How Can It Be Good?

I once described retail analyst Howard Davidowitz as "the perfect andidote" for "all those policymakers, 'economists,' and TV pundits whose thinking has been clouded by the 'green shoots' they've been smoking."

Well, here we are nine months later, and it looks like the permabulls are in need of yet another dose of Davidowitz-style reality (courtesy of Bloomberg Television) to shake them out of their stupor:

When I look at the numbers for the "big guys" -- I'm not talking about some dinky little apparel chain doing $2 billion, which is idiotic -- when you look at the real numbers, we're going nowhere. And the consumer, who has lost a trillion dollars in credit availability, who has massive job losses...consumer bankruptcies are at a record level, savings is way up because they're petrified of everything Obama's doing (and so am I). So when you're looking at what's going on around here, how can it be good?

...

What doesn't make sense to me is an improvement in the American consumer. I don't see it.

Here is the full video:

(Hat tip to The Pragmatic Capitalist.)

Comments

[Bob Crane]

The people who are buying new cars, clothes, etc. are largely teachers and other government workers. They have secure jobs, get regular raises, medical is paid for, even after retirement, and have huge retirement packages, so there is no need to save money.
If you knew that you could spend every cent that you have in retirement, and next month, another fat check would arrive, would you save??

[AustinCompany]

Excellent point Bob. What most people don't realize (and don't expect the major news networks to report it) are these interesting facts:

- Most labor union members are now government workers. They represent over 50% of all state, local and federal workers in the US vs. less than 10% membership in the private sector.

- Government workers, on average, get 30% higher pay and 70% better benefits than private sector workers.

- Almost all government workers are covered by benefit plans that continue to pay from 30% to 90% of pay at retirement until death. Most also include full medical benefits. Try to find that sort of deal in the private sector!

Needless to say, the above facts spell disaster for the US. Think France and Greece over the coming years; strikes by public employees demanding more money, benefits, etc. from already bankrupt local and state governments. They, of course, will give in continuing to raise taxes and fees on the few remaining private workers to satisfy the government unions which now represent over 50% of the voters. Now think Argentina, as this is where we are all headed.

[Angryfutureexpat]

Agreed. The optimal public sector salary is slightly less than a corresponding private sector worker.

If the 30/70 numbers are right (seem high to me), it's begging for patronage, corruption, state/municipal bankruptcy, and tax rates that are unsustainable.

[Rocky]

According to an NPR news report on Friday, the City of Los Angeles is close to filing for bankruptcy protection. We'll see how the Hollywood fat cats react when the city lays off a big chunk of its police and fire departments. The west side of LA may not be such a great place to live in the near future.

[AustinCompany]

Angry-

One quote I found was here:

"According to the BLS, state and local governments in September 2009 paid $39.83 in salary and benefits per hour worked. That is 45 percent higher than what private employers paid. The salary component was one-third higher. The benefit component was two-thirds higher."

There is more here:

http://tinyurl.com/yaw5xot

To make matters worse, over 15,000 California public workers make over $100k - http://www.sfgate.com/webdb/statepay/

Could that be part of California's budget problem? I also did not even mention the huge problems with plic pensions - most are grossly under funded.

[Chris]

These comments have nothing to do with the video. Go back to your AM radios Glenn Beck wanna-bes.

[Matt]

Your right Chris the facts are false, made up, we are actually in a renaissance or golden age and 10-20% of America is not struggling.

[roger]

The consumer is not the driver of the economy.
The consumer is a beneficiary of a major enterprise/invention,
such as the construction of railways,automobiles, air line transportation,
massive production of armaments for wars,the old way of doing things have saturated the markets,and something new is needed.
SEE ANYTHING NEW ON THE HORIZON,beside the elimination of jobs thanks to automation???

[xqqme]

Is Kalifornia our 'Greece'?