Archive for July, 2006

Job growth weak again… Job slump continues… A lot of people fall prey to the pessimism of the media when they report on the economy. What is the truth about the economy? Is it really that bad? Is it really that good? Well, let’s lay it down and look at the facts. Let’s compare today’s economy with that of 1996; the height of the technology boom, and arguably the greatest economic year for the Clinton administration. Let the lesson begin…

According the US Department of Labor- Bureau of Labor Statistics (www.bls.gov), the unemployment rate in June 1996 was 5.3%; last month it was 4.6%. That’s a net decrease of 0.7% or 199,500 jobs, despite September 11th, Katrina, and $3.00/gal gasoline. In June 1996, the average hourly wage was $12.02; last month it was $16.70. That’s an increase of $1.19/hour or $206.27/month when you factor in inflation.

According the US Department of Commerce- Bureau of Economic Analysis (www.bea.gov), the Gross Domestic Product (GDP), or the total value of all goods and services produced by the US, has increased on average 5.4% each quarter over the last five years; despite September 11th, Katrina, and $3.00/gal gasoline.

So what about investing? Everyone thinks the true indicators of the economy are the stock markets. On July 1, 1996, the Dow Jones Industrial Average was 5729.98, yesterday it closed at 11,224.18. Despite a few sell-offs and corrections, that is an increase of 95.89%! Also in 1996, the Nasdaq closed at 1,197.45; yesterday it closed at 2,127.59. Again with sell-offs, corrections, and the famous tech bubble burst, it’s still an increase of 77.68%!

No, it’s the local economy that is struggling! Oh, well let’s look at North Carolina. In June 1996, the NC unemployment rate was 4.4%; May of this year closed at 4.6%. Even with all the mass layoffs across the state over the last few years, it’s not enough to warrant a panic, don’t you think? North Carolina has been among the top 25% in GSP (gross state product) increases in the last 12 months, averaging 3.9% per quarter. Also, North Carolina remains second in the southeast in average annual wages, which have increased on average of 2.5% over the last five years.

So what’s the bad news… gas is $3.00/gallon. Then again, so is McDonald’s iced tea.