Monday, the Dow Jones Industrial Average set a new 2009 high, trading above 10,225. GDP growth came in at 3.5% for the third quarter.
However, what we are experiencing is a disconnect between Wall Street and Main Street. Last Friday, the Labor Department reported that unemployment is now above 10%. Consumer spending for September fell .5%, the biggest drop since December 2008.
Economist David Rosenberg cited polls by the WSJ/NBC that reported that 58% of people surveyed in October believe that the recession is still on, up from 52% in September.
Here's another shocker. Karen Dynan, economist for the Brookings Institution, testified before the Joint Economic Committee. Here is what she said: "Recent declines in asset prices have reduced the ratio of non-pension wealth to income for the median household below the levels seen over the past quarter century and similar to the level seen in the early 1960s."
Looking at this data, we are nowhere near the bottom of the recession. Both public opinion and hard economic facts, show that we have gone backwards. Yet during those 50 years, the cost of living has risen sharply. Just one example is the price of oil, which was $2.33 per barrel before the price spikes of the 1970s. Last year we saw the price of oil skyrocket to $147 per barrel.
During the past 50 years, goods and services have risen proportionally to the price of oil. So now we have a consumer with little or no money to spend, having to live at today's inflated prices.
Do you believe that this recession is over?
Why is gold marching higher? Ask the central bankers
Newspaper ad revenue of 28%, 8 quarters of double-digit drops
Closing Bell: Earnings working against stocks (BCRX, DELL, DHI, INTC, LEAP, PCS)
Reader Comments (Page 1 of 1)
11-11-2009 @ 10:04AM
brewstert said...
The mainstream media is still focused on retail performance as the barometer for the health of our economy. The pillars of the "consumer" based paradigm are cracked and crumbling. How can an economy be 70% consumer consumption? Adam Smith said that you measure the wealth of a nation by its manufacturing capacity. Well, we sure make some fine doughnuts! Unfortunately, as nations move out of the dollar this will bring our imperial currency home as massive inflation