The latest data shows jobless claims dipping slightly while consumer spending is up. Now the bandwagon is filling up again with those who would claim economic recovery is underway. Pardon me if I do not go along for the ride.
I'm not trying to be the scrooge that spoils holiday happiness, but, let's be realistic. The fact that unemployment claims dipped a mere 3000 one week, during the time of year when some retailers expect to do as much as 80% of the year's business in just a few weeks, just does not impress me. It alarms me!
Equally as alarming, is the slight increase in consumer spending accompanied by claims that this is a sign of recovery. With the country in the midst of a moratorium on mortgage foreclosures, it's no wonder people have some extra money to spend. Let me remind you that more than 10 million homeowners are at risk of foreclosure. Indeed, had there been no moratorium, tens of thousands of people, maybe hundreds of thousands, would have been spending money on rent instead of flat TVs and IPads.
Then, there's this little tidbit from the aforementioned article. The saving rate slipped to 5.3 percent last month, the smallest since March, from 5.4 percent in October. Savings dropped to $614.8 billion, the lowest level since March.
Now you tell me. We're still losing jobs, (BLS Stats as of December 3, 2010) millions of people are on the brink of losing their homes, others are having to spend savings to survive but somehow the economy is recovering.
Let's just be honest here and take the earrings off the pig. To say the economy can recover without jobs is like saying a thermometer can make heat. When you talk recovery it's all about jobs. If we are printing stimulus by the trillions and still 9.8% of the workforce is unemployed, where did the printed money go?
While we hear all the jabber about recovery, rising consumer confidence and benign inflation data, we also hear things like the gold bubble is about to burst. Now, as economic fears subside, allow me to make this comparison. A recovery without jobs is like a currency without backing. When you can print money as the Bernank once said we had to do, it's not backed by anything except third shift at the print shop. And, every time you print more, it diminishes the value of what already exists.
Yes, my words are harsh but not spoken without purpose. Don't fall into the trap of complacency. Do whatever you can to preserve and protect the wealth you have lest inflation and a weaker dollar steal the purchasing power of all you have saved.
All the forces that have driven gold prices higher over the last decade are still working to drive gold prices ever higher. Gold demand has not lessened, as our foreign business partners now scramble for their financial lives to acquire as much gold as they can get their hands on. Even at today's prices, gold, to many, is still a bargain.
Be wary and stay informed. News and information at LearCapital.com is free. We are not yet out of the woods. If you are one fortunate enough to still have a job, don't take anything for granted. It is the unknown that always sneaks up on us.