Sunday Question – How Do You Feel About The Economy?

By the time most of you read this, I should be on my way to New Jersey for almost a week of consulting for a hospital system in the area. This is a big deal to me because it means that the chains are finally off the wallets of some hospitals, now that the health care bill has been passed, and that most of them have some kind of idea of what their monetary situations are as it pertains to Medicare and Medicaid reimbursements.

As I look at health care, it makes me wonder whether the economy is finally starting to turn around for the better, after about 2 years of horrible financial distress around the world. Actually, that’s not quite a true statement. I don’t wonder about it at all because I think I know the answer, and I’d like us to discuss it to see if I’m alone in this thought.

What I think the answer turns out to be is “no”. Here are some reasons why I say that.

1. Unemployment in the United States is around 9.7%. It’s remained there for the last two months, which means it hasn’t gotten any better, but it hasn’t gotten any worse. I’m not one who believes if you’re not falling further behind that you’re actually making progress.

2. Housing is still in the tank. Real estate people are saying that things are getting better because foreclosures are starting to diminish. I’m sorry, but if foreclosure rates were around 40% a month for awhile, and now they’re down to 22%, to me that doesn’t mean things are getting better, just that there are fewer properties for banks to foreclose upon. Home sales in general aren’t getting all that much better, home prices are still way down, and banks are trying to inflate the prices of some homes by withholding how many foreclosed properties they’re putting on the market.

3. Banks are closing at a higher rate than last year at the same time. There were around 140 banks that were closed last year by the Federal Reserve, the highest number since 1990. As I wrote on my finance blog last week, we were at 37 bank closures before Friday (that’s usually when you hear about more banks being closed), which was 16 ahead March 28th of last year. Also, all the large banks that had received bailout money from the government have paid it back, but more than half of those banks are recording losses ever since they left. That doesn’t bode well for anyone.

4. And that’s only in the United States. British banks are in trouble because the American banks are in trouble. Most of you heard about the problems in Abu Dhabi as they thought they’d be able to build forever without having any extra cash, investors, or clean water, let alone building everything on slave labor (no, they don’t like talking about it). Foreign investments are having problems as well, and let’s face it, the Chinese market is killing all of us because they just won’t open up; Chinese leaders, communism is dead and dying!

5. Credit. I’m talking about all of it, or the loss of it. Remember when you used to get 3 to 4 credit card offers a week? For about 8 or 9 months I stopped getting any, and now I’m getting one a week, for my business, and that’s it. Banks have learned the wrong lesson. They were giving a lot of credit to people who didn’t deserve to have it, or as much as they gave out, and they got burned. They got burned because they generated a lot of revenue that’s not real money, and when people were suddenly out of work and couldn’t pay, even collection efforts couldn’t save banks because all that money, which they turned around and invested, wasn’t real.

Now they’ve decided they’re not giving almost any money out, even to people with high credit scores, which I’ve already deemed are worthless. There are people with high credit scores being turned down for loans; that’s a shame. And let’s not even talk about how people are being cheated as it comes to their credit cards, even with the new legislation. Once again, this isn’t just in the United States.

Those are only a couple of reasons why I don’t believe the economy has turned around. I could go into a litany of things, but this should be enough to get a discussion going. Yes, some things are finally starting to turn around for me, but I never use myself as a gauge for how things are going for everyone else. What say you?

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12 thoughts on “Sunday Question – How Do You Feel About The Economy?”

  1. I see an economy that is headed for a slow but welcome recovery. Across most indicators, I see that the bottom seems to have been reached and people are getting back into spending – this time a t a more realistic and cautious pace than the foolhardy credit lust from before the recession began.

    1. Interesting take, Alan. I do think people are starting to spend a little bit more also. I just don’t trust a lot of other things. For instance, I asked someone who knows better than me why they thought the stock market had gone back up last year when things were still bad, and he said they were guessing that things would be getting better and wanted to get the jump on it. It’s that kind of speculation that makes me wary sometimes.

  2. Well Mitch, I’m just a truck driver with no advanced education but I see things that many are not aware of. On the other hand I live in Michigan, one of the hardest hit states so perhaps things here are not an indicator nationwide. I guess that was my disclaimer.

    I work for a very large trucking company that most would recognize by name. I drive locally so many of the businesses I see have been regular customers for years. I see them shipping less, receiving less and in many cases still laying off employees. Many are in financial trouble. I know this when I’m told to collect a check before delivery because they are so far behind on their account. Some of those checks have bounced so I have to go back and collect a certified check. It’s sad to talk with small business owners and managers and hear they don’t know if the doors will be open from one day to the next. I won’t go into details about the company I drive for but as you can imagine it is effecting them as well.

    I don’t mean to sound all glumly about it, people are resilient and bounce back. Even if the economy doesn’t improve, but it will, people’s lives will improve once again as we adjust. I just hope it’s a lesson we don’t forget too soon so we can protect ourselves better in the future.
    .-= Brian D. Hawkins´s last blog ..Google Alert Shows Blog Comments Are Indexed =-.

    1. Great stuff, Brian, and as a “great” truck driver, you would be on the front lines of seeing some of these things. I mean, gas prices are higher, produce is higher, and there are fewer people buying things that aren’t generic staples of what most everyone eats. There’s always that other story, right?

      1. It’s true Mitch, especially for business that may not be considered a necessity like beauty supply stores, paint and home improvement, pool and spa, even general warehousing. Other areas of business never slowed down, at least from my vantage point. Things like chemical manufacturing and plastics all the way down to dollar stores. It’s hard to see the reason but some business doesn’t seem to be effected while others have been devastated. I’m not even talking about auto manufacturing. It’s sad to watch sometimes but it’s pretty interesting, at least for a nerd like me. lol
        .-= Brian D. Hawkins´s last blog ..Google Alert Shows Blog Comments Are Indexed =-.

      2. Actually Brian, they all slowed down. You know the one business that made money in 2009 across the board? Health care industry companies, most specifically insurance companies, pharmacy companies, and medical supply companies. And these teabaggers say we don’t need health care reform; please!

  3. The word recession isn’t something many young people are familiar with as this credit fuelled boom went on for a long time. I believe that history tells us that there is normally a lag between the economy starting to grow (thus technically ending the recession) and businesses coming out the other side – in the UK we have seen unemployment figures continue to rise months after a recession has ended.

    With regards to credit – I have been personally stung badly by this, there comes a time when more people should concentrate of having a sound business model and growing at a slower but more sustainable pace – don’t forget credit got us all into this so to base your activites on credit should not always be your measuring stick to determine whether or not to invest or buy
    .-= Peter Davies´s last blog ..How Often Do You Mail Your Lists? =-.

    1. Good stuff, Peter. I’m one of the lucky ones, because I cut up almost all my credit cards years ago, and I only have two right now, and I’m doing well enough to keep them paid. I also buy my cars outright, so I don’t have to deal with financing, and already have my house, so I’m covered there as well. But a lot of people are suffering around the world, and the best we seem to have to offer right now is that it’s not getting worse.

  4. Hey Mitch, I look at the economy a bit differently than many. I’m not smart enough to figure out what it all means. 🙂 I do know what it means to my family and friends. We still have to eat and stay warm!

    If anything, the economy has helped my business. I left the corporate world last July to start a biz, helping small mom-pop shops who struggle to keep their doors open. It’s a win/win situation. They get more customers, I get paid for showing them how.

    The economy is what it is. It’s going to be good, it’s going to be bad. I do my small part to encourage people how to look for new opportunities when it’s bad. Does that mean I don’t feel bad for the unemployed? Not at all! I do help when I can to show them how to move forward.
    .-= Tim Zager´s last blog ..Everything You Know Is Wrong =-.

    1. That’s pretty good stuff, Tim. There are some people with figured out how to get by and actually thrive in a lousy economy. I’m glad to clients you have helped out has been able to learn from you and thrive as well. And I hope everybody else who doesn’t know about you can find a way to thrive as well.

  5. Hi Mitch,

    Being in the military, I’m a little bit insulated from the extremes of the economy. But, it is effecting our family in some ways, such as my 17 year old son is getting pretty frustrated that he can’t find a job … and I’m trying to not to have him get his hopes up too much.

    Otherwise, I’m basically going to agree with Allen … overall, it looks like things are starting to get better (or have at least stopped getting worse).

    Now, I’m sure that’s no comfort at all for the people who are still losing their jobs, or even worse, have lost their homes. For them personally, this must feel exactly like a full blown Depression.

    Some of the things you described above, while seemingly still “bad”, may actually be stuff to needs to happen. For instance, banks that are in bad shape, probably need to close. And with housing, again I’m sympathetic to people who bought homes at the “top” of the market, but let’s be honest, housing prices right now are a lot closer to where they “should” be, than they were 2 or 3 years ago.

    Summing it up, I guess you could say that I’m cautiously optimistic.

    .-= Todd Morris´s last blog ..Joining The Air Force Was A Good Decision =-.

    1. Hi Todd,

      Actually, military families have been in some pretty tough financial straits as well. And you probably know, there’s never enough base housing, so many of those people have to live off-base and find that it’s difficult to keep up with some of those types of prices. Also, families who have had the enlisted person go overseas to either Afghanistan or Iraq have ended up with some major financial difficulties as well, especially the National Guard people.

      I agree with you to a big extent on the banking and housing industry, and believe that neither one of those issues should have come about in the first place. But neither one of those had anything to do with unemployment; rather, unemployment and the discovery of some very sneaky characters showed us just how fragile an economy really can be. I figure we can hope for the best, but I think the best has a really long way to go before we see it.

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