Ian, after looking at Abelson's chart I conclude that the worst it gets is that those feeling worse off are nearly equal to those feeling better off. The wiggles are statistical glitches. It's all based on feelings and expectations, anyway. Not a good indicator to use for investing. Quote >As Bridgewater comments, over the past quarter of a century there certainly have been periods when the economy was in worse shape than it is today, but "people have never seen their financial situation deteriorate this quickly."< People also whine more than they used to in the olden days.
Abelson [what a pompous ass!] continues...
>for the first time in eight years, more folks feel worse off than better off. As a matter of fact, the percentage feeling worse off is the highest since the survey first posed the question back in 1976. As Bridgewater comments, over the past quarter of a century there certainly have been periods when the economy was in worse shape than it is today, but "people have never seen their financial situation deteriorate this quickly."
The single biggest factor, we submit, both in the rapidity and depth of this disheartening change, has been the slide in the stock market -- in other words, the negative wealth effect.
Nor, we're compelled to report, is there much in the way of evidence to support hopes for a quick reversal of fortune. For the forces that conspire to depress the stock market and by extension popular sentiment -- a sagging economy and a melancholy job outlook foremost among them -- show no sign of diminishing.
Quite the contrary. Unemployment claims continue to climb, as do those unsettling presagings of future unemployment, layoff announcements. The latest data on durable-goods orders -- down again in July and June's revision showing a much more pronounced drop than originally recorded -- underscore the likelihood that when the final reckoning on second-quarter GDP growth is in, the economy will have slipped into recession territory.
Alarming manifestations of the negative wealth effect are not, it should be noted, restricted to the compulsion to take inventory of the state of one's financial well-being at 3 o'clock in the morning. Or in the shuttering of another pricey eatery.
They also can be spotted in venues at some remove from the economy. As, for example, in the warm, inviting waters off the fabled beaches of Florida, where swimmers have been subject to increasing attacks by sharks.
Ichthyologists and their specialized brethren, big-fish psychologists (they charge a fin a minute, which may seem steep unless you've ever tried to get a shark to repose on a couch) have been nonplussed by the sudden gathering of the sharks and even more so by their hostility and outright ferocity.
But to anyone intimately familiar with what has been happening in the stock market, the rash of incidents is easily explained: With the pickings so much slimmer in Wall Street, the sharks en masse have taken off for choicer feeding grounds.
Even more worrisome is the news that hatcheries for a somewhat different but even more vicious species of shark are overflowing. More specifically, the negative wealth effect, by closing former springs of sustenance, has caused an explosion in applications to law schools.
Worse comes to worse, swimmers can always stay out of the water. But what defense is there against Blackstone-spouting carnivores?< [snip]
Gottfried |
