Let me return to November 2008, Thanksgiving Day, I was sitting around a table having been invited to the house of a husband and wife who have a lot of friends and hosting experience. A few people remarked about the topic of the economy and asked, When will it get better? I announced, in a matter-of-fact tone, This whole thing will clear up in 2110. A few people didnt realize I was talking about considerably longer than two years until one lady asked in a stunned voice, Twenty-one ten?
Yes, 2110, I replied and then added, Its going to take about a hundred years to work through this mess.
Some people said they hoped things would clear up in a few years. I did acknowledge the possibility for some mild improvements which would take ten years or longer so by that time wed be in the roaring 2020s perhaps.
So when the media prints weve already recovered, such as Claims fell steadily last year after the recession ended in June 2009 or names some other period of recovery and then suggests the possibility for a double-dip recession Im certain weve never worked our way out of it.
Lets not gloss over the numbers presented by the Labor Department today:
The number of people continuing to receive jobless aid fell by 9,000 to 4.4 million, the department said. But that doesn’t include several million people who are receiving benefits under extended programs approved by Congress.
The number of people on extended benefits rose by about 280,000 to just over 5 million people in the week ending Oct. 2, the latest data available. All told, about 8.8 million people received unemployment aid that week.
Foreclosures are still at a high level potential of 1.5 million to 2 million. In another post I mentioned that four million more folks had been added to the qualification of living below the poverty line. The US doesnt have the same manufacturing base or structure it did during the 1930s so I dont see an easy way to boost the economy with long-term job prospects and furthermore they need to be good jobs.
The Wall Street Journal on Monday October 18th 2010 reported a story about the reduction of pensions being offered by large companies, and that these firms were under funded in their potential pension obligations. They have to switch money away from stock market investments as the decline over the past ten years has caused them to put in additional funds to prepare to meet pension obligations. They found out the stock market wasnt a safe place to put money, not even over the long-term (stock market gains are mostly inflation, not real profit increases sixty to seventy percent of the gain is inflation over the last twenty to thirty years and over the longer-term it is roughly ninety percent inflation rather than actual gains this was mentioned in the book Winning the losers game but there are is also plenty of academic research and charts online that illustrate this). Pension fund managers realized that stocks were not likely to have safe sustained periods of positive performance five years ago and have made reductions to stock market exposure within pension portfolios. I wont go in to how they got convinced to invest.
So, its not just that times are tough theyre bleak. If inflation, real inflation, is close to six or seven percent then in roughly ten years time your moneys purchasing power is worth about half of what it was certainly there has been consistent purchasing power decline over the last ten to fifteen years even with a partially robust economy in the late 90s.
During the 1992 recession the DJIA was around 2000 and in January 1993 the index was around 3000. Its a lot worse now than 1992 or 1993 or than during the Savings & Loan crisis of the late 80s into 1990.
And the issue of free and affordable health care has not been fully addressed and implemented if your money cannot hold value due to consistent inflation, and job growth for the foreseeable future is dim, and you dont have promising retirement benefits then you need the benefits of health care reform youre entitled to something that works well for you, the people.
The CEO of a large company can weather the economic storm because he or she has been making anywhere from 271 to 431 times what the average worker has been making over the last fifteen years compared to around 1982 when it was closer to 42 times the average workers income.
If health care costs continue to increase, and inflation, and the people accept lower paying jobs, or even recover their prior financial earning status you still dont get ahead year after year. One reaction by the public is to focus on paying off their personal/consumer debt which is fine, but thats not the consumption of new goods and services thats catching up on old obligations.
At the next Thanksgiving party Ill still say, 2110.
