|
We’ve all
heard the old adage, “You’re only as old as you feel!” That wise
saying has often proven true as some elderly people can be
extremely active, because they feel much younger than their age
indicates. Meanwhile some younger folks limp around as if they
were decades older than their actual age. It seems that the same
maxim can be applied to our current economy.
While the
government-produced GDP numbers continue to show a growing
economy (latest numbers were even revised upward), it certainly
feels like we are in a recession. The latest jobs data this week
showed a worse than expected increase in jobless claims, while
the unemployment rate shot up to 6.1%. In addition, sales at
retail stores were very weak and auto sales continue to plummet.
Almost every major auto manufacturer recorded a drop in Y/Y
sales for August. In fact, Chrysler saw sales drop 34% last
month.
Even the
lone bright spot – falling gas prices – is actually a negative.
That’s because gas prices are dropping due to decreasing demand
worldwide for oil. And while gas prices are down from their
summer highs, we are still currently paying much more than we
did last year. This is true for almost every major commodity, as
budgets are being squeezed by escalating costs at the grocery
stores.
Not to be
forgotten, the stock market has certainly reacted this year as
if we are in the midst of a recession. The S&P 500 has fallen
over 15% since the beginning of the year. Meanwhile, the Dow is
down over 20% from its high of last October. Even a late summer
rally seems to now be giving way to realization that the economy
is not going to improve anytime soon.
So the
reality is that the latest GDP numbers give a very deceiving
picture of the true health of our economy. Our economy has
slowed to a crawl and over 600,000 workers have already lost
their jobs this year with little prospect for improvement in the
coming months. So while the GDP numbers may tell a different
story….it definitely feels like we are in a recession.
At the time this article was
published, the author did not have a financial position in any
of the stocks mentioned in this article.
Read Disclosure Policy |
