Valentine’s Day #MoneyConscious Mash Up

Economic News

Pompeii

If you were as optimistic as Bastille and still riding a high from 2013’s modest economic gains, you’re likely questioning your 2014 outlook after this week. It was first reported on Monday that the U.S. “quit rate” hit 1.8% in November, off a low of 1.2% in September 2009. Unemployment for those between the ages of 20 to 24 is hovering around 11.9% and Boomers are dropping out of the labor force in droves. The U.S. isn’t producing net-positive jobs or much anything else for that matter, as indicated by a 0.8% “unexpected” decrease in manufacturing last month.

An economy for us all.

The Debt Free Guys fail to see how an increase in the “quit rate” is good for the economy, though we appreciate CNBC’s Bobby-McFerrin-Don’t-Worry-Be-Happy style. The U.S., i.e., government and business, needs to focus on growth rather than celebrate a shrinking labor force because this is not as good as it gets. The U.S. can’t survive another four years of a weakening economy. As Sir James Goldsmith presciently warned Charlie Rose in 1994, “the economy is there to offer the fundamental needs of society” and when it no longer serves society we are in trouble.

Thankfully the new Fed Chair, Janet Yellen, wasn’t wearing Charlie-Rose-colored glasses on Tuesday during her first official meeting with House Financial Services Committee. With clarity, she said “too many Americans remain unemployed.” She may never say a more accurate thing the rest of her tenure as Fed Chair. Whether she or her Congressional partners will do what’s necessary to correct the state of jobs in the U.S. remains to be seen. Congress doesn’t seem as eager to help Main Street as much as it did Wall Street. This will continue to lock the middle class out, as is happening in many facets of this economy.

The loss of the middle class is leading some politicians to conjure up creative solutions and while we are super fans of education, it could be years until the benefits of such measures make themselves evident.

What we’d like to see is more direct pro-growth policies to help the middle class get back to work. While corporations can’t think of enough excuses to give one CEO more money than the next, it seems for many there aren’t enough reasons to protect the golden goose. The goose being the consumer that makes up 70% of GDP. With buying power shrinking, it’s hard for the middle class to continue propping up the U.S. As PIMCO’s Bill Gross said last year, “balance sheet alchemy and financial wizardry” do not a growth economy make. Investments in people (read wages, income, salary, a.k.a. $$) and products do.

We’re all in this together.

According to the Center for Economic Policy Research, if wages had kept up with the pace of inflation since 1968, the minimum wage would be $21.72 in 2014. This would increase the power of Americans to buy the very products businesses currently have sitting in inventory. For context, CEO pay has increased 725% over the last thirty years. This isn’t helpful as the wealthy tend to put more of their money into investments rather than directly into the economy, contrary to the middle class. This is part of the reason why all news seems to be good news for the stock market anymore.

Personal Finance – The Millennial Edition

While this millennial is quick to correct her peers that it’s not their parent’s fault for their cohort’s lack of financial education, this millennial is quick to encourage hers to adopt bad habits and spend what little money they have despite high unemployment and low job security. When all else fails, shop.

Millennial Falcons

We suggest that millennials take ownership of their lives, as hard and unfair as it may be, and continue with their high savings rate relative to income because they shouldn’t expect the government to help them whence they hit retirement. Heck, even Gen-X gave up on government-sponsored retirement safety nets over a decade ago. We, also, suggest that millennials not rely on creative financing, as it tends to favor banks as much as Washington does.

As consolation, they may want to keep an eye on the future costs of phone plans, as millennials tend to be heavy tech users, or find a job that capitalizes on this planet Neptune-like winter we’re experiencing.

Kash is King

What holds true for millennials, as for all of us, is that a financial plan and a budget are necessary for financial success, neither of which must take more than 30 minutes. Mint.com has an app for that.

Stick with the beliefs you’ve adopted from your Great Depression ancestors of only paying for things with cash and only buying the house you can afford when you can afford it. This will take you far.

Finally, stay positive and hopeful for regardless if you’re rich or poor, married or single, there will always be a place for you (to retire). As the great philosopher, Ke$ha, once said, “If you put out positive vibes to everybody, that’s all you’re going to get back.

Is the awesome life you always dreamed of
still somewhere over the rainbow?

Our FREE #MoneyConscious Financial Planning Guide:
12 Steps to a Richer You eBook will help you get there!

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