Stupendous! An eye-opening 5.7% jump in fourth-quarter GDP, the most explosive growth rate in six years. This disclosure Friday, coming on the heels of 2.8% growth in the third quarter, was an unmistakable sign to Wall Street that the economic frost is over.
Maybe yes, but then again maybe No.
For sure, you would be hard pressed to sell the end of the frost argument to one particular beggar. Panhandlers are hardly an unusual breed, but there's a rising clan of them in New York City (undoubtedly elsewhere, as well, given the economic climate). One, in fact, provides an entirely different insight into what's really happening on the economic scene, versus the contrary and non-stop cheery economic talk we're getting from the White House, Wall Street and many media outlets.
This beggar would undoubtedly challenge the contention that the economy is now on a roll. A fella in his early to mid 40s, this particular beggar, seeking a handout a few days ago in front of Manhattan's upscale Four Seasons restaurant, asked one of its emerging patrons entering a stretch limo, "Sir, could you spare a few dollars so my wife and I can get something to eat?"
He got a fast brushoff, according to a Washington contact who witnessed the incident, and was coldly asked by his would-be benefactor: "Why don't you get yourself a job?" The panhandler replied: "Sir, this is my job for now. I've been looking for work for two years and I can't find a thing." That answer worked: he was given, I'm told, a $20 bill.
A bartender by profession, the beggar explained to a passerby that he and his wife, a cocktail waitress, were both out of work, couldn't get jobs and each evening, one of them goes to the entrance of one of the city's leading hotels or restaurants for a couple of hours and begs for money. "It's demeaning," he said, "but we have to eat."
Another sign that not all is well on the economic front--that the 5.7% growth rate is somewhat misleading in addressing what's going on with the masses---is that the begging trend is just not limited to individuals. Merchants, for example, are also getting into the act, literally begging you to buy with their advertising and promotions.
A case in point is a recent ad campaign by Food Emporium, a leading Manhattan supermarket chain, which is staging an unusual promotion: buy two, get one free. Significantly, these offerings involve everyday staples, such as soap, toothpaste, milk, cough drops, laundry detergent, tissues, paper towels and boxes of pasta.
Why such an unusual promotion on everyday needs?, I asked one of its managers. "Just come into the store," she said. "There's more help than customers."
There are three necessities in life--food clothing and shelter. I just covered food. Let's move on to clothing, notably to the Men's Wearhouse chain, one of the largest specialty retailers in North America with more than 500 stores. It has been bombarding shoppers with a steady stream of TV ads in which it offers a second free suit if you buy one, along with two free shirts and two free ties.
A trendy women's apparel retailer, New York & Company, has also gotten into the act, offering a second free pair of pants if you buy one at its regular price.
As for shelter, landlords are offering growing incentives to potential renters, among them one or two months free rent and free flat screen TV sets.
Yet another sign of the times: On Manhattan's upper east side, a newspaper stand outside a store, put up a sign, reading: "Please don't steal newspapers. Pay inside."
What's really clear, though, is that the impressive 5.7% growth rate, boosted by government stimulus and inventory replenishment, is unsustainable (nor is anything close to that number) in an economy plagued by:
--Continued work force reductions.
--A refusal by highly cost-conscious Corporate America to rehire a goodly number of the nearly 16 million unemployed.
--Falling wages and salaries.
--Slow private sector demand.
--Ongoing weakness in housing, as evident by rising mortgage delinquencies and foreclosures and some recent disappointing numbers. (Existing home sales fell 16.7% in December, while new home sales for the month dropped 7.6%).
--The dogged reluctance of banks to lend to small and medium-sized businesses.
--A sharp contraction in consumer credit, which is synonymous with a shrinking economy.
Equally telling is the stock market's dismal reaction Friday to that considerably stronger than expected GDP number, suggesting much skepticism about an economic recovery still abounds.
Interestingly, investors' initial response to the happy economic news was positive, as the market rose in early trading. In fact, there was much speculation that the Dow that day would post a healthy triple-digit increase. Such speculation, though, turned out to be all wet as the Dow actually fell 53 points.
"It was a surprisingly bad market showing," observed Los Angeles money manager Arnold Silver of A. Silver Associates, who believes the market's decline in the face of such favorable economic news signals more bloodletting in equities and continuing fears of new financial heartaches. "The obvious message, a miserable one," he said, "is that a lot of people are convinced the economy is nowhere near out of the woods. And the market's action seemed to say the same thing.
What do you/think? E-mail me at DanDordan@aol.com