5) The parking lot at Applebee's is thinning while the drive-thru line at McDonald's is lengthening
Many Americans are continuing to Super Size their order while downsizing the bill. The Dollar Menu is how people are "Eatin' Good in the Neighborhood." This is evidenced by increasing sales at McDonald's and decreasing sales at Applebees. Cutting back on restaurant bills is the opposite of how people behaved during the most recent bubble when disposable income was flowing in from Flip That House winnings. Forget fancy polls: this consumer sentiment gauge speaks louder than words.
4) Uncle Sam is holding up the housing market
At the moment, the only thing "stabilizing" house prices are historically low mortgage rates and a monster home buyer tax credit. Without these major subsidies, the housing market may have fallen into the great abyss. So don't get too complacent. If Atlas shrugs while unemployment is high, mortgage prices will rise and the housing market will get slammed. The Home Buyer Tax Credit is set to expire in April. Let's see if politicians can stomach another round of foreclosures.
3) A bunch of countries are on the verge of going bust
Yes, countries (not corporations). Remember what happened when Lehman Brothers imploded? Now imagine Portugal, Italy, Ireland, Greece, or Spain (affectionately known as the PIIGS) going belly up. Throw in some Eastern European countries and a black swan (the UK or US), and fear could spread faster than swine flu. Don't think it can happen? The math is simple. Countries have borrowed and spent much more than they make. That is like breaking a fundamental law of the universe. And when that law is broken, bankruptcy or bailouts loom.
2) Many jobs have been lost forever
The US was once a
job creating machine. In the 1940s, 10 million jobs were created. In the 1990s, 19 million jobs were created. In the economically crappy 1970s, almost 16 million jobs were created. However, in the 2000s, the private sector deleted 208,000 jobs -- many of them are now permanently overseas. We cheered for free market trade agreements like NAFTA, but did we truly understand the consequences? Apparently not. Now the only way to grapple back many manufacturing and tech jobs is to lower wages and compete in the free market. That could get more bewildering than an episode of
Lost.
1) 78 million baby-boomers are eligible for Social Security and Medicare
This is the economic atomic bomb. There are not enough greeter jobs at WalMart to offset the back-breaking burden of 78 million people falling into the social safety net. Politicians have used the Social Security and Medicare funds as ATMs for tons of unrelated spending projects over the years. Unfortunately, no one refilled the cookie jar. As tax collectors reach into our purses to make good on promises made to the Boomers, there will be less money to drive the economy back to prosperity. This would hurt a booming economy. What will it do to a fragile one?
What other obstacles stand in the way of prosperity? What are some reasons we will pull out of this mess? Let us know below ...
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http://economictimes.indiatimes.com/articleshow/5683827.cms
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Now, the reasons why things can do well rest in people taking risks to build new businesses, and there is still a great entrepreneurial spirit in America. As those take off, they will create more jobs and make more money, but they are more efficient now and can be done for less due to technology. So it will take more new businesses to create fewer jobs.
Additionally, it will take smart people to pry the money from baby boomers' hands but it isn't impossible even though they won't be big consumers as they leave their consuming demographic prime... but things that eliminate their bills such as microgeneration of alternative energies will make their long term money go farther in preparation for retirement to hedge against energy inflationary pressures, but will also create an export market for third world development which will create more jobs and profits here if automated properly. It is these kinds of export markets that will offset the loss of consumers in America due to baby boomer retirement. That is what America must look for, export markets for the short and medium term, which will make us stronger in the longer term.
Fourth, all that you have said about baby boomer retirements is true, however, it isn't a great concern for gloom and doom. Echo boomers are about five years behind in being able to offset some of the work force and the debt is sustainable if we can pay for some projects now, and then start to lower it after. It isn't nearly as gloom and doom as some predict. Though it is absolutely a problem. As baby boomers die off, things will get better.
First, the line at McDonalds vs. Applebees may simply be people starting to understand economic value vs. failing to understand value. That doesn't mean Applebees isn't healthier than McDonalds, but rather that a dinner on the run for $5 saves at least $10 over going to Applebees once tip is figured in. I would prefer to see sales increasing at grocery stores and both lines decreasing as a better sign of understanding value, but the point is really that I don't think Applebees vs. McDonalds is necessarily the indicator you would like it to be.
Second, I never did understand the appreciation of housing. What other market can you use, abuse, and break a product and have it increase value? It only made sense because population was growing faster than the housing market. What we have found now is that baby boomers have left the housing market and echo boomers have yet to enter it, which leaves us with a surplus. The problem is people no longer see the value in having a paid off home when they get old, instead they see a lost investment, which is part of a failed economic understanding. Housing will pick up again, but growth in housing needs to slow if values are to rise again.
>>"We cheered for free market trade agreements like NAFTA, but did we truly understand the consequences? "
Not all cheered. Many saw this job destruction trend coming. A lot of people booed NAFTA at the time, but they were slandered as 'nationalists', 'Luddites', 'isolationists', 'xenophobes', and so on, by the same crowd of globalists who steamrolled those who warned about the unsustainable speculation on real estate. If you can't get your message out through the media because the US media doesn't represent US interests, you can be right on the facts all day, it doesn't matter in the court of public opinion.
Even when public opinion is with you, it doesn't matter. Look at the TARP. It was opposed by a huge majority of citizens but it didn't matter.
Wall street gets bonuses for failure, and no one is held accountable.
The Fed failed to do it's job, and no one is held accountable.
Congress no longer functions, and no one is held accountable.
Politicians lie to the public on a daily basis, and no one is held accountable.
People die, or go bankrupt, while insurance companies profit by denying services, and no one is held accountable.
Where do we go from here?
#1 Congress
#2Congress
#3Congress
#4Congress
#5Congress
#2 Innovation is not dead, it has just gone underground, where the rugged American spirit still ingeniously applies its creativity toward maintaining the same resilience that it has always drawn upon and celebrated. While dumping all of our problems in the lap of government and big business, we still invent the solutions we need and ply the Internet for more, thrilling at the seeds of possibility.
#3 Economic and monetary policy matters. People are finally awaking to the fact that boring economics does matter a great deal, and the population is interested for the first time in the framework that defines possibilities for themselves, their children and grandchildren. They are not likely to lose interest again soon.
#4 People can not spend what they don't have, and the world will change because of it. It is only a matter of time until business learns this.
#5 Our television is in the closet. I know I'm not alone.
There's an opportunity here to get smart, of course--we'd do a lot for our economy (peak oil or not) if we got serious about getting rid of suburban sprawl and developing walkable communities and shopping. And there are plenty of construction opportunities in a world where we've decided to do away with sprawl. Developing a more energy friendly infrastructure would do a lot toward fixing our balance of payments--the TARP bailout of $700 billion is about what we spent on oil in 2008. But in order to do this, someone would have to talk to the American people like an adult and do away with pipe-dreams like Hydrogen cars and "drill baby drill".