Another Sign Something Is Wrong with the Economy?

So I’m reading this piece from the New York Times today. To make a long story short it tells us that luxury good sales are fully recovered to 2007 levels and are growing double digits this year. I can’t help but wonder if the levers politicians and Fed policy makers are throwing are having the desired effect on their macro-economic measurements but the desired macro effects aren’t specific enough.

What I am really trying to get at is that politicians want to be able to point to a number and say, “See, the economy is growing! GDP is up! Economic recovery is healthy and strong.” Politicians and policy makers have a nasty habit of myopia and relying on the convenient statistic that tells them what they want to hear. Once a politician hears a number they like, they stop probing. Now I know this is not true of Fed policy makers (who know that 16% under-employment with 9% completely unemployed), but they have limited tools (and now credibility) to improve conditions. In fact I would submit that they are entirely out of policy tools to promote growth.

Now perhaps someone out there in the blogosphere with a better understanding of economics can tell me how the economy will unfold and recover from here. My submission is that recovery is in the hands of the political leaders in Congress – namely John Boehner and Eric Cantor in the House and Harry Reid in the Senate. The Fed has no more bullets in the holster. Any policy actions taken by the Fed have made a considerable amount of money for the top 1 to 20% of income earners but effectively nothing has “trickled-down” to the bottom 80%. One need only look at the WalMart projected sales numbers upcoming (down 2.6% Q2 – 8 consecutive down quarters YoY) to know people at the bottom are making hard choices (gas, heat, or food) with nothing left over in discretionary income to spend.

Regardless of whether the answer to the present economic situation is contraction / deflation or inflation, people in the bottom 80% need to start earning more money in order for the economy to begin to grow robustly again, right?

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About S Wise

I teach others about the various uses of binary options as part of an options trading strategy. Learn to make money trading options and increase the performance of your portfolio without inducing excessive risk.
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3 Responses to Another Sign Something Is Wrong with the Economy?

  1. Freedom, by the way says:

    Right. Unemployoment and underemployment are plagues. We can’t expect our economy to turn around if folks are on the dole instead of on the tax roll. And you can’t blame business. I wouldn’t boost hiring right now, either with so many new regulations, stipulations and a sputtering economy.
    BTW_ The name of your blog is scarey to me, since I know next to nothing about options trading. But you seem to write for the layman–thanks!

    • lol! I’m not the kind of tutor that uses a ruler for discipline, I promise!

      Thanks for the kind words, though. I try to write in a way that clears the smoke and mirrors from the BS that politicians and bankers would try to fool you with.

  2. Pingback: Are We Looking at the End of Too Big to Fail Banking? « Binary Options Tutorial

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