Dan Geller, Chief Research Officer at the Money Anxiety Index, is warning the world that “the emperor has no clothes.” Unfortunately for him, it doesn’t appear that anyone much is listening. Last week the stock market rallied in the wake of a Labor Department report showing an increase of 163,000 non-farm jobs and a 3.2-point rise in consumer confidence. Sounds like great news, but if you believe Geller, it’s all smoke and mirrors.
A closer look at the employment numbers shows that of those 163,000 jobs, nearly 30,000 are seasonal employees hired by food-service establishments to accommodate seasonal travelers. These are not permanent positions. Additionally, another 23 percent of the new jobs are healthcare-related jobs and are not secure until healthcare laws become clearer, and another 6.7 percent are directly related to the upcoming presidential election and will disappear November 7, 2012. This means nearly half – 48 percent – of the new jobs created are uncertain at best and temporary at worst.
A look at consumer confidence numbers is equally disheartening. Geller points out that “consumers are exhibiting higher financial anxiety by holding back on spending” and according to the Money Anxiety Index, consumer money anxiety is at an all-time high of 92.0. This means that even though consumers may say they are feeling more confident, their actions do not bear it out. “The June confidence level is wishful thinking on the part of respondents,” says Geller, adding that “had they felt that confident, they would spend, but they don’t.”
Do you think that analysts like Geller are just trying to poke holes in the good news of an economic recovery, or does he have a point?
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Category: Personal Finance