A recent survey released by the National Association for Business Economics said, “Any recovery is likely to be so gradual that these jobs won’t return to the labor market for three years.” In other words, the 7.2 million jobs that have been lost in our “recession” won’t return until 2012 or beyond. Based on the trends that have been unfolding, I would say well beyond 2012.
When I say that, some people accuse me of pessimistic thinking. Quite the contrary; I consistently look for whatever hidden opportunities might exist within the current economic crisis. And right now, there just aren’t a lot of options on the table for people to choose from.
In the 1990’s there was a hot debate over NAFTA, the North American Free Trade Agreement. Opponents argued it stole jobs from the U.S. Supporters pointed out that while some jobs were being exported, we had a new high-tech industry emerging that was filling in the gaps with higher paying jobs.
Regardless of which side of that debate you supported in the 1990’s, there is no debate today. The fact is, the 7.2 million jobs that have been lost are not coming back. Not in 2012. Not for a long, long time, if ever.
There is no new industry or technology filling in the gaps behind this massive and sustained job loss. The game has changed. Most pundits and many people are still waiting for the game to go back to the way it was before. The game isn’t going back to the way it was. The game is over. New rules are emerging. Those new rules require fewer players on the board and a diminished role for the U.S. dollar.
Many economists are still talking about inflation remaining low. Wishing doesn’t make it so. Prices have been rising for years. Yes, your house has lost value and so have your investments. But has your health insurance gone down? Have your energy costs gone down? Have your insurance rates gone down? Have your food costs gone down?
For years, consumer product manufacturers have been shrinking their package sizes to avoid increasing per unit costs. Well guess what, 20 cans of soda at the same price 24 cans used to cost is a price increase. A 24-oz. package at the same price a 32-oz. package used to cost is a price increase. Food and consumer product manufacturers have reached the point where they can no longer hide inflation by continuing to deceive us. Prices are going up.
The ugly part of this equation is that with six people for every available job, wages are not going to keep pace with inflation in any way, shape or form. Everyone is going to get hurt.
For many, Santa Claus may be spending Christmas at the North Pole because he won’t be able to afford the food and energy to make it around the world.
The challenge for most investors is this: there aren’t too many places for people to put their money and get any kind of return. Now that the price of gold has cleared $1,000 per ounce, more people and institutions will be waking up to investing in real tangible items this coming year. Things like gold, silver, base metals, energy and agriculture will become popular. Against this current backdrop of rapid economic change, real stuff will emerge as the investment of choice.
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