|How to Hedge a Failing US Economy|
There is a large supply of worry, and perhaps even a larger supply of reasons to be worried about.
In researching the current state of the American economy I had a few moments to think about what would be a good investment.
I asked myself; where should one put their hard earned money?
The Answer will shock you...
I think the most appropriate way to hedge ones portfolio at this point is to invest your time in a garden.
See the thing about this whole situation is that we as a country have messed with things like stimulus, bail outs, zero interest rates, new legislation, more regulations. and the like so much that there is little else to throw at the next unknown problem.
If things go bad again... It won't be because there is a shortage of money. No, It will be because there is no money of any standard or clearly determined value. Our economy will shift back over to the bartering system.
I am just not sure that are economic wheels can take another pot hole, recession, depression, or whatever.
We are already driving this thing with a spare tire (and on "E" thanks to BP).
The way i see it the US is still on track to a recovery, our economy is still growing, the illusion of money is still alive and well. However, there is just not a whole lot of great looking tricks to patch a tire if we catch another flat.
We can hold this thing together as long as everything runs smoothly, or if destiny blesses us with just a bit of luck we should all be just fine and dandy.
I fear that any sort of bad luck in the near future could really F**k us.
But then again what do I know?
Let's get to the latest numbers that everyone is talking about...
GDP and Economic Growth
|Where is The US Economy Going?|
Over the last four quarters GDP has averaged 2.9%, The Experts on the matter say that unemployment will only get worst unless we have a GDP growth rate of 3%.
The US Consumer has actually been spending more on everything except for housing. Not to long ago I posted that the housing market was stabilizing but apparently I am a big fat liar.
|Consumers are Spending - But Not on Housing|
In fact you have to go back half a century or so to find home sale numbers that low!
The home sale numbers have droped 33% year over year and they were not doing so well last year as you already know unless you have a world of warcraft account.
On top of that the Make Home Affordable Plan, Obama's mortgage assistance programs, has had fewer and fewer loan modification workouts come through HAMP, the modification program. The Obama modification plan, or more accurately HAMP has been a tremendous success by any comparative measure. But just the same, as of late, the HAMP performance has been a bit sluggish.
However the Obama Plan made an additional Hardest Hit Fund Payment to an additional five states that were hardest hit by the financial crisis.
I believe the foreclosure prevention assistance payout through the Hardest Hit Fund was 600 million dollars. Combining that with the original 1.5 billion dollars that stimulus total adds up to 2.1 billion dollars.
I think Obama is doing an amazing job overall on this side of things. Obama's housing and financial stability efforts have been tremendous.
The US Job Market
The private market is actually still producing new jobs. In July we had 71,000 new private sector work force additions. However the US economy as a whole shed a total of approximately 130,000 jobs.
These job losses were in large part due to the temporary census jobs that have come to an end. In July this number was around 145,000 jobs terminated. In June 225,000 jobs were lost. That is a total of 370,000 paychecks that are no longer going to be spent every other Friday... That is just no good.
But let us not get to hung up on that large and very scary number. The good news is that the private market is hiring and not firing. This is a blessing and a glimmer of hope for homeowners.