Hold on to the reigns tightly Main Street America, the realization of recession is upon us.
(Stocks in this article: NYSE: AU, NYSE: HD, NYSE: HON, NYSE: UBS, NYSE: MOS, NYSE: NWA, Nasdaq: AAPL, Nasdaq: DPHIQ.PK, AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ)
CNN Money published an important article yesterday afternoon that, while reading, I found myself saying "yep, uh huh, yes!" to over and over again. We've linked to it below. CNN's article, and the flow of economic data all point to the onset of recession. While Wall Street has already discounted some degree of recession into the prices of stocks (which typically happens starting from six months before), Main Street has only had warning of it's arrival. Oh sure, you homeowners out there who bought at the peak and were swindled into a scheme of a mortgage, you've already felt the impact. However, for the most part, Main Street America has not felt the pinch.
Yes sure, everything in the supermarket is more expensive for everyone, and gasoline is priced higher, whether you pay for it or your driver does. But, the centric force of this nation, the American middle class, has thus far lived life as usual. That's about to change.
For those of you living in the same home you've owned, and working in the same job you have held for the past five years or more, life has been hunky dory. Still, soon you are sure to feel the pinch as well. Your office temp has already been let go, and some of the easier decisions have been made in the office regarding the "no brainer" layoffs. However, now your job, and your department's existence may be in jeopardy too. Rumors likely abound about your company's last quarterly report, and management's promises to cut
costs (that could mean you). The regular birthday cake parties for employees have been eliminated and pizza Fridays have been canceled as well. The fluff is gone, and that leaves you.
The Signs Are Everywhere
When you go to your bank, the usual greeter at the door is conspicuously missing. Loans are harder to come by for all, and so that new car purchase might have to wait a while. Maybe you should put off that kitchen renovation you thought you would finance with a home equity loan, since your equity has decreased along with everyone else's.
The reason Main Street has mostly ridden out the spell thus far is because your still employed for the most part. Your Saturday morning antiquing trips have not been disrupted by a job search just yet. But there's reason for concern.
Employment Situation Report
The big jobs report for March was rather depressing this morning, especially for those who are already unemployed, as they realize the competition for jobs is about to heat up. The nonfarm decrease of 80,000 marked the third straight month of decline, and the unemployment rate jump to 5.1% from 4.9% was unsettling as well.
Up until now, Main Street has been insulated by several factors. One good one for your job security has been the prevalence of stubborn, or strategically blind corporate managers, who consistently miss the freight train steaming down their path. However, with corporate earnings starting to see impact from expensive energy, delivery and production costs, and more importantly lighter sales, job security is no more.
The temps and the contract workers bore the front-line of the blow, like the tough marines they are, but now the regular infantry is facing
fire. According to this most recent employment report, construction, manufacturing and employment services (temps) saw the most job loss. When they run out of temps to fire buddy, next is you. Or, if things get bad enough, your entire department may finally go, because it's the poorer performing groups on the ROIC scale that get written off first. Even if you're in the strongest department, Middle-America-Man, you could still find yourself sold to a better fit parent company or to a rich foreign buyer. In times like these, if your CEO can add value by selling you, he will. Soon, we expect you'll be on the street exclaiming, "bring back the unions!" I expect you'll certainly be electing a Democrat to the Presidency anyway.
Suggestion for the Dems
The Greek has a suggestion for the Democrats. Make Chris Dodd your VP to strengthen your chances, and more importantly our future. He should have been your nominee in the first place. After watching another hearing of a joint Congressional Committee, however, it's clear elections remain nothing but a primitive popularity contest. In this day and age, it's just embarrassing who the masses have put into leadership position. It's amazing what money and marketing can sell sometimes. God bless.
Be sure to explore the site over the weekend, as we'll be offering some interesting off-topic weekend reading we are sure you'll enjoy. Be sure to see our disclosure at the
Wall Street Greek site.
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