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1/11/13 – A Good Friday

Written by Brad McMillan, CFA®, CFP® | Jan 11, 2013 3:39:39 PM

There is not a lot in the way of breaking news today, which is a good thing, but I think two articles are worth a look. They illustrate that there really is a healing process under way and that, despite all of the kvetching (of which I am certainly guilty), we really are making progress.

The first relates to a point I have been making for some time. Even as employment in general improves, the recovery of the housing market has given hope to a section of the long-term unemployed—those who work in construction—who may have been out of work for years. There is a good article today on page A2 of the Wall Street Journal, “Long-Term Unemployed Begin to Find Work,” that makes this point explicitly.

In fact, unemployment is falling fastest among the long-term jobless. To some extent, this is a statistical artifact, as the shorter-term unemployed are constantly replenished, but even so, it represents real progress. The human misery and economic waste of the longer-term unemployed is effectively larger than for the shorter term, and to see it declining is a real win both for people and for the economy.

The problem is not completely solved, of course, as many of the new jobs pay less than the previous jobs, and, in any case, the number of unemployed people is still at very high levels. Nonetheless, real progress is being made, and it should continue. We are on our way.

The other very positive headline today is that California has balanced its budget and may well be on its way to a surplus. I mentioned yesterday that as recently as 2009 the state resorted to using scrip to pay its creditors; now, it has a balanced budget. This is a huge turnaround.

California is often a trendsetter for the country as a whole, and to go from a complete fiscal disaster to a balanced budget in less than five years suggests that maybe the U.S. can get its house in order after all. We have seen other countries do the same, and if California can as well—well, we can hope.

Overall, the positive signs are growing. Nice to see cheerful news heading into the weekend.