THE FREE RIDE IS OVER

After a few years of relative frugality, the amount of money that Americans are saving has fallen back to its lowest level since December 2007 when the recession began

Yes, well - like it or not - at least initially the reason was to pay off credit-card debt that people drew down their savings account.

No doubt, this Great Recession (officially over), from which we have yet to see the light at the end of the tunnel because unemployment remains abnormally high, cannot be ended without enhanced Consumer Demand. (Which Congressional Troglodytes refuse to allow.)

And that wont happen until consumers regain their Feel-Good-Factor. Remember, a recession is when a neighbor loses their job and a depression is when you lose your job.

Not a joke, because it does describe aptly the reigning consumer sentiment. There is yet too much unemployment for consumers to return to a healthy propensity to spend. So, when is that going to happen?

Well, it already is happening, but like any deep hole, crawling out is slow and requires great effort. We should be back up to 5% unemployment within two years, but it is difficult to see (with the current structure of employment being offered and skills mix necessary) that will happen quickly enough.

The fact of the matter is that there are too many new graduates without any commercial/industrial experience that constitute the unemployed. Before companies hire them, they will almost certainly be seeking amongst the experienced unemployed to fulfill hiring needs.

And what about the future?

Another sad fact is that those jobs that have left over the past decade are gone forever - they aint comin’ back. They were mostly un- and semi-skilled jobs that fled to the Far East in the US and the Near East in Europe.

MY POINT

So, the country needs, for this Brave New Global World of Commerce, upgraded skills - meaning people with at the very least a solid high-school diploma and preferably some professional skills learned in a two-year college or vocational school (with as much apprenticeship time OJT as possible). Better yet, a university diploma and better yet again a night-school Master’s degree in some specialty.

The idea of training/study-with-apprenticeship has worked in Germany, since it gives graduates the all-important credential of “experience” that companies seek with preference in a candidate.

And then, down the road, given the necessity, a reinsertion to learn whatever renewal skills may be needed as job requirements shift and change in a tumultuous world of changing needs.

POST SCRIPTUM

And, as I never tire of explaining: Either we provide these types of training/education free, gratis and for nothing or - within the next ten years - we shall be paying far more expensively the unemployment of scores of people who do not have the necessary skills that the World Economy is forcing upon us.

The free-ride is over. So, when the going gets tough,  etc., etc., etc.

The fallacious assumption here (as usual) is that “most people” have some savings to call upon for relief from financial stress.  But, but, but ... millions of American citizens (through no fault of their own) have no savings except their house, and maybe a small life insurance policy if that, and are living month to month, this month paying one bill by withholding payment on another bill till next month, etc. etc.
  And without an income from a job, there’s no money even to do that. It irks me that these articles on the plight of “Americans” invariably overlook huge numbers of people who are much more in need of debt relief.  What’s wrong with debt relief, anyway?  Most people who have more than they need could give some portion of their extra to help those in great pain and write it off as “do unto others….”.

So the Chicago Federal Reserve President isn’t privy to direct statistics on credit card use, or is that just his manner of speaking?