Lex Luz

Expect the Real Rally by Mid-2009

This is one of the most bizarre leaps of illogic I've ever read on SA. First, the secular trend in employment has been completely obfuscated by changes in the way the statistics are derived; there is absolutely no credible way to determine what the realistic employment numbers are in the United States (or if there is, I'm certainly not aware of it).

Employment could be extrapolated, perhaps, through income trends but goodness knows no one wants to examine THAT secular trend too carefully. If anything, the secular trend in income is down and headed lower. The consumer spending binge of the past 15 years has been financed entirely on debt and illusory asset inflation, cycling together.

Secondly the notion that retiring baby boomers will drive employment higher, and therefore spark the revival of the American Consumer, is suspect at best. To begin, boomers will likely find that they can't retire in the traditional sense and many will compete for low-wage jobs to supplement income. This will likely pressure wages lower, and in turn pressure consumer spending lower too.

We are entering a seismic structural shift. The entire economic establishment appears to be firmly attached to the cliff-edge of denial. Frankly, I think the American Consumer is comatose and will remain so for decades.