The Latest Jobs Report Sure Did a Job on UsJames Cordelaine
image: Almost forgotten these days, American author, radio and vaudeville star, and wit Will Rogers had a keen eye for the foolishness that surrounds us.
The legendary American humorist Will Rogers once said, “I don’t make jokes. I just watch the government and report the facts.”
What could Oklahoma’s favorite son possibly make of the blandly reassuring accounts we’d been reading these last couple of years about the nation’s financial health? According to a September 2015 article in Business Insider, our economy’s been undergoing “a slow but steady recovery marked by moderate, consistent growth” since the Great Recession.
During those painful years, real GDP slid by four percent from nearly sixteen trillion dollars in the second quarter of 2008 to less than fourteen and a half trillion dollars in the second quarter of 2009. But by 2015 the economy had purportedly “rebounded” to an estimated $16.33 trillion. Figures for total construction spending, goods and services exports, real personal consumption expenditures, durable goods orders, average hourly wage growth, as well as many other employment metrics, were noticeably up from the depths of 2008-2009.
Furthermore, this year we’ve had tremendous “official” encouragement about the country’s employment picture. Since January, we’re told, the rate of unemployment has been five percent or lower. According to most reports, Fed Chair Janet Yellen and the Fed Board of Governors have been so elated about the economy they were planning another interest rate increase for July.
Now suddenly – whack! Friday, the Labor Department announced its abysmal jobs report for May. The U.S. created only thirty-eight thousand new jobs, less than a quarter of the hundred and sixty-two thousand Wall Street had anticipated.
This news on jobs now makes it difficult for the Fed to go ahead with its intended interest rate hike. As David Lafferty, chief market strategist at Natixis Global Asset Management understatedly observed, “I don’t think history would look very favorably on that.”
If the economy is going to continue to stagnate or creep ahead in fits and starts – and ugly reversals – it becomes an enormous challenge for individuals to invest for retirement. Our only option, therefore, is to think defensively at the same time we do our best to plan for the long term.
According to Robert J. Gordon in his portentously named book, The Rise and Fall of American Growth, “…Economic growth is not steady or continuous…. [It] is not a steady process that creates economic advance at a regular pace….” It seems silly, then, to keep checking the economy’s ups and downs from week to week or month to month in a search for the safe moment to invest in a particular stock, bond, CD, etc. We’re back to basics with a vengeance, particularly those of us who, now ten years closer to retirement, simply can’t afford to lose it all a second time.
But how do you continue to invest in such a hair-trigger world? You make sure you have some powder dry where no one can get to it, no foreign nation can torpedo it with a shock currency devaluation, and no financial crisis not of your making can take you down.
Regular readers won’t be surprised when I say putting physical gold in your IRA is a smart way to protect savings you can’t afford to lose. You can still purchase stocks and whatever other paper investments you deem appropriate, but when you do it in a gold IRA you can also hold actual, physical precious metals coins.
Then you don’t have to worry if you miss foreseeing the next slam to the economy. Gold will perform like a portfolio shock absorber, just as it did last Friday, when the Department of Labor issued that ugly jobs report. The dollar pulled back and stocks slumped, but gold rose thirty-seven dollars in one session.
Just imagine the peace of mind that comes with not having to check economic indicators from day to day. You’ll be able to take a month’s vacation and never have to check the internet or read a paper—and when you return, your gold will still be there – shiny, safe, extremely valuable, just exactly as you left it.