Marcia Hammer (l) and Kay Ullman (r) enjoyed Patrick Lyons' presentation along with breakfast and warm cups of coffee on a very cold morning. The program was held at the Village Club of Sands Point. Photo by Will Wright.
Snow and ice did not deter Port residents from turning out in full force for March's Friends of the Library "Cabin Fever" event at the Sands Point Village Club. Selma Wilner, program chair, described the group as a "hardy crew." Wilner introduced the featured speaker: Patrick Lyons, a Port resident who is on the editing staff of The New York Times.
Lyons spoke on economic issues, clearly explicating the impact of different economic trends on the daily life of the ordinary citizen. He said, "Economists tend to think of the economy in the abstract, but economy is a tide that runs through every part of our lives. He added a disclaimer, saying, "I am not an economist, but a layman who has had the opportunity to work with a number of brilliant economists." (Lyons spent a decade editing business and economic coverage at The Times.)
Lyons explained that the economy affects us in a number of ways, complicated by the many different roles that we play. We are at the same time consumers and producers, buyers and sellers, spenders and savers. He said, "Making a judgment is therefore difficult. The economy refuses to boil down to simple truths. Everything cuts two ways and drives everyone crazy." He went on to give concrete examples.
The most vital factor in the economy, Lyons said, is the level of growth. "Growth is the issue," he said. "Nothing else will be healthy unless the economy is growing." He added that after going almost flat for a couple of years, the economy is picking back up again. That is good news, but," said Lyons, "sometimes too rapid growth makes economists nervous. Too much money chasing too few goods and not enough labor, and very soon the economy runs out of breath." In order to prevent the inflation that results from the above-described situation, Lyons explained that the Federal Reserve raises the interest rate to increase the price of money and thus slow down the growth rate. (The Federal Reserve System, commonly referred to as "The Fed" is a private body responsible for overseeing open market operations, the principal tool of national monetary policy.)
Conversely, low interest rates spur growth, as is the case currently. The "dark side" of this, said Lyons, is that very low interest rates discourage savings and investment and encourages borrowing. Right now in the US, individual savings are at an all-time low (just over one percent) and consumer indebtedness at an all-time high (estimated at about $2 trillion). Lyons noted that the Fed has raised interest rates by one point and a half in the last seven months. "In the banking world that's a lot," he said, "and I expect that this will continue."
Returning to the issue of inflation, Lyons rhetorically asked, "How are we doing?" His response: "Not badly, but not as well as we are used to." He said the inflation rate is currently around 3 percent; excluding food and fuel it is only about 2 percent. Illustrating his point that every economic factor cuts two ways, Lyons pointed out that when consumer prices rise more slowly than producer prices, consumers benefit, but shareholders don't do as well, and vice versa.
Specifically addressing the price of oil, Lyons commented, "In 1973, the oil embargo taught the US how vulnerable we are, and we have been paying for that for decades." He went on, "Oil is now over $55 a barrel. Traders in the oil market say that oil would be about $10 a barrel cheaper without the war in Iraq because of the 'risk factor'; that is, terrorist acts in Iraq and elsewhere." He pointed out that US consumers have not been deterred by the high oil prices. He said, "We have a big appetite for imported oil. People are still driving their SUVs and pretty much doing what they always did."
Another economic issue that cuts both ways is the outsourcing of jobs to countries overseas. Lyons specifically pointed to China, where a large number of goods consumed in this country are manufactured. He said, "We get huge pocketbook savings from the growth of goods manufactured in China. The consumers pay less. That is good news for consumers but not for workers." Regarding the political pressure to keep jobs here, Lyons said, "It is understandable, but futile. Such measures almost always do more harm than good." He added that the situation is sometimes self-correcting, because the currency of the nation with the trade deficit weakens. In the question-and-answer period, Lyons said that he is not as concerned in the short run about service jobs going overseas (for example, to India), because right now the service sector is growing rapidly, providing an abundance of such jobs. "In the long-term, he said, "we may see an impact, but now we don't." He added, "India is a great success story."
Lyons expressed concern that we have a growing economy, but are not creating new jobs; in fact, we are losing them. He noted that in February the unemployment rate rose to 5.4 percent. In addition, average hourly earnings are stagnant. "Profits are high," he said. "Shareholders are happy." But, he pointed out, consumers need rising income to sustain the economic growth. "Henry Ford understood this," he said. "He knew he had to pay his workers enough so that they could afford to buy his cars."
Addressing the local economy, Lyons said that unemployment on Long Island is very low and home building strong. However, he said that the one spotty throughout the area is retailing. He said, "Some stores are struggling. We have seen a churn on Main Street and closed stores in shopping malls." In response to a participant's question, he expressed concern about the overdevelopment of Nassau County. He pointed out that zoning laws were established when there was lots of land and not enough housing. He said, "Nassau County has not addressed the issue how dense we want to be." He added, "I hope that the visioning process will leave us with a county that we are all happy with and not just the developers." Lyons also expressed concern about the decline of manufacturing and the trend of converting commercial property to residential. "This is a worrisome trend, because communities that don't have a mix of jobs do not have a mix of people. You end up with only the poor and the rich." He added, "Its diversity is what attracted me and my wife to Port Washington."
Other issues addressed during the lively question-and-answer period were the "underclass" (Lyons said he hoped the Bush administration would address this), the huge part of the US debt that is owed by countries like Japan and China (Lyons agreed that this is a serious concern), and Fed Chairman Alan Greenspan. (Lyons declined to criticize, but felt it was time for someone new to take over the reins.)
Patrick Lyons came to Port Washington 14 years ago from Queens. He lives here with his wife and two children. Lyons combines an unusual mix of graphic and literary skills, which he credits with the success he has achieved in spite of being what he describes as a "college dropout." (He said, "I ran out of money and Cornell ran out of patience.") Through a "friend of a friend," he began his career with a small trade publication where, he said, "I was a jack of all trades." He went on to Associated Press, where he caught the attention of The New York Times. They recruited him as a graphics editor in the newsroom. "They were specifically looking for people who could do both information graphics and narrative," he said. He went on to do business and economic coverage, including a stint as the paper's business enterprise editor. He is currently on the editing staff of the News of the Week in Review Section. "I love my job," he said. Lyons also for a number of years did freelance graphic work for our own Residents for a More Beautiful Port Washington.
Amy Bass asked that we mark the date of Friday, May 13 for the annual Book and Author luncheon. She said, "It will feature one novelist and one non-fiction author. Look for a notice later this month."