Wall Street was yet again impressed with a jobs report (in October), reflecting a strengthening economy. Now we should see resulting Fed action to raise interest rates from their “emergency levels” – right? No and it’s a continuation of a long-standing pattern.
Well, at some point rates will rise. Maybe December 2015, maybe later. And I can’t imagine the reaction on Wall Street and Main Street will be favorable.
Despite market returns (the October Dow was up nearly 8.5% and remained barely positive in November), the Wall Street/Main Street disconnect is as strong as ever – and getting worse.
Consider these facts:
30 million Americans withdrew from retirement accounts early
Because they needed cash, several Americans withdrew funds from their retirement accounts before age 59-and-a-half, incurring taxes and penalties. Another 21% of savers borrowed against their nest eggs.
Working age adults still live with their parents
Young people are getting married later and also cite student loans and stagnant wages as reasons they don’t leave. While unemployment for them is down, most new jobs are service jobs that don’t pay well.
Foreclosures are rampant
October 2015 foreclosure notifications jumped 12% from the previous month. Repossessions were up 31%, indicating that people are having serious trouble staying in their homes.
These are all strong, clear signs of an ailing populous. The disconnect between investors and typical Americans is too strong and large to ignore any longer.
In that light, how will higher interest rates affect everyday people? My guess is not so well.