The deficit will be taken care of later with the new prosperity.