Nearly 200 companies have announced either special dividends or accelerated dividends – moving dividends that would have been paid in 2013 to 2012 so far in the fourth quarter. The threat of higher tax rates on dividends (as well as on capital gains and ordinary income) is scaring the hell out of consumers and business owners/management. Consumer sentiment, as measured by Reuters, plunged to 74.5 in early December, the lowest level since August. This reading was far below November’s figure of 82.7 and the median forecast of 82.4. Consumers are worried that higher taxes could not only reduce their available cash, but could threaten their jobs and the overall economy. As a result, we can be sure that holiday spending will be weak. Most retailers depend on the holiday season to eek-out a profit for the year. Without a solid holiday season, many will loss money. This will result in more lost jobs and less hiring.
Today’s employment number, which seemed to show good growth in jobs – 146,000 new jobs added, and an improvement in the unemployment rate from 7.9% to 7.7%, is unreliable and just plain worthless. In November, the same time–period for this jobs report, companies announced an additional 57,000 planned lay-offs. Jobs are being lost, not added. Who is hiring right now? No one. Due to the fiscal cliff and the threat to the U.S. economy of higher taxes on the wealthy and lower spending, along with the debt ceiling limit, which we will reach this month, companies are far too afraid to hire. The data is either seriously flawed, or purposefully manipulated. One explanation could be the people falling off the unemployment rolls, because they have exhausted their unemployment benefits – after 6 months, benefits run out. Since those people are no longer receiving unemployment benefits, they are assumed (incorrectly) to no longer be unemployed. The reality is almost always the opposite – they are still unemployed, but are no longer counted. This has the affect of skewing the official count to make it look better, significantly better, than it really is.
Wealthy people don’t have to build companies…they don’t have to hire people… they don’t have to invest. They don’t have to do anything. They are wealthy! They can go sit on a beach and enjoy life, regardless of what happens to the economy. The redistribution of wealth is not democratic and will not work. There will be serious consequences that the Obama administration clearly has not considered. Either they are just that ignorant, or they are idiots. Either way, if they proceed with this course of action, we are going to do serious damage to the economy that will take many years to correct, and we will all suffer as a result, that is all of the rest of us besides the wealth, who have enough money to still live good.