It's been quite some time since my last post. All I can say is that it has been a very busy semester. However, I feel an economics post is always warranted. Obviously, the presidential election is on most people's minds as November 6th draws much closer. We've seen debates between the candidates and shifts in momentum on either side with the most concerning topic being the economy. As employment is still abnormally high and the national debt at over $16 trillion, the economy has shown only mild signs of improvement. Investment is still low(even with record low interest rates) mostly due to uncertainty in the future economy. Are there any signs of life? Some, but not much. The housing market has consistently shown gains in 2012 since the bubble burst back in 2007. However, it has yet to make a full recovery. This seems to coincide with the general theme of the recovery for the past two-three years that has been slower than expected.
In the beginning of October we saw the unemployment rate unexpectedly drop below 8% to 7.8%. This was the sharpest job-gain in over 30 years and for lack of a better word, it was well...weird. The unemployment rate is derived by two surveys that are sent out to both employers (business owners) and households. And while the employer survey sent back gains of a meek 140,000 jobs, the household survey showed gains of over 800,000 jobs in September. This is a staggering contrast and makes one understandably skeptical of the methods used while conducting this survey.
Perhaps part of the reason for the slow economic recovery is the fact that most of the job gains have been low-wage earning jobs which have effectively increased the ever-so-delicate wage gap. This has effectively shrank the middle class and forced many to pursue two jobs in order to make up for earnings from previous employment. Not only that, but another round of Quantitative Easing has hit the fore front with no deadline in sight. In effect, QE3 will inject currency into the economy in order to generate liquidity and create an incentive to invest or spend. While the FED pushes money into the economy, it walks a tough line with the declining dollar on the world market. The injection of currency also contributes to inflation and may lead to a decrease in REAL income, i.e. purchasing power.
The big question is: What will happen after the election? Does the country need another sales pitch to increase confidence in the economy, or a CEO that will substantively implement changes from what we've previously seen? Perhaps this uncertainty will lead us to make a substantive decision to make change, rather than JUST rely on hope.
