Boots on the Ground Economics:  Observing Change

If you follow the news, you’re going to hear that the jobs data shows a solid performance and that with the stock market at post-2008 highs, the economy has turned the corner and we’re on the mend.  But you look around or listen to others and the sense is that what’s reported doesn’t jibe with the reports.  Can you trust the news or is there a discrepancy?  How do you check what CNBC and Fox Business are throwing out?  You have two options.  The first is to go to the source material for the news reports themselves and the second is to simply pay attention to the small indicators around you.

There’s an increasing distrust of the main-stream media, and that’s especially if you get your economic news from cable sources such as Fox Business or CNBC.  The beauty of the internet is such that you can review the sources for these stories and we’ll take a gander at the US Bureau of Labor Statistics news release that provided the source for the HuffingtonPost.com article.  In the press release, the private payroll job rise actually came to 233,000 jobs instead of the 277,000 jobs overall that the HuffPo article referenced.  Of these 233,000:

  • 45000 were in the temporary employment sector (19%);
  • 41000 were in the food service sector (18%);
  • 61000 were in the health sector (26%).

More than a third of these job-finders are working for minimum wage/tips or no benefits while a full quarter of the job recipients are in a sector that’s heavily dependent upon government spending.  With the government spending a deficit greater than $1 T annually and attention sure to be paid to the Medicare/Medicaid budget segments – anybody notice the television commercials announcing the campaign against Medicare fraud – is there doubt that these programs will undergo significant reform in the future?  When this happens, the healthcare sector will be rocked and that sector will go flat at best.

If you sense that people are continuing to cut back or feeling the pinch, this macro-level view helps explain why that’s the case.  The jobs are there, but they aren’t the jobs that our grandparents, or even our parents, had and there’s no advancement future in a temporary position.

The other way to check out what’s going on is to simply pay attention to what’s going on around you.  A look at the state of youth sport programs in my area is a clear indicator of our situation.  Eldest has played soccer since elementary school and has participated in the area’s rec soccer league; she’s good enough that she’ll actually play Division III women’s soccer when she attends college in the fall.  Through all of that time, there have been teams at age levels from pre-K to U-19 and three years ago, the local rec league participation was strong enough that the U-19 (females between 15 and 19) level fielded three teams.  Two years ago, that division could field two teams of about 14 players apiece but with other activities and part-time jobs, there were games in which Eldest and her teammates played Ironman soccer, down a player for the entire game with no substitutions.  When Spring sign-up arrived again, I contacted the league and found that the U-19 division was defunct because there weren’t enough to field even one team.  There’s is cyclicality in any activity and I chalked the situation up to that.  In the meantime, Eldest asked to play for a nearby area’s soccer club in order to keep her skills up and she signed up for that team instead.

When no notice that any first practice was forthcoming, I spoke with that club’s president – who was also going to be coaching Eldest’s team as well – about the status.  After getting the details, we chatted and I discovered that his club, which historically fielded three or four teams at that level, was now down to one team of 19 girls.  This is actually more than you want for one well-stocked team but there weren’t enough for two teams and the decision was to turn no girl away.  Not only were these two clubs, that used to field five or six well-manned teams, down to only one team, but several of the 19 girls on the squad were like Eldest, soccer refugees from localities that could no longer field teams.  What was once an eight or nine team county league was now down to five and this couldn’t be explained by the cyclicality of a single club’s program.  It’s possible that the decline is due to families opting not to pay for soccer for the older kid because of stretched incomes, but not definitive. 

From my perspective, it wasn’t definitive until I had a conversation this weekend with Youngest’s baseball coach.  As we watched the boys throw and do warm-ups in the pouring rain, we discussed players and he commented that there were more boys moved up to this level than in any previous year.  I mentally ran through the teams and there are as many teams in this level as in previous years, but why were they moving the boys up instead of leaving them at the lower level?  It’s possible that the younger crop of boys simply has better skills than in previous seasons and that would account for the shift upwards.  But given the other conversation with the soccer club president, I suspect that it’s something different and related to money.

There’s a natural winnowing process in sports, in which most children get to try something new.  This is how the kids learn what they like or dislike and it helps teach some basic people skills apart from kicking a ball with the instep or loading up before you swing the bat and parents don’t begrudge the opportunity for their kid to have that opportunity.  But kids develop preferences as they grow and this contributes to that process; kids also understand more and aren’t stupid to what’s happening with their family.  I believe that the increasing stretch of the family budget is increasing the pinch and parents who, two decades before, might have permitted further exploration are now deciding that the kids are old enough to understand and cutting back accordingly.  This is exacerbated by gasoline prices at almost $4/gallon and the cost of driving to playing fields all over Hell and half of Georgia.  Am I positive that this is the case or am I viewing everything through money-colored lenses?  It’s impossible to say for certain, but I’ll keep these two Main Street datapoints in the back of my mind as I continue to watch what’s going on.  The point of the exercise is to see whether what’s happening on Main Street jibes with what Wall Street – and by extension, the government – says and at what point they diverge.

 

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