A Simple Misunderstanding

Happy New Year!  It’s only been less than 2 weeks but 2012 is already a very important year for Americans.  First, Beyonce and Jay-Z, a couple with influence matching the Pope, had a baby.   This will never stop being a news story.  Second, we realized that the presidential primary debate season may just be one of the best shows currently on TV.  This genius program runs like “Survivor” contestants are tested for being “Smarter Than a Fifth Grader” and voted off as if it were “Celebrity Apprentice.”  So far this year, Michelle Bachmann got voted off Republican Island in a cruel Iowan twist, and Ron Paul claims to read economic textbooks on Saturday nights.  Third, but no less important, we got to watch Kim K realize that if she can have fun without her husband then maybe she shouldn’t be married (sorry, this is considered a major news story).   At this rate, we can expect a banner year all around, maybe even complete with a Paris Hilton comeback on DWTS.  (You heard the big prediction here first.)

Americans have had a lot of time on their hands over the last few years to concoct such great TV ideas.  We’ve been out of work or underworked, and needed a break from our own realities.  We want to see other people who are bigger idiots than we are, or in a worse predicament than we are, because it makes us feel better.  We want to see people just like us, getting their problems with food, clothes, and hoarding solved so we can think about how to improve our lives.  And then we sprinkle in some motivational programming, like Keeping Up With the Kardashians, because it makes us think about getting off the couch to see if we can get in on that golden ticket.  Coupled with countless talent competitions where “anyone” can win fame overnight, and we are optimistic that we’ll find better fortunes in no time (we hope we win Deal or No Deal but a job will suffice too).  

This year we can expect more quality programming as we bide our time.  Just as many people (not as intellectual as ourselves) misunderstand our TV show preferences, so too do they misunderstand the most recent jobs numbers.  Last Friday’s jobs report claimed that the economy added 200,000 jobs, with the unemployment rate falling to 8.5%, the lowest in almost 3 years.  Of course this piece of information was received with a sigh of relief.  Job gains, until now barely having a pulse, are finally catching up with the rest of the ongoing economic recovery.  Finally we are out of the clear for a double-dip recession.

Not to be a party-pooper, but uncovering the numbers just one layer shows the story really hasn’t improved.  It turns out almost half of the new jobs added in December where seasonal.  These “jobs” were in retail and transportation (think Fed-Ex and UPS), are low-wage, and likely will not last through January.  Subtract those 90,000 seasonal jobs from the total and we are right back to where we’ve been for more or less the last 7 months, adding roughly 100,000 to 115,000 jobs.  This pops the party balloon: the number of new jobs is still not enough to sustain economic recovery.   Worse, the numbers show unemployment is lower partially because fewer people are entering the labor force.  The working age population grew by 0.8% in the last year while the labor force participation rate fell 0.3%; presumably they wanted to watch some good old American TV programming instead of bothering with jobs.

At least we’ll have plenty of time to live the “American Dream” in our dreams.  So get your foreign-made TV, sit on your foreign-made couch, wear your foreign-made clothes and relax.   Forget about understanding why we don’t have enough American jobs, and why real wages are falling, that makes our brains hurt.  Sit back and enjoy the show.

(Bureau of Labor Statistics)

Gobble Gobble

November is coming and going faster than Kim Kardashian’s marriage (sorry, had to go there).  It’s coming and going faster than Lindsay Lohan’s jail time (4 hours for a 30 day sentence, blink and you missed it).  But don’t worry if you missed these great cultural events, another opportunity to hem and haw over marriages and prison sentences for these fine citizens will be here soon enough.  They haven’t let us down so far!  And just as fast: Thanksgiving and Christmas will be here again.  Apparently, according to retailers, Thanksgiving already came and went and we’ve already moved on to Christmas.  If retailers had it there way, Christmas would be a year-round celebration (and for some, it is!).

And if Christmas was year round?  We would oblige.  We love this time of year, although “the most wonderful time of year” gets awarded to back to school, a retailer designated holiday in early September (Labor Day wasn’t cutting it).   We love any excuse to celebrate and are always preparing for the next event.  Thanks to Halloween, retail sales in October were up 0.5% over September.  Year over year, sales are up over 7% - well done America.   And in other helpful news, as we ramp up for the big 3 (Thanksgiving-Hanukah-Christmas), the prices we paid for stuff in October – not including food and energy – remained relatively flat (up 0.1% over September, and up a mild 2.1% over last year).  Extra stocking stuffers for everyone!

If only food and energy prices could get the message and shape up.  After all, Thanksgiving is a time to feast on Turkey, Ham, potatoes, cranberry, stuffing, biscuits, pumpkin pie, and whatever else can fit on the table.  Food is the centerpiece of this holiday.  Yet prices on food are up almost 5% over last year (that’s not something to be very thankful for).   Worse, digging in to individual food prices, we find some numbers that might just give us indigestion.

After a three year hiatus on increases in the cost of our Thanksgiving dinner, prices of some important feasting necessities have taken a considerable hike.  Turkey prices are up 10% over last year, canned fruits and vegetables are up 7%, and biscuits and rolls are up 11%.  Worse, potato prices are up 36% over last year.  Dessert isn’t looking much better:  cakes and cookie prices are up 11% while pies, tarts and turnover prices jumped by 13% last year.  Hopefully we didn’t go so overboard for Halloween that our Thanksgiving feast will not require breaking the piggy bank.

A word of advice:  if traveling to another household for the big dinner, offer to bring a bottle of wine or some beer.  Not only will your hosts be happy to drown their sorry grocery bill away, but you will come out ahead.  Why?  Because the savvy consumer you are knew that while food prices skyrocketed, alcohol prices were the only ingredient of the feast that remained relatively flat (not even up by 1%).  Now that’s something to be thankful for.  Happy Thanksgiving!

(Census Bureau, Bureau of Labor Statistics)

That is “Scary”

Boo!  Okay, that didn’t scare you.  But hopefully you got your fright on this Halloween – be it haunted houses, creepy costumes, creepy people, or just watching Scream.  That Northeastern snowstorm was pretty scary – the movie “The Day After Tomorrow” comes to mind.  Global warming be damned.  Apparently everything around us is just now suddenly “scary”: the news is running stories about the “scary” economy, “scary” houses (though that should be saved for the “scary” drop in home prices), and even “scary” celebrity Halloween costumes (Heidi Klum has outdone herself yet again, what a “scary” surprise).  If we believed everything we saw and read, we would be right to stay inside, lock our doors, and hope November is a little less “scary”.

But that’s not how we roll.  Good for you for not letting the attempts to spook you get you down.  We went out in full force for Halloween, witches, pirates, “slutty” pumpkins (or anything really) and all.  We may have even outdone ourselves, which is impressive considering last year’s numbers.  According to some fun (yes, fun) statistics, last Halloween there were 41 million trick-or-treaters covering 116.7 million eligible trick-or-treating stops (homes).  And we love getting into the seasonal spirit: last year we ate an average of 24.7 pounds of candy per person (during the course of the year) and pumpkin production totaled 1.1 billion pounds!  We are serious – go big or go home (and lock your doors). 

Certainly we aren’t going to let the economic naysayers tell us what to do either.  In what turned out to be fairly good news in econoworld last week, our economic output increased in July-August-September by 2.5% over the previous 3 month period, after very weak gains earlier in the year.  While still quite lackluster compared to other post-recession “recoveries”, this news was good in that our output – after adjusting for prices –finally passed pre-recession levels (yes, it actually took this long).  You have yourselves to thank: consumer spending led the growth spurt (hey, we have a lot of candy to consume this year).  Congratulations, the economy is growing again.  It’s easy to conclude our wallets will soon join our stomachs in the happy parade.

Not to be a debbie-downer (or a villain, or goblin, or whatever name Halloween gives this role), but this might be a bit optimistic.  Growth fueled by our consumption, given the reality of our finances, really isn’t sustainable long-term.  On Friday, other data showed our spending in September was up and away: after adjusting for prices, our spending was up 0.5%.  Meanwhile, for the third month in a row, our “real” spending money (disposable income after adjusting for prices) was negative – our available funds are decreasing!  Where is this spending money coming from?  If we aren’t making it, we are borrowing it from somewhere.  For many of us, it’s our savings.  In a worrisome trend, savings continued to dwindle away, down $60 billion in September, to $419 billion, just 3.6% of our income.  Last year we had almost $600 billion in savings.

Low savings, high spending, and high debt is a risky combination.  We’ve been using this formula for a long time, but it also dug the big economic hole we can’t seem to fully get out of.  If anything is going to “scare” us this year, that seems as good (if not better) a candidate as anything else.  Boo!  

(Census Bureau, Bureau of Economic Analysis)

You Raise Me Up

Halloween marks the starting line of the great annual holiday race.  First Halloween, then Thanksgiving, followed by a big a religious Holiday of some sort (yes, Christmas is actually a religious holiday), and ending with New Year’s.  That is a lot of festive celebrating in over a 2 month period.  Fortunately, celebrating things is usually fun.  We get to see family and friends, eat lots of delicious (but not nutritious) food, and hopefully get some presents.  Some of us might even have a birthday celebration squeezed in there, bonus points (unless you’re too close to Christmas to make it a separate event, then you get minus points). 

The unfortunate part of the holiday season is that someone has to pay for it: you.  All of us are stuck with paying for part of the bill.  And while retailers (the entire economy, really) rely on the holidays for a large part of their financial success, we are constrained by what we earn (assuming we spend responsibly).  That seems to be a problem for many of us, who aren’t seeing much in the way of raises, especially while we are seeing increases in prices that continue to shrink the value of every dollar we make.  According to data released Thursday, our average weekly earnings went up by 1.8% over the last year, to $753 per week, yet the prices we pay for stuff increased by almost 4%.  So, in “real” terms, our wages have gone down over the last year.  That is not exactly setting the mood for the upcoming celebrations.

For those of us daring to be bold, or getting our annual performance reviews, now is the time to be brave and ask for a meatier raise.  How much should we be getting?  Certainly it varies by occupation, industry, and which part of the country you are in.  Another factor is your educational attainment.  Take a look at the national average wage by educational attainment (median means 50% of people make above this amount; 50% make less).  Where do you fit in?  For the record, 54% of us have a high school diploma or an associate’s degree.

Average (Median) Weekly Earnings by Educational Attainment (3Q, 2011)

    

Now think about our average wages in terms of the cost of the new iPhone 4S, which was apparently oversubscribed.  These phones start at $199 dollars, plus all of the monthly connection fees, internet usage, and apps that go along with it.  The cost of the phone by itself is 26% of an American’s average weekly earnings.  And we aren’t about to give up our lifelines to today’s information economy.  Yet we haven’t even touched food, rent, utilities, healthcare, or gas (which, at the current average of $3.47 per gallon can easily cost over $50 for a tank).   It’s hard not to notice how much a pint of ice cream, or a box of cereal, costs these days.  A bag of potato chips can easily reach $5.  At this rate something’s got to give.  Hopefully for you it’s your salary – and a big increase at that. 

Tell your boss that you deserve to be compensated among your peers.  Or that you would like your company to pay for classes, so you can climb the ladder of educational attainment (you would like to “be the best you can be”).  More compelling, tell your boss that you are losing money if your wages do not keep up with basic inflation (cost of living).  If we can’t afford to buy the stuff we make, then who is going to fill that role?  (What is an “export” anyway?)  It could ruin the foundation of our economic well-being (over-spending has nothing to do with it).  Yes, it’s true that as employer’s costs go up, prices go up and we’re back to where we started in terms of purchasing power.  But at least our fixed debt will go down in real terms, very good for our mortgages.  Now is the time to make your case.  Good luck!

(Bureau of Labor Statistics, Energy Information Administration)

And We're Back

The last month has been quite the whirlwind: Oktoberfest, Oktoberfest, Oktoberfest, and of course “Kim's Fairytale Wedding: A Kardashian Event.”  Not even Teresa Guidice from Real Housewives of New Jersey could compete with her sister-in-law hating antics (sorry, it was a nice try, but the table flip was better).  A special congratulations to Kim is in order for reaching the epic Paris Hilton status, what a prize.  How does she do it?  The first thought that comes to mind is clearly how hard she works for what she has.  Just look at the wedding, how much time she needed to spend “looking her best” with so many people watching!  All that make-up!  It is a tough job, but someone has to do it.  Or do they? 

We’ve had a lot of time to appreciate Kim K’s (or any “K’s”) societal contribution lately.  The Kardashian wedding special is so pervasive you can run but you can’t hide: it’s always on.  We’ve been forced to watch it so many times we might actually decide it’s worth an Emmy.  It’s getting about as much press as Prince William’s wedding, except there is one minor (unimportant, really) difference: he is likely going to be the next King of England.  The bad news is the next (and ultimate) step will be for her to go to jail.  Everyone’s footsteps she is following has taken a turn in the slammer: Paris, Lindsay, and Nicole have all donned the stylish orange suit.  It will be a full circle, from sex tape (remember Ray J?  remember “One Night in Paris”?) to jail.  She’ll join good company, from Michael Vick and Plaxico Burress to rappers TI and Lil’ Wayne to Charlie Sheen.  But don’t worry; if past trends are anything, she will make it through and make even more money for it.

Given reality TV is probably never going away, and given the lot of people given their own shows, we can’t help but wonder why we don’t have our own show already.  Why be “unemployed” when you can do no work and get paid?  Slowly jobs are coming back, in September the economy added 103,000 jobs, with revised job gains totaling 184,000 in July and August.  Employment in “Information,” where TV and movie broadcasting jobs live (where TV and movie “stars” live), increased by 34,000 jobs in September (mostly due to 45,000 striking telecom workers returning to work, but we’ll choose to ignore that).  While these aren’t tremendous gains (unemployment stayed above 9% - that’s quite high), we’ve all got to start somewhere right?  If they can do it, so can we!

If reality “stars” can be famous by having cameras follow them shopping, so can we.  We certainly know how to shop til we drop.  We spend money regardless of whether we should or shouldn’t be (aren’t credit cards great?).   Retail sales in September were up 1.1% over August, exceeding expectations of a 0.8% increase (go us), while our spending money after adjusting for prices (“real disposable income”) decreased by a combined 0.5% in July and August.  Relax, we’re not pulling a Teresa Guidice who actually went bankrupt from over-spending.  We are just pulling from our savings, down $30 billion in August.  We are destined for stardom, who needs savings anyway?  It’s not like this attitude got us into this economic mess.  Not creating value to the economy and spending money like we are?  Oh, wait.

Before we forget our reality dreams, maybe we should consider adding the next dimension: going global.  Maybe we can “trade” each of the three main Kardashian sisters as an honorary gesture to commemorate each of the three recently passed Free Trade Agreements (of course with Kim going to South Korea because that’s the most publicized agreement) and let other countries finance what makes us so interesting.  In return, these countries can have the best of America in their backyard.  Reality TV pushing the final frontier.  Now that’s a prize we can take to the bank. 

(Bureau of Labor Statistics, U.S. Census Bureau, Bureau of Economic Analysis)

And the Winner is...

Tonight are the Primetime Emmy’s (definitely not to be confused with Daytime).  The who’s who of TV will be out in force, and Jane Lynch is hosting.  Isn’t she great (maybe even greater than last year’s Jimmy Fallon).  But the real question of the night (aside from who’s going to win) is who are they going to be wearing?  The dress! The shoes! The jewels!  The hair!  Even men are scrutinized, although unknown spouses seem to catch a break.  For those of us who (so sadly) missed the VMAs last month we are hoping to redeem ourselves with this not to be missed TV event.  We can only hope Kayne will be there, or that we somehow get our fill of shock with a Kayne-esque event.  Something has to keep our attention besides shiny dresses and pretty people.  We are committing 3 hours (plus red carpet time) to this and we do not want to be disappointed.

As with life, there are winners and losers.  The Emmy’s have a particularly ugly ratio of 4 losers for every winner, dangerous territory.  Hopefully you are a winner, or at least can count on winning more than once every 5 tries (poor Susan Lucci, it took her 19 tries).  You may have noticed that life has been giving us lemons lately, while the lemonade (or cherries a la Louis Vuitton) seem to be overseas.  Anyone frequenting designer boutiques may have noticed the clientele is more non-Americans than Americans.  Running the numbers, it wouldn’t be the least bit surprising to learn that people in China are spending more on Louis Vuitton, Gucci, and Chanel than we are.  Data released Wednesday showed American’s retail spending was flat in August, lower than expected.  The fact is demand is so high from non-Americans designers are raising prices in America and Europe to keep up with the prices in Asia.  Stores are designing their business development plans around their new clients: non-Americans.  Meanwhile we are worried about where next month’s rent is coming from, and what’s going to happen when our unemployment benefits expire.

What’s going on America?  Are we letting other people get ahead because we’re too busy watching Snooki and Kim K’s every move?  (What about that wedding, huh?)  Of course we can’t also forget the “Real” Housewives, because certainly when you think “winner” they come to mind.  Seriously, though, we need to take stock.  Here’s what’s happened this week:  The Federal Reserve’s New York and Philadelphia surveys for September  reveal large pessimism (coming in at -9 and -17 respectively) from the business community on current sales and future business, which affects hiring levels over the coming months.  Meanwhile, even with the economy in a continued delicate state, consumer prices are on the rise more than we would like.  Data released Thursday shows the prices we pay (“Consumer Price Index”) rose by 0.4% in August, and by 3.8% year over year.  The target rate of inflation in 2%; higher prices eats into our purchasing power and quality of life.  You might think there is no time like the present to focus on being a winner, or not letting our winning status get taken away.  Why watch everyone else wear the jewels instead of working to be able to actually afford them ourselves?

But that will have to wait.  Right now the Emmy’s are on.  Then we need to be on tap tomorrow for more excitement from the Emmy’s – didn’t you know it only gets better?  Tomorrow night Joan Rivers and her Fashion Police crew will break it down in excruciating detail in case you missed it, or just want to re-live the moment.   Even Fashion Police knows how to win by going overseas and is complete with a fantastic import from Britain (Kelly Osborne). 

(Bureau of Economic Analysis, Federal Reserve, Bureau of Labor Statistics)

Don't Worry, Be "Unstoppable"

Aren’t you a good friend: your best buddy calls you right in the middle of HBO’s “Unstoppable” back-to-back marathon (right when they put the locomotive in reverse) and you took the call.  Why? They were upset, and apparently airing their troubles on Facebook just wasn’t cutting it (they only got 400 comments).  They needed the prize: you (aren’t you awesome).  Even though you were hoping to get at least three showings of “Unstoppable” in today, you put the final viewing aside for your friend (did you mention it was right when Chris Pine and Denzel go after the 777?).

Your friend seems seriously depressed, when they are usually happy.  Quickly your “unstoppable” mood is in danger of stopping:  they tell you they lost their job and have relationship problems.  All they need is money issues and they’ll have the perfect trifecta (luckily you aren’t the one to bring that thought into the conversation).  They worry money problems will come next and fear they will never find a new job “with things being the way they are.”  

The good (no, awesome) friend you are, you do some quick research online to see “how things are.”  You see that the jobs numbers released on Friday show why your friend is pessimistic – when subtracting loses from gains, the economy added no jobs (that’s zero) in August and the unemployment rate remains unchanged at 9.1%.  The private sector only added 17,000 jobs (much less than what is needed to keep up with population growth let alone reintegrate the unemployed back into the work force) after downward revisions to jobs totals for July and June.  But then you see a bright spot to quickly bring to their attention.  Your friend chose their career wisely by working in healthcare.  You tell them not to despair as they should have an easier time finding employment than other people because, relatively speaking, healthcare jobs have been increasing like gangbusters this year.  Even as most other industries are holding constant or shedding jobs, healthcare added 35,500 jobs in August.  Keep looking and they will find something before they know it.  The numbers are in their favor all around.  Thank goodness for the booming population of old people, it is job security for life.

You then proceed to problem #2: it appears your friend was dumped (a.k.a. “taking a break” that wasn’t their idea).  Relationship problems are not usually fun, unless you enjoy being unhappy.  Your internet research also reveals that, in apparently more great economic news, consumer confidence in August was at a 2-year low.  Last week consumer confidence for August measured in at “44.5”, dropping by almost 15 points from July, meaning we (the public) believe the economy is in another downturn (not good, we need a measure of “50” or above to indicate economic growth).  No wonder your friend is depressed.  You tell them it’s not them, it’s everyone.  We are all feeling a little pessimistic these days and they too can become “unstoppable” if they detach their locomotive from the rest of the train (yes, you like the movie that much).  Take a long weekend somewhere (their schedule just cleared) and hang out with some quality friends (like you).  You assure them they’ll feel better in no time.  Plus, bright side, the expectations component of the measure, while also at a 2-year low, came in at “51.9” which still indicates positive expectations ahead (barely, but you leave that part out).

You tell them there is always a bright side: now your friend can take some time to clear their head and search for a job they actually would like, and maybe even meet someone worth their while (you never liked their significant other anyway).  And, added bonus, they can take the time to enjoy what's important, like the new season of reality delights including "H8rs" where people confront the reality celebrities they "h8" like Snooki and Kim K (what genius).  They can think about such important questions like “I h8 people, how can I get paid to act it out?” or “who will take Maury’s place when he is too old to read DNA results?”   Maybe during a 10 hour back to back Hoarders marathon your friend will come up with the next big thing that all households must buy.  Maybe they could start an (educational but fun) blog!

(Bureau of Labor Statistics, The Conference Board)