We all want to believe that the economic situation is improving. The stock market has climbed back up in the last few weeks. Housing sales seem to be improving. Factory orders were up a bit. My neighbors are more optimistic today than they were a few weeks ago. Unfortunately, the specter of a “dead cat bounce” lurks gloomily above the marginally “up” numbers.
While home sales may have increased somewhat, so what? The numbers were so low to begin with, the uptick is laughable. Besides, huge price cuts forced by foreclosures, pent-up buyer demand and a federal tax credit for new home buyers may provide only temporary sales fuel. But as long as home prices are collapsing, it’s premature to call the bottom of the housing collapse.
Other economic forces offer a more clear and ominous picture of what is happening in America today. The loudest message is coming from the employment situation: more than 660,000 jobs were lost in March, reports The New York Times.
While the official unemployment rate is at 8.5 percent, the true rate, when the underemployed and those who gave up looking are included, is more like 15.6 percent, reports The Associated Press.
As I write this, 13.2 million Americans are officially unemployed with another 9 million underemployed. Massive job cuts are expected to continue in April.
Another sign that all is not well in America is increasing bankruptcies, which reached nearly 6,000 a day in March, reports The New York Times. While the numbers are low compared to a huge surge in 2005 when a tough new bankruptcy law took effect, the current trajectory is clearly up.
So while some pundits happily report the end of the recession is in sight, I doubt the overall majority of Americans share this view. “This prevalent view that the recession is about to bottom out has somehow bypassed the most important part of the economy, which is jobs and income,” David A. Rosenberg, an economist at Merrill Lynch, writes his clients, according to the Times.
Meanwhile, trillions pour into the banking industry while little makes it to the average American, reports ProPublica. Take a look at the article and scroll down to see the chart of how little of the stimulus money is making it to programs that help everyday Americans:
- Housing and Urban Development: $0
- Labor: $0
- Veteran’s Affairs: $0
- Education: $0
- Energy: $0
Overall, less than 2 percent of the stimulus money has gone to stimulate anything, reports ProPublica. (Perhaps this is good news since we haven’t seen the impact the stimulus might have.)
Even the lawn guys are getting hit as the nervous rich cut back on maintenance, reports The New York Times. “You’re seeing the Wall Street guys suffer, but it’s a trickle-down effect,” Tony Femia, who owns Femia Landscaping and Site Development, tells the Times. “I have clients who are billionaires, clients who are famous, and the small guy, too — they’re all cutting back.”
The same thing is happening in the restaurant business, which is apparently overbuilt, reports The New York Times. “Bob Goldin, executive vice president at Technomic, a Chicago consultancy for the restaurant industry, predicted that more than 20,000 restaurants would close over the next three years,” writes the Times.
The real risk is that those losing their jobs are likely to trigger another round of home foreclosures, business closings and job cuts. So while a handful of experts see sunlight, the rest of us live in the real world.