Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
As rono and I have been whining for months about, see if you don't think this discussion might also apply to the unemployment rate, the CPI, the rate of inflation, etc., etc., etc..
Howdy Mark, A well thought and reasonable article, in my opinion. Much of what was noted has also been noted here and at FA about "real conditions" over the past several years. While we all find various factors in the areas where we live; I also chat with those whom I know in real estate sales and the construction sector in my area of MI. There remains a lot of slack in anything related to actual home construction. Those I know, are finding more work within the past 6 months in the area of "re-do" and "fix-up" to existing housing; which points more to those in a monetary position to take advantage of slow work schedules and also paying less for the same work than would have been the case in 2006. I also know of a number of grown kids who are living in the basements of their parents homes. They may have a job; but at a low wage, and in most situations (as is the case today) the employer is only hiring part time and does not have to comply with benefit packages. So, the young ones or newly reemployed have low wage work and likely no benefits. While there may be young ones who think about owning a house, or even a newer auto; I do believe the cuts (from the 2008 melt) into the fabric of the overall economy are very deep and will be long lasting for many. I still contend, that this is not my or my parents economy any longer and will not be again. The last slammer on this will be the continued impact of technology upon the non-skilled jobs area. So, yes; employment in the service sector may indicate better numbers going forward; but many in the so-called service sector will barely have a living wage, let alone thoughts of buying a home and/or a newer auto. Rono and I have both noted the number of folks who fill the restaurants in our areas. Yes, there are younger people eating at these, too; but some of the business lies with the fact of a large generational group of +60 year olds who have very decent benefit packages for a monthly pension, much of their other medical expenses via Medicare offset and paid for from a medical retirement benefits package and also draw Social Security (which for some, reduces their work pension payout). This older generation is the remains of a full tilt manufacturing state that lasted for many decades, much of; within the bounds of a blue collar union job. The majority of these folks will pass within the next 20 years. An assumption on my part, is that much broad based economic support continues from we older folks; while many of the young ones continue to scratch and claw a for decent standard of living. 'Course there are about 100 variables thrown within all of this to be able draw a simple picture in anyone's area of the country. Many things are indeed, local. Not unlike the old joke for the northern most area of the Upper Peninsula of Michigan: There is nine months of winter and 3 months of rough sledding. At the very least, our economy is likely in line for continued rough sledding. Thanks for the link, Mark. Take care, Catch
Speaking of the "non-existent" rate of inflation: my primary retail food and beverage purchase analyst today advised me that Two-Buck Chuck has just jumped from $1.99 to $2.49 at Trader Joe's. Now the gummint will probably attribute that to some sort of "increase in quality", but I would find that to be highly improbable in this case, despite the obvious need for such improvement.
Reply to @Old_Joe: Gilette Fusion - which used to be $8.99 are now nearly $11 a few years later, Robitussin (popular this time of year) now around $8 when it used to be $5-6 not that long ago, Head and Shoulders (which used to be the cheap brand) now $7.99. Mucinex $15-18. The list goes on and on (and on and on.)
I bought Reckitt Benckiser (Lysol, Mucinex, Durex, Clearasil, Schiff Vitamins, etc) right after the election. I'm not displeased. I believe someone on the board mentioned owning Unilever the other day (sorry I forget who) and that beat this morning or yesterday morning. I continue to like consumer staples and would look for other names if opportunities came up.
I will say Whole Foods actually has some good deals, if you really look around.
Know I'm kinda slow here, but been drinking lota OJ this winter and just realized the half-gallon container in the grocery is really only 59 oz. Grumbled to a stock boy & he said it's been that way long as he could remember. Course, maybe that's "deflation"? The size of the bottle "deflated" over the years.
Good article Mark, but hardly surprising. I've said for years that the official figures are designed to spin the data to the gov'ts advantage. shadowstats.com
With housing, the issue has been and is the overhang of housing being held off the market because they are underwater on the mortgages written at the market high. Until this overhang of supply is brought to market, housing will not recover in any big way. We are seeing a little bit of a recovering in my neck of the woods but sill woefully 'little'. At the low we had less than 10 new house permits. Now we're up to 20-25. These are still down from the peak when we were pushing 100.
Good point about the Haves and Havenots. The couple across the street. He's recently retired for GMC and she's a secretary for the state. Untill recently, all 3 grown kids lived at home - both twin girls with their boyfriends. Finally, one of the twins and her SO were able to get an apartment. These kids don't really have much of any kind of a job and they're all hard workers. Just not much pay nor benefits.
The Economy of Yes and the Economy of No. You've got a good job with a pension and benefits. Spouse has a decent job. You've got some savings and an IRA and your mortgage is fixed around 5-6%. The kids are in college. Life is good. More wine?
Ah, but let's say you worked for the vacuum cleaner company that sent your jobs overseas. Then you worked construction until the housing meltdown. Since then you've been unemployed. Wifey has a job at Walmarts making about minimum. Neither of you have benefits, nor pension, nor savings. House is being foreclosed. Daughter's pg and son's a stoner. Life sucks. You gotta another one of them beers?
Huge disconnect that is not healthy because it highlights the disparity of wealth and income and that it's getting worse. Much worse. Middle class is becoming a pipe dream for many.
As for the inflation numbers. It's not that they're lying about the numbers, but that they've tweaked the formula to the extent that it understates inflation. Hedonic adjustments apply to some 50% of the market basket. If the product is new and improved they can charge more and it doesn't count. That's all well and good As Long As You Can Still Buy the Old and Unimproved product. Seasonal adjustments. Etc. That said, the internet and globalism combined with an absolute lack of wage pressure have gone a long way towards negating rising costs for medical, food, energy, etc. And everyone is hiding it as well as they can. Check the size of everything in the grocery store. Same price - smaller package. Those 16 oz. cans are now 14. The airlines . . . what is your ticket going to cost to Florida? WTF knows? Geez, it's like finding Waldo with actual prices.
For the way back perspective, Harry Dent said that this depression would last until 2023 or so but that in the '13-14 period that would be a bit of a relief. He was suggesting this would be the time to sell that house of business if you needed to otherwise it will be a long wait. From where I sit, I really don't see that he's wrong.
As for the equity market, enjoy it until they stop filling the punch bowl. When they stop QEnth, we will be well and truly screwed.
Reply to @rono: Well said. Re: "haves" and "have-nots" ... Unfortunately, a certain small but vocal group like to define this huge divide as the "givers" and the "takers" - LOL - many extremely wealthy in the group to which I refer pay a lower effective federal tax rate than does a family earning 75-100k by the toil of their hands. Their idea of manual labor is limited mainly to stuffing gift-boxes for the troops in front of TV cameras at Christmas. To borrow from Spiro T, this small but vocal bunch really do constitute an "elite corps of impudent snobs." And, I think it was Lincoln who noted: "A house divided will not stand."
That reminded me - coke 6-pack plastic bottles were 24 oz, then 20oz, now 16.9oz. Price is still higher than what it was a few years back, despite smaller size.
Comments
A well thought and reasonable article, in my opinion. Much of what was noted has also been noted here and at FA about "real conditions" over the past several years.
While we all find various factors in the areas where we live; I also chat with those whom I know in real estate sales and the construction sector in my area of MI. There remains a lot of slack in anything related to actual home construction. Those I know, are finding more work within the past 6 months in the area of "re-do" and "fix-up" to existing housing; which points more to those in a monetary position to take advantage of slow work schedules and also paying less for the same work than would have been the case in 2006.
I also know of a number of grown kids who are living in the basements of their parents homes. They may have a job; but at a low wage, and in most situations (as is the case today) the employer is only hiring part time and does not have to comply with benefit packages.
So, the young ones or newly reemployed have low wage work and likely no benefits.
While there may be young ones who think about owning a house, or even a newer auto; I do believe the cuts (from the 2008 melt) into the fabric of the overall economy are very deep and will be long lasting for many. I still contend, that this is not my or my parents economy any longer and will not be again.
The last slammer on this will be the continued impact of technology upon the non-skilled jobs area. So, yes; employment in the service sector may indicate better numbers going forward; but many in the so-called service sector will barely have a living wage, let alone thoughts of buying a home and/or a newer auto.
Rono and I have both noted the number of folks who fill the restaurants in our areas. Yes, there are younger people eating at these, too; but some of the business lies with the fact of a large generational group of +60 year olds who have very decent benefit packages for a monthly pension, much of their other medical expenses via Medicare offset and paid for from a medical retirement benefits package and also draw Social Security (which for some, reduces their work pension payout). This older generation is the remains of a full tilt manufacturing state that lasted for many decades, much of; within the bounds of a blue collar union job. The majority of these folks will pass within the next 20 years. An assumption on my part, is that much broad based economic support continues from we older folks; while many of the young ones continue to scratch and claw a for decent standard of living. 'Course there are about 100 variables thrown within all of this to be able draw a simple picture in anyone's area of the country. Many things are indeed, local.
Not unlike the old joke for the northern most area of the Upper Peninsula of Michigan: There is nine months of winter and 3 months of rough sledding. At the very least, our economy is likely in line for continued rough sledding.
Thanks for the link, Mark.
Take care,
Catch
I bought Reckitt Benckiser (Lysol, Mucinex, Durex, Clearasil, Schiff Vitamins, etc) right after the election. I'm not displeased. I believe someone on the board mentioned owning Unilever the other day (sorry I forget who) and that beat this morning or yesterday morning. I continue to like consumer staples and would look for other names if opportunities came up.
I will say Whole Foods actually has some good deals, if you really look around.
Good article Mark, but hardly surprising. I've said for years that the official figures are designed to spin the data to the gov'ts advantage. shadowstats.com
With housing, the issue has been and is the overhang of housing being held off the market because they are underwater on the mortgages written at the market high. Until this overhang of supply is brought to market, housing will not recover in any big way. We are seeing a little bit of a recovering in my neck of the woods but sill woefully 'little'. At the low we had less than 10 new house permits. Now we're up to 20-25. These are still down from the peak when we were pushing 100.
Good point about the Haves and Havenots. The couple across the street. He's recently retired for GMC and she's a secretary for the state. Untill recently, all 3 grown kids lived at home - both twin girls with their boyfriends. Finally, one of the twins and her SO were able to get an apartment. These kids don't really have much of any kind of a job and they're all hard workers. Just not much pay nor benefits.
The Economy of Yes and the Economy of No. You've got a good job with a pension and benefits. Spouse has a decent job. You've got some savings and an IRA and your mortgage is fixed around 5-6%. The kids are in college. Life is good. More wine?
Ah, but let's say you worked for the vacuum cleaner company that sent your jobs overseas. Then you worked construction until the housing meltdown. Since then you've been unemployed. Wifey has a job at Walmarts making about minimum. Neither of you have benefits, nor pension, nor savings. House is being foreclosed. Daughter's pg and son's a stoner. Life sucks. You gotta another one of them beers?
Huge disconnect that is not healthy because it highlights the disparity of wealth and income and that it's getting worse. Much worse. Middle class is becoming a pipe dream for many.
As for the inflation numbers. It's not that they're lying about the numbers, but that they've tweaked the formula to the extent that it understates inflation. Hedonic adjustments apply to some 50% of the market basket. If the product is new and improved they can charge more and it doesn't count. That's all well and good As Long As You Can Still Buy the Old and Unimproved product. Seasonal adjustments. Etc. That said, the internet and globalism combined with an absolute lack of wage pressure have gone a long way towards negating rising costs for medical, food, energy, etc. And everyone is hiding it as well as they can. Check the size of everything in the grocery store. Same price - smaller package. Those 16 oz. cans are now 14. The airlines . . . what is your ticket going to cost to Florida? WTF knows? Geez, it's like finding Waldo with actual prices.
For the way back perspective, Harry Dent said that this depression would last until 2023 or so but that in the '13-14 period that would be a bit of a relief. He was suggesting this would be the time to sell that house of business if you needed to otherwise it will be a long wait. From where I sit, I really don't see that he's wrong.
As for the equity market, enjoy it until they stop filling the punch bowl. When they stop QEnth, we will be well and truly screwed.
and so it goes,
peace,
rono
That reminded me - coke 6-pack plastic bottles were 24 oz, then 20oz, now 16.9oz. Price is still higher than what it was a few years back, despite smaller size.