In recent months our country, and as a result much of the world, has gone through tremendous turmoil and angst. You might recall the political battles in Washington, D.C., over the nation’s debt ceiling, deficit, and budget that had us watching President Obama fighting the GOP, House Speaker John Boehner fighting the Tea Party, and Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi fighting, well, just about everyone.

Because all of them were unwilling to move away from ideological extremes, our nation was brought to the brink of collapse. Then a last-minute deal was struck August 1 to raise the debt ceiling. Whew! The President and both political parties proclaimed their leadership in narrowly averting a crisis.  The news media pounced on the drama; the world was reading and watching every bit of coverage they produced (and all of their advertising, too, by the way).

However, in all the hype, the media generally failed to report that the debt-ceiling negotiations resulted in a deal to cut the 2012 federal budget of $3.6 trillion by just $22 billion --- which is less than 1% of the budget, according to an analysis by the Washington Post.  Now, I don’t know about you, but for such minute results, I would loke to have been spared all the name calling, accusations, skewed data, threats of economic collapse, and excess stomach acid.  When I consider the magnitude of what our Washington elite has accomplished, I am reminded of William Shakespeare’s comedy Much Ado About Nothing!

As if the ineffectual showdown weren't enough bad news, a new crisis occurred on Wall Street shortly thereafter, when Standard and Poor’s downgraded its rating of U.S. sovereign debt from AAA, the best possible, to AA+, the next level. The stock market responded to the downgrade with its greatest drop in recent years.

Up and down; round and round we go. News headlines are telling us the economy is slow and unstable and the future is uncertain. Shareholders are nervous. Employees are more nervous. Unemployed workers are distressed. And consumers are just plain skittish.

A Note from Your Friendly Fact Checker
While everyone is getting stomach ulcers over these short-term crises and the entrenched pattern of headlines about high unemployment, slow job growth, and staggering national debt, there is a counterbalance of positive indicators and good news that doesn’t seem to find its way into the media. For instance, did you know that:

• The corporate default rate was only 1.9% in July, down from 2.3% in June and much lower than the 5.5% rate it was a year prior, according to Moody’s Investor Service.
• According to the Wall Street Journal, banks now have more liquidity and capital today than even prior to the 2008 meltdown, and are lending to credit-worthy borrowers.
• The country’s CFOs are reporting their company’s cash is safe and they don’t expect the rating downgrade on sovereign debt to affect corporate debt, according to the CFO Journal.
• By and large, corporate balance sheets are better than they’ve been in several years and the merger and acquisition market is starting to pick up.
• At the time of this writing, the value of stocks versus the S&P 500 is trading almost 200% below the capitalized value of their earnings, according to economic research firm Laffer Associates.
• The Federal Reserve announced it would keep interest rates steady at near zero through 2013, thus stimulating corporate borrowing and demonstrating their confidence that material inflation is unlikely in the near future.

So what are we to believe? If you react to headlines and market fluctuations, you will perhaps believe that we are headed back into another Great Recession. But if you analyze what really drives the economy (i.e., banks lending money to healthy companies who employ people who spend money), you may believe that the economy is stabilizing and recovering.  With all the back and forth between these opposing influences, I sometimes feel like I’m watching a ping-pong tournament!

Relax That Jerking Knee
My intention is not to get into a political or economic debate here. Nor am I suggesting that we not deal with our country’s debt and deficit spending. Rather, my point is that we need to be careful not to engage in knee-jerk reactions to reports --- positive or negative --- about the economy, and make sure that instead we are looking at a balanced score card.

Our country needs leaders who are smart about political and economic issues and don’t over-react. If we rely on mainstream media (notwithstanding this column, of course!) to give us the good news about economic growth, we will be waiting for a long time. Instead, we have to dissect the hype and do our best to get to the facts. If we don't, we might be making critical business decisions on the basis of factors that have only a 1 percent impact on the economy.

Business leaders need to be the calm in the economic storm for the benefit of all their company’s stakeholders … employees, customers, suppliers and their communities. These stakeholders need business leaders who don’t take political sides but keep a balanced outlook without panicking over market fluctuations and political mud wrestling. Overreaction is not a desirable or acceptable characteristic of a business leader.

Remember that when consumers are nervous, they stop buying new refrigerators, for instance, which means the refrigerator orders slow down, which means revenues drop for refrigerator manufacturers. That makes it harder for the refrigerator manufacturers to pay their employees, which means layoffs, which results in out-of-work consumers who save their money to buy groceries, not new refrigerators.

That's very simplistic, I know, but it seems that too many people have forgotten these economics 101 lessons. Let’s not lose sight of the fact that the United States is still the world’s largest consumer and leads the world’s economy. Despite what S&P says, we are still a AAA country. And If cool heads prevail, our politicians will find compromise, unemployment will decrease, consumers will spend, and the troubled economy will heal.

Let’s act like the leaders our stakeholders need us to be and not create “much ado about nothing”. What they need us to create is a confident vision of the future, based on the facts.