Are these the “Happy Days?”

By Mac McPhail - Contributing columnist

Mac McPhail

“Happy Days Are Here Again.” You can probably hear some trader humming that song this month down on the floor of the New York Stock Exchange. And for good reason. The U.S. stock market has been at its all-time high during July. The Dow Jones Industrials, the S&P, and Nasdaq have all been at record highs during the month of July. Yes, it’s a good time to own stock. Things must be going great economically here in America.

Funny, because it sure doesn’t feel that way. The average actual wage for working Americans, minus inflation, have actually decreased since 2000. While the unemployment rate may appear low, it is not a true reflection of U.S. employment. Over 94 million Americans are no longer in the labor force, nearly 40% of the available workers. This is the highest percentage in nearly forty years. It may be by choice, like retirement. But the growth in the rate is primarily due to Americans being unable to find work and giving up looking.

There also appears to be a general feeling that while I may be doing economically okay today, I am unsure about my financial future. And I’m really concerned about those coming along after me. Surveys show that barely one in ten American adults believe that their children will be better off financially in the future than they are. And only 20% believe that their children will have a better quality of life than they have.

The American economy is a consumer driven economy. As long as we keep consuming, buying more stuff, the economy keeps humming along. And we are doing a good job of doing that. But how can that be, when we are not really earning as much as we used to? Or, there are not as many people working as in the past? How? By spending more than we, as individuals and the government, actually have. In other words, by going into debt.

We know about the U.S. government debt. It’s over 19 trillion dollars and has more than tripled in just the past 15 years. If the government had not manipulated interest rates in order to keep them low, the U.S. government debt would even be much higher. All that additional debt has pumped money into the U.S. economy, so that we can keep consuming.

What about us as individuals? After the 2008 Great Recession, Americans were more reluctant to go into more debt. Which lead to less consuming and our economy felt the effects. But time has passed, and debt is back in style.

Why buy a car or truck when you can lease a nicer one for the same price? It seems that there now are many more car commercials on TV promoting leasing, rather than buying. Why buy a Toyota when you can lease a Lexus and have the same payment? Why a Honda, when you can have an Acura? Why a Nissan, when you can have an Infiniti? You can rent that fancy car for three years and impress your neighbors. Of course, you will end up not owning anything.

I’ve noticed commercials on TV from Experian, the consumer and business credit reporting services corporation, promoting helping clients learn how to be good at credit. That being in debt is a skill you need to learn. And that the only reason you are having debt problems is that you haven’t learned the proper skills in handling it. And evidently that’s a skill that is needed to be learned early in adulthood. The average college graduate now owes $25,000 in back student loans when they graduate. That’s just debt from college. What about a car? Or a place to live?

There’s a big risk when your economy, like the U.S., is based on consumer spending. It will roll along as long as the consumer continues to spend. But if the consumer decides not to spend, or can’t get the money to spend, the economy will slow rapidly. Which will lead to a lack of consumer confidence, which will lead to even less spending. And from the surveys mentioned above, there is already a lack of confidence in our economic future.

Then, why is the stock market so high? Simply, because there is no better place to put your money and hope for some return. As I heard on CNBC, the stock market is still the cleanest dirty shirt in the drawer.

On October 29, 1929, the song, “Happy Days are Here Again,” was being recorded in New York City. Less than two miles away from the recording studio, the stock market was crashing on Wall Street, in what would become known as “Black Tuesday.” This was basically the beginning of the Great Depression. So maybe that stock trader today may need to change his tune.

Mac McPhail McPhail

By Mac McPhail

Contributing columnist

Mac McPhail, raised in Sampson County, lives in Clinton and can be reached at

Mac McPhail, raised in Sampson County, lives in Clinton and can be reached at

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