The Lagging Indicator

I am taking a break today from my usual – or at least sometimes – cheerful self to air a perspective on the current economic crisis. These views are based on what I read, see and hear each day from the three-ring-circus otherwise known as the media, the politicians and the economists.

As I tune in to the daily array of infotainment provided by the aforementioned circus performers trying to fit into the clown car that has become the media, I am struck by the descending order of issues given airtime on any given day. Namely, the rising unemployment rate, number of lost jobs and projected recovery date for this critical component of our economy to improve seem to get short shrift. “Oh, that’s a lagging indicator…Let’s fix Wall Street and Main Street.” Fix what without jobs? Huh?

Top of the List
So, what items are discussed before turning to the lack of work available outside of the big tent? Well, generally, the first item is propping up the banks by infusing billions of dollars in a TARP (isn’t a big tent also called a tarp?), TALF, and some other acronyms I can’t remember as I’m reaching for the Tylenol (actually a generic brand as I no longer afford the name brands). Money is doled out with few strings attached and the big banks are already reaping the profits from our grandkids’ money. The theory is that banks need to be inflated like a tent to open the credit markets, which are still shut tighter than my Aunt Millie’s piggy bank.

Next up, the real estate market. First it was the residential and now commercial properties as well. Foreclosures in the millions, people put out on the streets, and until very recently, no rest for the weary home buyers or commercial landlords.

Some proposed solutions: lower interest rates, tax cuts, supplements for first time home buyers, stimulus packages and encouragement to save more money to help prop up the banks and other financial institutions even further.

The common wisdom seems to be if we do all of these things, the economy should start coming back out of the recession sometime in the second half of this year. And where is job creation and unemployment reduction in all of this you ask? Well, that’s a “lagging indicator” so we won’t see an improvement until the end of 2010. That’s 20 months from now!

A few questions from my feeble mind…How are we to buy homes, assume debt, save money and stir the economy by buying consumer “stuff” if we are bleeding jobs at the rate of 650,000 per month? How are we to get to a “reasonable” rate of unemployment, say 4-6 percent, when the Stimulus Plan only calls for the creation of 2.5 to 3 million new jobs over the next 2 years? And, when many of these jobs will be contracting or temporary jobs?

I wish I had answers to these questions, I really do, as I am very worried about a so-called “jobless recovery.” I’d look into it for us, but I have to ask you all for your opinions as I haven’t the time. I’m off to join the circus today. Maybe they’ll let me sweep up after the elephants. I mean, that’s kind of what we’re doing metaphorically anyway.

Please let us know what you think. Mark