Posted: Sun, 23 Aug 2009 04:20 PM - 6,562 Readers
By: Scott Burns
Lake Travis is a great metaphor for the U.S. economy. The man-made lake near Austin is simply stunning. Whether you're on the water or above it, applauding a magnificent sunset from the many decks of the Oasis restaurant, it's just plain wonderful.
It is, of course, most wonderful when it has lots of water in it.
Recently, I went to the lake to see a sailboat that's for sale. The water was so low from the long drought that it was no longer possible to walk down the gangplank to get to the floating docks. If the gangplank had still been there, it would have been hanging nearly straight down.
The lake is down an incredible 30 feet from its average level in August. To get to the docks, new stairs had been built in stone. With a bit of care, you could get to the docks and walk from boat slip to boat slip. From there, you could contemplate the steep climb back.
The boat I had gone to see is a 34-foot sloop, built by Sabre in Maine. It's a classic coastal cruiser.
Yes, perhaps that's a bit large for a lake, particularly one that has less and less water. But I was thinking of trucking it to Corpus Christi and sailing her up the East Coast. I was imagining gliding into a guest mooring at Red Brook Harbor, Mass., on the way to a quiet, well-protected place, like Tenants Harbor, Maine.
And then it hit me. Lake Travis could be so low that it would be difficult to get a boat out of the lake. The boat could be stranded, waiting for rain.
That is what we're doing in this economy. We're waiting for rain. It has been promised by the rainmakers in Washington. A few sprinkles have been noted:
Home resale prices have ticked upward, even if the year-over-year price is still down.
Home resales have increased, even though the unsold inventory remains a burden.
Stock prices are up. They may be down from their October 2007 highs (try 35 percent), but they are up nicely from their March lows (try 48 percent).
A good drenchingFederal Reserve Chairman Ben Bernanke appears to prefer gardening metaphors because he has called the hopeful signs green shoots. Whatever metaphors you prefer, there's a real difference between a pause while being beaten and actually having a good time.
So the upticks are nice. But we still don't have any real, lake-filling rain. We need the rain that floats all the boats. We need the big nonstop stuff, the rain that drenches everything. We need the rain that brings back the green.
That rain is called personal income – wages and salaries – the money that goes into checking accounts or little manila envelopes every week or two. Until that money starts increasing, we're still going to be having the National Yard Sale that I wrote about 20 months ago. Without that rain, boats like the Sabre 34 I inspected more than two years ago in Puerto Vallarta (which is still for sale) or the Sabre 34 on Lake Travis aren't likely to find buyers. And if they do sell, like houses in Phoenix and Las Vegas, they will bring a lot less than the sellers hoped.
Drought's endAccording to the Bureau of Labor Statistics, average weekly earnings in July were $612.87, up slightly from $607.27 a year earlier.
Some analysts would argue that wages have really gone up, since the Consumer Price Index has declined in the last year. In fact, those analysts should leave their cubicles more often. What sane person would bet that an hour of work will buy more gasoline in a few months than it does today? Expansive thinking comes from expanded incomes, not from adjusted incomes.
No, we need basic rain. We need higher wages and higher salaries. We need longer workweeks, not shorter workweeks. That will float the boats.
How will we know when that's happening? Simple. Watch the Bureau of Labor Statistics' average weekly earnings announcement, released around the middle of each month. When it shows a steady progression of rising wages, we'll know the economic drought is over.
