If you’re not prospering now, something’s wrong

Rick Newman
Columnist

This might be about as good as it gets.

The unemployment rate, at 4.1%, is historically low. There are 6 million unfilled jobs in the United States, close to the highest level in the 18 years the U.S. government has been tracking the data. There’s work for nearly anybody who wants it.

Corporate profits are at record highs–and going higher, on account of the business tax cuts President Trump signed at the end of 2017. Strong corporate profits are the main reason stock markets keep hitting new record highs, as well.

Home values have been going up too, which is why Americans’ total net worth, at $97 trillion, is also the highest it’s ever been. The “wealth effect,” for those lucky enough to own financial assets or a home, is a powerful reason spending has been strong. Aside from the real-estate bubble in 2006, the economic numbers haven’t looked this good since Bill Clinton was president and the Internet was a novelty.

It’s a good moment to take stock. Are you getting ahead? Is your company doing well? Is there a lot of economic opportunity where you live? If the answer is no and you don’t feel like you’re prospering, then something is probably wrong—and waiting for things to get better probably won’t work.

Are you getting ahead?

Since there are always snags in the economy (and in life), it’s important to use a reasonable definition of “prosperity” when assessing where you stand. Prosperity doesn’t mean getting rich with ease, or doing anything with ease, necessarily. A good way to think about prosperity is as opportunity—the opportunity to improve your circumstances, get smarter, earn more, save more, give your kids a leg up and perhaps boost your quality of life, in nonmonetary ways, by trading work for time. This is essentially the original idea of the American Dream.

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It’s easier for some people to get ahead than others. That goes without saying. White-collar families with two working parents have a much easier time sending their kids to college than a single working mom or dad toiling in a factory or service job. We have too much income inequality in the United States, and the Trump tax cuts will probably make that worse, not better.

But it’s still possible to get ahead on the lower end of the income ladder, and that’s easier now than it was 5 or 10 years ago. A slow recovery from the 2007-2009 recession has now left labor shortages in some areas, even for entry-level jobs. That means workers will get paid more and enjoy more leverage to demand better working conditions. The minimum wage is going up in many states, and some companies, including Walmart (WMT), the nation’s biggest employer, are raising minimum wages on their own. The Affordable Care Act helps too, since it subsidizes the cost of health insurance for many lower-income workers—an important bit of help they didn’t have before 2014.

Nearly 200 companies have taken the unusual step of announcing bonuses, raises or benefit improvements in 2018, with many attributing the moves to the larger income they’ll book on account of the Trump tax cuts. Workers should be skeptical, since there’s more to this than meets the eye. Still, something is going right when there’s a mass movement to pay workers more. Ordinarily, companies are more likely to do the opposite, cutting costs wherever they can get away with it and whispering to Wall Street analysts about how that will boost net income.

Political partisans are having a big argument over who should get the credit for an improving economy that may be close to peak prosperity: Trump? Or his predecessor Barack Obama? It’s a foolish argument, because the economy largely does what it wants, with presidential policies influential only at the margins. A better question is this: Do my family and I have adequate access to opportunity? And if not, what should we do about it?

There are always winners and losers in the economy, no matter how bright the overall picture is. The S&P 500 stock index is up 24% over the last 12 months, and it’s glory days for investors. But for roughly 50 of those S&P companies, the stock is down 10% or more during that time. General Electric (GE)—the Worst Company of 2017, according to Yahoo Finance readers—is cutting 12,000 jobs rather than boosting pay or improving benefits. Once high-flying Under Armour (UA) is cutting jobs and restructuring. CenturyLink (CTL), a $17 billion telecom provider, canceled its annual holiday bonus for unionized workers last year and recently told employees there will be no raises this year, as it struggles with a turnaround plan.

Companies foundering in otherwise calm seas probably need to examine the seaworthiness of the ship. The company might be struggling, as GE is, with an outdated business model or a sclerotic culture outmaneuvered by nimbler competitors. Strategic bets may have failed. Management might just suck. Some companies simply have a natural life span.

Might be time for a change

A prosperous economy doesn’t mean everybody wins. That never happens in capitalism. But when times are good, it’s a lot easier to fail and start over. You get a second chance, sometimes a third. Struggling companies can renegotiate with their creditors and beg for patience from Wall Street analysts as they work to turn things around. There’s wiggle room, unlike the ruthless financial meltdown of 2008 and 2009, which was defined by credit freezes, five-figure layoffs, bankruptcies and panic throughout corporate America.

The same goes for individuals. If you’re not prospering now, it’s probably a good time to make a change: find a more rewarding job or career, get some training or education that will open new opportunities, take a risk, move somewhere with a more vibrant economy, if that’s necessary to get ahead. Just because it’s possible doesn’t mean it’s easy. You could take a new job that doesn’t pan out, or move someplace new where living costs seem impossibly high.

But waiting around for things to get better may be an even worse idea, if you feel trapped and don’t see much opportunity. We’re now in the ninth year of an economic upswing, and the longest period of time between recessions in modern times was 10 years, from 1990 to 2000. So we’re fairly late in the business cycle. Sure, things could get a little bit better still, and we might set a new record for the longest economic expansion since World War II. But if you don’t see fresh opportunity now, why would you expect it to materialize over the horizon?

It’s also possible the good times could end sooner than expected, which is usually how they end. The Trump tax cuts might cause the economy to overheat, and interest rates could rise faster than expected. Nobody knows the exact timing, but sooner or later, getting ahead will become harder, and perhaps impossible, until the next recession passes. When that happens, early 2018 might suddenly look like a missed opportunity.

Confidential tip line: rickjnewman@yahoo.com. Encrypted communication available.

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Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman

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