It’s official: last week it was announced that the recession is finally over in the United States. In fact, it’s been over for more than a year! It seems that the people who track such things wanted to be sure that we weren’t going to experience a double dip recession, so they delayed making any pronouncements until they were sure.
The strange thing is that the recession doesn’t seem to be over from my perspective. In fact, I’ve noticed the effects of it more the past 12 months — when there has technically not been a recession — then before that, when were was a recession.
Even so, I have seen some positive signs in the last week, since when the announcement was made. Perhaps we just needed someone to tell us it was over and then we would begin acting that way, making a self-fulfilling prophecy. If that is the case, they should have proclaimed it to be over a long time ago. Then would have begun acting differently last year and things could be in full swing now.
While we’re on the subject of recession, how many times have you heard something along the lines of “this is the worst economic times since the great depression”? Although this may be true (I do, however, recall that things weren’t too hot in the early 80s either), it has the subtle effect of allowing us to infer that today’s situation is as bad as the great depression. By framing these two events together, the conclusion can be all too easily drawn that the two are equal in scope and magnitude. That is not so, not by a long shot.
So in summary, things weren’t that bad in this recession, the worst is over, and now we need to act like it to make it so. The economy needs us — don’t let it down!
The US government’s “Cash for Clunkers” continues to motor forward. It is hoped that with the additional $2 billion added to the fund, the program can continue in overdrive for the rest of the summer.
CNN reported the initial statistics that 83% of the “clunkers” are in the truck and SUV category, while 60% of the purchases are passenger cars. This confirms a pronounced tendency away from trucks and towards cars.
Of all the billions of stimulus money, this is the one program that had a quick effect — and the one program that was put in the hands of the American people. Perhaps had more stimulus money been put in our hands — and not controlled by various bureaucrats at all levels — more money could have been used to jump-start the economy quicker.
As it stands now, it is likely that the recession will be over (some are saying it has already bottomed out) before the majority of the stimulus funds are spent. Perhaps the economy didn’t need that much stimulus after all.
Did you know that the three major US stock indices are all positive for the year?
According to CNNMoney.com, as of last Friday (June 12)
- The DOW ended the week up for the year, albeit slightly, at +.26%
- The S & P 500 has been in positive territory since early May and now stands at a gain of 4.76% for the year
- While the NASDAQ moved to the plus side the beginning of April and is now at a whopping +17:87% year-to-date.
Although there is still a great deal of ground to make up, it is encouraging to see growth for the year from all three. Investments are beginning to rebound and positive signs abound.
Yet it is hard to pick this up from the mainstream media, which is mired in the swamp of doom and gloom, focused on negativity and pessimism.
As for me, I am full of optimism and expectations. Will you join me?
Yesterday I posited that an increase in blog readership might be indicative of increase consumer confidence and a sign that the long awaited economic recovery is underway. There are, of course, no hard facts behind that assertion. However, I have another parallel observation that is quantifiable.
Many of my websites, including this blog, include Goggle ads. Although I don’t make a lot of money from the Google ads, it is generally enough to cover the cost of the sites and to maintain them.
(The ads are from companies who agree to pay a certain fee each time someone clicks on their ad. The content of the ads are matched with the content of each page on my websites, with the highest paying ads automatically displayed. Some people think that I control which ads are displayed — that is not the case; Google controls the entire process, sending me a small check each month for my portion of the clicks.)
I was pleasantly surprised when I analyzed my report from Google for March. All other things being equal, here is what I found:
- The number of times the ads were viewed increased 7%, meaning that more people are visiting my sites.
- The number of times ads were clicked on, increased 16%, suggesting that people are now having a greater propensity to click on an ad; that is they are more willing to consider buying a product or a service.
- The amount of money I earned increased 30%, meaning that advertisers are willing to pay more for each click this month than in past months.
Since advertisers are willing to pay more when people respond to their ads, this suggests that these advertisers are now more optimistic about their future economic prospects.
Again, this is a microcosmic observation, producing somewhat empirical conclusions, but when you’re looking for signs of economic recovery, I’ll take good news wherever I can find it.
At the World Economic Forum, Jim Wallis suggested that wondering when the global economic crisis would be over is the wrong question to ask — even though it is the one foremost on our minds.
He posited that the real query should be, “How will this crisis change us?” After all, if we don’t learn from our mistakes, we are doomed to repeat them. Drawing parallels between the years preceding the Great Depression and the past few, he offered that we have indeed repeated history. Here then is how I suggest we must change:
- Learn to be happy with less. Virtually everyone in the US is better off then half of the world’s population.
- Don’t spend what we don’t have. Satisfying today’s urges with tomorrow’s income is courting disaster.
- Plan for the future. That includes having an emergency fund and a retirement plan.
- Whenever possible, avoid debt. When that is not possible, pay off debt as quickly as possible.
- Charge cards are intended to be a convenience when making purchases, not a means to buy when we have no money. The first month that the balance can’t be paid in full is an indication of living beyond one’s means — cancel the card and don’t apply for any more.
- Shun greed.
In essence, greed got us here in the first place. I hear a chorus of readers concurring, “Yes, corporate greed caused this mess to happen.” Wait a minute; let’s not blame corporations. Although corporations are legal entities, they cannot think and act on their own accord. It is people who control corporations; many of them are greedy. The stockholders who own stock in the corporations seek higher returns on their investments; they are sometimes greedy. The people with 401ks, IRAs, money market accounts, CDs, and any interest bearing investment want to make as much as they can; they are partly to blame as well. On and on it goes. Virtually everyone, in one way or another, is culpable for the mess we are in — we have an insatiable desire for more.
As my first bullet point suggests, let’s instead seek to be more happy with a bit less. And we’ll all be better off.
I don’t know about you, but I’m tired of hearing the gloom and doom news about the economy and our future. While I try to minimize my exposure to negativity, sometimes it is hard to keep smiling and remain optimistic.
My efforts to do so were recently emboldened by an article I received by Eileen McDargh. It is titled: Today’s Economy Demands A Critical Skill: Optimism.
Please check out the entire article, but some of her key recommendations, with which I heartily concur, are:
- Focus on what you can control
- Reframe the event so that you are not a victim
- Cultivate optimistic responses
- Refuse to watch or read anything that puts a dark pall over your day
- Refuse to participate in a chorus of negative conversations
Don’t let the news media color your world or your outlook on life. If we buy into their slant on the news, we merely serve to fulfill it.
As for me, I prefer to ignore the pundits and naysayers, envisioning instead a bright and promising future. There will be good days ahead and I’m doing all I can to realize them sooner instead of later.
In the 80s, Ronald Reagan responded to bad economic times with a tax cut. Dubbed “trickle down economics,” it masterfully did the trick, with the economy smartly rebounding, ushering in a period of prolonged economic prosperity.
An alternate strategy for economic recovery is for government to spend their way out of it — even if it means massive deficit spending. Of course, part two of the theory is that once good times return, the budget needs to be balanced and the deficit eliminated. (Like that’s going to happen.) However, the Obama administration does seem to have the first part down, but for it to work quickly, the money needs to be spent quickly. Funding projects that will take several years to complete, no matter how worthy, will not fuel a turnaround now. Strike one.
Additionally, much of the spending seems to be earmarks, aimed at pork-barrel projects, intended more to help an incumbent be re-elected than to help the country prosper — or grow the economy. Foul tip; strike two.
With this in mind, imagine my shock and dismay last week, when the governor of Michigan (which leads the nation in unemployment, with 1 out of every 9 workers unemployed) announced that she was going to save much of the funds allocated to Michigan — because we might need them even more in the future then we do now. How will that stimulate anything? Swing and a miss; strike three.
I am seeing early signs that things are beginning to turnaround, but the stimulus plan doesn’t deserve the credit — it struck out.
We’ve been hearing nothing but bad economic news for the past several months.
The stock market is tanking, with folks losing huge portions of their retirement accounts. People are being evicted from their homes as banks foreclose on properties in record numbers. Even renters who pay on time every month can be pinched when their overextended landlords lose their rental properties. This puts downward pressure on real estate values, with bargain hunters (who have cash) snapping up deals. Just yesterday, I heard of business people in China looking to buy homes in the US because of their relative affordability.
With my retirement funds suffering the same plummeting fate as everybody else, I expected to learn similar bad news on the value of my home. Curiously, the assessed value of my home — according to local authorities — did not go down in 2008; it did not stay the same; it went up 4.6%. Say what?
There are two possible conclusions that I can make. The first is that the media has overstated the situation and my home really has increased in value. The other consideration is that, since my taxes are based on my assessed value, the township is seeking to increase revenue.
I’m not sure which scenario bothers me more: errant journalism or tax-hungry government officials. What I do know is that I’ll being paying more in property taxes in 2009.
The recent issue of Sojourners magazine cited some sobering facts about the state of the prison system in the US:
- 7.4 million people were under the control of the US criminal justice system in 2007. I’m not exactly sure what is meant by “under control,” but that is over 2% of the population, which is shocking.
- 67% of people released from prison are re-arrested within three years. So, the number of repeat offenders in prison is substantial. The question is, how much does incarceration contribute to recidivism? More to the point, would crime decrease, if we could keep first-time offenders out of prison? Environment has to be another factor, and in most cases, a released prisoner returns to the same environment; that doesn’t help. Economics would be another factor; see the next point.
- 83.5% of the people in jail (in 2002) earned less than $2,000 a month prior to being arrested. Certainly, economic pressure is a factor in the commission of crimes. Interestingly, a $2,000 month threshold is quite a bit more than the poverty level, which the US Census Bureau put at $9,183 a year for a single person in 2002. Two thousand a month roughly equates to an hourly wage of $12.50, quite a bit higher than the current minimum wage. This all suggests that viable employment, at an appropriate wage, is part of the solution to lower crime and incarceration.
(The title of this post comes from the game of Monopoly and was chosen merely to be catchy and provoking. Interestingly, Go Directly to Jail is also the title of a book on this subject. I haven’t read it, but it may be worth checking out. The product description on Amazon is most promising, but the reader reviews suggest that it digresses from that tack. Caveat emptor.)
For 77 years, General Motors (GM) has been the world’s largest auto manufacturer. That reign has ended with Toyota assuming the number one spot. Ironically, Toyota usurped GM with their sales falling 4% (9 million vehicles sold); GM’s drop, however, was a larger at 11% (8.4 million).
Amazingly, since 1999, Toyota’s sales have increased 70%, largely because of demand for fuel-efficient cars. This is all bittersweet for Toyota as they are forecasting their first operating loss in 71 years. (GM, however, is begging for a bailout.)
Interestingly, GM took the top spot from Ford in 1931 in midst of the great depression. Now, in the throes of another economic downturn, they are passing the crown unto another.
In hard economic times, there are winners and losers. Those businesses that manage and position themselves well are likely to come out ahead, whereas those who enter a downturn in an already weakened condition, do not fair so well.