The headline above describes how I feel about the glimmers of “evidence” being put forth by some economists and commentators that the Great Recession is starting to wind down and could be history by year-end.
All these signs that are noted as signs of hope are on the macroeconomic level, however. And while, literally, it may be true that two consecutive quarters of GDP growth mean we’re out of the recessionary woods, in this case the macro signals mean squat.
Flash to the ivory tower: The recession is very much alive at the micro level.
It just goes to show that you can use statistics to prove anything you want.
This is also playing out in the great debate over healthcare reform where the same statistics are often used to reach opposite conclusions.
Thus, one faction will emphasize that 85% of the population is covered by health insurance and there is no need—pressing or otherwise–to change a system where so many are covered.
The other side will respond with the fact that 15% of the population is around 47 million people who aren’t covered and that this kind of situation is untenable in a country like ours.
The response to this–and believe me I know because any time I mention the 47 million I get the same response—is that of course there are not 47 million people uninsured and that once you take out the illegal immigrants, the young people who can’t afford health insurance, the rich people who won’t buy health insurance and other assorted groups, you are left with around 2 or 3 million who are really uninsured.
(I didn’t really intend to get into the healthcare reform quagmire in this piece, but there’s no avoiding it, it seems.)
In any case, one set of statistics that doesn’t lie came out from LIMRA International the other day and had to do with individual life sales in the first six months of this year. They would seem to provide pretty strong proof that the recession still has quite a way to go.
The headline of LIMRA’s release read in part: “Steepest Six Month Drop in Individual Life Insurance Sales in Almost 70 Years…”
Yes, Virginia, that means since 1942.
Individual life annualized premiums were down 23% in the six months, with some product lines down considerably more than that. You don’t have to be Sherlock Holmes to come to the conclusion that variable life and variable universal life are down the most, some 72% and 55%, respectively, for the six months.
Other product lines, while not so depressingly bad were still off year to date.
The rest of LIMRA’s release headline read: “…But Results Improve Slightly from First Quarter.” The evidence for this is that the falloff in the second quarter was less than in the first.
What the figures show me, however, is that there is still too much pain and suffering out there for one to conclude that the recession will be over soon.
It’s not only consumers who are suffering (and thereby holding off purchasing life insurance), but obviously companies are feeling the pain and agents are getting their share too. This pain has enormous ripples throughout our economy as vendors, media and other service providers feel the pinch.
I’d love to believe the glimmers of evidence economists see are more than fool’s gold, but those sparkles just don’t look real.

Hold on to your wallets, folks. 

The stock market has been on a winning streak and Wall Street is starting to feel its oats once again.  Yes, you guessed it, those same people who brought us the biggest mess since the Depression because they convinced us that markets could defy gravity are again banging the drum with the message that the seeds of a recovery are starting to bloom.

Really? 

At this point the level of skepticism about anything Wall Street says should be so high that any positive remark sets off Geiger-counter-like beeping. Wall Streeters made tons of money after all by getting the maximum number of suckers to buy into the deals and bargains and can’t-lose situations they created, many times out of bubble soap.

They’re paid to highlight the seams of gold among the dross, no matter how much dross there is.   Need I tell you that dross is everywhere and any gold to be found is fool’s gold?

And when things go bust, well, that’s equities for you.  Seems there really was some risk involved after all.

As for the recovery, I know it doesn’t serve their purpose, but I suggest anyway that these financial wizards leave their towers and see what’s happening on the ground.  Down here, the recovery isn’t around the corner.  It hasn’t even gotten into town.

Agents and insurance companies know it; retailers know it; newspapers and magazines know it; manufacturers of goods and services of every stripe know it.  Things are terrible.  And if they’re not getting worse, they’re hardly getting better.  People all over are scared for their jobs and until that fear is allayed and the job market starts to come back, nothing much is going to change.  Here on the ground.  

There’s a good reason for the old adage “once bitten, twice shy.”  The collective ouch that our finances have experienced as a result of getting bitten should give us pause about getting close to this particular dog again.  Even if the dog is wagging its tail.

Caveat emptor.