By Michael McCune
The economists who dwell in Washington and on Wall Street looked into their crystal balls these past two weeks and almost unanimously proclaimed the economy looked improved for 2012. In fact, each report seemed better than the previous as America marched toward 2012.
The ignorant masses have had their moment: the ball has dropped, the parties have been attended and the last echoes of “Auld Lang Syne” have faded. Here’s the first 2012 forecast done in 2012. You better sit down; our economy has to be very excellent in 2012 just to get back to mediocre.
The official unemployment rate as we left 2011 was 8.6%–but it has to be false. By Census Bureau data from 2000 and 2010 we find America shed just over 8 million payroll jobs. That means the unemployment rate had to INCREASE on that alone by over 6%, not the 3.4% reported. But America also added 30 million people in the decade, meaning if the same number of jobs were available in 2010 as 2000, the unemployment rate had to INCREASE another 11% on that data alone. Thus in official Washington numbers, the unemployment rate in the decade should have been at least 22.2%, not 8.6%.
Both sets of data agree that private consumption accounts for 70% of our economy. But where does the consumer get his money without employment? It isn’t from savings because, by and large, America has none.
Misuse of credit is the root of all economic growth for the last 10 years. Public debt doubled in the decade and surpassed GDP this past year. It is the unwashed masses that learned the lesson too well. Private debt is not 154% of private income in this country. This means a repeat of the 2007 meltdown is inevitable and all the talk about the solution is merely perfume to cover the stench of decaying flesh.
Incredibly, more than 14% of all Americans own a minimum of 10 credit cards. Yet a Novermber survey of Main Street business indicates three of every four plan no new hirings for another 18 months. These are the businesses our economic strength originates with.
Then too is the aging population of America. More than 20% of all living Americans will be in the magical years by the end of 2013 and they are woefully unprepared. Half of all working people have less than $10,000 set aside for the big moment and a staggering three of every 10 have less than $1,000 saved.
Wall Street and Washington economists proclaimed 2012 “could be a very good year” on the road back to economic strength and hailed December’s 9% rise in hosuing construction as proof of a rebound. But 2011 set a record for the fewest housing starts since the count was begun in 1953. A 9% gain on nothing is still barely nothing and that’s the shape of the economy.
Finally, if you use the same criteria to fall into the “unemployed” category today as was used in 1972, the official unemployment rate would exceed that of 1932, the year we dropped into the Great Depression from the depression we’d been in.
Oh yes, Happy New Year!!!
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Thanks for contributing. It’s helped me understand the issues.