Fire and Brimstone

Posted on August 22, 2014 by MN Gordon

Here’s a demoralizing fact.  Your paycheck has been shrinking for 5 years.  We wish we were making this up…but we’re not…

According to MarketWatch, “Since the Great Recession ended five years ago, the amount of money Americans earn each hour after adjusting for inflation has actually fallen.  And that largely explains why the U.S. economy is growing just 60 percent as fast as it normally does.

“Hourly wages have risen about 10 percent overall since June 2009, to $24.45 an hour.  But over the same span they’ve slipped 0.3 percent in “real” or inflation-adjusted terms.  That means most families are just treading water.”

This, in a nutshell, explains the frustrations the average American worker is faced with these days.  They’re working harder than ever.  But they are earning less.

It feels like running in ankle deep sand down a hot dry beach that never ends.  Terrible amounts of time and energy are traded for a diminishing return. Continue reading →

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Janet Yellen’s Big Surprise

Posted on August 19, 2014 by MN Gordon

More evidence was offered over the weekend validating our prediction for 2014.  If you recall, at the beginning of the year we gazed deep into our crystal ball and saw a vivid image of the earth not getting warmer…but cooler.  So far this guess has been right on the money.

“Pittsburgh is dealing with one of the coldest summers in history, and it’s having an effect on the trees,” reported CBSPittsburgh.  “Friday morning temperatures fell into the 40s in Western Pennsylvania.

“Meteorologists say these cold temperatures are leading to trees changing colors in the middle of August.  ‘“This is extraordinary for August, and certainly is a reflection of the prevalence of cool weather,’ KDKA Meteorologist Dennis Bowman said.”

Of course, we bring up our prediction of global cooling to pat ourselves on the back.  We rarely hit the bull’s-eye with such accurate prescience.  We must allow ourselves to gloat about our occasional triumphs.

So, too, we bring it up to grin and giggle at the consensus view for being so far off the mark. Continue reading →

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Whirlwind Economics

Posted on August 15, 2014 by MN Gordon

Things may be looking up for the unemployed working stiff.  After years of competing for scarce jobs with stagnant wages something extraordinary may be happening.  If you can believe it, opportunity has finally come for the unemployed.

According to the Labor Department’s recent monthly Job Openings and Labor Turnover Survey, the number of unemployed workers competing for each open job fell to a six-year low in June.  The number of unemployed job seekers per open job fell to 2.02 in June,” reported Reuters, “the lowest level since April 2008.  The ratio was at 2.14 in May and is now below the average from 2002 to 2006.”

On top of this, the number of job openings is at its highest level in over 13 years.  In addition, the rate of hiring hasn’t been better for over 6 years.  If these labor market improvements continue, wage growth should pick up too. Continue reading →

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Knockdown Drag Out Slugfest

Posted on August 12, 2014 by MN Gordon

Blows are being taken on the chin and dished out to the gut as daily prices wildly soar or crash.  Last week, for instance, the DOW jumped and dived several hundred points before finishing up about where it started.  Here we go again.

Down.  Up.  Up.  Down.  Up.  The stock market’s bouncing around like two boxers in a slugfest.  So far the judge’s score cards report a draw.

What to make of it.  Is the bull dead?  Or is the market searching for a new toe hold to spring upward and onward?

Here at the Economic Prism we have our money on the bear.  We see a slow growth economy that never really recovered from the Great Recession.  At the same time we see a stock market that’s been over inflated by radical monetary policy.

Extreme interventions into capital markets have pushed up assets and ballooned the accounts of the wealthy.  The wage earner has been left behind…median income is still below where it was in 2007. Continue reading →

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