This year, the only standout name for the Dow Jones Industrial Average is Wal-Mart (WMT), which was one of the biggest losers in 2015.  A part of the retail giant’s problems is its slow move into online sales and other signs of complacency, which management finally, if not painfully, addressed.  Other retail names joining Wal-Mart this year include Macy’s (M) (activists), Express (EXPR) (positive comments from management), Lululemon (LULU) (strong holiday sales), and Burlington Coat Factory (BURL) (a better-than-expected sales update).

Can the American consumer come to the rescue when wages aren’t budging, and our collective savings is $700 billion, down from $1.2 billion, 4Q of 2012?

Confidence Check

Public confidence in the integrity of the Government is indispensable to faith in democracy; and when we lose faith in the system, we have lost faith in everything we fight and spend for.

-Adlai E. Stevenson

If something someone has said or written rings true, their stance on other issues are irrelevant; in the case of the above quote, Mr. Stevenson is spot-on.  Americans need the right nod from leadership to push the nation into the right direction of risk-taking, investment, and action based on confidence in the future.

Therein is the classic pickle that’s haunting the economy right now with the lack of confidence.  Last January’s economic conditions and outlook took a sharp and a somewhat surprising dip.  The slide lasted well into September, where it’s been bobbing in a narrow range since.  Current conditions are negative, but the outlook is very pessimistic.

I Ain’t Working Here No More

The only solutions are better jobs and higher wages; to that point, maybe it’s the beginning.  On that note, there is a good sign.  Finally, Americans are telling their bosses to shove it…the job, that is - 2.8 million Americans quit their jobs in November, which is the highest in almost seven years.  This is supposed to be a great harbinger of higher wages.

2,800,000

Quit Job November 2015

We continue to take it one day at a time, and to sharpen our list of stocks that we want to own, even more after this downdraft.

Real State of the Union

Anyone claiming that America’s economy is in decline is peddling fiction. What is true — and the reason that a lot of Americans feel anxious — is that the economy has been changing in profound ways, changes that started long before the Great Recession hit and haven’t let up. 

President Barack Obama

SOTU

Last night President Obama attempted to take a victory lap and yet warn about dire economic circumstances for many Americans.  The antithesis of his points of view was laced throughout the speech, where only a few people are doing well, but the economy is rocking.  The notion the economy has changed in profound ways is spot on, but the reasons for these changes can be traced back to the White House.

The war on success has taken a massive toll that will linger for years unless the message is altered to morning in America for everyone willing to lace up their boots not look for jobs that conform to their leisure time schedule.  I suspect President Obama was alluding to the knowledge economy of the next 100 years that will be dominated by Asian countries.

The problem is watered down curriculums and complaints that excuse academic excellence have been a hallmark of this administration.   Of course Americans feel anxious, but it’s because they haven’t been made to feel confident.

Peddling Fiction

President Obama played fast and loose with numbers last night to put a smiling face on an economy that's clearly under duress and clearly not living up to its potential.  I agree with this statement:

"The United States of America is the most powerful nation on earth, Period. It's not even close."

That statement should, however, been followed by: "But, our preeminence is being challenged from within and without as my policies to level the playing field and redress the wrongs of yesteryear have gut the heart and soul of the nation, retarding the very things that lifted us to the most amazing nation to ever grace the face of the earth.  Mr. President America's economy is in decline and its ability to right the ship becoming more difficult as debt and doubt coupled with deleterious taxes and dubious regulations keep growth anchored.

• Wages are lower
• Millions have fled the workforce
• Home values aren't all the way back for everyone
• Manufacturing jobs are still not at level Jan 2009
• Home ownership, Marriage, Birth Rates and Business Start Ups at Record lows
• 93% of US Counties not fully recovered from recession

We should look at employment-pop ratio for a real pulse on the jobs picture as it takes into account growing population.

On that note, the employment boom, which began under Ronald Reagan and peaked with George Bush, is in deep trouble.

Ronald Reagan inherited an economy in rapid decline with an employment to population ratio in rapid retreat.   He turned it around big time without gimmicks and with a fair amount of initial pain.

• Jan 1981 59.1
• Jan 1989 62.9

The ratio peaked under George Bush at 64.7.  If that was the ratio today, there would be 163,000,000 employed Americans instead of 149.9 million.

President Obama hasn’t been able to move the needle.

• Jan 2009 60.9
• Dec 2015 59.5

Additional examples fiction:

 

 

 

Today’s Session

Oil is down 2%, for now.  And as such, all the markets are poised to open in the green.

Comments

As always, EXCELLENT piece. I suggest showing one more chart to add to the fire of illumination. The velocity of either M1 or M2 showing the collapse of Money Velocity would truly show the destruction caused by Obama and the Democrats confiscatory tax and choking regulatory policies. It is currently lower than it has ever been since they started recording it and still falling! It is interesting to note since you mentioned Reagan, that under his changes we added 1.7 million jobs in one month with 30 million less people working than today after his tax cuts and policies kicked in! Wow!!!!! Ray Weldon on 1/13/2016 11:36:10 AM

I heard that the Baltic Dry Index is at record lows indicating lack of international trade. Is it bogus info? Jon Lewis on 1/13/2016 11:57:13 AM

After last nights State of the Union address, I know longer believe the president has an agenda. I do believe he should be tested by a non-political team of Behavioral Scientists [probably from another country] including competent psychologists and psychiatrists; and that team should follow and treat him until the his term expires...for the sake of our country. FMT on 1/13/2016 12:14:53 PM

Not the type of charts that I want to see as I look at impending retirement....... Jim Hubbard on 1/13/2016 1:16:51 PM

GREAT piece Charles? Can I share the link with non-member friends? I'd love to post it on FB too. Let me know if that's OK. Thanks, from a long-time friend Mike H on 1/13/2016 1:38:07 PM

I could not agree with you more. At this point in time I cannot believe anything this government tells me, the president is running the show and this government is not helping our economy at all. It will take many years for our country to come back from the ruin he has brought to the American people. Audrey T. Gallagher on 1/13/2016 3:10:25 PM

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