Maybe it is just me but I have this lingering feeling that we American's are about to experience a very long period of feeling poorer. WSJ journal articles from the past month tell the tale:
Despite the foreclosure wave, home prices in cities across the country are still at a historic levels of unafforability when looking at income versus home prices.
Banks have been slammed by real estate investments. Banks are failing and there is still a huge amount of uncertainty about how many bad investments (and losses) are still out there.
States are experiencing a major shortfall in revenues which is leading to cuts in services and jobs. High gas prices, fewer home sales, higher costs for education and healthcare are putting a hurt on local governments who will have to raise fees and taxes.
The federal governments plan to help homeowners is expected to at almost $1T to the federal deficit (assuming they did not under-estimated).
Energy and food prices are higher and rising. Oil prices are 2x what they were a year ago and gasoline is over $4. (Diesel has been around $5!)
The US$ is low, low, low and there are grumblings about moving vast oil investments from the Middle East into Euros.
While current investments are looking bad, a huge wave of baby boomers are getting ever closer to retiring yet many have little savings to live on.
People are dipping into their 401k at record levels to get money for living expenses.
On a personal level, Ive been shopping for a new computer monitor and for the first time I can ever remember, prices have been going up not down over the past few months.
This is more than a few data points and none of them are positive.
After Japan's stock and housing bubbles, they experienced 10 years of deflation and a stagnant economy as prices slowly corrected. Is that what we have to look forward to?
Everywhere I look, I see signs that the goods and services we are accustomed to are going to be more expensive and I see signs that people are going to have less disposable income than they used to. Taken together, the prognosis looks painful and long-term.
