Yesterday (October 9th) was an anniversary of sorts. In 2007 on October 9th the Dow Jones reached the highest level it has ever recorded closing at 14,163.53. At the start of business four years later the index is 11,103.12. For those interested that’s a 27.5% reduction in value.
There are many ‘experts’ that said the United States recession began in December of 2007. Those same experts generally called the end of the recession for June of 2009. Economic recession is often categorized as beginning when industrial growth begins to contract and ending when it begins to grow once
again. At least that’s what it means in the technical sense.
Throughout the period those Americans who have been down-sized and laid-off have found it increasingly difficult to find new jobs. It wasn’t as if there was an upturn in June of 2009 where people who were unemployed all of the sudden were able to find jobs. In my opinion this recession (or whatever one might term it) is one long unending event representing what (sadly) might be considered a ‘new normal’.
In general I’m a very positive person. I tend to not allow my mood to swing based upon reported economic news. I would no more be buoyed by a 3/10 of 1% drop in the national unemployment rate than I would be depressed by a similar increase. Nobody has to tell me that times are difficult, people are nervous and uncertain, and leaders in general are groping for the ‘right’ answers.
One thing that is of interest to me the most is the concept that economies need to consume more in order for true economic recovery to take place. That goes for more than just the United States. Consider China – a country where individual savings of its citizens is considered to be too high for its own good.
The growth engine of Chinese government investment that has stoked China’s rise could be running on fumes as Chinese banks have been lending people’s savings for a multitude of state projects. What the world appears to be hoping for is that the Chinese people begin to spend that saved money in order to help bolster the world economy. I find that concept to be bizarre don’t you?
The recent ‘Occupy Wall Street’ protests in cities around the United States underscores people’s frustrations with what they consider to be the elite 1%. While I understand people’s frustration I don’t understand a protest that has no defined outcome.
What if the current state of the U.S. and world economy is beyond the reach of policy changes and stimuli? While hope springs eternal, it might make more sense to come to grips with the idea that things may not get worse, but they also may not get much better.
How would that make you feel?