Economic things I learned or overheard this Memorial Day

I’m a sucker for barbeques, especially good ones.  Normally I’m not a “family” person, but I am a people person.  When it comes to barbeques, though I tend to even go to the ones my family puts out.  This year I hosted, unfortunately the weather was not on my side and being someone into risk management I decided to hold an “indoor bbq.”  The food, as always, was good, but my other type of appetite was also satisfied, my hunger for news and tid bits. 

Many years ago,  I read a few books by Peter Lynch, one called “Learn to Earn” and the other “One Up on Wall Street.”  Now Lynch was one of those guys that could pick a stock and make money, but in my opinion he was one of those money managers in an era where really everyone was making money.  He’s one of those proponents of “buy and hold” which today has been proven to be bunk for the most part.  Anyways besides learning how to read a company’s financials, his other main pony trick was to utilize “outside forces” for research, that is taking notice of things.  For example, if you’re kids or their friends all seem to be wearing the same Chinese-made sneaker, maybe you should look into that company to invest.  Well one derivative of that which I adopted was to listen to people and pay attention. 

Yes, I watch the news, but sometimes you can pick up something just on hearing a friend who is an expert on something or he or she is one of those “tells” on the economy.  This gets me to my first thing I learned this weekend, the consumer is more worse off than even the news is saying.  My cousin Will is a shopper, I mean he’s like the last of the big spenders regardless if he’s got the money or not, we’re talking the types that predatory credit cards love.  His credit is shot, yet he still could get a card.  I say could instead of can because as of now, all he gets are rejection letters. His biggest binge is on clothing, he is (as he says) the “Shopping Queen.”  Now I’m a plain man, not a great dresser, working jeans and good shoes I’m happy.  Not him, name brand this or that, I even seen him spend $300 on a pair of jeans.

Well ok, so what the hell does this have to do with anything?  Ok, we get it, he wastes money, why are you wasting this on EP?  Because today he told me he’s gotten into mending his old clothes!  And by mending, I mean he actually went into a pawn shop and purchased a sowing machine and whatever else you need.  He went on to say how since he literally cannot afford even pants from Target (Where he works), that he’s gone to finding whatever he hasn’t thrown out (which he used to do almost every few months to refill his closet) and making them last.  I have to say, he seems pretty good at it.  He showed me all the spots he fixed and that.  I asked him where he learned to sow and then he dropped another bomb.  His friend, another shopaholic took it up when he fell into financial disrepair.  It seems his whole circle just stopped shopping and going on to making their clothes last.

This mending business isn’t just clothing, folks.  Two friends, one an accountant who was laid off, said he returned his year old Toyota and is keeping his Chevy he let his wife use.  It’s now the “family car,” meaning sharing and such.  Now this thing has got to be 7 years old.  But he said no matter what, he isn’t going to into hock to buy another new car.  That they will keep this going for at least another 7 years.  This was echoed by another family member, who was looking to buy a car but was afraid to.  They all hear from people saying the same thing.

Homes, not really a surprise here.  I would say that a third who attended my indoor bbq shindig are going to lose their home.  They didn’t come up and say it, but you know how when someone talks and wants to say something but doesn’t come out and say it but you get the idea?  Like that.  Damn shame too, because we’re talking small families and in one case pets too. I had 4 who were trying to sell who just gave up and took their homes off the market.  Half are in industries where there is a shakeout going.  Instead of selling, most who believe are going to stay in their homes are now doing for their homes what they are for their cars.  Trying to keep it up, fixing a pipe here, adding something affordable like a new sink.  One friend of ours who live in Lake in the Hills was telling us how a lot of the fancy homes out there are quietly becoming empty.  I’m curious and going to have to get out there, they got some BIG homes over there.

Another thing I learned is that the job market is a lot worse than the media is saying it is.  Of course, we here at EP have known this for a while.  9% my ass!  A lot of my friends who worked in the service or retail sector had their hours cut.  My cousin, Will, the shopaholic, had his hours paired down from 30/week to less than 10.  Several others were given a choice of less hours or being laid off.  You know, the level of underemployment in this country I think has to be the highest since the Great Depression.  I bet if you added it to what we all think unemployment should be, the overall figure would be at least 20%. And this has an impact on the economy, folks aren’t going to spend if they think they won’t be working as much or at all.

The last thing I learned, despite the graphs and studies, most aren’t saving like they should  We keep hearing how Americans are once again approaching 10% savings rate.  If my informal unscientific poll/inquiry is any sign, I would say we’ve gone from a minus figure to perhaps 4-5%.  Most are now plowing what they can to pay off their credit cards.  What they can save, gets quickly eaten up by rising gas and food prices. Not to mention taxes, here in Cook County, we have 10.25% sales tax.  The City of Chicago has a score of fees and taxes as well, all of this eats up folk’s salaries and savings.  My aunt actually said she plans on trying to find cereal online to avoid buying it in Chicago.  It isn’t easy for her to get out to the burbs, she’s all the way on Sheridan by the lake, got in there when it was cheap back in the day.  She says how seniors are having it tough, “you just can’t save, you try but you can’t! Having a bitch of a time doing it!” she goes on.  I think those words could actually go for a lot of things I learned.  Folks are trying to survive, but can’t or having a bitch of a time doing it.

Cross posted from Venomopolis.com

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Sometimes just talking and listening to people

we can get a true assessment of what is happening.

I feel deeply sorry for people in Chicago. I left Chicago several years ago but still have family and friends back there and it is amazing that they are surviving but I know they are hurting.

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Listening in at a BBQ

I also went to a BBQ this weekend and hear much the same story. What struck me most: Here in FL, people that have lost (or are losing) their home are less shy about talking about it now. And everyone is struggling to stay afloat.

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Broad unemployment is 15.8% seasonally adjusted ...

... 16.2% raw.

Table A-12. Alternative measures of labor underutilization

And since the recession started over a year ago, there's going to be long term unemployed that start dropping off of the marginally attached figure even though they would take a job at a drop of a hat if it was available.

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which is why 8% permanent unemployment figures are unacceptable

The way they calculate unemployment statistics, they do not even capture the underemployed or those who have dropped off their stats through long term unemployment. Even worse, they do not count all of the contractors who are now categorized as "small business". It's so pathetic, the BLS literally counts foreign guest workers in the employment statistics, which skews and hides the real unemployment stats through selected occupational areas. The number of these being technical occupations.

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They don't count people underemployed ...

... as far as qualifications, but they do count people employed part time who want more hours ... that's part of what goes into U6. Also those who wish to work and have actively sought work in the past year.

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right

I'm referring to by occupation. For example, someone with a PhD in Chemistry who is working at home depot is counted as a retail clerk and not an underemployed Chemistry PhD.

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PHds

You'd be amazed at the number of PhDs who are unemployed. It almost reminds me of those out of work Russian scientists right after the fall of the USSR.

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www.venomopolis.com

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Well, I'm only unemployed in U6, in U3 I'm employed.

I've got two sessions of an Issues in Economics class, notionally 10 hours work per week. It is 10 hours work the first week, then 16 hours or so for the next 8, and maybe 20 hours the last week.

Since the target is a Masters, I guess I might be underemployed in terms of qualifications too, but only by one rung, so that's better than when I was hauling boxes off the box line to be shipped off to individual Bed, Bath and Beyond stores.

I'd have 20 hours notion, more than 30 hours actual except they were able to get a Masters in Math to teach Math classes.

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Whats wrong with Now this thing has got to be 7 years old?

I am and always have been, one of those people that buy used cars. I am good at turning a wrench and know how things work. I bought a new Ford van in 1978 but that was my only new vehicle.

My wife's car is a 1995 and mine is a 1990. Either car would have no problem running from coast to coast. My car has 175,000 miles on it. I did have a recent big invoice of $1,300. I burned a valve. But I am back up and running. Compression is great (even across all cylinders), does not burn oil, leather seats are 90% good leather.

I guess I should count my blessings that there are people willing to take the big depreciation hit on new cars.

If they pass there trial balloon VAT tax, things will then get even a bit harder on the average American. I wonder if the VAT will be considered outside the "I promise to not raise any taxes" statement?

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I resemble that remark

Based on my last two purchases (a 1999 in 2003, and a 2002 in 2006) I won't even consider a car less than 4 years old.

I'm tempted. Oh yes, I'm tempted by the Neighborhood Electric Vehicles- but they're too new, I want them to shake the bugs out first.

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Executive compensation is inversely proportional to morality and ethics.

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Maximum jobs, not maximum profits.