So, now we know.
The US economy isn’t doing very well. You already knew that in your gut — and now Washington’s statistical apparatus is finally confirming it.
The fact is, the economy hasn’t been healthy since around 2007. Since then, it’s been growing at only about 2 percent a year — and that’s if you believe Washington’s numbers. And you shouldn’t.
That’s a burp and hiccup away from recession levels. And 2 percent isn’t enough to create the number and kind of jobs that will make Americans happy with the people running this country.
Donald Trump and all his crazy ideas wouldn’t be finding support if we had economic growth of a more normal 4 percent and oodles of jobs.
The latest bad news came last Friday when the Labor Department announced that only 142,000 jobs were created in September. That was below Wall Street expectations and not even enough to absorb all the people looking to enter the workforce for the first time — much less bring laid-off workers back into the fold.
To make matters worse, the August and July job-growth numbers were revised lower — by a total of 83,000 jobs.
And in case you missed it — probably because I’m the only one who reported this — Labor in August also removed 208,000 phantom jobs from its count in a benchmark revision. That revision was for the March 2014 to March 2015 year.
Phantom jobs are positions the government thinks are being created but can’t prove are being created — and in this case, after a year, it became clear weren’t created.
That’s the way things work in Washington. An entire month’s worth of jobs just went poof!
Last week, we also got news from the Atlanta Federal Reserve Bank that the economy in the third quarter of 2015 probably grew at only a 0.9 percent annual rate — half as fast as the miserable expansion that is already causing discontent.
OK, now that I’ve taken you on an unpleasant trip down a very bumpy memory lane, let me offer my solution once again. Robert Samuelson, the famed economist, recently wrote in his column that America needed bright ideas.
After eight years of Washington and Wall Street pretending that the economic situation was getting better, maybe someone is now willing to listen to my new, creative solution.
It’s simple: Change the rules on how private retirement funds like individual retirement accounts, 401(k)s and the like can be used. Right now those accounts are so restricted that only the stock and bond markets benefit from their massive size.
Wall Street likes it this way, but it isn’t good for America.
If — at the very least — people were permitted to withdraw some of their retirement funds to invest in real estate, the US economy would get the boost that Congress and the Fed can’t give it.
In fact, this year marks the 11th anniversary since an economist named Walter J. Williams and I came up with this idea. Unless we enjoy the current dismal state of the economy, maybe someone in Washington should give me a call so we can discuss this.
Some readers argued with me after I wrote a column last week about states making it easier to confiscate people’s “abandoned” assets.
As I mentioned then, this warning came from the Investment Company Institute (ICI) — so don’t argue with me.
Just to reinforce the points I made in that column, and to shut everyone up, I asked Tami Salmon, ICI associate general counsel, to say a few additional words on this subject.
Here’s Salmon:
“For decades, states have had laws that enable them to take possession of financial accounts — such as mutual fund accounts, retirement accounts or education savings accounts — when the owner has become lost to the financial institution.
With recent budget shortfalls, however, states have begun to realize how much money they were making as a result of these practices, and many amended their laws to make it easier to claim this property.
Today, states will deem property abandoned if the owner does not contact the financial institution on a regular basis — three to five years, in many cases.
If the states were as aggressive in searching for lost owners and returning property to them, perhaps these laws could be viewed as serving a public purpose. This is not the case.
Most states do not actively search for owners of property, but instead, they wait for the owners to find them and claim the property, all while using the proceeds of the property and the interest on the proceeds for state purposes.
Even when owners succeed in reclaiming their accounts, they have likely been harmed through this process, because they only receive the value of the account as of the day the state liquidated it.
The state has not just cut off any of the growth that should have benefited the owner; with some accounts, liquidating the account imposes tax liabilities on the owner for prematurely withdrawing tax-advantaged funds. Though we would prefer to see the state laws rewritten to put the rights of owners ahead of the interest of the states in the property, this is not likely to occur.
It is up to investors to take the steps to protect themselves and to avoid becoming a victim of these practices.”
So, argue with me if you’d like and ignore Salmon if you trust your financial institutions. But I think it would be foolish to do either.