Here we go again. Three years after the bottom dropped out of the economy, and just months after a long, slow and painful climb toward recovery seemed to be producing results, the flooring is starting to feel awfully flimsy again.
For years, the U.S. government, abetted by greed on the part of everyone involved, happily ran up the debt. After all, we were entitled, and the government simply raised taxes to make it so. Millions became billions, billions became trillions, and we were reduced to borrowing from China.
But we in the business aviation industry are by nature an optimistic lot. And since early 2011, we watched charter and fractional flight hours slowly inch up. We cheered, though quietly, when it appeared the fleet of used aircraft for sale was shrinking and prices were once again starting to climb. And we softly applauded any report from maintenance and repair shops and refurbishment centers that demand was increasing. But I suspect one day we will look back at it all as a triumph of hope over reality.
And the reality is that nationwide, the economy is still stumbling. In August, Standard & Poor's removed the United States government from its list of risk-free borrowers, dropping the rating on concerns about federal debt. And this month, the head of China’s biggest ratings agency, Dagong Global Credit Rating, warned that it may downgrade the U.S. sovereign debt rating again because of Washington's failure to tackle the federal budget deficit.
And the national debt? It’s now more than $14 trillion and climbing, with no end in sight as the politicians fiddle while Rome burns.
All that should serve as a reality check. And if that isn’t enough, take a look abroad. Over the past year, we have watched our cousins in Europe struggle to prop up the euro and hold together a union that was ever suspect. Observe Greece, where the government spent like drunken sailors on Saturday night for decades and its citizens continue to make a national sport of avoiding taxes. Now comes Italy, where Prime Minister Silvio Berlusconi’s government has fallen and that country’s economy appears to be circling the same drain as Greece.
Elsewhere, the French are wringing their hands and the Germans would like to wash theirs of the whole affair.
This is the same Europe that rode to the rescue of our business aviation industry during this three-year recession. They bought airplanes and aviation services, and along with the emerging economies of Brazil, Russian, India and China, did much to keep the U.S. business aviation industry afloat. That alone should make it painfully obvious that it is a global economy, and what happens to one affects all.
Today, the U.S. is hopeful of an economic recovery, but even the most optimistic observers are cautious.
In a recent letter to employees, notifying them of yet another round of layoffs, Hawker Beechcraft chairman and CEO Bill Boisture expressed caution. He pointed out a number of factors responsible for such worries, including Europe’s continuing debt crisis, slowing economic growth in China, an Arab spring that is turning into a fall of continued unrest, and reductions in government spending worldwide. “At present,” he concluded, “the airplane markets in which we compete are showing little sign of growth, and the key indicators that could trigger such growth are stubbornly low.”
As for me, I would like to be more optimistic. But I fear Boisture’s outlook is too close to reality. While there will be a recovery, it certainly won’t be tomorrow, and a recovery of our industry can only follow the recovery of a global economy to which we are now inextricably tied.
Perhaps the best advice is that given to his troops by England’s Oliver Cromwell: “Trust in God, but keep your powder dry.”
(Illustration: dream designs/FreeDigitalPhotos.net)
