Our Economy Suffers

On October 27, 2011 due to a proposed plan by Europeans to bail out Greece, our stocks skyrocketed (up 339.51 points, the single best month in 25 years). At the time, economists said that the US economy grew slightly faster than anticipated and combined with the Greece bailout deal it sparked the US DOW’s rally. The Dow rose 9.5% in October, the third best gain in its history; Ford had just posted its 9^th straight profitable quarter and auto sales were expected to be the best in 8 months. I also heard computer sales were up, stores were stocking shelves for the holiday season and the major banks decided against the charge for using debit cards. Prior to all this, the FCC and wireless companies on October 15^th threw you a bone by initiating a program to warn cell phone users prior to going over their limits. With all this positive stuff, financial journalist Trish Regan said the US economic growth of 2.5% in the third quarter (between July and September) was still not good enough to prevent a double dip recession – we need 4% - we need jobs. She said corporations need to be making money and feel confident enough about the future to invest in people and the infrastructure. We have to remember that nearly 14 million people are still out of jobs. It’s being said that if we maintain this growth rate, as Americans spend, businesses hire and we could be back to normal unemployment in 3 – 4 years. So much for the good stuff!

The GAP is closing nearly 200 stores in North America and expanding overseas, Whirlpool says it’s going to cut 10% of its workforce (5,000 jobs) due to slow sales and high costs and Greece’s decision to vote on the acceptance of the European bailout sends our Dow nose-diving 297.05 points (2.48%). Here’s the kicker. Greece is a country with massive benefits, lush homes with pools, Porsches, and massive tax evasion. Our Social Security maximum payment is $28,000 a year while Greece’s people get $48,000. Greece borrowed from many European banks, if Greece fails it puts Europe in a depression. The US does a lot of business with Europe so it pulls us down with them as the confidence level of our businesses falls they’ll be less willing to hire and less willing to loan on mortgages. So our economy falters even if we try to pull ourselves out of a hole by:

Buying American - 10/10, the ABC News Made in America team went to Bozeman, Montana to find a builder with a degree in economics that is building houses (every screw, nail, tape, paint, etc.) with 100% American products from 33 states. This builder says they couldn’t find J bolts when laying the foundation so they got the steel from Utah and hired a machinist to make them. He said making house with American products could cost a little more, for example the box of American nails cost $5 more than the Chinese nails but the American nails jam the nail gun far less often and the American steel cost $916 a bundle while the foreign steel cost $770. He said the plastic piping and the windows had the same cost while the American made shower was $15 cheaper. He says if every builder uses 5% American products it would create 220,000 jobs right now. The Boston Consulting Group say the numbers add up. The whole house is running about 1% more right now but J bolts will now come from Georgia at 11 cents cheaper than the foreign ones.

Good business practices - 10/18 – ABC News - New technology for retrieving natural gas is being used in the Steubenville, Ohio area. As many as 200,000 jobs for up to $77,000 a year may be created in the next few years in several states in the east. At the pace unemployment has been going down in Steubenville within the last 5 months, everyone could have a job by next spring. The risk is that the gas withdrawal could pollute the ground water but residents say their standards are high so they say the job creation is positive, 10/21 Los Angeles had a free clinic, giving mammograms, dental and other care, 10/27 ABC News report regarding the Wrangler Jeans building in Hackleburg, Alabama that was destroyed in the tornado and Wrangler’s promise to have a new building in 2 years and hire more workers and in the meantime workers are being paid and transported 80 miles to a warehouse so they can continue to ship the jeans as well as Starbucks’ wrist bands going on sale to help promote business). It was reported that 80,000-100,000 jobs were created by private industry in October; dropping the unemployment rate 9.0%.

It was reported on November 3^rd at the G-20 Summit that China said not to look at them to bail out Europe; they hold $3 trillion in foreign currencies and aren’t looking to add Greece’s debt. They are the largest holder of US debt and said they could give billions if the plan is a sure thing. The Europeans were unable to resolve the Greek crisis at the G20 Summit meeting. So, because of Greece, our economy will continue to suffer.