[I]f we go by the book… hours could seem like days.
— Spock, The Wrath of Khan
Much thanks to the folks at MaxSpeak* for pointing out this set of figures from the Economic Policy Institute. Basically, they have the Degrees In Economics and the wonk-fu to compile actual statistics confirming what most of us have thought at some point in the last 2 years: “If the economy is so great, how come money is so tight?”
The figures show on a regular basis that wages are not rising despite the fact that profits are. The only way that economists can make it seem like wages are so much as keeping up with inflation is to figure in the CEO’s salary when they make the “average” figures. Frankly, this situation may be even worse than I thought, judging from some of the stuff in the description of Jack Bogle’s new book. Mr. Bogle is the fellow who invented the index fund. He knows what he’s talking about when it comes to business and the markets.
Debt is up and savings are down. And what’s even worse is that with interest rates this low, there is incentive for things to remain this way. Bernanke is going to need brass balls to steer the economy over the coming years. Frankly, maybe we don’t need to worry about Social Security solvency when the baby boomers start to retire, because a large percentage of them won’t be able to leave the workforce.
Of course that impacts the next fact, that job creation has not kept up with population growth. In last year’s elections, this fact was glossed over by both parties, much to my disgust. The headline unemployment number has remained low because of the semantic games that keep people from appearing in the workforce: people are going back to school or staying in school; people are becoming “contractors” or working “commission only” jobs or taking part time jobs because it’s better than nothing; formerly two-income households are scaling back to a single income. All these things keep someone who would really like to have full time paid work from appearing “unemployed.”
Poverty is rising. Every year since 2000. Not just in raw numbers, but as a percentage of the population. One out of every eight Americans lives in poverty. Think about that the next time you are in a crowd. I bet you a nice shiny quarter that in your local newspaper or newscast, there has been a story in the last 6 weeks about how donations to local charities such as food banks are down over previous years, yet the number of clients they serve is up.
Finally, keeping all this in mind, health care costs are rising. The insurance premiums are rising. The amount that people are paying out of pocket are rising. The number of people who decide that insurance costs too much and they will chance going without it is rising. The number of people who simply can’t get it or can’t afford it is rising. As the nice folks over at The Mess That Greenspan Made pointed out some weeks back, the fact that healthcare costs are rising is under-calculated in the official inflation number.
Oh and don’t forget, the durable goods sales were up because Boeing had record orders. Joe and Jane Average aren’t buying airplanes. They buy things like cars and houses and refrigerators. Sales of all those things are down. So “how the economy looks” all boils down to which numbers you want to use. The old saying about “lies, damn lies, and statistics” comes to mind.
In closing: How to make your credit cards pay you. Say, has Daschle found his backbone at long last? Not Necessarily the New TSA carry-on guidelines. And this last tidbit I am calling a rumor, since I can’t substantiate it anywhere — a nationwide voucher bill may have gotten through Congress. It’s possible, since they have done so much stuff this week there’s no way they have even read it all. School vouchers are one of the first subjects I wrote on here at ShortWoman.com, and I stand by my opinion that they are not a good thing. In short, they underestimate the cost of education, they ignore the incidental costs of private schools, and they pave the way for state control of private schools.
*As I write, MaxSpeak’s top story says there is a possibility of negative GDP growth in the fourth quarter. I wish he would share whatever data leads him to this conclusion, as it is a fascinating hypothesis.
Follow up: Seattle Times columnist correctly points out “If car-camping colony isn’t news, then times are worse than we think.”
Second Follow Up: I was just listening to a fellow on CNBC named David Rosenberg. He’s an economist over at Merrill Lynch whose research suggests that “the wealth effect from rising home values and the boost to spending from mortgage-equity withdrawal, and housing accounted for an astonishing 50% of GDP growth in the first half of this year….” He considers this a conservative number and cites studies by Greenspan himself suggesting the number is closer to 75% — no luck finding that online unfortunately. Now if these numbers are right, then the drop in new housing sales might explain MaxSpeak’s hypothesis. More importantly, if these numbers are right, we are all in trouble if/when the big housing boom is over.