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(Image:
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After
10 years of telling the unvarnished truth to rising stars and delusional
wannabes alike, American Idol judge Simon Cowell last month announced that he was calling it a day. But
perhaps the popularity and success he achieved with his call-a-spade-a-spade
approach has enticed others to try and do the same. Otherwise, how else to
explain the fact that two mainstream media organizations have just printed
articles that are so far removed from the Washington-Wall Street "it's
all good" snowjob that it's almost as if I'm a guest on a Hollywood unreality show?
"America’s
Jobless Picture Is Alarmingly Bleak" (Financial
Times)
We are
drifting. We take comfort in bits of good news, but we are in dangerous
waters; the Great Recession is being starkly revealed as a global crisis with
the US, the traditional engine of recovery, sputtering on every cylinder. The
US government responded with dramatic financial support by transferring money
to the household sector. But outside of these transfers the personal income
of Americans is still declining; the residential market remains stagnant at
best; consumer growth is nominal. The only real energy in the economy has
come from the cessation of inventory liquidation, which is now the main
factor in rising industrial output and any modest improvement in the economy.
The
mood of US households is despondent. In May only 11.3 per cent believed they
would see their income rise in the following six months, while 16.6 per cent
thought they would see it decline. This is the first time in over four
decades that more people believe they will be worse off than better. Any
massive fiscal and monetary stimulus that might reverse the trend is likely
to be politically unsustainable given the growing concern over the exploding
national deficit.
Wherever
you look the scene is bleak. Leading economic indicators fell in April
– unusual at such an early stage in the up-cycle. Jobless claims were
up by 25,000 to 471,000. And up again above expectations in the first three
weeks of May – raising the four-week moving average to a level consistent
with 100,000, or more, net job losses. For the past several months, claims
have been nowhere near the levels of 400,000 and less that in the past were
consistent with sustained job creation. We are not enjoying the normal cycle
of economic improvement. If we were, employment would already have reached a
new high and made up all of the jobs lost, as it did during the previous
postwar recessions. This time we remain short of the old peak of employment,
by an astounding 8.4m jobs. One in six Americans is either unemployed or
underemployed. This is not a normal cycle when compared with a typical
recession, which sees no more than 2m to 3m jobs lost.
"For Many, Recovery
Means Lower Expectations" (Associated
Press)
PROSPER,
Texas — Advised by a Walgreens superior that a promotion was "very
highly likely" if he transferred to the drugstore chain's Dallas
division, Chris Cummings uprooted his family and bought a spacious house in
this hopefully named suburb.
"The
sky's the limit," he was told.
But
instead of a promotion, the company for which Cummings had been an assistant
manager three and a half years cut his hours so drastically that he had to
take a second job. In March, he was laid off, and his part-time second job
became full-time.
And so
that is how a 40-year-old father of four with a master's in business
administration from the University of Notre Dame finds himself bagging
groceries at Sprouts, a local health-food store.
"I
never thought I'd be here with the education that I have and that I'd worked
hard on," Cummings said before a recent shift in the checkout lane at
the Sprouts in nearby Frisco. "Probably where the frustration comes most
is when I get the alumni magazine and I see what my classmates are doing. And
that's not a good feeling."
The
federal government says the "Great Recession" is over — has
been for months now — and that we're well into the recovery. But don't
tell that to Cummings, who has seen his income cut by three-quarters and
can't afford health insurance for his family.
Or Af
Shirinzadeh, who went from a $100-an-hour chiropractic job to part-time work
as a docent in an Atlanta museum that features plasticized human cadavers.
Or
welder Mark Sepeda, who had to move his family of six from a spacious home in
Nevada's lush Carson Valley to a two-bedroom apartment when the Las Vegas
building boom came to a screeching halt.
Or
Paul Lechner, who, with a mixture of gratitude and dejection, accepted a job
stocking shelves at a Super Target after two years and hundreds of
applications failed to land him a position in advertising, the field for
which he trained.
Yes,
the stock markets have largely rebounded. Housing and car sales are back up.
And though job creation isn't robust — last week, the Labor Department
reported private employers added just 41,000 jobs, down from 218,000 in April
and the fewest since January — the economy is growing again.
But,
if "recovery" means getting back to where you were before things
fell apart, many aren't even close. To people like Lechner, 43, who came to
North Carolina's Research Triangle full of hope for a bountiful future, it's
meant resigning himself to lower expectations:
That
any mental stimulation he gets will come from crossword puzzles,
conversations with his wife or the weekly pub trivia nights with the guys
— not from his work. That if he ever manages to get another job in
advertising, it'll probably be too late for any awards or recognition. And
that his 4-year-old son, Jerry, will likely be his only child.
"An
optimist sees the glass as half full. A pessimist sees the glass as half
empty. I see the glass as twice as big as it needs to be," Lechner says.
The
American landscape is littered with huge and half-empty glasses, and men and
women like Paul Lechner.
Michael
J. Panzner
Editor, Financialarmageddon.com
Michael J. Panzner is a
25-year veteran of the global stock, bond, and currency markets and the author
of Financial Armageddon: Protecting Your Future from Four Impending
Catastrophes, published by Kaplan Publishing.
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