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The U.S Stock Market Has Rallied Big Time Amid Worsening Job Situation and Local Government Out of Money

Recession is over says the U.S Government....bull shit!
The U.S puts out reports that the recession ended last year sometime, and the Federal Reserve say that they are going to do more “Quantitative Easing” to further stimulate the economy. The stock market responds by sending the Dow Jones Industrial Average well over 11,000. All this in my personal opinion is hog wash, it is just more U.S Government propaganda to make things seem a lot better than they are.

In actuality the U.S economy is worse, but the Government do not want you to know that, they want to paint a rosy pictures so that you will keep spending conspicously, even though you are trying to pay off a big debt, or you have no savings or your spouse has lost his / her job.

There is a disconnect between the stock market and the real economic situation right now. Corporate profits are doing very well right now, mainly because corporations have done massive cost cutting by laying off or cutting lots of jobs. However, with almost 10% U.S Government reported unemployment rate (real rate is probably closer to 20%), there are a lot of people out there suffering, alot of Americans who used to be middle class now pushed down below the poverty line. Oh and by the well the poverty rate in the U.S and the gap between rich and poor have grown to its all time high.

Ask yourself this question. Will the struggling Americans who have lost their jobs be out splurging or cutting back a lot on their spending?

In my opinion, consumer spending is going to see a big decline as over 33 million unemployed Americans will cut spending on non necessities and cut luxury goods. Consumers will be mainly spending money on food, shelter and gasoline. Imagine 33 million Americans cutting pending…what does this mean? What it means is that going forward corporate profits for companies making non-necessities will fall, as demand for their products decline, due to excessive unemployment.

Another problem is that the U.S Government has run out of money, this includes the local state Governments. Look at the state of California that wants to pay their government workers minimum wage. And just look at the failing infrastructure of city roads, bridges and parks etc. They are deteriorating due to lack of funds.

While all of the above is happening the stock market has been rising over the past month or so. I’m a Canadian looking from the outside in, and when you are looking from the outside in, you have a different perspective than the individual or country that you are looking at. From my perspective the American government is still in a stage of “denial”. The American people are at the later stage of “denial” and transitioning toward “anger”.

The economy won’t improve until step 5 of the “Stages of Grief” has been completed.
1. Denial
2. Anger
3. Bargaining
4. Depression
5. Acceptance

It is only after “Acceptance” that people will do actually really do something to change. So you see there is quite a long way to go and if history is any indication this may last a good 7 years. We are already 2 years into the recession, so it will be another 5 long years of low growth for the U.S. The latest upward move in stock market has topped out and in my view the U.S stock market is headed for a decline.

by Das Brain

Please read my disclaimer.

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This entry was posted on Thursday, October 14th, 2010 at 4:45 pm and is filed under Economy, Job Related, Personal Finance, Saving, Spending, Technical Analysis. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

One Response to “The U.S Stock Market Has Rallied Big Time Amid Worsening Job Situation and Local Government Out of Money”

  1. banker says:
    April 17, 2011 at 12:22 pm

    I am tired of all the economic negative news. I think the reason the economy sounds bad has less to do with an actual recession than media sensationalism and doomsday pessimism. Everyone was in a panic in 1997 because of the Asian financial crisis, but the sky did not fall. I don’t think the media should lie about a high unemployment rate, but I would like to hear more positive news stories. Just like news reports about Y2K, killer bees, Firestone tires, shark attacks, and the oil spill, people
    will soon realize any economic downturn is partly due to hype and life will go on.

    http://www.usnews.com/money/blogs/alpha-consumer/2009/1/8/did-the-media-cause-the-recession.html

    http://www.time.com/time/magazine/1998/int/980706/cover_story.one_year_aft33.html

    I did some research and found that there is plenty of good news out there:

    The recession officially ended in June 2009:

    http://money.cnn.com/2010/09/20/news/economy/recession_over/?section=money_latest

    The unemployment rate is falling:

    http://www.greenbaypressgazette.com/article/20110402/GPG0101/104020692/U-S-unemployment-rate-falls-2-year-low?odyssey=tab%7Ctopnews%7Ctext%7CGPG-News

    The stock market has risen 53% recently and is still cheap:

    http://www3.signonsandiego.com/stories/2009/oct/15/cautious-optimism/?uniontrib

    Wells Fargo, Apple, Ford, SkyWest, Adidas, Men’s Wearhouse, Kroger’s, General Mills, AutoZone, CarMax, Walgreen, Dell, Disney, and Discover are
    some of the many respected companies to have declared profits recently:

    http://www.bloomberg.com/apps/news?pid=20601100&sid=az6fjhaa_gsg

    http://www.usatoday.com/travel/flights/2009-11-05-skywest-q3-profit_n.htm

    http://www.sanluisobispo.com/topnews/story/906588.html

    http://blog.seattlepi.com/microsoft/archives/182538.asp?from=blog_last3

    http://www.latimes.com/business/la-fi-earns22-2009oct22,0,1394503.story

    http://www.businessweek.com/news/2010-06-10/men-s-wearhouse-surges-most-since-09-as-profit-rises-update2-.html

    http://www.nytimes.com/2010/09/15/business/15kroger.html?src=busln

    http://www.bloomberg.com/news/2010-09-22/general-mills-first-quarter-profit-rises-12-on-sales-of-cereals-snacks.html

    http://www.washingtonpost.com/wp-dyn/content/article/2010/09/21/AR2010092101256.html

    http://www.fayobserver.com/articles/2010/09/22/1033100?sac=Bus

    http://www.nytimes.com/2010/09/29/business/29walgreen.html

    http://www.bloomberg.com/news/2011-02-15/dell-reports-profit-that-tops-estimates-on-business-pc-demand.html

    http://www.sfgate.com/cgi-bin/article.cgi?f=%2Fg%2Fa%2F2011%2F02%2F08%2Fbloomberg1376-LG9TY20D9L3501-0G67SN2ECLJ7PKT7EQBGOISSMQ.DTL

    http://www.bloomberg.com/news/2011-03-22/discover-beats-estimates-on-declining-defaults-boosts-payout-shares-gain.html

    US housing starts have increased:

    http://blog.al.com/breaking/2009/10/us_housing_starts_rise.html

    Business confidence has risen:

    http://www.bostonherald.com/business/general/view.bg?articleid=1203965&srvc=rss

    Factory orders have increased:

    http://www.telegram.com/article/20110203/NEWS/110209884/1002/busines

    Consumer confidence has risen:

    http://money.cnn.com/2010/08/31/news/economy/consumer_confidence/index.htm?section=money_latest

    Consumer spending is up:

    http://www.reuters.com/article/idUSTRE65M2WK20100628?loomia_ow=t0:s0:a49:g43:r5:c0.051546:b35270006:z0

    The US GDP rose 3.1%:

    http://finance.yahoo.com/news/Stocks-rise-on-Oracle-apf-2813128403.html?x=0

    North Dakota has an unemployment rate of 3.7%. South Dakota and Nebraska have unemployment rates of less than 5%. Singapore has an unemployment rate of just 2.2%. Unemployed people who move to these places can find work in agriculture, oil fields, schools, and hospitals. These newcomers will need to buy homes, food, and services creating more jobs. If you don’t have a job, move to an area with a better economy. If you can’t sell your house at the price you want, you shouldn’t
    have paid so much for it. If you don’t want to move and make trade-offs, I guess that you aren’t that desperate for work.

    http://www.bls.gov/lau/

    http://online.wsj.com/article/SB10001424052748703803904576152630710927512.html

    http://www.jamestownsun.com/event/article/id/81609/

    http://www.economist.com/node/18488276?story_id=18488276

    The United States will face a labor SHORTAGE in the next few years as millions of baby boomers retire. There are 76 million baby boomers, but Generation X only has 46 million people.

    http://seattletimes.nwsource.com/html/nationworld/2002185894_boomers21.html

    http://www.argusleader.com/article/20091107/business/911070331/1001/news

    If you really want to stay where you are and haven’t found a job, think of a way to make money from your hobbies. Find a need and fill it. Do you like to cook? Are you good at fixing things? Do you like to paint? If there is a recession, refuse to participate. Optimists make more money and I strongly believe that if you do what you love, the money will follow. Whatever the mind of man can conceive and believe, it can achieve. Just because someone says there is a recession, doesn’t make it true. Just because most people used to believe the world was flat, did that make it true? If you are feeling negative, I highly recommend the book “You Can Have it All”:

    http://www.librarything.com/work/508754

    http://www.entrepreneur.com/management/managementcolumnistscotthalford/article207648.html

    You might also feel less sorry for yourself or the economy if you put your life in perspective. How would you like to trade places with someone in North Korea? Would you rather live in Burundi where the GDP per capita income is $300 per YEAR?

    https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html?countryName=Burundi&countryCode=by&regionCode=af&rank=228

    Even if things are really bad for you and you become homeless, there is a safety net of food banks, shelters, general relief, and food stamps. You could join a commune or a monastary.

    America needs a good pep talk instead of negativity. I really think Obama would be more helpful to the economy by talking about the positive sides instead of pushing expensive stimulus programs. People should live within their means to avoid crashing the economy, but even when overextended, the United States has managed to pay the massive debts of the Depression and WWII.

    http://zfacts.com/p/318.html

    Americans need to think more like immigrants. Politicians are too afraid to say it, but Americans should stop whining, get up, take responsibility, lower their standards, bite their lips, tough it out, and get busy. Americans should stop buying SUV’s and McMansions they can’t afford and pay off their debts. I have no sympathy for the sheep who went in debt to buy expensive restaurant meals, clothes, vacations, cars, and overpriced homes when times were good instead of saving for a rainy day. Buy LOW and sell HIGH. If people had put their money in the bank instead of wasting it they would still have it. The United States is capitalist not Communist. There is social Darwinism and survival of the fittest here. If Americans want a handout, they should move to Sweden. I have seen refugees from places like Vietnam immigrate to the US with NOTHING and own houses and cars five years later, while some lazy Americans who haved lived in public housing and on welfare for GENERATIONS complain about how poor they are. Why can a third world immigrant who doesn’t speak English make more money in five years than some Americans who have lived in the US their entire life?

    http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/09/27/financial/f063017D17.DTL&ao=all

    http://online.wsj.com/article/SB10001424052748704895004575395491314812452.html

    The negative thinking about “tough times” and the supposedly “decline of the US” kills me. The USA is by far the richest and most powerful country in the world. Who invented the assembly line, telephones, movies, light bulbs, airplanes, air conditioning, elevators, skyscapers, television, the atomic bomb, the pill, calculators, microwaves, lasers, the Internet, mobile phones, the space shuttle, and landed on the moon? What country wins the most medals at the Olympics despite having only 5% of the world’s population? If the United States is dying, why do so many people want to immigrate there?

    http://www.statemaster.com/encyclopedia/List-of-United-States-inventions

    http://englishrussia.com/index.php/2010/02/14/russian-or-not-russian/

    http://sports.espn.go.com/oly/summer08/medals

    I think the best years of the United States are ahead of us, not behind us. I would be shocked if the USA won’t be the first country to put a person on Mars, invent mass-produced hydrogen and solar cars, and cure cancer. Americans who worry about the future are ignoring the facts and aren’t doing anyone any favors.

    While I am not blind to the difficulties that may exist in the present economy, I just think people should be more optimistic and look at the good sides. I
    remember when I was in middle school in the mid 1980’s and had a teacher who asked my classmates whether the USA was on the way to the peak of power,
    at the peak, or on the way down. I was the only student who said the US hasn’t reached the peak yet. A few years later the Soviet Union collapsed, the Japanese economy crashed, and America was the only superpower.

    I am not sure if there is a recession, but if there is one, I think it will soon be a distant memory.

    http://www.nytimes.com/2010/07/05/opinion/05douthat.html?_r=1
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    Remember: Whether you think you can or whether you think you can’t, you’re right.