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Home for the Holidays will have a new meaning this year.

Instead of a visit, this time it’s permanent.  A new study from the Pew Research Center says 1 out of 7 Parents had at least one child move back in this year:

Faced with limited job options, many young adults are turning to an old standby to weather the recession: moving back in with mom and dad.

“The journey home for Thanksgiving won’t be quite so far this year for many adults,” said researchers Wendy Wang and Rich Morin, who wrote the report. “Instead of traveling across country or across town, many grown sons or daughters will be coming to dinner from their old bedroom down the hall.”

What’s interesting to note about this sudden realization of job losses is how it’s being portrayed  by the White House. Time and time again we have been told about the ’successes’ of the nearly $1 trillion Porkulus bill in terms of creating jobs.  For example, take a recent report from the Obama Administration on October 30th:

The Obama administration’s $787 billion stimulus bill directly saved or created about 650,000 jobs as of the end of last month, administration officials announced this morning.

An administration official says in a statement that “because these reports show that less than half of the spending through that date created or saved about 650,000 jobs, they confirm government and private forecaster’s estimates that overall Recovery Act spending has created and saved at least 1 million jobs.”

1 Million jobs?  If you continue reading, an example from the state of New Jersey shows these ‘jobs’ didn’t need saving in the first place:

The White House can claim that they saved the job of teachers, police officers, and firefighters whose jobs were never in jeopardy, and New Hampshire avoided cutting jobs elsewhere by shifting the money to cover budget shortfalls.

Meanwhile, what happens to these jobs when Porkulus runs out?  Almost none of these jobs are established on new economic growth.  They’re either jobs that New Hampshire has to fund anyway (teachers, police officers, firefighters) or one-off project jobs that will disappear when the money does.

Is reality setting in?  Jobs aren’t created with the government; jobs are created by providing economic growth i.e. tax incentives to give businesses and consumers reasons to spend.  Government plays a role in the growth – but it’s only facilitating, not taking over.

Speaking of economic growth, this brings us to the next financial update: GDP.  Many of you might have heard the new report that came out today that revised US third quarter economic growth from 3.5% down to 2.8%.

What on earth is GDP and why is it important?

GDP is essentially made up of 3 components: Consumer expenditures, Business Investments, and Government spending.

Do you know which component of GDP increased the most during the third quarter?  I’ll give you three guesses but you’ll only need one!  Yep, government spending.  Government spending never, ever produces lasting economic growth (if any at all).  It’s always bloated and always inefficient.

The key to sustained and lasting growth is to get the government out of the way.  Unfortunately, we are heading in the wrong direction right now.  A picture of what government intervention looks like can be seen in the housing market.

A new report  shows home prices in the US rose for the 4th month in a row.

Good news, right?  Even we are hoping to sell our house soon so I hope it is a good sign!

Having said that, it’s clear that the main driver behind this growth is the government.  And, what happens to any growth spurred by the government?  It’s inefficient and temporary and that’s exactly what’s happening to the housing market.

The government has temporarily propped up the housing market with the recently expanded first-time homebuyer credit.  This handy little credit gives first-timers $8,000 just to buy a new house.

Man, I wish I would have waited one year to buy my house

What happens when this credit expires (which, they’ve already had to extend until June 2010 in order to maintain the housing market)?  With mounting unemployment, increasing foreclosures, and numerous borrowers upside-down on their mortgages, homes prices will plummet:

Another reading of home prices published by the Federal Housing Finance Agency held steady from August to September. Analysts expect prices to dip again this winter as foreclosures increase.

“As long as the unemployment rate stays elevated, you’re going to see pressure on the pace of foreclosures, which are going to find their way back onto the market, depressing prices,” said Dan Greenhaus, chief economic strategist with Miller Tabak & Co.

While prices nationally are likely to keep rising through November, “we are very worried about the potential for a huge wave of supply next year, both from private sellers and banks,” wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics. “Prices could easily reverse their recent gains.”

You can see that not even the experts are looking at a lasting recovery.

Bummer.

What’s to gain from all of this doom-and-gloom?  None of us like to claim we’re an Ostrich and stick our heads in the sand.  At the same time, none of us can predict the future.  Is it time to buy some chickens and hide money in our mattresses?

Not exactly.

The one anomaly in all of this is the American spirit that has survived for over 200 years.  We are people of excellence. We work hard and expect our work to pay off.  If there is anyone who can pull off a recovery, it’s the American people.

It’s not the government.

On second thought, with the current administration in power, maybe one or two chickens won’t hurt

PS – sorry for the long post – next time I’ll do this in a podcast!