From the midweek edition of the Morning Jolt . . .
Stocks Booming! . . . In Same Old Lousy Economy We’ve Had for Past Five Years
Great news! The Dow Jones Industrial Average and S&P 500 hit record highs Wednesday!
What’s behind the boom?
After spending months alerting the public that they could begin to wind down an $85 billion-a-month bond-buying program at their September policy meeting, Federal Reserve officials got cold feet Wednesday and decided to keep the purchases in place.
The reasons: An economy that has failed to live up to the Fed’s expectations for growth and a worry that a jump in long-term interest rates over the past several months could squeeze an already weak recovery.
Oh, wait. That doesn’t sound like such good news.
Fed officials, who have been consistently disappointed by economic growth, nudged down their growth forecast for this year and next year, projecting growth between 2% and 2.3% in 2013 and between 2.9% and 3.1% in 2014.
Wait, that’s bad news. Yet traders on the floor of the stock exchange were literally roaring exuberantly when the markets closed Wednesday.
How about those corporate executives?
A new survey shows U.S. CEOs are less optimistic about the economy’s prospects for the next six months. The survey indicates that disagreements over the 2014 budget in Washington are making them cautious about hiring.
But wait, there’s more:
While the unemployment rate has fallen from 8.1 percent to 7.3 percent over the past year, even those with a job are falling behind. Real average hourly earnings rose just 0.7 percent during that time period and real weekly earnings are up only a tad more, at 1.0 percent. That means even with inflation at relatively tame levels — at least by government accounting measures — it still has beaten the growth in pay.
And speaking of inflation: The 71 food items tracked by the Bureau of Labor Statistics saw prices rise an average of 2.1 percent over the past year — not bad, but still well above the rate of pay increase.
And speaking of food: More Americans continue to utilize the Special Nutrition Assistance Program — food stamps — to deal with their grocery bills. The latest figures show food stamp rolls at just under 47.8 million — 15 percent of the total population — and 23,116,928 households, which is a record high.
Indeed, the latest Census figures released this week show the number of Americans living in poverty remains at 15 percent — representing 46.5 million people — the second straight year the number has not moved. Wealth disparity has reached its widest chasm since 1928, the year before the stock market crashed and the Great Depression began.
The percentage of Americans in the workforce, 63.2 percent, is the lowest in 35 years. About 75 percent of the 1 million new jobs created this year are part-time. Wages have barely budged in the past five years. Meanwhile, corporate profits are up 42 percent from 2007, and the stock market has spent much of the year at new highs . . .