Facts, not forecasts, spit out true economic events. That's worth keeping in mind, what with a sizable contingent of Wall Street stock pushers trying to convince us that some economic sunshine has all but signaled the economic storms are pretty much over.
If you look at the facts, though, some recent bum economic data and warnings of additional financial turmoil suggest just the opposite, in particular:
--Termites are still gnawing away at housing, as evidenced by sizable declines in January's new and existing home sales of 11.2% and 7.2%, respectively.
--Unexpectedly higher weekly unemployment benefits claims.
--February's drop in consumer confidence.
--Non-stop growth in foreclosures and rapidly growing mortgage delinquencies in commercial and residential real estate, which is a prelude to rising bank losses and even tighter lending policies.
--A strengthening greenback (which hurts our exports).
--Mounting political friction in Washington, restricting the ability of Congress to produce any sgnificant reform, especially as it relates to health care and energy legislation.
--A renewed warning from Ben Bernanke, questioning whether any economic recovery will be strong enough to generate much jobs growth this year.
Anyway you want to interpret this data, it's hardly a ringing endorsement that the economic tailspin is history.
In addition, John Silva, the chief economist of Wells Fargo Securities, tosses in another sour note in relating to country's single biggest economic worry: How do you restore jobs for many of the nearly 16 million unemployed Americans? Sorry to say, but Silva believes that although the recovery is continuing to take shape, there is an increasing realization that such economic growth is insufficient to significantly lower unemployment.
There has been some suggestion that what's really required to get the economy cracking again is permanent government stimulus. If that's so, Silva sees ominous implications, namely
that federal deficits would remain unsustainable in the long run and that unsustainable deficits would give rise to higher interest rates and weaken growth once again.
Speaking of employment, the Obama administration -- whose forecasting prowess in this context is about as competent as that of the local weathermen -- is now projecting a 9.8% jobless rate by year end, versus its current 9.7%. Others however, see higher numbers, among them Goldman Sachs, which expects unemployment to rise through all of 2010 and peak at 10.5%.
G. Gerald Hart, skipper of Hart & Co., an executive placement and consulting service based in New York City that caters to people with annual incomes ranging from $35,000 to $300,000, offers some grim tidings. There's now a "new normal" for today's labor force, he tells me. Essentially, he explains, the size of the work force and salaries will never be the same again; the game has changed, and there are now different rules," he says. Likewise, he predicts, there will not be a lot of new hiring because companies, aided by technology, will seek to do the same business with fewer people.
"We're looking at musical chairs, but with less chairs," Hart says. Intense competition means fewer jobs, lower salaries, and therefore, he observes, the unemployed, to avoid financial peril, should be prepared to look for employment elsewhere and commute, as well as explore other markets.
Interestingly, amid all the risks and uncertainties, commission-hungry Wall Street is stepping up its attack on the supposed wimps -- maybe you're one of them -- for failing to recognize and capitalize on the grand fact (no ifs, ands or buts) that we're now in a resumption of last year's bull market that could drive stock prices appreciably higher, maybe another 15% or so before year end. Just click onto any of the TV business networks and you'll see a non-stop, steady stream of touts who are berating the meek for sitting on the sidelines.
I've already stopped counting the number of people who have told me the bottom of this year's stock market is behind us. Invariably, such bull talk is full of bull.
Even AOL is exuberant, suggesting in a recent business column that stocks, after a huge 70% run from their March lows, may not only be cheap, but 15% undervalued to boot. Who knows? Maybe AOL should expand into the brokerage business.
What many exuberant bulls refuse to acknowledge is that we're in an increasingly treacherous yo-yo market, marked by sudden surges in stock prices and sudden dives. So those supposed wimps -- if they were indeed to fatten their stock holdings -- might well be getting an invitation to go from the frying pan into the fire.
What do you think? E-mail me at Dandordan@aol.com.