Snake Oil Anyone?
The New York Times highlighted a sobering number on Sunday—at the rate of current job growth—about 200,000 per month—it will take 10 years for the US to recover its job losses from the 2008-2009 recession and at the same time keep up with growth in the labor force. Then keep in mind the country never did fully recover jobs lost from the 2001 recession. That means it would take two decades for our “vaunted” economy to catch up at the current pace unless the jobs engine ignites suddenly and at the same time manages to avoid another downturn (highly unlikely)… On the not so encouraging front JC Penney (retailing) and Yahoo (technology) announced layoffs last week while the Labor Department jobs numbers (at 120,000 new hires) for March were below economist expectations—they almost never get it right (February was a recent exception) and were way off this time. It all suggests a long haul to make those catch up numbers… While our economist friends (most of whom work for financial institutions who don’t want to highlight any bad news that could impact their companies’ profits) thought hiring activity would be much more vigorous than it was, they also predicted no way the unemployment rate would go down in the anticipated numbers—wrong again. The rate dropped a very modest tenth of a percent (because fewer people entered the labor force). It’s like why do we pay any attention to their their forecasts?
The dismal science, which mostly bases its prognostications on past trends and cycles, doesn’t offer much guidance when the future course will be determined by a host of rapidly changing parameters and conditions, involving job killing technology, the vagaries of climate change, deteriorating and obsolescent infrastructure, increasing congestion, and cheap overseas labor markets, among others… Of course, the explosion of the debt bomb will take years to get over absent a heady rush of inflation. Moody’s Analytics reports that average home equity per homeowner has fallen to 1968 levels (adjusted to 2011 dollars)—that is from about $200,000 at the 2006 peak to only $78,000 today. What happened to those big home value nest eggs everybody was counting on for retirement? I guess that equity was mostly refinanced out of existence… I got another call this past week from a 55-plus someone I used to work with, looking for a job that really doesn’t exist anymore and certainly not for an over-the-hill baby boomer, who piled on too big a mortgage, lost a pension, and doesn’t have much in the 401K. It’s scary and depressing, because these stories are not particularly exceptional. I’m sure you know at least a few folks in your circle in the same dire straights… And despite our recent wake up calls—the credit crisis debacle, the latest round of energy spikes, the totally unsustainable deficit numbers--our political parties sell the same old snake oil in the current election cycle—we have a choice of solutions—either more tax cuts (you cannot take in less and somehow get more–it just doesn’t work) or the same old high price social programs (they are totally unsustainable). Oh yes, and our leaders pander to us about how we can continue to use as much energy per capita (fracking is the answer), and expect cheap gasoline (put more drilling rigs in the Gulf), while buying as much stuff (I need an I-pad since my I-phone doesn’t show movies in high definition) and eating as much unhealthy food (don’t dare tax my soda—you’re taking away my liberty and being a nanny) as we desire… I recommend you see a new documentary film just opening in the US called “Surviving Progress.” My cousin Daniel Louis was the lead producer (Martin Scorsese is an executive producer). It raises a bunch of provocative questions that lead you to the obvious conclusion that we all need to make a lot of lifestyle changes and some sacrifices, if we want the next generation to have any chance at prospering.
Or we can continue to buy into the snake oil and pay attention to economists.