It was surely no surprise that the Gross Domestic Product would not “grow” another 7.2 % this quarter. However, picking through the data, there are three things which should give pause to everyone concerning the economy.
First, WalMart and Target both announced that things are not going as well as expected. No, they are not losing money, just not making as much as some people expected. Specifically, they expect the Christmas shopping season to be somewhat less than robust. Now think about it: things are so tight that people are watching how much they spend at WalMart. It isn’t that people are doing more upscale shopping, because Target is seeing below projected sales at Mervyns and Marshall Field. And it isn’t just a problem at Target Corporation because Kohl’s is reporting pretty much the same. Indeed, retail sales in general were down and wholesale prices were up in October.
The second bit of bad news for the economic optimists to explain is the record personal bankruptcies in the 12 months ending September 30.
Remember, the White House would still like to sign legislation making it harder to declare personal bankruptcy. It will still be just fine for corporations to stuff their executives’ pockets with money, fire the lions share of the employees, and drastically reduce their debts through bankruptcy. That’s compassionate conservatism in action.
The final bit of bad news sounds like good news at first. It seems that the Federal Reserve is not considering raising interest rates anytime in the near future, despite admitting that “they can’t remain at 45-year lows indefinitely.” That sounds great, doesn’t it? It’s a huge relief for people with variable rate loans. It’s good news for people who own bonds too, because when rates go up, bond prices go down. However, rates are not going up because, in the words of Greenspan himself, “Uncertainty is not just an important feature of the monetary policy environment, it is the defining characteristic.”
Maybe bad things aren’t happening, but good things aren’t happening either.
Of all the words of mice and men, the saddest are `It might have been.
Never let your sense of morals prevent you from doing what’s right.
There’s a fine line between genius and insanity. I have erased this line.