Recovery and The Middle Class

No Links. Only my thoughts.

What recovery, we wonder. Despite the protestations from DC and the talking heads, most of us can’t see it, or feel it. Where is it?
Nowhere. It is a chimera. An invention of those that don’t actually have to live in it. Small – and by small – I mean tiny businesses of fewer than 50 employees do not have expanded horizons, for the most part. The customers that went bust in late 2008, and throughout 2009 are still gone. Few new ones have emerged to take their place. We are, therefore still crawling along, with few prospects,but hoping for a turnaround.
Good news in the construction industry (mine)? No. Another chimera. Yes, new starts have picked up a bit to about 400K. Yippee! that is still a depression number compared to the 1.4 M starts in 07. And that spreads itself around. Small building materials suppliers? Gone. Landscapers? Gone. And the beat goes on to most other small businesses across industries.

How about those shrinking incomes and net worth? Net worth, for the middle class, was highly correlated with housing prices, which are still 30% below their 2008 levels. Coming back? Not for a long time. Defined Pensions? Mostly gone. Ira’s and 401K’s? Treading water, for the most part.
Incomes have declined due to a reduction in hours, cuts in pay, and the artificially low interest rates enforced by the Fed. What does that have to do with it, you ask. Well, many current seniors planned their future retirement by saving like crazy, and building up a nice nest egg that could help them live comfortably in a future retirement. When Interest rates on savings were in the 4 – 5% range (long term average), this looked like a good plan, where each increment of $100 K in savings would yield $4.5 K in income per year. After Bernanke, Each $100 K yields $750 or less in income. Formerly middle class seniors are now in the poverty class.

And we wonder what is wrong? It is as clear as can be. The administration is aligned against its’ own people.


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