In the Know?

Here's how things stand from Wall Street's perspective [italics mine]:

"Abby Cohen Sees S&P 500 Fair Value at 1,250 to 1,300" (Bloomberg BusinessWeek)

The Standard & Poor’s 500 Index may rise to between 1,250 and 1,300, said Abby Joseph Cohen, the Goldman Sachs Group Inc. strategist known for calling the bull market in the 1990s.

The S&P 500, which closed at 1,094.87 yesterday, would need to rise as much as 19 percent to reach the high end of Cohen’s prediction. The benchmark gauge for U.S. stocks has risen 62 percent from a 12-year low in March after governments around the world spent trillions of dollars to stimulate the economy. The index has retreated 4.8 percent from a 15-month high on Jan. 19 as widening fiscal gaps in Greece, Portugal and Spain spurred concern Europe faces another recession.

“We do think the market overall is likely undervalued,” Cohen, 57, said on Bloomberg Radio. “The recession is over and has been over for several months. Not every sector recovers at the same pace. We’d be looking in some of those areas focusing on economic improvement.”

Contrast that with the view from Main Street (and beyond):

"88% Americans Say Economy still in Recession" (FT Money Supply)

Eighty-eight per cent of Americans think the economy is still in a recession, despite economists saying the opposite. This is from an ABC poll. Those who think the economy is faring worse than before outnumber the optimists (see chart). On a more personal note, 53 per cent say that, based on their experience, the economy has not begun to recover.

"Suburban Homeless: Rising Tide of Women, Families"  (Associated Press)

ROOSEVELT, N.Y. – Homelessness in rural and suburban America is straining shelters this winter as the economy founders and joblessness hovers near double digits — a "perfect storm of foreclosures, unemployment and a shortage of affordable housing," in one official's eyes.

"We are seeing many families that never before sought government help," said Greg Blass, commissioner of Social Services in Suffolk County on eastern Long Island.

"We see a spiral in food stamps, heating assistance applications; Medicaid is skyrocketing," Blass added. "It is truly reaching a stage of being alarming."

The federal government is again counting the nation's homeless and, by many accounts, the suburban numbers continue to rise, especially for families, women, children, Latinos and men seeking help for the first time. Some have to be turned away.

"Yes, there has definitely been an increased number of turnaways this year," said Jennifer Hill, executive director of the Alliance to End Homelessness in suburban Cook County, Illinois. "We're seeing increases in shelter use along the lines of 30 percent or more."

"Illinois Kids Count 2010: Children and Families in a Time of Economic Crisis" (Voices for Children)

Effects of the recession on child poverty: Children represent one-fourth of Illinois residents but more than one-third of the state’s poverty population. In 2008, before the full-scale recession, the state’s child poverty rate was 17%, which represents about 530,000 children. Rising unemployment and increased use of Food Stamps indicate that these figures will become substantially larger. National child poverty rates are expected to continue rising for several years after the economy begins to recover, reaching levels higher than at any time since the early 1960s.

"The Human Recession: Selling Food Stamps for Kid's Shoes" (AlterNet)

Unable to find jobs, kicked off welfare, women in Connecticut are forced to sell food assistance to buy basic necessities.

Since she was 16, Eva Hernández has worked a string of low-wage jobs. She’s prepared chicken at KFC, run the register at Dunkin Donuts, packed and sealed boxes at a produce company, and held other similar jobs in Hartford, Connecticut, where she was born and raised. These jobs haven’t paid enough for Eva, now 28, to support herself and her two young daughters. So for almost three years in the last decade, she’s relied on welfare to supplement her income. Most of the time, though, she’s simply found another low-wage job, a task that in this economy is proving almost impossible.

In March 2009, in the midst of the worst job crisis in at least a generation, Eva opened the last welfare check she will ever receive. She is one of a growing number of people in the United States who can’t find work in this recession but don’t qualify for government cash assistance, no matter how poor they are or how bad the economy gets.

Without the help of welfare, Eva doesn’t have enough money left at the end of each month to feed her daughters full meals. It is the first time in her life, she said, that she hasn’t had enough money for food.

Now, with no other source of income, Eva breaks the law, selling her food stamps to pay for the rent, phone bill, detergent and tampons.

On the first day of each month, when her food stamps arrive, she walks to the convenience store up the street, buys food for her family with her food stamp card and uses it to pay off the debt she accumulated the previous month after she ran out of money. She then trades in the remaining balance for cash. Although the bodega is more expensive than larger chain grocery stores nearby, she’s locked into shopping here because places like Wal-Mart won’t let her keep a tab—or exchange her food stamps for desperately needed cash.

About 6 million people receiving food stamps report they have no other income, according to an analysis of government data collected by the New York Times.

"Report: Recession Slammed Low-Income Households Hardest" (St. Louis Post-Dispatch)

A Northeastern University study released last week confirms the obvious: Workers at the lower end of the wage scale  have been particularly hard hit by the jobs crisis.

Researchers at Northeastern’s Center for Labor Market Studies found  residents of the three categories of households that earned up to $30,000 prior to the recession comprise over half of the workforce are now involuntarily employed part-time or in positions that fall below their skill level.

By comparison, the underemployment rate averages 7.7 percent for households in the top income brackets, $75,000-$150,000-plus.

“These stark findings clearly reveal that the economic costs of underemployment in the current U.S. economy were disproportionately borne by workers at the lower end of the income distributions. Thus, underemployment contributes in an important way to the high and rising degree of income inequality in the United States and to growing poverty in the recession,” researchers wrote.

"Use of Temps May No Longer Signal Permanent Hiring" (Associated Press)

WASHINGTON — It's not the signal it used to be.

When employers hire temporary staff after a recession, it's long been seen as a sign they'll soon hire permanent workers.

Not these days.

Companies have hired more temps for four straight months. Yet they remain reluctant to make permanent hires because of doubts about the recovery's durability.

Even companies that are boosting production seem inclined to get by with their existing workers, plus temporary staff if necessary.

"I think temporary hiring is less useful a signal than it used to be," says John Silvia, chief economist at Wells Fargo. "Companies aren't testing the waters by turning to temporary firms. They just want part-time workers."

"Poll: Parents Tell Their Kids about the Recession" (The Biz Beat)

Kids are being told about the Great Recession.

Seven out of ten parents with children between the ages of 6 and 16 said their kids know we’ve been in a recession, according to a just released survey by American Express.

“This number suggests that talks about the current economic environment are happening at kitchen tables across the country,” said a news release about the poll’s results.

Hmmm. Seems like more proof to me that those highly paid Wall Street "experts," who are allegedly "in the know," don't know jack.

Comments

[DavosSherman]

It is really heart breaking to read these clips. Then when I hear the Fed calling that the recession has ended all I can think is what f*cking idiots, not only did the create the mess they are now turning it into GDII.

[Chip]

OVERHEARD AT HOME DEPOT
This and our family business highlight the incredible manpower capacity waiting to be utilized before any new hiring is needed.

Two workers at my local Home Depot were talking about their hopes to either get more hours or land a second job elsewhere. When asked what they meant their reply was that Home Depot has avoided layoffs by reducing most employees to 30 hour work weeks.

My parents family business (in the heavy equipment servicing industry) has facilities in Florida, New Jersey, Louisiana, Texas, and California. All shop employees are scraping by on 30 hours a week. Long gone is the overtime on top of a busy 40 hour work week. Work backlogs, which were the norm for five decades, are non existent.

If and when the economy picks up, neither Home Depot nor our business will need any more warm bodies for a long time. With a long list of skilled future-employees-in waiting there will be no raises. Worse, hourly pay cuts are being considered (by the family run business). There will be no turnover either. The HR department will soon be downsized by one or two people because of reduced responsibilities in this stagnant economy.

The 10 - 17 percent of our country who do not have jobs are surviving but not thriving. My glimpse at this segment of the "employed" sector says that some of those still employed are not thriving either. Adding 2 + 2, I see added downward pressure on the retail and other disposable income sectors as peronal savings and credit availability dry up for both the under- and un-employed.

Does anyone track early "cashing in" of retirement assets? I wonder if consumer spending is sustained these days in part through the draining retirement funds - despite the penalties.

[roger]

The second half of 2010 will see a fizzling out of
the global stimulus.Maintaining the sedative drug
called stimulus, will at some point become impossible to maintain.
In the mean time, the destruction of the middle class in going great guns,
and we are witnessing a re- birth of the Lumpenproletaria.

[Kevin]

I'm in the flooring industry. We have have went from 25 employees to 11. In addition we have cut all wages 15 to 25 percent. Sales are no longer going down now after a 40 percent decline in the last 3 years, even though the number of competitors has decreased by 25 percent. Some of those companies had been in business for over 50 years(so I'm not talking about start-up businessess). Even though the flooring industry has seen a 46 percent delcine in quantity over the last three years, the 3 companies that manufature flooring have raised prices 6 to 12 percent each year, including a 6 pecent increase just last week. We still have seen no signs of this industry turning around.

[Slowly going broke thanks]

The human depression/recession continues...the statistical recession has ended...

[MichaelN]

Alright, I have mixed emotions with some of the stories above - primarily the one about Eva Hernandez and selling food stamps for shoes, etc.

First, she has two children. Where are the fathers? Does Eva have no other family?

Second, my parents were born in 1920 and 1921. They are both, therefore, "Children of the Depression" (and my dad a WW 2 vet). After the war they lived in temp govt housing for 2 years and when that ended they moved in with my mom's parents - a bungalow with 3 bedrooms for grandparents, parents and, then, two kids.

That lasted until 1953 and they used the money that they saved and bought their own home.

There is a large age gap between my older siblings and myself and younger brother. I therefore, while growing up, witnessed my much older siblings frequently move in and out of the house - depending upon their financial situation. I bought that 1,300 sq. ft "mansion" from my parents and now I tell my two kids,18 and 16, that no matter what - they will always have the welcome mat out for them here.

Of course I have no idea if this choice is available to Eva and her own two children, but, in general, why is the rest of us in society, those also scrapping to get by, supposed to have great sympathy for the millions of Evas who have made disastrous choices in having, well, children that they can't afford (obviously)? How many "Evas" also have cable, cell phones, smoke and drink (and more), etc?

Where are the fathers of the children? Grandparents?

I know that I may sound heartless and that is a legitimate thing to say or think - I also am concerned with/for her two children, but it also occurs to me that having society provide all of these benefits (food stamps, welfare, housing assistance, free medical, etc.) simply enables a large and growing share of our citizens to continue to make dumb and reckless choices.

I had a conversation with a friend today and he was bragging how his daughter, who has a driving permit, is turning in to such a great driver and that he works with her all of the time. My daughter is leagues behind her. But when I brought up what he told me last week about her relatively poor academic performance and that he might want to link the access to her driving with stronger academic performance............he didn't think it necessary!?!

C'mon society, what's more important - a driver's license or good academic performance?!?

Now apply this same type of reasoning to the millions of Evas in our country and we wonder how/why so many people are miserable??? Yes, it is even worse now than before, but Eva, per the story, ALWAYS struggled.

Like I started out with, my heart breaks for Eva and her children, but where are the fathers? Grandparents? Siblings? And where is her cell phone? Cable? Cigarettes? Choices, choices, choices.

[Marion Shaw]

Enevitably, if these trends continue, prices will
start falling in the general retail and food sector,
although we are seeing spikes in certain foods due
to external pressures (such as the recent setback in
the chicken industry due to snow damage), If enough
people end up in cold, dark apartments, without
phones and food, facing eviction, history clears points
to the fact that food lines and temporary camps
are not far away. If no jobs are to be found, which is
evident in many lives, history also points to the
increase in illegal methods to survive. There is a lot
of truth in what MichaeIN says, butyoung women with
children often have no families to fall back on, and

that is why the benefits of unwed mothers looked so
deceptively attractive in the first place.

[Sackerson]

Or is there now a disconnect between the multinationally-based fortunes of Wall Street and the fate of the growing American underclass?

[MG]

MichaeIN wrote "Like I started out with, my heart breaks for Eva and her children, but where are the fathers? Grandparents? Siblings?"

Granted, Eva has probably made some very bad decisions. But, I don't think you take into consideration how fortunate most of us are to have been raised in a reasonably healthy environment consisting of two parents, a father present, and at least the basics provided for.

I ran a small construction firm for many years. Talking to the younger workers about their background, family history was eye opening. The horror stories I've heard from having drug and alcohol addicted parents, parents in and out of prison, physical/mental abuse, and parents just not giving a damn about the welfare of their children are numerous. Many times I wondered how in the hell these kids made it through.

Family units among the poor are much weaker than among other income classes. I'm in no way excusing behavior but don't assume all are as fortunate as we have been to have had loving parents, grandparents and strong family units. We all are a product of our environment.

[Chip]

I'm with MichaelIN above! Choices were made..... but also the choices offered played a part in her decision. This is where I get real angry with our "compassionate" politicians! My wife and I are attempting to adopt one or more children. The pregnant teenagers have three options: abort, put up for adoption, or keep the baby with a HUGE helping hand from us taxpayers beginning with an expense paid delivery.
Government policy increases the shortage of available infants to adopt.

Roll the clock forward a few years. Our agency has presented us numerous options of older children to adopt who come from abuse and neglect situations. How many of these precious but damaged kids could have been spared the experience of abuse / neglect if the option of keeping the baby had not been feasible for the mom from the start?

The added costs to us (society) to deal with abuse, foster care etc. are immense. Meanwhile we have to import kids from China to satisfy a "market" that exists for young children to adopt.

[Bob Crane]

Come on out to California.
Teachers in our district are getting a 4% raise this year(average salary $66,000.)plus fully paid medical.
The firefighters won't give back any raises from the last 5 years, and want the city to hire more firemen (average salary plus overtime- $111,000.)Fully paid medical, and retirement at 90% salary at age 55.
Our society has 2 levels- the "have's"- city employees, and the "Have not's"- the average tax payer.

[roger]

@MichaelN,
Humm.... Before the advent of Dr. Benjamin Spock,
Mom and Dad where the center of the universe.
After his advent the child became the pillar of the family
I wonder what that did to manners, self respect and
self discipline.

[Onlooker]

Cohen and the rest of her ilk up on Wall Street and throughout the executive suites of America are completely out of touch and clueless about how the real world is living. And she is just a classic example of the great bull market psychology that persists, but that will be finally and soundly trounced in the coming couple of years.

I can't wait to see them go down in flames, although they've fleeced enough off of the fake economy over the years that most won't suffer a bit from it. Though they may have to commit more of their ill gotten gains to securing themselves from the mobs.

[Blurtman]

Again, I will offer the following hypothetical:

Imagine Goldman Sachs is the only employer in the US, and employs just 10% of the labor force. Goldman Sachs is doing well, and their continual growth drives US GDP to increase at 5% per year.

GDP is growing nicely, but the unemployment rate is nonetheless 90%.

[doug]

Cohen is always brought out when the markets are near the top and getting ready to take a dive. She says the same thing ALWAYS. markets are 20-25% undervalued