What Recovery?

All the talking heads, from the Federal Reserve Chairman, the Treasury Secretary, politicians from the present administration and the news media have been telling us that the economy is improving.   I have to ask, one question.   What country are they talking about and where is the proof?  Maybe those guys are living it up, but all I see are students graduating without jobs or being underemployed and many other people having a difficult time.  Today the unemployment rate is 8.2%, not including the students without jobs.  We have been in the 8% range for three years or more, making it the longest length of high unemployment since the Great Depression.  Even the unemployment rate is a misleading figure since many people have dropped out of the workforce, as I pointed out in a previous commentary. 

But besides unemployment there are other disturbing indicators.  Costs are rising.  I guess everyone sees that gasoline prices are sky high but also food costs have been rising.   The USDA sees 2012 food prices rising 2.5%-3.5%.  College education costs also have been rising every year.  People’s median income has not risen but has dropped in the last few years.  We have seen this week, that home prices have dropped again for a sixth straight month to nearly a decade low.  The housing industry has never recovered.   America has a 15 trillion national debt that is growing daily.  But at least the interest rates are low, for now.  Does not seem like anyone cares.  There has not even been a national budget passed since April 29, 2009.  No hurry, no worry, the recovery is taking hold and making everything better. 

I guess the only indication these people are really looking at is the stock market, which has been in recovery since 2008.  But even this is a little bit of a false indication.  Corporations with cash have been buying back their own stock and the cautious investors such as the old and retired are forced to put their money into the stock market because bank accounts and other forms of fixed income investments offer so little in interest.  These investors who rely on fixed incomes are feeling no type of recovery in this market.  This stock market effect may not last long either, as many European countries are heading into dire straits and are facing another recession or the specter of bankruptcy.  We may see why the national debt is something that should not be ignored very soon.  If or when this happens, all the markets will be affected from Asia to the USA.  Everyone has kicked the can down the road and I cannot understand or see where we or the world has fixed any of our economic problems since the downturn of 2008.  I guess the fix was that time heals all wounds and that spending more money was the band aid to hold it all together.  But if you do not cure the disease, all the time and band aids can’t keep our problems from returning with a vengeance.

So where is the recovery?  We are not there yet and we do not seem to be close to one either.   We better realize our present situation and keep an eye out for any more hits to our economy.