U.S. Recovery: Spending vs. Saving, Cyclical vs. Structural Unemployment, Double Dip

U.S. Recovery:  Spending vs. Saving, Cyclical vs. Structural Unemployment, Double Dip

U.S. Recovery:  Spending vs. Saving

An article today titled 'Spending vs. Saving:  Good or Bad?' advocates saving by U.S. Consumers as 'the road to recovery'.  I commented on this article, which I suggest you read - reading time 5 minutes - as follows:

As I see things, the fewer moving parts something has, the easier it is to understand and hence deal intelligently with in a short time period. The corollary to me is that the more moving parts something has, the more complex it is to understand to the point where if indeed it can be adequately understood at all, the longer is the time frame necessary to deal with it.

I do not believe the U.S. economic problems (note the plural) are as simple as consumer spending vs. consumer savings - nor do I think it likely Mr. Harding does either. That said, I do think there is little doubt that U.S. consumer spending has been the most important part of the 'gas' that has fueled the U.S. economy for decades - and that if a car runs out of gas it ceases to be able to deliver its occupants to wherever it is they want to go.

The idea that a population where a large number are without jobs or question their job security can either spend or save at levels it did when jobs 'were more available and presumed secure' I see as impractical at best, and nonsensical at worst. I am reminded of a child's rhyme I once heard: 'Michael, Michael motorcycle, ran out of gas and fell on his ___'.

The American economy is highly complex with many continuously moving parts, and with new and unexpected ones rearing their respective heads every day - the BP spill, the latest Hurricane, a new 'trading partner' issue, a 'terrorism threat', etc., etc. I don't have an ability to understand all the complex inter-workings of it. I will say, that intuitively I think the core issues - that unfortunately I think are unlikely 'to be resolved' in the near near or longer term - are manufacturing job creation, learning to live with reduced competitive wage rates, getting the U.S. population to settle for a lower standard of living without going through a period of significant social unrest, and getting the annual Federal, State and Municipal budgets balanced and in surplus in the near-term.

I don't envy President Obama, nor would I envy any other current President of the United States. On September 7, 2008 - just before 'Lehman' I said in a Blog Post that I saw (and now say 'continue to see') Ben Bernanke as the person who lost the 'game of musical chairs' when he was appointed to replace Alan Greenspan as the head of the U.S. Federal Reserve - see that Blog Post which is sub-titled 'Why is Nobody Else Looking at the World from 20,000 Feet and Focusing on the Prospective Spending Ability of the U.S. Consumer?' at www.stockresearchporta.../ Unfortunately as things have transpired, I see President Obama being the one who lost an even bigger and more important 'Musical Chairs Game'.

You might consider clicking on the link in my comment and read what I said on September 7, 2008 - I did, and was pleasantly surprised (although not pleased - two quite different things) that my comments at the time were quite consistent with what has transpired to date.  Feedback on my comment at info@stockresearchportal.com will be appreciated.

Cyclical vs. Structural Unemployment

I recommend you read an article published this morning titled 'The Varieties of Unemployment' - reading time 3 minutes.  I think the article worthwhile, in that it draws the distinction between 'cyclical unemployment' and 'structural unemployment' in an 'easy to understand' manner - something that not everyone necessarily thinks about.  I commented on the article as follows:

Good 'food for thought' article. To me, loss of U.S. manufacturing jobs that I think are unlikely to return results in an immediate 'structural unemployment' situation. I hope to be proven wrong.

Double Dip

The following is an excerpt from a short article this morning titled 'The Double Dip Arrives'.  I suggest you read the article - reading time 1 minute.

"The next 10 years will not present an easy investing environment. Just look at a long-term chart of Japanese stocks to get an idea of what we could be facing.  Investors will need to be very diligent when buying equities.  Precious metals and other select commodities should do well. The world's population is still getting bigger, and emerging markets are still growing."

The article's author and I seem to be singing from the same line, on the same page, of the same hymn book.  If we are, it is a certainty we are either both right or both wrong.

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Ian R. Campbell

President

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