Black Coffee: Unicorns, Rainbows and the Improving Economy

It’s time to sit back, relax and enjoy a little joe …

Let’s get right to it this week …

Credits and Debits

Credit: Don’t look now, but the US dollar index is currently on its longest winning streak ever — 12 weeks and counting. In fact, the latest upswing has some people in the mainstream media hailing the return of “King Dollar.”

Debit: Then again, dollar strength is relative. Compared to other currencies, the dollar is nothing more than the best-looking horse at the glue factory. After all, the US owes more than $200 trillion in unfunded liabilities. In reality, the emperor has no clothes.

Credit: Even so, the rising dollar means Americans are paying lower prices for imported goods — which is good since the US seems to produce very little at home anymore. On the flip-side, folks who use other currencies are paying more for greenback-priced commodities.

Credit: Meanwhile, some people are celebrating the latest data out of Washington that shows 248,000 new jobs were created last month, as well as upward revisions for July and August of 69,000 more.

Credit: With all of those new jobs, the official US unemployment rate fell to 5.9%; that’s the lowest it has been in six years. Too bad the government’s unemployment rate statistic is part of the “smoke and mirrors” that mask the true state of the American economy.

Debit: Those who are willing to look behind the curtain will see that 80% of the new jobs created in the US last month paid low- or minimum-wages. It’s impossible to build a sustainable growing economy with those.

Debit: By the way, last month the average month-over-month hourly wage actually dropped; it fell a penny to $24.53. For the year, US wages are up just 2% — so even though there is a strong demand for workers, it’s not translating to higher wages. Yes, more magic.

Credit: Economist Joel Naroff suggested to USA Today that, “The only way we’re going to get stronger economic growth is if people have money to spend.” Close, Joel; but no cigar. Strong economic growth depends upon the steady creation of quality high-paying jobs.

Debit: Unfortunately, there has been a big decline in the number of quality high-paying jobs in the US for a long time now — especially in manufacturing. Today they’re being increasingly replaced by minimum-wage and gratuity-based service sector positions.

Debit: From NPR: “As a portion of the US economy, manufacturing has shriveled. In 1952, manufacturing made up nearly 28% of the economy. Now, it’s about 12%. And the U.S. manufacturing position in the world has shifted dramatically. The U.S. share of global manufacturing has dropped from about 30% in the early 1980s to just about 17% today.”

Debit: Frankly, now that the US — and the rest of the world — finds itself deep inside the central bankers’ Keynesian rabbit hole, nothing makes sense anymore. One example: With unemployment under 6%, why are 20% of American households still on food stamps?

Debit: Perhaps those food stamp figures might have something to do with the labor participation rate, which slid to a 36-year low last month after 315,000 more Americans dropped out of the labor force. Yep — the economy is so “healthy” that 96 million Americans aren’t working; that’s an all-time record.

Credit: What’s that? You say the labor participation rate is falling because all of the Baby Boomers are retiring? Not true. In fact, as Zero Hedge points out, 92% of those 248,000 new jobs last month went to people older than 55. Try again.

Debit: I’ll let Zero Hedge sum things up: “What about the prime worker demographic, those aged 25-54, whose work output is supposed to propel the US economy forward? They lost 10,000 jobs.” So much for the “improving” employment picture, huh?

By the Numbers

America, we have a problem:

49 Percentage of American households that currently receive direct monetary benefits from the government.

$2 trillion Amount of total government benefits Americans received in 2013.

42 Number of American workers for every Social Security recipient in 1945.

1.6 Number of private sector workers for every Social Security recipient today.

$12 billion In 1967, amount that the government estimated Medicare would cost in 1990.

$110 billion Amount the US actually spent on Medicare in 1990.

$600 billion Amount the US spent on Medicare in 2013.

$256 billion Amount the government estimates Obamacare will cost taxpayers in 2023.

$1.1 trillion Projected amount the US will actually spend on Obamacare in 2023 alone, assuming the government’s estimate is as accurate as the one it made for Medicare in 1967.

Sources: Silver Doctors; Weekly Standard

The Question of the Week

[poll id="28"]

Last Week’s Poll Results

How much do you typically tip your restaurant server for good service?

• More than 20% (47%)
• 16% – 19% (26%)
• 11% – 15% (26%)
• 10% or less (1%)

More than 200 Len Penzo dot Com readers weighed in for this week’s survey — and almost half of them tip 20% or more for good service. That’s my standard for excellent service. I use 18% as my benchmark for good service, 15% for average and 10% for poor. And before you servers out there start sending me hate mail, at least I’m not among the 1% of survey respondents who believe a 10% gratuity (or even less) is appropriate when you do a good job.

Other Useless News

Programming note: Unlike most blogs, I’m always open for the weekend here at Len Penzo dot Com. There’s a fresh new article waiting for you every Saturday afternoon. At least there should be. If not, somebody call 9-1-1.

Hey! If you happen to enjoy what you’re reading — or not — please don’t forget to:

1. Click on that Like button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!

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And last, but not least…

3. Don’t forget to subscribe via email too! Thank you.

Top 25 Referrers for September

It’s the first weekend of the month, which means it’s time once again to thank the top 25 referring websites to Len Penzo dot Com.

1. Business Insider
2. The Globe and Mail
3. MSN
4. Kiplinger
5. DIY All Things
6. Money Talks News
7. Rockstar Finance
8. LifeHacker
9. Budgets Are Sexy
10. Ready for Zero
11. Art of Manliness
12. Wisebread
13. Deseret News
14. The Apartment Prepper
15. Real Cent
16. Modest Money
17. Don’t Quit Your Day Job
18. Afford Anything
19. Work to Not Work
20. Plutus Awards
21. Save Outside the Box
22. The Sweet Home
23. Stacking Benjamins
24. Money Crashers
25. Art of Being Cheap

Thank you to everyone who refers their readers to this little ol’ blog! It’s much appreciated.

Hey! Here’s Some Posts You Might Enjoy …

Wealth Gospel – How Adversity and Success are Joined at the Hip

Frugal Fringe – 10 Ways the Financially Independent Spend Less than You

Budgets Are Sexy – 7 Cheap and Clever Ways to Entertain Your Kids

My Money Design – What’s the Least Amount of Money You Need to Retire?

Escaping Dodge – 12 Tiny Habits that Can Lead to Incredible Wealth

Don’t Quit Your Day Job – For Your Money, Which House Should You Target in Silicon Valley?

Letters, I Get Letters

Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at: Len@LenPenzo.com

After reading my article suggesting that only suckers buy monitored home security systems, Alan, who works as a customer service rep for a home security company, wrote in to share this:

Security companies prey on people with paranoia.

Thanks, Alan. Something tells me that you don’t have plans on climbing the company ladder.

I’m Len Penzo and I approved this message.

Photo Credit: brendan-c