The James Dicks Blog

I guess it depends on how you look at it and who you are.  There is no doubt that many of the world’s working class feel like they have hit rock bottom – no job opportunities, continued likelihood of foreclosures, rising oil prices at the pump and a mailbox full of bills.  Then there are others, the influencers, who observe and control the global economy and hope that a bottom will soon be reached so that growth can begin and our situations just might get back to some kind of normal.

We have recently seen a number of economic reports that portray a slowing of the misery the economy has been passing along to all of us and that is a very good thing – if it’s true.  We now know that the past eight years of dramatic growth in our economy was caused by a credit bubble.  Easy credit, mainly from home equity, fueled a consumption boom which, in turn, also created a stock market boom.  The last eight years of growth, like the dot com bubble bust, was entirely make-believe.   Not until we return to 2001 values for both the housing and stock markets, will the global economy hit bottom and be able to begin a solid and believable recovery.  I personally think we’re almost there. 

Home prices in many areas of the country have lost very large percentages of their value leaving owners, in many cases, without a dime in equity but still consumers are starting to show some early signs of assurance, if even just a little.  For instance, the most recent University of Michigan consumer sentiment report showed that confidence increased to 69 from 68.7 in May.  The report said the slight growth in the confidence level was due to slowing job losses, new reports that showed housing and manufacturing stabilizing, and belief that the Obama administration’s fiscal stimulus just might help encourage consumer demand.

A “psychological” bottom will be seen when positive news begins to replace the negative news we grown accustomed to hearing every day.  We all need to hope and pray that this bottoming trend continues, barring anything in the news from changing the direction of the recent improvements in the global economic situation.  Remember what happened after the attacks of 9/11?  There’s plenty of “bad” stuff going on around the world today and let’s pray that mankind is smarter than that – but you and I know the distinct and disturbing answer to that question. 

Since economic numbers (whether from the government or corporate America) compare themselves to the same period in the year ago period, good news probably won’t start hitting the street until the end of this year; more than a year after the stock market collapse of September 2008.  And if the unemployment and weak home prices persist, that will more than likely keep us all apprehensive and it will become less probable that we will decide to get back out there and spend, at least for the rest of the year. 

Americans must start to center on the country’s economic growth rather than their personal situations or what we hear from the national media.  Once that happens we will all be more likely to pull out our wallets which will create some needed economic growth, well-being and, ultimately, global recovery. All we can do is hope the best and look for the bottom.  Remember, we’re all in this together.