Your feeling on the economy vs. one year ago

I'm still more than a bit skeptical - unemployment has barely moved and my investment manager, who has nothing to gain by spreading doom and gloom, insists that the majority of positive Fortune 500 earnings reports are fluff. This guy is featured quarterly on CNBC and I pay him only a flat fee annual to manage my portfolio - he makes nothing on any trades.

My personal opinion is that the US has a large, bitter pill to swallow if we want to really right this economic ship. The stories from the Great Depression are horrible, and I'd hate to see us flush the economy by those means, but we're soon going to be owned by China if we continue on this borrowing binge.

The majority of my portfolio has recovered, and I am really considering converting to 25% gold, 50% low interest money market, 25% stocks.

I tried to get a thread going on this but I failed horribly. I'll add some fuel to your fire.

To be honest, I don't feel much better about the economy than a year ago. The indicators you cited (stock market, corporate earnings) poorly reflect wealth or conditions for the middle class. Corporate earnings probably had rebounded after off-loading tons of workers. Unemployment is up, but it seems that it will stay embedded at high rates for a few more years. The economy has not undergone any major structural changes (things like more financial regulation, changes in gov spending), even though it surely needs them after suffering the worst recession since the 1930s.

It seems jobs are going to have a hard time recovering more than anything. This shift away from the worker and job protection has been going on for decades, and finally will lead to embedded high unemployment rates. Individuals can no longer rely on their employer for security. We have to become wealth creators of our own if we want to establish financial security.

I hate to be a cynic in this situation, but times are going to be tough.

1) Many countries in Europe are about to go bankrupt

2) Unemployment hasn't moved despite loads of govt efforts

3) Real estate is still down despite huge govt and Fed efforts to prop it back up

4) The bond market has nowhere to go but down

5) The stock market is pretty much stagnant despite money at near 0% interest rates from the fed

6) credit is not expanding despite these low rates

My dad has been unemployed for almost 2 years. He has a PhD in an in-demand science field, loads of pubs, and is smart, hardworking, and good with people.

If someone like him cannot get a job, I can't believe the economy is doing much better.

Anecdotal, of course, but for me that's the marker.

I've pretty much got a 50-50 feeling on this. The stimulus helped keep the jobless rate from going through the roof. And the strongest companies seem to be rebounding. But inflation is right around the corner and it will take years, if not decades, to get the jobless rate back to pre-recession numbers. In short, the jury is still out on this one.

I feel that things are quite a bit better. Not only did I get a tax cut, but because the stock market has stabilized my 401k has almost doubled in the last year (the stock market free-fall had really hammered it). Also, I work for a company that contracts with many of the largest companies in the US, and I can tell you for a fact that things are moving again, albeit very, very slowly.

LeopardBoy wrote:

I feel that things are quite a bit better. Not only did I get a tax cut, but because the stock market has stabilized my 401k has almost doubled in the last year (the stock market free-fall had really hammered it). Also, I work for a company that contracts with many of the largest companies in the US, and I can tell you for a fact that things are moving again, albeit very, very slowly.

You and I share similar thoughts, though so far in the minority on this thread.

Generally, I have good feelings. Then again, I'm not in construction or housing.

I'd say the economy is going to hold together and we're due for a rebound. The catch is, it's going to take a *long* time for housing to recover, and I'm not seeing enough movement to make up for that yet.

People wihout an education or in the wrong field are going to starve. It's going to take them a long time to be "ok" too. Bottom line? The economy is going to be stable and sound, but we're going to hear a lot of bitching and moaning from the ones left behind.

Jack of Speed wrote:

I'm still more than a bit skeptical - unemployment has barely moved and my investment manager, who has nothing to gain by spreading doom and gloom, insists that the majority of positive Fortune 500 earnings reports are fluff. This guy is featured quarterly on CNBC and I pay him only a flat fee annual to manage my portfolio - he makes nothing on any trades.

My personal opinion is that the US has a large, bitter pill to swallow if we want to really right this economic ship. The stories from the Great Depression are horrible, and I'd hate to see us flush the economy by those means, but we're soon going to be owned by China if we continue on this borrowing binge.

The majority of my portfolio has recovered, and I am really considering converting to 25% gold, 50% low interest money market, 25% stocks.

I agree that unemployment is the big remaining issue. That is always the last to rebound following a recession. We've still got a ways to go yet...better I say though than the end of February 2009. I REALLY hope for your sake that you don't put 25% of your portfolio in gold. Historically that is a horrible idea, and if, as has been suggested on this thread, that lots of countries in Europe go bankrupt, that will make the US Dollar stronger, and gold will drop. Not sure of your age, because that matters a lot, but so much in a money market is a bad bad idea if you ask me. If I were feeling a need to go more conservative than my current 87-13 stock to bonds ratio, I would change it to 60-40 stocks to bonds perhaps. Gold is way too risky, and a MMA should be used to stage money for placement in stocks or bonds only really...and to perhaps hole your 3-6 month emergency fund money.

Anyway, good luck (and I mean that sincerely) with what ever you choose.

1) Lots of middle class people (I'm middle class) are invested heavily in the stock market...many of them are relying on their stocks for their retirement. A greatly up market since 12 months ago greatly benefits the middle class.

2) You are correct about positive corporate news being because of less overhead (laid off workers), but the corporations NEED that positivity before they will reinvest (hire back some workers)...it's a necessary step. Companies always want to grow their business, and they do that with investment (more workers, R&D, money to other companies so that THAT company can then hire people, etc.).

3) You are correct that unemployment is up (since a year ago), but it did drop at the last reading.

4) I also agree that employees can not rely on employers. Too many employees had their head in the sand about that for a long time.

From a personal standpoint, I love the current state of the economy. I have a very stable job that pays well with excellent benefits. I am virtually at no risk for losing my job. I am glad that I can buy things for cheap, especially houses and stocks. I don't care that my retirement investments dropped over 50% because I am only 30 and have a long way to go before I retire.

My 403(b) is up quite a bit since last year, so I'm happy with the rebound. Also, I got a nice tax refund.

adfdaf wrote:

1) Many countries in Europe are about to go bankrupt

2) Unemployment hasn't moved despite loads of govt efforts

3) Real estate is still down despite huge govt and Fed efforts to prop it back up

4) The bond market has nowhere to go but down

5) The stock market is pretty much stagnant despite money at near 0% interest rates from the fed

6) credit is not expanding despite these low rates

1) Could be.

2) Government efforts kept it from being way worse. Employment rate dropped last time.

3) Real Estate PRICES are down. Lots of GREAT bargains to be had out there for people who have a little bit of money. Go to

and search for houses between $50,000-$90,000 in the following cities west of Phoenix: Sun City, Buckeye, Surprise, Glendale, Goodyear. CRAZY deals to be had on some very nice houses that are just a few years old. Low prices benefits the economy (in the way that it SHOULD) because people can spend lots less for their home thus having more disposable income that is spent elsewhere. Low prices are bad for those who want to use their homes as an ATM, but they shouldn't have been doing that anyway.

4) Disagree about the bond market.

5) The stock market since one year ago is not stagnant...Dow was at 6400 in March 2009...it's today at ~10,400.

6) Credit is not expanding as one would expect with these low rates, true...I see that as a GOOD thing though. I don't WANT the economy to get a boost from people borrowing money...then we're back to where we were in 2007. Slow growth for longer while people learn to save money before spending it...that's what's better long term.

podunk wrote:

My dad has been unemployed for almost 2 years. He has a PhD in an in-demand science field, loads of pubs, and is smart, hardworking, and good with people.

If someone like him cannot get a job, I can't believe the economy is doing much better.

Anecdotal, of course, but for me that's the marker.

I'm not meaning this to sound jerky, but something in your equation doesn't work out. Either the field isn't really "in demand", or he's not all that smart or hardworking or good with people. Or he could be asking for too much money or something. Is he 70+ years old and being discriminated against due to his age? Assuming you are correct about your father's qualities, I say either he's asking for way too much money, or that science field isn't really in demand.

If your comment about the bond market was in reference to the domestic bond market, would you care to explain why you disagree with the previous poster?

i feel that the end is near!

but seriously, we're going to have a major problem within the next 10-20 years. The government can't just keep printing money. Our country can't keep letting jobs that create value float overseas (meaning we need to compete, not try to screw those companies with tariffs and taxes). We can't keep feeling entitled to a certain lifestyle just because it's what we see on TV.

I heard some quote once about not just trying to get your piece of the pie, but making the pie bigger. America has forgotten about making the pie bigger in our relative comfort over the past decades. Now others who are still hungry for what we take for granted are going to eat our lunch.

but i know we'll all keep chugging along with our blinders on. Oh well.

mrb wrote:

If your comment about the bond market was in reference to the domestic bond market, would you care to explain why you disagree with the previous poster?

The term "bonds" means lots of things. Is he (and are you) talking about Treasuries? Munis? Corporate bonds? So, my disagreement with him was because he had a broad sweeping statement about "bonds" having no where to go but down. On that I disagree.

Mr. Price wrote:

Generally, I have good feelings. Then again, I'm not in construction or housing.

I'd say the economy is going to hold together and we're due for a rebound. The catch is, it's going to take a *long* time for housing to recover, and I'm not seeing enough movement to make up for that yet.

People wihout an education or in the wrong field are going to starve. It's going to take them a long time to be "ok" too. Bottom line? The economy is going to be stable and sound, but we're going to hear a lot of bitching and moaning from the ones left behind.

This is a good observation. I'll add that the rebound has already started, that the low housing prices isnt' all bad (and in fact is mostly good) and that people without an education or in the wrong field are going to have to get educated and/or find a new field, even if that means starting over again...good employees are good employees, no matter the field.

i know. wrote:

i feel that the end is near!

but seriously, we're going to have a major problem within the next 10-20 years. The government can't just keep printing money. Our country can't keep letting jobs that create value float overseas (meaning we need to compete, not try to screw those companies with tariffs and taxes). We can't keep feeling entitled to a certain lifestyle just because it's what we see on TV.

I heard some quote once about not just trying to get your piece of the pie, but making the pie bigger. America has forgotten about making the pie bigger in our relative comfort over the past decades. Now others who are still hungry for what we take for granted are going to eat our lunch.

but i know we'll all keep chugging along with our blinders on. Oh well.

Your concerns are all valid I believe. I think enough people share your concerns though that the next 10-20 years won't be as bad as feared.