Before we begin this weekend and step aside from overinflated markets and weak economic reports, let's all feel the momentum of a stagnant economy.
By now, we have 16.7 percent of the people who cannot find full-time work and companies with more than enough cash to hire them. But, they don't because they look at their balance sheets and say, "I can't hire anyone right now." But why?
Because companies don't have enough income coming in and they don't know when or how demand will improve. In other words, who is really spending money on any luxury items?
As unemployed workers fall off the extended benefit rolls, they have little money to spend at all; people on unemployment can only afford the necessities--clothes, food (mostly from Walmart or Target) and shelter (in the form of a high mortgage payment or an increasing rent payment).
Now, we get to the full-time employed people whose wages remain relatively stagnant to commodity prices--and that's a conservative estimate. With families, these people are trying to pay down debt. Without families, they are likely saving money with hopes of retiring someday.
These are the basic middle-class people whose spending behavior is unlikely to prop up any economy much less provide 70 percent of gross domestic product.
Then, there's the 1 percent to 2 percent of the population that is not only employed but has disposable income, no debt, a paid-off mortgage, plenty of income and the ability to buy high-priced items whenever they want to do it. They can spend all they want and contribute massive amounts of money to the economy.
The only problem is: they represent 1 percent to 2 percent of the entire U.S. population. That makes them unlikely to also represent 70 percent of GDP.
So, that's why employers have plenty of cash and are not hiring anyone. They still have productivity and less people. There's one other thing...
As for that measure of wealth we call a stock market, the Federal Reserve is printing money, giving it to "primary dealers"--a.ka. Goldman Sachs, Deutsche Bank, Morgan Stanley, JP Morgan Chase, etc. to throw into the New York Stock Market Exchange so that companies can cash-out stock and have more money. So, why hire when there is no demand and plenty of money?
This is another reason companies are sitting on plenty of cash and that 1 percent to 2 percent remain the wealthiest people in the U.S. They're also the ones who pay our Federal Government to make important decisions--like laws that we live by.
And, it's not just the U.S. All these countries are floating out funds, taking on debt, as they cross their fingers in hopes that the so-called consumer will spend whatever they have left without any thought toward future savings or paying down debt.
Meanwhile, that 10,800+ number looks awfully good for our future--until it drops. As they say, what goes up, must go down. It's gravity. It's science.
So, while you're enjoying the weekend, drinking a beer, watching football or just taking a stroll on a Sunday afternoon, try not to be discouraged by the fact that we have absolutely no control over how the Federal Government and lawmakers spend our tax dollars--Republicans and Democrats are in on the game, of course--and how Wall Street spins its wheel of fortune using our future savings rather than showing us gradual gains from solid fundamentals.
What goes up will come down and go back up again...As Blood, Sweat and Tears once sang, "Spinning wheels--got to go round."
But we don't have to like it.
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