We are in a recession. Did you know it? The news says we are in a recovery but then they tell us it is a jobless recovery. What does that mean anyway? Unemployment is high, housing is in a tailspin, and the rest of the economy is treading water. At least that is what we are thinking. But is it real? What is really going on?
When I think about unemployment I normally do not look at the government numbers as much as the subjective viewpoint of urban and rural activity. When I do into a city the unemployed seem to be much less than if I go into rural communities. This must be because even minimum wage service jobs are needed in urban areas to service those in the higher economic strata. It would appear to me that unemployment in rural areas is over thirty maybe even forty percent while the urban areas are much lower than ten.
I attribute this to the high concentration of service jobs in the cities while the rural areas have a large concentration of construction related workers. It would appear that the housing crisis is the major driver of the rural unemployed. Even the construction worker for city infill development normally commutes to work and lives in these rural areas. This is a precursor to what could be a major demographic change as jobs are concentrated in the Cities and the rural worker is left behind.
I began this analysis shortly after reviewing the financials of two popular stocks. One such was a major retailer and the other was a technology manufacturing company. The retailer was showing a continued profit through this recession, all the while selling non necessary consumer electronics. This was BBY Stock BBY being the symbol for the giant big box retailer Best Buy..
My analysis showed that Best Buy was profiting greatly from urban areas and there high employment and disposable income. Whereas the rural areas are slowly becoming 21st century dust bowls. This is also because in normal unemployment times a worker seeks a job not in their normal trade. For example a repair person may become a sales person. But for the rural construction worker those substitution jobs are not available. The rural worker cannot go to the nearest shopping center and find a service job. They would have to move into the City.
After analyzing the second stock BRCM which is the ticker for Broadcom. Broadcom’s numbers once again showed that a company that has its core business revolving around the delivery of products and
To summarize it appears that the old saying “it’s only a recession if you are not working” is more true today than ever before. In urban centers there is high employment and high consumer spending as if nothing has changed. Yes, there is an underlying drag on the economy from housing but this is mitigated by the continued income of the working population. These people are spending as normal and leaving the housing problems to correct themselves. The compound effect of the construction industry collapse has decimated rural communities but left the urban centers unscathed hence the solidity of consumer stocks such as Best Buy and Broadcom.
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