Not feeling the recovery everyone is talking about? That’s because we’re currently seeing what economist calls a two-speed economy.
New data from the Federal Reserve shows the nation’s wealth is back to where it was before the Great Recession. It’s no secret that we had an enormous drop in net worth through the financial crisis and the real estate bust. Today, it’s back to where it was on a national level. But individually, some of us are doing very well while others are just struggling day to day.
Just take a look at McDonald’s. They’re a bellwether for younger men. They had been having a tough time month after month getting people to come into their stores and buy anything. Yet in the month of May, they had an increase in sales because they put a big emphasis on their dollar menu.
We’re also seeing a parallel thing happening at Walmart. They’re seeing sales early in the month, but by the last week of the month, people are out of money and sales drop.
So we have a two-speed economy. One segment is doing very well while another is not back on their feet yet from the recession.
The people who have money again have increased their spending. At the high income end, people are renovating, buying second homes, etc. That kind of spending will be a sustainer for the economy and will drive some economic growth moving forward.
The good news is there’s search on for workers in the energy industry and the automotive industry, just to name a few examples. Medical too remains a growth source because of an aging population.
One drag on the U.S. economy this year will be the decline in spending at the local government level. Many of us are happy to see a decline in this spending, but it does have short-term consequences.
Many things about the economy — even though they’re unbalanced — are positive moving forward. The most recent monthly data shows discouraged workers came out again to look for work. That is a positive sign for employment and for people’s wallets as we look down the road in 2013 and 2014.