Have you listened to the news recently? If answered “yes,” you have probably noticed 3 underlying trends:
1. The economy is improving
2. The economy will get worse IF we don’t “solve” the Fiscal Cliff
3. The price of Milk is about to soar
I’m sure there are a few trends I’m leaving out, but these are the common ones I’ve seen and heard repeatedly.
Let me begin by saying, “I don’t know anything about Milk.” Just because one of my nicknames growing up was ‘Milky’ (because of my skin tone) doesn’t give me the credentials to comment on the Milky Cliff.
I would, however, love to comment on the former two.
The Economy is NOT Improving
If you remove the doubt hovering over the debt negotiations, the media highlights many signs of improvement.
Consumer confidence is at rising. Consumer spending is beginning to pick up. Homebuilder sentiment rises to a 6-year high! The unemployment rate has fallen from 7.9% in October to 7.7% in November. Things are looking goooooooood!(best read if ‘ud’ sound is held for 3 seconds)
Unfortunately, each of the economic measures above is somewhat meaningless. Let me explain…
- Consumer confidence reached all-time highs just before each recessionary period. Therefore, consumer confidence is not a good indicator of what lies ahead.
- For whatever reason, people mistakenly believe that consumer spending grows an economy. Correction – production grows an economy. The consumption of foreign goods helps foreign economies grow.
- Homebuilder sentiment could be useful, but the headlines are extremely misleading. In October, the indicator rose to 41 – which is a 6-year high. Sounds good right? In actuality, readings below 50 mean that more builders view market conditions as poor than favorable.
- Lastly, the fall in the unemployment rate doesn’t mean much to me either. The high-paying manufacturing jobs have been replaced by low-paying service jobs. In my opinion, this problem will only get worse.
In Summary, the economy is still in shambles.
So What’s a Guy To Do?
*If you’re single, you need to save 25% of your income.
*If you’re married, you need to save 50% of your income.
*If you’re poor – you will lose some assistance.
*If you’re rich – you will pay higher taxes.
*If you’re neither poor nor rich – double whammy – you may be affected by both.
Regardless of demographics, you need to prepare for decreased income.