Obama's Just Another Clown in the Fast Food Economy

John Ransom
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Posted: Apr 30, 2014 12:01 AM
Obama's Just Another Clown in the Fast Food Economy

Analysts agree that the bull market in stocks will continue as long as there is no recession.

And that ought to concern you greatly.

“All in all, the silver lining of our slow economic recovery is that another recession is a fair distance away,” notes MarketWatch.com of chief U.S. market strategist at RBC Capital, Jonathan Golub’s recent market forecast. “Therefore, Golub’s bull-market thesis remains intact: Price-to-earnings ratios will continue to expand, leading to double-digit returns over the next few years.”

But that assumes that we really have been in the midst of a true economic recovery.

There are several things that I know about how our American economy works.

A key driver of growth—in fact, the key driver of growth—is consumer demand. The availability of credit is a key to consumer demand. Rising wages are a key to increasing consumer credit. And job creation is the key to rising wages, despite Obama’s brave promise to raise wages using his phone and his pen.

In fact, his pen and his phone promise to screw up what little job gains the country has made.

“A study by the National Employment Law Project, a group that advocates for low-end workers,” writes the Press Enterprise, “found that the majority of the jobs that spurred the recovery from The Great Recession are low-end ones.”

The study notes that while professions have made up some of the ground that they lost during the recession, they have not added jobs.

“There are 1.85 million more jobs in low-wage industries like fast food and retail today than there were before the recession,” says AOL Jobs. “But, there are nearly two million fewer jobs in mid-wage and higher-wage industries, according to the report from the National Employment Law Project (NELP).”

Now imagine how those job gains will evaporate once Obama raises the minimum wage—by phone or by pen. Of course, he won’t do that, because in doing it he’d: 1) have to take the consequences and 2) not be able to pander on the issue.

It’s very hard to electioneer on an issue when you have solved it.

Just ask illegal immigrants.

But still, it makes CEOs hesitant to hire. There was a time in this country we knew this.

When you add in population growth of the labor force of about 3 million since the start of the recession, it’s clear that the country is going in the wrong direction jobs wise.

The disparity is beginning to be reflected in the market.The stock market is finding many interesting ways to use their capital: stock buys backs, dividends, mergers and acquisations. They just aren't hiring.

One of the things the stock market needs in order to expand is leadership from industries. During the recent run up the market saw leadership in housing, banking, biotech and technology—old and new.

Each area benefited the consumer in some way.

This year the story is very much different.

Leadership is coming from all the wrong places.

Utilities lead the way with 13 percent gains, followed by energy at about 7 percent and healthcare at 4 percent for 2014.

Industrials, on the other hand, are only up about half a point, technology is up less than 2 percent, and consumer cyclicals are down more than 5 percent so far this year.

So the costs of goods and services that people depend on like utilities, energy and healthcare are crowding into other spending like consumer cyclicals.

That’s great if you think that real economic progress is going from 247 billion to 300 billion burgers served.

The great thing about the pace of the economic recovery, it seems the experts are saying, is that it’s so slow that you’d almost not notice a recession if we had one.

But a fast food economy is not one built to last, even though technically burger chains may never feel another recession again.