The Economy Has Gone Crazy!

If you find the economy, and what's going on with the economy, confusing, you are certainly not alone. Economists who believe in "fundamentals" are unable to explain what's going on. Supply side believers can't explain it either. Explanations given by financial reporters seem to change daily, with complex justifications and explanations given, that do not seem terribly logical to most of us.

The government releases unemployment figures on a regular basis, and at the same time lists the number of new jobs added, and the number of first time unemployment benefits applicants. Although it is common knowledge, we rarely hear discussed the fact that, in fact, unemployment is far higher than the statistical percentage, because we do not include those being under-employed or those no longer searching for employment into those numbers. For those unfamiliar with the term, under-employed refers to individuals having to accept employment at far lower levels of compensation than they previously enjoyed, due to the need to "make a living." With official levels of unemployment at approximately ten percent, is there any wonder that there is so much uncertainty in American consumer buying habits. Then, before the crucial unemployment issue is adequately addressed, the government, either through conscious decisions, or because of budgetary needs (especially at the state and local levels), finds it necessary to reduce the number of individuals it employs. While, that should help balance budgets, it is really a double-edged sword, because the then unemployed often become recipients of government financial assistance, and if they are not working, the government also loses a source of tax revenue.

However, despite all these factors, September 2010 was one of the best in the stock market's history, with the Dow index rising substantially. However, at the same time, as if investors are trying to hedge their financial bets, the price of gold has risen to near record levels.

The price of oil and gas continues to be an important one to overall economic health. The price of these commodities has risen significantly, and unlike historical references, it has not been due to supply and demand issues. Much of the increase in the pricing of these commodities has been due to the weakening of the United States dollar against most other world currencies, and, since oil is priced in U.S. dollars, the price rises when the dollar weakens, as an adjustment. However, since there is almost daily fluctuation in the price of gas at your local stations, consumers simply pay whatever the rate of that day might be.

If one were to interview the typical American consumer, he would probably say that the economy was not doing particularly well. Of course, much of this is related to that individual's personal finances, but when home prices have gone down from their highs in many areas by more than twenty percent, few people have been unscathed by these economic conditions.

Recently, financial and government reports have stated that the United States is no longer in a recession. Of course, by strict economic definition, while that may be true, when one simply looks at retail shopping, oil and gas prices, housing prices, how expensive gold has become, and many other circumstances, few people would probably say that the economy is healed and healthy. Consumer confidence remains low, and there appears to be more questions than answers regarding the economy.

It is clear that the public's level of comfort is still quite limited, and that most explanations that we hear, seem more like jargon and rhetoric than reality. Basically, many people believe that this economy has gone crazy!