US economy still quite soft

LOS ANGELES – Roughly 25 million Americans cannot find full-time jobs, and employers cut back on hiring in May. The US Federal Reserve has announced it is definitely ending quantitative easing part 2 (QE2) a program to purchase $600 billion in Treasury securities as part of its three-year-old economic rescue campaign. It claims it will do nothing more, for now, to boost growth. That should prove disappointing to investors worried about the stamina of the economic recovery.

But just one tweet from Bill Gross of PIMCO, a respected money manager, that predicted QE3 would be revealed in August at Jackson Hole was enough to make the sluggish stock market jump in anticipation. The economy is probably too lackluster that folks don’t believe there won’t be another attempt to drive it up specially with a presidential election in the wings. There are talks of a double dip recession or worse, a Japanese style lost decade.

The Fed statement tried to put the economy’s best foot forward but had to admit things leave a lot to be desired. “The economic recovery is continuing at a moderate pace, though somewhat more slowly than the committee had expected,” the Fed said in a statement. “The committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline.”

There is no denying that “recent labor market indicators have been weaker than anticipated,” the Fed observed. But they blamed some recent factors they consider temporary like the impact of higher energy prices and the disruptions to manufacturing caused by the Japanese earthquake. The statement offered hope that the pace of growth would increase soon.

Some of my relatives and friends sure hope so. Over the past two weeks of reunions here in Los Angeles, I have been presented a mixed picture of the US economy’s health. A niece of my wife who manages a branch of Victoria’s Secret says business is better than ever. Even during the depths of the recession, the business of selling premium priced women’s undergarments had been good. Now, she says, it is fabulous enough to keep her and her sales staff on their feet all day.

Not everyone has Victoria’s secret to prosperity in a downturn. The soft economy has, according to the WSJ, commoditized even the legal profession. In a report last week, the WSJ described how a lawyer who invested over $100,000 in law school is now accepting short term contract assignments reviewing documents for as little as $33 an hour, after enduring seven months of unemployment. This is how, the WSJ reports, the post recession belt tightening is permanently altering some professions.

Right in my own household here, my daughter who is an elementary school teacher with state credentials obtained after rigorous training has yet to land a permanent teaching position. Her pupils and their parents love her as evidenced by the flowers and cards they give her. The school principals she has worked with are effusive in praising her work but their hands are tied by California’s budget constraints.

Many of her batch mates that trained at CalState University at Fullerton, among the first to obtain skills in teaching for the digital age, were caught in a hiring freeze due to California’s budget woes. And those who managed to get hired end up getting fired first as California continues to cut the education budget.

You would think that with international test results showing American pupils outside of the top 10 in scholastic tests they would pour money into education to catch up. But the financial situation of states like California is so dire that they are now cutting the number of teachers, combining classes to cram more students per classroom and cutting programs like pre-school and even sports, music and the arts. The Third World ambience makes it seem as if a new Filipino immigrant never left home.

 There are hopeful signs. The property market is showing signs of recovery but no one wants to say so for certain. I have heard many sob stories of foreclosed homes or homes simply abandoned because jobs were lost and mortgage payments prove too much to meet.

But a cousin of mine who migrated here in the early 90s managed to buy a nice big house about two hours away from Los Angeles at half the price the previous owner paid for it. Yes, the previous owner lost the house in a foreclosure. Rich Chinese buyers on special tours are also paying cold cash for some foreclosed properties beating locals who can only afford to buy through a 30 year mortgage.

The summer season may prove to be a good test of the economy’s resiliency. With the vacation season starting it seems Disneyland is packing them in again. The big summer crowd has yet to arrive but from what I saw at Downtown Disney, Mickey Mouse is even now being kept busy by families determined to enjoy a respite, recession or no recession. We had a half hour wait for a table in the restaurant we went to for lunch to celebrate my grandson’s 7th birthday.

I have done a bit of checking out the malls in Orange County and there seems to be more people shopping than the last time I was here a year and a half or so ago. But retailers are adjusting their business models. Most notable is the new grocery section in Target. Obviously, selling food is a survival tactic of the mid range chain that used to be heavy on clothes, electronics, appliances and toys.

WalMart, the only chain that didn’t seem to have been affected by the recession, is doing brisk business. I didn’t find the Made in China guayabera shirt I used to buy there in previous trips for $12 but I found a really nice Wrangler shirt for $10.

Since my five-year old Fossil watch died on me, I decided to support the Cebuanos who manufactured the $30 Timex watch I bought… my way of contributing to the sagging American economy as I support our export industries. The tag said the watch movement was made in the Philippines while the leather strap was made in China and sold in America by WalMart… a perfect example of a product produced and sold in this age of globalization.

A visit to an Oriental supermarket is highly recommended for our DTI Secretary. It shows how we are falling behind our neighbors on products we traditionally make at home… like patis and bagoong, now both produced by the Vietnamese and the Thais. The Thais are also selling canned buko juice and one wonders what high technology they have and we don’t that enables them to do that.

I don’t know if San Miguel sold its right to the Magnolia brand in ice cream because a local company is marketing it here at premium prices. Their versions of the macapuno and ube flavor ice cream are a travesty on the original. Both taste more like frozen coconut oil than macapuno or ube. It is destroying the Magnolia brand image because certainly, the Pinoys here know what macapuno and ube tastes are.

The nice thing in California is the ubiquitous turo turo type restaurants where busy Pinoys buy their dinner fare. That seems to be the more convenient and economically prudent way of surviving on a daily basis for harassed and budget conscious Pinoys.

That’s the other thing… the recession has made Pinoys more mindful of their budgets these days. That’s why I wonder if the so-called Balikbayan Promotion junket of DOT’s Bertie Lim is going to make any difference worth the hundreds of millions of pesos of our tax money that they will spend.

In the first place, Pinoys need no real convincing to go home for vacations. They always want to go home but the question is affordability, specially now that many have been retrenched or fear they will be retrenched. They want good budget fares from PAL. Yet, PAL fares are always at a premium, no doubt due to the convenience of a direct flight. And PAL flights are always fully booked, giving the airline no reason to have budget fares.

So I guess Bertie and his fellow junketeers will just have a five star vacation here in North America at our expense. Actually, they shouldn’t even include balikbayans in the tourist statistics. That is a given. They should really earn their keep by working on new markets.

Correction

 Regarding the campaign for foreign aid transparency, the website URL is www.makeaidtransparent.org and not .com.

Limerick

 Robin Tong sent this one.

 There once was a pervert named Weiner

Who had a sarcastic demeanor

Forced from the Hill

For acting like Bill

Now Congress is one wiener leaner

Boo Chanco’s e-mail address is bchanco@gmail.com. He is also on Twitter @boochanco