Wall Street Destroying The Economy?

I grew up listening to Van Halen. The band’s eponymously named debut album was easily one of the greatest pieces of vinyl to emerge from the late ‘70s to early ‘80s rock scene. And then along came Sammy Hagar to replace David Lee Roth as lead vocalist, and, well, the chemistry died.

The formula was the same: four dudes, a guitar, a bass and a set of drums. But the chemical reaction they catalyzed was something altogether different. I lost interest.

Which is, I acknowledge, an admittedly obtuse segue into a speech Fed Governor Stanley Fischer recently gave at the Aspen Institute. Fischer’s words gathered a good bit of ink, but for reasons unrelated to this week’s dispatch.

The media trained its sights on Fischer’s comments that seemed to indicate the U.S. economy is approaching the Fed’s employment and inflation goals, and, thus, the Fed is nearing the point at which it will raise interest rates again.

I was focused on a different comment — one that explains why the U.S. economy has no traction and why the U.S. stock market sits on a precarious ledge. The chemistry is, in essence, off. An ingredient necessary for economic vibrancy is missing, and this week’s dispatch aims to show you exactly what it is that’s missing and why it’s missing.

Let me quickly dispense with the notion that employment in America is strong. I’ve written many times showing why that assessment is as bogus as a Milli Vanilli concert. (Remember the duo ostracized for lip-synching in the ‘80s?) While the economy has added a fair number of jobs, quantity does not speak to quality.

Every month for the last few years, the preponderance of jobs we’re adding are in low-wage service-sector corners of the economy. Or they’re low-wage white-collar jobs in office administration, education, menial health care and temp agencies. Average pay in every case is below the U.S. median, meaning the ability of the American worker to pursue a consumption-oriented middle-class life is increasingly difficult, which, in turn, is part of the reason our economy (deeply dependent on the consumer) continues to struggle seven years after the recovery began.

1 2 3 4
View single page >> |

As a lifelong world traveler, Jeff Opdyke has been investing directly in the international markets since 1995, making him one of the true pioneers of foreign trading. ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.