Monday, January 12, 2015

A ROARING 2015!! (?)

 
 


"Happy days are here again, the skies above are clear again...so let's sing a song of cheer again, happy days are here again..."
 
Happy Days are Here Again



Holy smokes! This is better than the Roaring 20's! The economy has mending and we are all doing much, much better! Well, that is the cover story on many of the MSM news channels. Are we doing better? Is the economy healed? Have the President's policies really helped? Time to take a look I believe.

Recently I listened to a host of one of the more popular financial shows on cable. His words - "The rich keep getting richer, the poor keep getting poorer, and those in the middle are going nowhere fast." He went on, "The only reason our economy is looking so good right now is that all the other world economies are so much worse." I then decided to look at our metrics as of the end of 2014.
  • Unemployment - Ah, the number we all love to talk about. The U3 rate has dropped to a paltry 5.6% at the end of December. That is good right? Not really. As has been said many times before, that number is about as useless as a screen door on a submarine. With over 92,000,000 people out of the workforce, the U3 keeps dropping. The U6 number however, is still at 11.2% Our labor participation rate dropped to 62.7% (hint: that is very bad). The statistic which is the most shameful is black unemployment. It is still at 10.4% with black youth unemployment at 33%.
  • Wages - For the middle class, they remain flat. However, the net take home pay went up solely for one reason - fuel costs. With gas being under $2/gal in many areas of the country, that is an additional $1,000 net dollars for the average family every year. The mystery to many is why in this era of high labor demand, wages are not keeping up. One reason is Mexico. They continue to offer a lucrative option for touch labor manufacturing. The average wages for manufacturing in Mexico is $5/hour. NAFTA has made that option very easy. The other reason is technology. More and more jobs are becoming automated.
  • Debt - I can hear it now - "Will you PLEASE stop gripping about the debt?" Okay, I will. I will only talk about obligations. The national debt is just a smoke screen anyway. Mere chump change to the real issue. In fact, the real issue is so scary, it is rare to ever hear it discussed in Washington. Our unfunded liabilities is $92.5T, and growing. The total of our national assets is only slightly higher than that. If we were a household instead of a country, our credit score would be under 500.
  • Banks - tick tock, tick tock. I have addressed this issue a few weeks ago. All the metrics are once again in place for another financial catastrophe (like derivatives). Tick tock, tick tock.
So maybe happy days are here again. Or maybe this is the calm before the storm. It is of little solace knowing our economic prosperity is based on the fact we are the best of the bad. Time to sign off and go to Costco. I need some more survival food. 


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