American Morning

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October 5th, 2009
10:01 AM ET

Romans: Caution ahead

The Dow has lost almost 300 points in two weeks, after a monster rally all spring and summer. Now what?

Caution ahead. The jobless rate will remain uncomfortably high. Regional banks are failing. The big banks are reeling in credit. Businesses are coping with a new normal that means less credit for them to expand and hire. What should you be doing right now?

If you have your job: keep investing in your 401 (k), especially if you have a company match. Keep investing in the 529 for college. Concentrate on your job and doing well there. If you don’t have a job, expect an extension of unemployment benefits and remember that so many people are out of work, the stigma is vanishing. In short, we are living in historic times and the only thing certain is uncertainty.

Alan Greenspan, the former fed chief who presided over a historic period of stock market prosperity, says “we are in a recovery.” On ABC’s This Week, he said this quarter the economy could well grow 3 percent. That is a dramatic improvement from two years of treacherous recession. But the jobless rate will surpass 10 percent and could linger there before finally coming back down. His great concern is the 5.4 million Americans out of work for longer than 6 months. He worries the broader economy will suffer with so much idle talent.

The longer people are out of work, they can lose their skills or not keep up with new skills on the job. “What makes an economy great is a combination of the capital assets of the economy and the people who run it,” Greenspan said. ”And if you erode the human skills that are involved there, there is a real and in one sense an irretrievable loss.” For months we have been focused on the kitchen table tragedies of job loss. But the Maestro gives us something new and potentially troubling to think about.

Filed under: Business • Economy
soundoff (3 Responses)
  1. T45

    When are we going to get these banks straight? Sometimes we get so stressed out with everyday life until something will slip by. In my case, balancing the checkbook. These banks charge there ridiculous overdraft fees and expect you to still do business with them! Wachovia is the worst of all of them! And we had to bail these fools out! What a slap in the american people's face!

    October 6, 2009 at 8:15 am |
  2. Cathy

    After being laid-off for 8 months, I took a contract job paying 43% of my previous base pay before I was laid-off; I took the job to keep busy, I was getting tired of entertaining myself and to be with people. So, I'm off the unemployment books, I'm not a number anymore, but the pay is lousy. It really is an insult and I'm sure there are several other people like me – taking a job just to take a job. I'm luckier than most, I was able to draw my SS early, so I am able to make ends meet even with the lousy pay I am making. BUT, the people I'm working with are nice, I'm using my brain again, and it gets me out of the house everyday!!!!

    October 6, 2009 at 5:58 am |
  3. Kelly Chang

    If you pay attention, every time our president goes on tv with another of his celebrity news conferneces, the DOW drops significantly. Maybe he should get a clue about that, we don;t trust him, he has no clue what he's doing and all he does is throw money at things that can't be saved. Oh yeah and vacationing with friends in Denmark when we could have used that money better, say hire 5 people for the money wasted on that trip and pay them for 4 years?

    October 5, 2009 at 3:05 pm |