With unemployment approaching 10%, housing stats at all time lows and manufacturing revenue leaving the country is it no wonder that we are in a major recession? I have been looking at the numbers and I am not certain they add up.

It would be best to start with unemployment. Looking at the numbers that are distributed it is difficult to tell the real story. I see that in some urban centers unemployment is very low. There is an abundance of activity and even the lower service jobs are in demand. It would seem from my anecdotal review that the urban unemployment rate is much lower and the rural rate is in the 30%+ range.

I attribute this to the high concentration of service jobs in the cities while the rural areas have a large concentration of construction related workers. It would appear that the housing crisis is the major driver of the rural unemployed. Even the construction worker for city infill development normally commutes to work and lives in these rural areas. This is a precursor to what could be a major demographic change as jobs are concentrated in the Cities and the rural worker is left behind.

These observations all came together after a lot of financial review and analysis I was giving to two stocks. Each of these stocks revolved around consumer spending on goods and services that were not necessary for living. You would think that in a recession that disposable income would be lower yet these stocks were still making solid profits. I first looked at BBY Stock this is the parent company stock for the large worldwide consumer retailer Best Buy.

My analysis of the consumer electronic spending while in a recession led me to the conclusion that it is the housing industry that is primarily dragging down the economy. The rural construction worker is not finding work and because they live in rural areas they are not able to find a substitutionary job for themselves. There simply are no jobs available in the rural areas. This has led to incredibly high unemployment in counties like Riverside County in California where the county next door Los Angeles County has much lower unemployment.

These numbers were consistent when looking how they impacted the second stock. This was BRCM the symbol for Broadcom. Broadcom being a major manufacturer and provider of information technology and the infrastructure of IT delivery. They too showed solid profits through the recession. This lends itself to the primary theory that the recession is more of an isolated phenomenon than most people think.

In the end it is an interesting conclusion that we now see the disparity between urban and rural centers. The urban centers are hurt by the construction crisis but they have many substitutionary industries to fall back on. While the rural areas have lost their agriculture, low end manufacturing, and now construction base. This explains the disparity between news reports of the end of the recession and the incredibly high unemployment in rural communities. This also explains the strong performance of consumer retail stocks like Best Buy and Broadcom.

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