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Gloomy Outlook

Gloomy
Our Economy
in the Tank

Posted on December 7, 2011

Beyond the hype over the kick-off of the 2011 Christmas shopping season; pesky details are poised to nullify all of the hoopla about the ‘return of the spending public’.

Black Friday gave us the first glimpse of trouble. Throngs of people lined up for the door buster bargains sprinkled throughout the retailing world. There was enthusiasm for making purchases, but that enthusiasm seemed to be only for marked-down items.

To get the shopping season off to a good start, stores mark down a certain number of popular items to lure customers with the hopes that displays of other wares not marked down will be gobbled up in the frenzy of ‘Black Friday’. Items not marked down are fitted with those garish signs indicating “Sale”! Some stores even go so far as to declare bargains of up to 75% off. When in reality, the prices may actually have been increased.

But this year is different. The crowds did show up, but the majority of those shoppers were there only for the marked down items. The scramble for those marked down items was so intense that the crowds turned ugly. There were fights, parking lot robberies and even one person who used pepper spray to get to the wanted item.

What is a person to think of the spectacle unfolding in and around the stores offering these lures? Does such a mad dash for a few bargains signal a public ready to open their wallets and spend for presents? I think just the opposite.

An unemployment rate of a recently estimated 8.6% and an under-employment rate of 17%, means that money is at a premium. The 17% underemployment rate includes those who are working at jobs that pay less, those who have become discouraged and quit looking, and those who need fulltime employment but have had to settle for part-time jobs. Statistically, a substantial section of our population is squeezed for any extra money to spend on Christmas.

Americans are typically generous during Christmas, but in today’s economy, that giving spirit has had to take a backseat to the realities of the money that families can spend. Americans are torn between the desire to buy for their loved ones or pay the bills and eat. That is the reality and germination for the type of behavior witnessed on “Black Friday”.

Those bargains offered as teases by the merchant’s means everything to a lot of people wanting to celebrate Christmas. But, there isn’t enough of those bargain teasers to go around, so people with thin budgets will have to wait until the ‘after Christmas’ clearance sales to be able to buy presents.

Look for retail sales to lag behind past Christmas seasons and further deflate our enthusiasm for the future. That big bang on Black Friday is an indicator of things to come.

The picture doesn’t get any rosier with the fully employed. According to polls taken, a large number of the employed are worried that they might be laid off. That group is also not going to spend as much as they normally would.

Quoted from Bankrate.com at: http://www.bankrate.com/finance/consumer-index/july-2011-financial-security-poll.aspx

“They would appear to be the lucky ones -- the fortunate souls who are still employed years after the worst recession in eight decades knocked the U.S. labor market cold.

But in today's enfeebled economy, anxiety isn't just in the heart of the lonely job hunter. Bankrate's latest Financial Security Index found a sharp increase in the ranks of people who might be described as "the working worried."

When asked how they feel about their job security, a mere 15 percent said they feel more secure than a year ago. That was off a sharp 5 percentage points from June's 20 percent.”

Read more: Millions of Americans working -- but worried | Bankrate.com http://www.bankrate.com/finance/consumer-index/july-2011-financial-security-poll.aspx#ixzz1fquTINRC

We need pro-business policies rather than policies that promote ‘food stamps’. We need policies that encourage self-determination rather than pity. People who are able to pull their own weight feel much better about themselves than those who have to rely on pity. The poverty trap of dependency has few opportunities. A society that feeds the beast of their own destruction is as foolish as the sheep that accepted the wolf’s invitation to lunch.

Bargain-only buyers also dig into the hoped for profits needed to sustain the economy. – Look for larger than expected unemployment figures in the first quarter of 2012. I hate to write this very pessimistic piece. And, I hope beyond all hope that I am wrong about what is going to happen. There is nothing healthier than a good helping of crow when being wrong means everything is actually getting better. But in the event that I am right, be prepared for worse times ahead. Only a change in the political landscape in 2012 will finally dig us out of the morass we find ourselves as a nation.

Robert welcomes your comment to this or any other of my commentaries.


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Robert Gross

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A Physics Major at the University of Texas
Retired from the offshore drilling industry where he worked as an Electrical Supervisor, Licensed Chief Engineer, and Electrical Designer.

Robert Writes for 2 Online Magazines and three private web sites.
Interests include computers, Cosmology, Evolution, and Environmental Research.

Robert welcomes your input whether you agree or not, and will respond via published commentary to all responsible comments.



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