The Other Side Of the Argument

It has been one of my core thesis over the past three years that things have been getting better in the economy.  Markets have been in rally mode throughout that time so it looks like most others agree with me.   However, that is not to say that those that argue that things are not as bright as might seem don't have some valid points or that things at some point can't get worse.  Also I believe that one needs to hear arguments against your point of view to test your beliefs.

Below I am sending you a link to a blog called Zero Hedge.  The article is via another blog entitled The Economic Collapse. The name of the article is 10 Charts Which Show We Are Much Worse Off Than Just Before the Last Economic Crisis.  Irrespective of where it originated it is a well thought out piece that does a very good job of illustrating why things are perhaps not as cheery as all seems.  Later this week I will link you to a Ted presentation given by Paul Tudor Jones about rising inequality in America.  I urge you to read and listen to both.  I also think in fairness I should show you that not everybody agrees with me.

I think that the concerns people place on the economy are justified.  Where I perhaps depart from the bearish troop is that I am not completely convinced that economic statistics today adequately measure the health of our economy.  Here are a few examples of what I mean by this:

A friend of mine told me that his wife, who is not currently in the workplace in the sense that she doesn't work for anybody earning a paycheck, recently told me that she made between $12,000-17,000 last year selling product on Etsy.com.  I don't know anything about how much time she spends doing this.  I'm also assuming that's her profit.  If that's correct that's a pretty good chunk of coin for an outside activity.  Is she employed or not?  Working or not?  I don't see how our economic statistics capture that activity.

Current estimates suggest there are 11 to 15 million illegals in the United States.  I'm guessing there's double the official estimates.  How are these folks counted in the statistics?  Assuming most work off the books how is their economic activity measured?

One of the statistics that is constantly shown is the Labor Force Participation Rate.  This is a number used to estimate the amount of people that have supposedly been out of work so long that they've given up looking for a job.  Who gets included in that number?  Does it for example include the woman mentioned above selling product on Easy?  Does it include me who works for himself?  How about the stay at home dad who writes a sports blog in his spare time and has enough of a following that he can make some money doing it?  How about a 55 year-old coal miner trying to apply for disability?  How about the hairdresser that cuts hair out of her home?   I don't know the answer to that and I suspect whoever keeps track of that statistic doesn't know it either.

Look I''m no Pollyanna and I think there are huge structural challenges to the US and world economies.  At some point things from an economic perspective will get worse.  But the people that have bet against the US economy in the past three years have been spectacularly wrong and I'm not sure they're going to be correct anytime soon.   Stocks may not necessarily advance in the short run and economy activity may slow down at some point this year due to energy prices, the soaring dollar and a few other things, but there's no indication based on current statistical readings that the economy is ready to tank again.  I'll let our indicators be my guide regarding this and wait to be proven wrong by the naysayers.