While news stories and politicians continue to tout the “recovery,” those on Main Street remain confused. Here are just a few of the news stories that minimize the economic crisis:
Reports of a recession have been greatly exaggerated
Don't Fear the Double-Dip Recession
US Economy Remains in 'Recovery Phase'
Of course we also have the continuing saga of the European Debt Crisis, which we have been told, has already been or soon will be resolved.
There Is No European Debt Crisis
European debt crisis exaggerated
What the European leaders and wishful thinkers would like for us to believe is that Europeans are ready to blissfully accept austerity measures and to relinquish their sovereignty for the sake of their hallowed union. And while some European politicians may be ready to blindly endorse the proposals of their “leaders,” the citizenry of those countries are poised to revolt if the measures currently under consideration are implemented. Should the EU fail the effects will be felt here in the U.S. and around the world, and failure of some description seems to be inevitable. “Can kicking” is nearing the end of its ability to keep this egg together.
A crisis in Europe will surely spread to the U.S., regardless of what politicians tell us. Europe is in deep trouble—Moody’s just downgraded Germany—Europe’s strongest major nation, and the crisis has already begun to create social unrest in both France and Spain.
And here in the U.S. conditions aren’t much better. While politicians and the Federal Reserve have pulled out all the stops in abating disaster, their efforts have done little to help those on Main Street, for whom there has been no recovery.
A true recovery, regardless of how sluggish it may be, should be felt by the majority of those affected; and I don’t see it. Sure, I see the stock market buoyed by a continuous stream of “free money,” and I see corporate profits at respectable levels. But to accept those as positive signs without looking beyond the numbers is to ignore the ongoing crisis in the U.S. economy.
Pundits, politicians, and prognosticators can tell us they see signs of an improving economy and can project a recovery, but the reality is that the future of the U.S. economy is far from rosy. Additionally, it’s too complex to predict. There are just too many unknown variables with the potential to dramatically alter the end result. Those making predictions (your humble commentator included) can only make “educated” guesses as to where the economy will be at any point in the future. But for me, I can’t envision a scenario where we return to the boom times of past years.
It doesn’t take a PhD in economics to see that the major nations, including the U.S., are treading on dangerous ground, and that dark clouds are building over our collective economic futures. Let’s look at a few facts:
· 46% of Americans believe the U.S. has slipped back into recession.
· June retail sales fell 0.5%, the third month to do so, and below worst case forecasts.
· Unemployment remains painfully high, with more than 20 million unemployed.
· Jobs creations maintain a rate well below the rate of population growth.
· Many of the jobs being created are low wage, service sector jobs.
· The poverty rate is on track to reach its highest level in 50 years.
· Drought will increase food prices at a rate far above reported inflation.
· GDP growth projections of more than 3% for 2012 have been revised downward to 2% or less.
Last November I posted my annual Predictions Blog, and at that time projected that there was a better than average chance that the U.S. would re-enter a recession this year. If I were to update that projection, I’d say that conditions have only worsened in the past six months. Regardless of the actual numbers touted by government, the nation’s economy continues to struggle. The reality for most is that the recession of 2008 never ended.
Politicians like to point to Wall Street as a sign that the economy is improving; however, corporate profits, CEO bonuses, and rising stock prices don’t really translate to an improved economy for those on Main Street. It makes no difference that CEO salaries have increased; and increases in the Dow have little effect on most Americans. What we need is a surge in job creations and increases in wages that will, at least, keep pace with inflation. (And I’m not referring to the distorted inflation numbers put out by politicians and bureaucrats intent on keeping their jobs; what we need is for wages to maintain pace with the rising costs of food, fuel, housing, and medical care.)
Politicians can assure us that things are getting better, that the U.S. isn’t headed back into recession; but the reality for the “folks” is that their wallets are thin and their patience is growing thinner. Recession or recovery? How about just giving us the truth and devising a plan to return the U.S. to economic prosperity that will actually make a difference to the average American.
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"Recession or Recovery? What We Call it Doesn’t Matter" - Originally posted at: www.TheHousingGuruBlog.com
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