Reviews and Views

Hard Times by Richard Benson

3 questions and 3 observations were made by Richard Benson in his article Hard Times.  See the original article at http://www.financesense.com/editorials/Benson/2009/0709.html

Mr. Benson asks a relevant question about how to determine just how bad is the economy.  There are three basic questions:

1. Are people working?  Are people actually employed?
   • In 2009, less than 20% of graduating college students had jobs lined up after graduation.  Compare that to 51% in 2007.
   • Official unemployment rate is currently around 9.5%.  However, when you include those who are not eligible for unemployment benefits, those who want to work but stopped looking, those who are underemployed, and part-time workers who want full-time employment the percentage is much higher (more than double).
2. Are they (those working) making any money?
   • Take a look at tax collections as a way to measure income.  In general state income tax receipts from Jan 2008 to April 2009 were down 26% from the year before.
   • The Georgia Department of Revenue reported on July 1 that tax collections had declined 16 percent to $1.36 billion in June compared to June of last year.  For the full fiscal 2009, which ended on June 30, revenues were down 10.5 percent.   Atlanta Business Chronicles, July 21, 2009.
   • You can see more details in a similar article from the Atlanta Business Chronicles, dated July 10, 2009.
3. Do they (those still working) have any money in reserves?  Does anyone have any financial resources?
   • Though the savings rate has increased, the numbers are questionable.
   • Cash in the bank is real savings.  Paying down credit card debt is not.
   • The number of people collecting food stamps is rising by 4 million per year.  To be eligible for food stamps, you need to have less than $2,000 in resources such as a bank deposit.

Benson recaps the following points:

• 7 million people are collecting unemployment benefits.
• 8 million people are unemployed and collecting nothing.
• 2.4 million people are in jail (1 in 100 adults).
• 51 million are collecting Social Security.
• 12 million more are collecting Social Security Disability.
• 34 million are on food stamps.

Finally, Mr. Benson makes the point that we are experiencing hard times the likes of which most of us have never seen.  The economy is dying and the American press is not focusing on the real economic statistics nor are most of the politicians.   He urges all of us that “It’s time to get grumpy and politically active!”

PERSONAL:  I would like to add that it is time to pray for God’s mercy and wisdom during these “hard times”.  Perhaps He will be so inclined.

July 22, 2009 - Posted by Bill Wyler | Economy