Are you better off than you were two years ago? Do you know anyone that is better off now than they were a couple years ago? For me, it's pretty clear that everyone is worse off. Many are much worse off.
The local cigar shop has a small, makeshift sitting area for guys to sit down and enjoy a cigar. Yes, in Indiana we are still allowed to smoke in some places... for now. So, this week I sat down with the six or seven fellows and lit up a Padron 3000 maduro. The discussion was candid and depressing.
Of the seven of us sitting there: three were unemployed and looking for jobs, one feels underemployed and is looking for a better job, and two of us own businesses which are fighting for every dollar. To top that off, gas went up over $3.50 per gallon and a cart full of groceries costs about $20 more... tough times for all.
As the discussion continued, it occurred to me that these older, wiser, experienced guys are seeing something different this time. In the past, these guys had roughed it through by tapping into savings or skipping expensive vacations. One business owner had lessened his margins just to get jobs and keep his guys working. Though we are taking these measures now, there is not much promising news after more than two years of this.
Personally, I believe things are about to get worse. Consider the state of things across the U.S. and around the world:
- Middle East is ON FIRE and it is spreading
- Japan is devastated
- Europe is crashing
- China is capitalizing and nefariously manipulating it's currency
- Total U.S. Employment is the lowest in DECADES
Now, combine all that turmoil with the confusing fact that U.S. Markets (Stocks) are performing pretty well...??? What does this mean? See, our economy and our markets are NOT one in the same. While the economy struggles to recover, businesses don't necessarily suffer the same fate.
Consider this example: A corporation reduces a department staff through attrition by 10%. Though employees fuss, the work still gets done. After further attrition, another 15% are gone, but the work is still getting done... hmm. Granted, the environment is not good for employees to fuss or threaten to leave - there are NO jobs for them to move into!
So, the end result of this exercise is that businesses get their necessary work done with less employees. Less expense means more net income, which, in turn means better performance and higher equity valuations. That's the business perspective - more profitability, more efficiency, and higher share value.
The flip side of this sad story... in our example 25% of the department's workforce was under performing and expendable. The employees that remain could have been working harder and many were getting paid for showing up. That is the sad truth, and the reason for the strange circumstances of a strong market with a crushed economy.
As for our Administration, we are about to experience the crippling effects of deficit spending and enormous budget growth. Pressure to raise taxes and cut benefits is coming. The irony is that the answer is cutting taxes, reducing Government and regulation, and empowering people to invest in themselves.
As I smoked that cigar, I felt thankful for all that I've got. I felt thankful for the incredible standard of living we enjoy, even during the toughest of times. Additionally, I feel hopeful that we will endure the next couple years of turmoil and ultimately reject the Liberal agenda of modern Government (including many GOP - moderates will also be rejected next election!). America's future depends on Conservatives acting - NOW!
POTUS, his agenda, his direction, and his Liberal Congress are all being rejected by America. The simple truths are that things are much worse for most Americans. Now, we understand why it's happening, which we haven't realized in years and elections past.