Sometimes, good news is not always as good as it seems, and can often be a harbinger of worse times ahead.
Most recently, we’re experiencing a rise in the number of new jobs being created. At first glance, it’s appears to be a positive development.
The White House glows, Main Street media trumpets, and we’re led to believe the road to recovery is at hand.
However, this so-called good news portends a day of reckoning that is unavoidable. The overwhelming majority of new jobs being created are service industry related.
This is no denigration on that type of work; after all, a job is a job.
However, when middle management manufacturing executives get put out to pasture, the economy loses a dynamic and powerful force.
During the middle-part of this past decade, people were secure in their jobs, and knew their next job was their choice, not someone else’s choice. In addition, the capital appreciation of their homes was very dramatic; they used their home like an ATM machine.
Credit cards flowed like water and the standard of living far exceeded their current income, all thanks to debt.
Every industry expanded to meet this burgeoning demand. A neighborhood that had six restaurants now needed ten, in addition to Circuit City, we also needed Best Buy.
Then it happened.
Supply and demand raised its ugly head, and home prices took a terrifying plunge. It was goodbye housing ATM; credit lines were slashed across the board, with some credit cards being recalled altogether.
The inevitable cascades of retrenchment began, and with that, significant increases in unemployment.
The pundits will have you believe we’ve turned the corner.
Yes, a job is a job. But when the worker takes a 50% pay cut, is forced to retrench spending, attempts to pay-off debt, and experiences an explosion in food and gas prices, an eventful shift in one’s standard of living must occur.
As the nation of prosperity, the reality is that for almost every new job created, it represents a backward step for all of us.
The day of reckoning awaits.