The stock market has its best year in decades. The economy is roaring back, right?
Wait a minute. So, why is Congress considering extension of unemployment benefits, an emergency measure that has been continued for about five years now? Makes no sense.
What’s wrong with this picture? Consider what else we’re seeing. A poll taken the same day as a recent stock market record showed that nearly half the country thinks we’re still in a recession. The labor participation rate (the percentage of working-age people who are actually working) hit a 35-year low within the past two months. Forty-plus percent of people in a recent survey said they are worried about their jobs. College graduates are still moving back with mom and dad.
So, what can explain this huge discrepancy? In my view, money printing by the Fed has created a huge bubble. The stock market is the outlier here. People rave about a good jobs number here and there. The third-quarter GDP growth number was undeniably good. But then the first quarter of 2012 was a little better and we did not have a great 2012.
I believe there are two major factions pushing the recovery story. The first is the mainstream media, which falls all over itself trying to make President Obama look good. The second is the business sector. CNBC and Fox Business do not want to come on TV and say “The economy is dead. Go check out reality TV and come back in five years.”
The sad truth, I believe, is that we are trying to will a recovery without dealing with the structural problems that plague this economy. Printing money, deficit spending, wishing and spinning the facts will not fix these problems. Considering the net effect of current policy, Ben Bernanke might as well have printed a few trillion dollars and Fedexed it to billionaires and Wall Street CEOs.
So, when you ask yourself if there’s a recovery, think about if you should believe the Main Street folks with their ears to the ground, or those flying by in their Learjets at 30,000 feet. My money is on Main Street.