Housing numbers and job numbers are still in the pits although the economy climbed out of recession mode awhile ago.
At least in terms of numbers. Whether it really feels like it–well, it doesn’t.
Is this a recovery without housing and jobs? If so, where’s the growth?
Housing was propped up at least for awhile by the tax breaks for first time homeowners; now, however, despite record low mortgage rates, there isn’t a lot keeping housing up.
Jobs continue to be lost without a lot of job creation; other than the temporary census jobs which are just about gone, it’s hard to identify many folks who are hiring.
How this recovery will play out is still anyone’s guess.
Although the economy is, at least statistically, recovering, there are still many, many issues (and businesses closing all the time). Inflation is currently non-existent, because people are not spending all that much money.
That’s why I was surprised recently to learn that two places I frequent–a restaurant and a barber shop–had both raised prices.
Granted, this is the first time in years either has raised prices–the hairdresser at least the three years I’ve been going there, and the restaurant posts a sign stating this is the first time they’ve increased prices since they opened in 2004–but it seems an odd time to do so.
Do you find some of your local businesses increasing prices now?
A few posts ago I discussed how that some of the same folks who were complaining about the dollar going south versus the Euro were freaked out when the Euro weakened dramatically. I wanted to add a bit to that–that there’s an upside to what are often seen as financial difficulties, if you’re in position to take advantage of them.
Sure, interest rates are paying next to nothing for CDs and money markets–but interest rates are also next to nothing for mortgages. If the Euro stays week, now might be the time to visit Europe–or buy Euros.
On the other hand, if interest rates go through the roof (maybe in response to wild inflation, which we don’t have at this time), look at getting some long term CDs and bonds. If the stock market bombs, look at it as a buying opportunity.
There’s an upside somewhere.
Over time, the US dollar has lost ground against all kinds of foreign currency. I remember when I was a teenager the Japanese exchange rate was 200 yen for a U.S. buck; now it’s a lot closer to 100 yen to a dollar.
There’s been a lot of talk from the U.S. government for years about how a strong dollar was something that they liked, yet the dollar tended to become more and more devalued versus the yen, Euro, and all kinds of other currencies, often to the chagrin of those Americans who followed it.
Yet in the past few weeks, with the financial crisis in Greece, the Euro has slipped versus the dollar, and many are up in arms about that situation–the exact situation that many were wanting for years.
When the US dollar does well versus other currencies, it means good we import are less expensive for us, but goods we export are more expensive for those countries; on the other hand, when the opposite happens–other currencies doing better versus the dollar–it means goods we export are less expensive for those countries and goods we import are more expensive for us.
When are goods are more expensive for other countries, we’re less likely to have an influx of cash from those countries, and in many ways, we need that, considering, for example, we already export a lot of greenbacks to other countries who don’t really care for us due to three letters: oil.
So it’s a tough situation to be in. It’s hard to win, one way or another.
To some surprise, I (and my coworkers) got a raise at work last week. Yes, it was a surprise–a pleasant one.
How much was it?
One percent.
It’s not a large raise by any means. But in these days where layoffs, furloughs, and pay cuts abound, I’ll take a raise of any amount. In fact, given the very low rate of inflation, this is likely equal in effect to the two to three percent raises we’ve gotten in previous years.
So yes, it’s a raise, no, it’s not a lot, and yes, I am grateful–it could be far, far worse.
Medical costs in the United States continue to go through the roof. Through talk of health care reform and controversy with Medicare and Medicaid recipients–and the tons of confusion accompanying those programs–health care costs have been rising typically beyond the rate of inflation.
Employers who are often required to provide health insurance for their employees are looking for relief from relentless price increases. Increased copays for the insured is often what happens–even myself, who works for a health maintenance organization, is far from immune. For the first time this year I’m paying for my health insurance–up until now the organization I worked for paid for the insurance in its entirety.
This all puts a dent on our personal finances. Not just paying the premium, but paying the copays for medications, tests, labs, and glasses is amounting to over $1,000 a year. Fortunately, this year my employer also started offering a flexible spending plan to give tax relief–essentially a discount of about 30%–for these out of pocket expenses.
It’s still more than I’ve ever spent before.
And this with a very decent medical plan. The underinsured or out and out uninsured are in much worse shape.
It’s going to be interesting to see how this unfolds.
It’s hard for my not-formally-trained-in-economics mind to understand how the country can spend its way out of recession.
We’re in debt, as a country. Granted, this is not high interest debt–the government apparently does not owe at credit card rates–but it’s interest bearing debt nonetheless.
The only way to get more money for the government to spend is through taxes–already unpopular–or borrowing–which will bring us into even more debt.
Sooner or later, that debt needs to be repaid. If the government was a friend of ours, we’d be telling them to pay down debt and not spend.
I can’t quite figure out how trying to spend our way out of a recession is a wise idea.
One of the things that concerns me in a recovering economy is the price of oil. In the United States, due to our failure to diversify into other sources of energy, we have a serious addiction to oil which puts us at the mercy of other countries, some of which are not exactly friendly with us.
When the economy was just about to go south in 2008, the price of oil was well over $100 per barrel, more like almost $150. When the economy went way south, the price of oil collapsed under $50 a barrel. Today it’s about $80 a barrel.
Keeping the price of oil down is going to be key to this economic recovery; in the meantime, the U.S.–and the rest of the industrialized world–desperately need to figure out other ways to power our future besides oil, something we’ve failed at forever despite being aware of the need all the way back to the 1970s.
The jobs number is not about Apple and Steve Jobs; rather it’s the number of jobs created or lost in the United States every month. With the unemployment rate still near a horrid 10%, it’s concerning that despite improvements in corporate earnings and the stock market, there still doesn’t appear to be more jobs on the way.
It is, of course, quite possible that part of the reason why we have seen improvements in corporate earnings and the stock market is because there are fewer employees for companies to pay for, but it’s tough to imagine that an economic recovery is sustainable without more jobs.
And for those of you who are out of work, I’m certain there’s nothing you want more than a job to work. So here’s hoping we’ll see the light at the end of this tunnel starting with this week’s jobs report.
After Furlough Fridays (which affect just about all state of Hawai’i employees but most equate with schools), apparently it’s believed that more blood can be squeezed out of the rock that is known as the public school system.
The Hawai’i legislature asked for 5% more in spending cuts for public schools; they were presented with about half that. Which means $37.7 million dollars.
It’s hard to imagine that the schools can endure much more without considerably negative effects to the education of our schoolchildren. As they say in the poorest countries of the world–we can’t afford education, but we really can’t afford to be uneducated.
