Scary unemployment numbers

I got this from John Mauldin’s April 5th newsletter.  I’ve been catching up on my reading from when I was out of town.

“More Fun in the Unemployment Numbers

Payrolls tumbled by 80,000 today, more than forecast and the third monthly decline, the Labor Department said today in Washington. The unemployment rate rose to 5.1%, the highest level since September 2005, from 4.8%. The household survey shows the number of unemployed people rose by 438,000. (That is not a typo!) In March, the number of persons unemployed because they lost jobs increased by 300,000 to 4.2 million. Over the past 12 months, the number of unemployed job losers has increased by 914,000.And of course, when you look into the numbers it is worse than the headlines implies.”

I found these numbers to be terrifying.  Soon they won’t just be numbers, they will be, (if they aren’t already) the faces and lives of relatives, neighbours, co-workers and friends.  4.2 million people out of work due to job loss.  Heartbreaking.  And to lose a job at time when credit is increasingly hard to get.  What are these people going to do?

And job losses begets more job losses.  So please everybody, try to cut back on spending, tuck whatever money you can possibly spare away for a rainy day.  Because if it isn’t raining in your neighbourhood yet, it doesn’t mean that the dark storm clouds aren’t lurking just beyond the horizon and a torrential downpour could be in your future.

And if it doesn’t happen?  If you are one of the lucky ones, what harm has been done?  You’ve saved some extra money that you can then tuck away into your IRA or your RRSP for when you retire.  A win-win situation.  Not to mention you’ll be able to sleep a lot better knowing that you and your family have a safety cushion in place.

But I guess it’s how you look at it.  I said to Don as we were driving through town, “Guess how high the U.S. unemployment numbers are?  Keep in mind these are not the long term unemployed who after a certain point no longer show up in the figures.  These are the ones the government cops to.  Guess.  It’s really shocking.”

“Um...10 million?” he said.

”10 million? No, god Don!  4.2.”

“Well,” he replied.  “I guess that isn’t too bad considering there are around 250 million people living in the States.”

“Not bad unless you’re one of the ones who have lost your job.  Or if you happen to be African American.  Then the unemployment rate soars to over 9%.” Which really, really seems wrong.  And all those loan officers who sold all those loans to minorities and such shockingly inflated rates over what they offered white people, SHAME ON YOU! Truly it made me feel sick to my stomach when I read the numbers.

I was reading Postcards from Cape Town and he has bits and pieces from different financial wizards points of view, often totally opposing.  I find it very informative.  Anyway, he had the cover of the English newspaper, The Independent, and it’s front page article was about how 28 million Americans are now relying on Food Stamps just to survive.  And there was something about seeing those numbers in print, seeing the long line of people lined up, defeat in their posture, their shoulders, the way they held their heads, that made my heart hurt so much.  I know that hopeless, hungry feeling. 

And then I can’t help it, I’m in a pretty safe situation right now, but still, I get scared that that one day it could be me again.  Not knowing where my next meal will come from.  That’s why I’m so careful and conservative with my investments.  That’s why, if I can’t pay for it in cash, upfront, I don’t buy it.  No debt.  Very important for me.  Very.

Posted by Meg Tilly on Tuesday, April 08, 2008 in Chewing the Fat

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