Who Bleeds in the “New Normal”?

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In the wake of the financial crisis and our era of quantitative easing, economists, pundits and market analysts have all talked about the “new normal.”

What is the new normal and what does it mean?

Yesterday I talked about the de-linking of money to reality and how it affects not only the economy, but the psyche of the country...

Well, the new normal is a part of that affect.

The truth is, new normal has a different meaning for different people…

For the poor and the 1%, there is no new normal

For those who are in the 1%--I loathe that phrase, but its use is so widespread that it serves the purpose—the new normal will not apply…

You know what I mean; if you’re one of those whose very high income hasn’t really changed, or if it has, it is not by enough to make a difference in lifestyle…

Like a CEO of a large corporation, a Hollywood mogul or movie star, or any other ultra-successful person for whom rises in the price of food, tax hikes, and stifling regulations don’t really affect how they live…

Then the new normal is something that “other people” have to worry about.

Personally, I am not in that upper stratum of people, although admittedly, I would certainly like to be, as I’m sure that you would, too.

And let me be clear, there’s absolutely nothing wrong with wealth or being successful; nothing at all.

And notice that I distinguish between the two…

Wealth is about having abundant financial means, whether it is gobs of cash in banks everywhere, a thriving business, property, or whatever.

A person may become wealthy many ways, whether through inheritance, winning the lottery, a legal settlement, in addition to the traditional American way of working harder and smarter to attain it.

Success, however, is not always the same as wealth...

A school teacher, a cleric, or a nurse to give just a few examples, may all be very successful at what they set out to accomplish, which ought to achieving excellence in their chosen profession...but not become wealthy doing so.

Others actively seek to become wealthy, and when they do, that is also laudable and perfectly fine.

So, for most of those in that notorious 1% group, there really is no new normal to worry about.

And at the other end of the economic scale, the new normal will have a minor affect if at all…

That’s because the level of federal support has increased in the new normal…

As have the number of Americans receiving that support.

Middle and Upper Middle Class in Crisis

So just who does that leave as mostly affected by the “new normal”?

The vast middle and upper middle classes, that’s who.

For the middle class worker in a plant, factory or office, salaries have dropped, jobs have been lost, and replacement jobs at similar wages are now less available.

The new normal economics for the middle class are very basic…

They are trying to remain middle class by reinventing themselves and making adjustments to how they live and where in a new normal economy where wages have yet to stabilize and credit has yet to loosen.

To many Americans, the new normal means hustling like never before to keep the wolf away from the door of the home they’re renting…

But is that so surprising?

That’s old news, isn’t it?

Well, here’s some news you won’t hear about…

Even for some in the upper middle class, the new normal has hit very hard, and has ripple effect that doesn’t get talked about very often.

For example, before the crisis hit, a then-client of mine ran a medical center.  He employed other doctors, nursing and administration staff, had several buildings, and a healthy stock portfolio.

He was—and may still yet be—a physician as well as a business person...

Before the crisis, his medical practice brought him over $1 million a year in income...

Add his business interests, and he was earning about $1.5 million every year, with a net worth somewhere around $6 million.

Sounds like the guy had it made, right?

Well he did…

But things definitely changed for him in the years after 2008…

The prices he could charge for his medical services have fallen, and, under Obamacare, he told me that it would soon no longer make economic sense to be in medicine…

He said that he was doing all he could to get out of medicine before things got worse and the value of his practice fell further.

Add to that a buy-and-hold mutual fund portfolio that was hard hit, his home and commercial property values becoming half of what they were, his line of credit disappearing, and some of his doctors leaving their practice….

And his income fell like stone.  It all added up to a sea change in his life and lifestyle…

And for those who he employed.

This doctor’s income fell from all sources, and therefore, so did his spending.

He laid off much of his staff, who then had to find new jobs to replace the one they lost…if they could…

He also closed offices, which meant cancelling cleaning and landscape maintenance services, and scaled way back as quickly as he could…

The new normal for him meant possibly leaving his life’s work, trying to unload his buildings, and conserve what he had left…

As well as cutting the jobs of many people who relied on his practice for their living.

But more than that was the change in his outlook on life, on the direction the country is heading, and what it means…

His mindset about the economy, his children’s’ futures, as well as his own, has been completely altered…

The “new normal” for this American success story is not one of optimism, energy, and success…

But rather, the new normal has become an outlook of skepticism, distrust, fear, and concern for a country he no longer recognizes…

A fact that is definitely linked to reality.

And those are…The Gorrie Details.

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