<p>I think it has gotten worse in my area. I see more of the haves and have nots. Prices are rising fast too. Restaurants are charging more and giving less.</p>
<p>I have noticed many small businesses which have started up in our neighborhood in the past couple years, closing already, more empty storefronts than there used to be. Also long term small businesses ( more than 20 years), closing.</p>
<p>As a teacher, I hear from graduates who have degrees and looking for work and hitting walls. Those that are employed are keeping their jobs while recent grads are living at home. Did I read correctly in the newspaper that 85% of recent college grads are living at home?</p>
<p>The answer to the question is yes…</p>
<p>And as ridiculous as that sounds, it describes the reality that the there is no one good answer to it, it all depends where you live and what field you work in and so forth. Housing is sluggish in many places, though in NYC apartment prices have been stable or are climbing, even as there are other indications that things aren’t so good (which implies the upper class(es) are doing quite well), and I still see the influx of young people into the city, a number of which seem to be living off mom and dad given what rents are like…other places are struggling. </p>
<p>In the burbs of NJ where I live it is pretty stable, while homes are not selling fast and prices seem stagnant from where they dropped to, there isn’t a firesale. Business at local stores from talking to owners is not particularly strong, but it isn’t terrible either, and when I pass by stores and malls, the parking lots are full…and other places are obviously hurting. </p>
<p>I would describe the economy myself as teetering, it is kind of swaying but staying around a center of some sort, you see small ripples of hope, like house prices going up a bit, but then soon you see something looking down, and what that means to me, using the teeter-totter analogy, is that it won’t take much to cause it to fall down (picture a feather causing the teeter totter to crash down, while on the other side it would take a 50 pound bag of concrete go ‘up’).</p>
<p>A couple of things are worrying me at the moment that could portend to more of a not rosy future:</p>
<p>-Companies that are profitable and sitting on cash are using that money, not to hire people or build their business, but to buy back stock to try and boost stock price (which does well for the executives of the firm and those with large stockholdings, but doesn’t create significant economic growth). Whether from self interest of the people with incentive to pump up the stock price or out of being afraid to hire, I’ll leave that to others to figure out.</p>
<p>-The European debt crisis is not over, and it has the potential to throw, not a feather on our swaying economy, but a brick made of lead. Besides the obvious impact, that of the European economy going down dragging the world with it, there is another issue. There is a tangled web of collateral interest in euro bonds, and if they fail, which is not an unlikely scenario, there is a web of financial transactions that will be kicked off if that happens, that could kill financial institutions, much as we saw in 2008. Basically, banks and their financial arms either issues credit default swaps against Euro bonds, or lent money to those who issued them, and they could end up with a major crack when they have to pay off on these…not to mention that banks were lending to companies like MF Global betting on Euro Bonds, and could end up with worthless paper. What is sad is a lot of these transactions happened after 2008…in any event, it could cause a slip back into recession and make recovery even more difficult.</p>
<p>It feels as if the decline has paused but it is very iffy and fragile. Here in NJ judges have kept foreclosed homes off the market (I can’t quite understand how this happened but I hear over and over again about it) and now there is a lot of dread off that great big set of properties washing onto the market and making real estate even worse. There are also nonstop layoffs at the pharmas that are big employers here. OTOH, there is pent up demand and people are shopping sales and deals very assiduously.</p>
<p>The Europe thing seems pretty dangerous. The deficit seems pretty serious. China seems pretty serious. But the American economy is resilient.</p>
<p>@ BC Eagle , we live in far south NJ .</p>
<p>“The Europe thing seems pretty dangerous. The deficit seems pretty serious. China seems pretty serious. But the American economy is resilient.”</p>
<p>Include most emerging markets that borrow money from european banks. The American economy is not that resilient if the countries that we export to, cannot buy our goods.</p>
<p>I think that Fitch put the US on negative outlook late this afternoon.</p>
<p>When do the results of the recently announced bank stress tests come out (if the Fed dares to be honest LOL)?</p>
<p>Apparently there are many many Credit Default Swaps at risk among the Euro banks, prob a ton on our banks’ balance sheets, too… Here we go again…</p>
<p>without naming names our CPA who is a friend tells us that many businesses in our area are on the edge, including quite a few that should close but haven’t yet. Some of those people are now in the attitude of “f it, since I’m headed for bankruptcy anyway I’ll take my credit card and go on one last vacation”. I wonder if the Black Friday numbers reflect some of that. I know several people who are in that mode and we have had some heated conversations. In my mind those actions hurt us all in the long run. someone is going to pay for those bankruptcies and I don’t want it to be me.<br>
We have one business owner who walked from their house but still went to Italy this year. The wife is always decked out in expensive clothes. I have made it a point to stop frequenting their business.</p>
<p>I think our feeling on the economy is driven by our immediate contacts- within our family did we get a pay raise or a salary cut, our friends and neighbors- has anyone been laid off and the businesses we frequent- is our favorite restaurant the hot one locally or did some other place just become the hot spot.</p>
<p>^^^^very true tom1944^^^^</p>
<p>i know of nobody unemployed,fortunate to receive annual increases,and most ofmour favorite restuarants seem to be thriving…i think the best way to judge restaurants,is see how they fare midweek,tuesdays-thursdays…</p>
<p>ebeeeee , our accountant just said the same thing to my husband. It is rough out there
for many businesses</p>
<p>During the Debt Ceiling Crisis this past summer , my husband and I took a drive down to a local tourist town that has many high end stores catering to wealthy people…the main street was packed with pedestrians. All of the stores were open and we couldn’t help but notice the only bags anyone was carrying from the merchants were from a candy store or the Five and Dime store…literally. People were buying ice cream , candy and dime store junk </p>
<p>My husband stays up all night very frequently to try to figure out ways to cut expenses…he budgets until he is cross-eyed . This year , he planned for a decrease in business and did pretty well with it , but unfortunately , Hurricane Irene wasn’t part of the plan and cost us dearly in lost revenue
I know we were not alone in that…that is income you can never recover </p>
<p>Even our grocery stores carry less and have fewer people working
Also , the largest employers in our area are the Atlantic City casinos , who have had declining revenue for quite some time…lots of people being laid off and many more in fear of losing their jobs.
I can’t help but think people don’t spend out of fear of what is to come</p>
<p>Unemployment in Mexico is 5 percent. Unemployment in Canada is 7.3 percent. Unemployment in America is 9 percent. It’s amazing to think that Mexico and Canada are better managed than America, but that is clearly the case.</p>
<p>Don’t blame the economy on Atlantic City Casino problems…Their business models have been terrible for 20 years…They discounted the affects of casinos in adjacent states,and have been paying the price for years…And it won’t get better, EVER</p>
<p>I’d agree that “it depends where you sit.” Those “buy your loved one a Mercedes or Lexus for Christmas” ads are stark contrast to this morning’s American Airlines bankruptcy filing, or closing of the last eatery in DW’s home town, or the rows of For Sale signs in a summer community near us. On the other hand it doesn’t seem that things are getting worse. No additional neighbors have been laid off in the past year. YMMV.</p>
<p>Worse.
Local restaurants are suffering.
A lot of houses on the market or “off” market yet vacant.
Many are working more hours. $ doesn’t go as far.
Grocery prices are up.</p>
<p>China, Europe…our own US Fed and policy…these are the things that should scare us all…</p>
<p>And consider real wage etc
<a href=“http://www.bls.gov/opub/ted/2011/ted_20111123.htm[/url]”>http://www.bls.gov/opub/ted/2011/ted_20111123.htm</a></p>
<p>“I can’t help but think people don’t spend out of fear of what is to come”</p>
<p>I think you’re exactly right. Even people with no reason to fear are worried. In a way, though, it is better that people are paying off their debts, living lower and saving more money (those that can) instead of blowing their money with nothing to show for it. Though it seems to be hurting the economy.</p>
<p>Consumer confidence, and the ability to predict outcomes or certainty are considered quite important by some economists, for the reasons above. Others also see dangers in “de-leveraging”.</p>
<p>I read up on Daniel Kahneman a bit this weekend. The system employed the Oakland A’s in Moneyball was apparently inspired by him.
He won the Nobel prize in 2002 for more a psychological approach to economics, by de-bunking the utility theory that economics had been based on up to that point: that humans always make rational, predictable, consistent and self-benefitting economic decisions. I think his Nobel winning theory was “Loss Aversion”, which is what we are suffering from and which is paralyzing us and the economy right now.</p>
<p>In his newly published book, Thinking Fast and Slow, based on lots of experiments that he describes, he sees humans as having two systems at work in making decisions:
the Fast: optimistic, overconfident, subject to emotion, the planning fallacy
vs.
the Slow: loss-aversive, analytical, pessimistic
He says that if the Slow thinking were to dominate, as individuals and as a species, we would be paralyzed, so that explains why Fast Thinking tends to be more dominant.</p>
<p>However, as I see it, right now, on average, we are in a rut of self-doubt and fear, and have stopped believing in the future or that there are solutions to the problems which are so large, intertwined and complex. We feel helpless, causing most of us to resort to Slow Thinking, acting carefully after analysis, exercising self-control, assuming the worst scenario in our calculations, and waiting for something to happen to prove that we are too negative, trying not to spend much, pay off debt, keep savings or housing or health intact.</p>
<p>This type of thinking is a bit self-fulfilling, unfortunately, as it breeds paralysis.
I do wonder what Kahneman would say about those who are “throwing in the towel because they have nothing more to lose”- that would appear to be still another response to this sort of hopeless and unpredictable economic situation.</p>
<p>I am too cheap to buy the book in hardcover, so it will be a while before I get to read more than the reviews and internet stuff about K and his work, which were interesting enough.
The vicious cycle.</p>
<p>Here are some tidbits from a newsletter I receive-</p>
<p>BLACK FRIDAY LEADS TO SMILEY FACE MONDAY. Retail analysts say the Black Friday retail flurry set a record for overall sales at $11.4 billion, 6.6 percent more than last year. ShopperTrak says foot traffic was up 5.1 percent, adding that the 8.3 percent year-over-year gain was the highest since 2006-2007. The National Retail Federation estimated that web shopping on Black Friday was 10 percent higher than in 2010. For the whole weekend, the Retail Federation said sales increased 16.7 percent over 2010, to $52.4 billion. The group said average per-consumer spending increased from $365.34 to $398.62. Some analysts credit major retailers’ decisions to open their doors Thursday night, saying that young people in particular turned their Thanksgiving socializing into midnight-Friday shopping party. BIGresearch said 37 percent of shoppers aged 18 to 34 hit the midnight sales. A report from Mall of America said that some stores “made as much between midnight and 4 a.m. as they made their entire Black Friday last year.” Sales also were up for the two weeks prior to Thanksgiving.</p>
<p>++++</p>
<p>MORE ENCOURAGING NEWS. The Commerce Department says personal income increased from September to October by $48.1 billion. The trend line is growing: September’s income number showed an increase of $15.5 billion.</p>