TIME Economy

Americans Splashing The Cash At 2008 Levels, Survey Finds

Tom Hahn—Getty Images

Gallup survey says consumer spending hit a six-year high in May, a significant $10-a-day increase on the month before

American consumer spending hit a six-year high in May, according to survey results released by Gallup on Monday.

Americans reported spending $98 a day, spiking $10 above the April average and climbing higher than any other point since May of 2008.

Gallup noted that spending was buoyed, in part, by a surge of Memorial Day weekend shopping. Past surveys have typically registered $3 to $6 jumps, but this year, with spending jumping by $10, the results suggest something deeper is stirring in the economy, other than a sudden demand for hot dogs.

TIME China

The Legacy of Tiananmen Is Holding Back China’s Economy

A security guard stands next to pictures of China's former President Jiang Zemin and late paramount leader Deng Xiaoping at an exhibition in Beijing
A security guard stands next to the pictures of China's former President Jiang Zemin, right, and late paramount leader Deng Xiaoping at an exhibition to celebrate the 90th anniversary of the founding of the Chinese Communist Party in 2011 Jason Lee—Reuters

To maintain its growth miracle, the Chinese leadership can no longer separate political and economic reform

As tanks rolled through the pro-democracy protesters on Tiananmen Square on June 4, 1989, the message from the Chinese Communist Party couldn’t have been clearer: Beijing would tolerate economic change, but not political change. A decade earlier, paramount leader Deng Xiaoping had embarked on the free-market reform that would spark China’s economic miracle.

But on that fateful June day, when he crushed the Tiananmen movement, Deng also eradicated any hope that political liberalization would accompany the government’s quest for prosperity. In fact, Deng believed political reform would undermine China’s economic progress, and the primary purpose of his shift towards “capitalism with Chinese characteristics” was to strengthen the Communist Party’s grip on power.

Twenty-five years later, the attitude of China’s leadership has remained unchanged. President Xi Jinping has proposed a sweeping slate of economic reforms that would hand more influence to private companies and free up flows of capital. On the political side, however, there are no signs that Xi feels any differently than Deng had in 1989. Xi has (arguably) grasped more power in his hands than any Chinese leader since Deng himself. The government tosses critics in prison, squashes any independent social movement, and has even intensified censorship of the Internet and social media. The Communist Party insists on reigning unchallenged.

Looking solely at China’s economic record, the Communist Party can make the case that capitalist success is not linked to democracy, as many in the West have always believed. Since 1989, China’s authoritarian leaders have engineered one of the greatest economic achievements in history. The economy is 20 times bigger today and now ranks as the world’s second largest. Hundreds of millions have been lifted out of poverty. Chinese companies, from telecom giant Huawei to PC maker Lenovo to e-commerce behemoth Alibaba, have become world-beaters. However, that fundamental question ­— can economic and political reform be separated? —­ has not gone away.

In fact, 25 years after Tiananmen, it is more relevant than ever. After three decades of rapid economic development, the Chinese economy is a vastly different place. Its growth has been based mainly on plentiful labor, low costs, and a (restricted) opening to foreign business. But that model has run out of steam. In fact, the economy is facing its biggest challenges since the start of Deng’s reforms more than three decades ago. Wages have escalated, eating into the competitiveness of China’s export machine. Debt has risen to dangerous levels. A property boom looks about to bust. An uncontrolled shadow banking sector has sparked widespread fears of a financial crisis.

Excess capacity haunts many industries. Private businessmen remain starved of capital and opportunities. Many of these dangers are the result of incomplete market reform. The bureaucrats of China’s “state capitalism” maintain too much control over the activities of banks and companies. They protect uncompetitive state enterprises and politically connected cronies, apply regulations erratically, and influence who gets bank finance and who does not.

To get itself out of this mess, the Communist Party is going to have to do what it doesn’t do so well: let go. Banks must be allowed to allocate money based on financial fundamentals, not political guanxi or bureaucratic fiat. Companies have to become more innovative and creative, which requires greater freedom of information. Protected and subsidized state industries have to be opened to private and foreign competition. Money must be allowed to flow more freely in and out of the country. Rule of law must be ensured to convince businessmen to take risks and invest in new ideas. That demands a more independent judiciary. The Communist Party is aware of the need for further reform.

In an important party plenum in November, Xi and his policy team pledged to loosen up capital markets, reform the financial sector and the courts, and support the private sector. Yet the pace of implementation has been glacial. The party has to make uncomfortable choices between holding fast to the levers of control and fixing a broken economy.

China’s leaders can no longer have it both ways. The banks cannot be expected to both allocate money more productively and still take orders from meddlesome cadres. Entrepreneurs cannot be expected to launch the next Google in an environment where the Internet is controlled, creative thinking is discouraged and the courts can’t protect them.

The verdict of Tiananmen, then, is coming under strain. If China is to lift itself into the ranks of the most advanced economies and rejuvenate its competitiveness, its people require the freedoms Tiananmen’s protesters fought for 25 years ago. The Communist Party has to wake to the fact that Tiananmen’s legacy is holding the nation back.

MONEY stocks

Stocks Are Slumping. You Just Don’t Know It Yet

Here are three reasons the little-noticed slide in small stocks is likely to spread to the broad market.

Psst…The stock market may be slipping into a correction. Pass it on.

This seems like a silly thing to say, since a “correction” is technically a 10% drop in stock prices and both the Dow Jones industrial average and the Standard & Poor’s 500 index of blue chip stocks are at record highs. Not only that, the S&P 500 is up nearly 5% so far this year and 19% over the past 12 months.

But if you examine the market more closely, you’ll see some key segments that are getting close to or have crossed the 10% threshold recently.

Among them: small-company stocks, which tend to thrive when investors favor risk — or are egged on by the Federal Reserve to take chances with the availability of cheap credit. The Russell 2000 index of small-caps lost more than 9% of its value between early March and mid May before recovering a bit in last week’s rally:

^RUT Chart

^RUT data by YCharts

The slump is more pronounced for small growth-oriented companies, which are favored by aggressive, bullish investors. Small growth stocks fell as much as 12% between early March and mid May and are still dangerously close to the 10% level:

^RUO Chart

^RUO data by YCharts

This is also true for the smallest of the small stocks — shares of high risk but potentially high reward tiny companies that are only embraced by the market’s most aggressive lot:

^RTM Chart

^RTM data by YCharts

True, these are small slivers of the market and the broader indexes such as the S&P 500, the Dow, and the Nasdaq composite index are all up modestly so far in 2014 and up by double-digits over the past 12 months.

The recent behavior of the faltering areas of the market, though, could be a harbinger of what’s to come. “A stealth correction has been unfolding,” says Craig Johnson, a managing director at Piper Jaffray, and he believes the slide will likely extend to the Dow and S&P.

Here are three reasons this is likely to happen:

1) Small stocks tend to lag as bull markets get tired. Small caps have historically been a fairly reliable late-cycle underperformer. Indeed, the last two times small stocks dramatically underperformed was in 2007 (just as the financial crisis struck) and the late 1990s (leading up to the bursting of the dot.com bubble in 2000).

2) The performance gap between large-cap and small-cap stocks is widening. Since Jan. 1, the large cap S&P 500 index has returned nearly 5% while the small-cap Russell 2000 index is down nearly 2%. “The continued divergence between the Russell 2000 index and the popular large-cap indices is a clear indication of weakening breadth and slowing momentum, and suggests investors are making an attempt to reduce portfolio risk by rotating assets toward the traditionally defensive areas of the market,” says Johnson.

In fact, he and his team at Piper Jaffray studied past periods when small stocks underperformed blue chip shares by such a wide margin and found that in years when this occurred, the broad market eventually experienced a correction that typically lasted two and a half years and cost stocks more than 12% of their value.

3) The broad market is way overdue for a correction. “The S&P 500 will soon have gone 32 months without a decline of 10% or more, versus the average span of 18 months since 1945 and a median of 12 months,” says Sam Stovall, managing director of U.S. equity strategy for S&P Capital IQ.

There have been only four other times since World War II that the stock market went longer without a serious pullback.

Alas, those stretches ended with a bear market in 1966, the Crash of 1987, a correction in 1997, and the mammoth 2007-09 bear that lopped off more than half of the S&P 500’s value.

Of course, there’s no rule that says market corrections must turn into full-fledged bear markets.

MONEY stocks

Profit Growth Is Slipping and That’s Not Good for Stocks

As corporate earnings growth slows, stock valuations are climbing well above historic standards.

The fact that companies have been consistently generating record profits in recent years has certainly been a boon to the S&P 500 .

Unfortunately, there will come a time when corporate earnings growth will inevitably slow — and that time may be now.

A government report released in late May found that overall corporate profits actually slumped in the sluggish first quarter, when a brutal winter weighed on business activity. The Bureau of Economic Analysis says that a key measure of corporate earnings fell 3% in the first quarter, compared to the fourth quarter of 2013. Versus the same period last year, profits slumped much more — 9.8%. This is true for both financial and non-financial companies.

Now, there are a variety of ways to measure the health of profits. In the private sector, economists often look at overall earnings growth for companies in the S&P 500.

By this measure, profits are still climbing, but the rate of that growth is slowing noticeably. In fact, expectations for both first quarter and second quarter earnings have been cut in half in less than a year.

Falling earnings chart
Source: S&P Capital IQ

A big reason why is that the economy is not rebounding as strongly as was thought, and overall corporate revenues are growing only modestly.

Sales Dwindling
Source: Thomson Reuters

Yet stock prices have been surging faster lately than the rate of both earnings and revenue growth. “Over the past few years multiple expansion has been the key factor lifting equity market levels higher,” notes Tom Stringfellow, chief investment officer for Frost Investment Advisors.

Forward PE ratios
Note: P/E based on forecasted profits over next 12 months. Source: Bloomberg

Indeed, virtually every part of the stock market is now trading at higher price/earnings ratios — based on forecast profits over the next 12 months — then they have historically. And that’s never a good sign.

TIME housing

Here Are the 3 Least Expensive Places to Buy a House in America

2013 Getty Images

And the 5 most expensive places, too

Getting restless in your current state? Check your bank balance before you move. We compiled data on over 100 million homes to find the three priciest (and least pricey) states for buying a house.

Note that we used final sales prices—not list prices—and that all numbers are from February, 2014.

Least Expensive

48. West Virginia – $95,000

While West Virginia’s Jefferson County includes several high-priced properties, Nicholas and Wood County are home to some of the most affordable houses in the nation, with median selling prices of $55,000 and $60,000, respectively. As a general rule, houses in West Virginia tend to get more expensive to the north and east (nearer to Washington DC) and less expensive to the south and west.

49. Ohio – $91,450

West Virginia’s northern neighbor, Ohio, earns the second-to-last spot on the list, with a median home selling price of just $91,450. The two counties most responsible for Ohio’s depressed market include Adams ($25,750), which lies just north of the Kentucky border, and Paulding ($33,675), which sits just south of #50 on this list.

50. Michigan – $82,000

Despite the auto industry’s resurgence, Michigan houses remain the cheapest in America, particularly near Flint and Detroit. During the 2007/2008 downturn, homes in Michigan’s largest county, Wayne, dropped from over $100,000 to under $15,000 in a matter of months. Recovery has been slow. Today, those same houses sell for a median price of only ~$25,000. (Note that Michigan home selling prices are particularly volatile from month to month—depending on sales, median values can jump up and down $50,000 every 30 days.)

Most Expensive

1. Hawaii – $412,400

The country’s youngest state is also the most expensive, with a median home selling price of $412,400. The biggest offender is Honolulu County, which includes the state’s capital and many of the priciest oceanfront properties—most houses in Honolulu sell for over $450,000. Popular tourist destination Maui is Hawaii’s next most-expensive county, with the median house going for $426,000.

2. California – $355,000

California is home to some of the priciest individual counties in America, including San Francisco ($960,000), Marin ($760,000), and San Mateo ($762,000). Silicon Valley might house some of the most successful entrepreneurs in the world, but for the rest of us, it’s quickly becoming impossible to afford. Those determined to live in The Golden State at a reasonable price should prospect north and east of the Bay Area in countries like Modoc, Lassen, and Del Norte, each of which offer houses at prices well under $100,000.

3. New York – $314,000

An international business center and perennial tourist favorite, New York City and its surrounding counties make New York state a particularly pricey region. Manhattan ($830,000) features New York’s most expensive properties, while Westchester County ($550,000) and Brooklyn ($525,000) also clock in far higher than national averages. Even with more affordable houses along the outskirts of the state, the median home selling price remains $314,000, good enough for third in the nation.


China’s Culture of Compliance Is Crippling the Country

Demonstration at Tiananmen Square in Beijing, China on June 01st, 1989.
Standing tall A Chinese youth at a demonstration in Beijing’s Tiananmen Square on June 1, 1989 Eric Bouvet—Gamma-Rapho/Getty Images

Next week will be the 25th anniversary of Tiananmen Square. It was a turning point not only for China, but also for the world, in the sense that it heralded a new era in which growing wealth and growing political freedom in emerging markets didn’t necessary go hand in hand. This year, China will very likely overtake the U.S. as the world’s largest economy. It has certainly become wealthy. But it has also become less free–as have so many of the world’s largest developing nations–think Russia, Turkey, many parts of Africa and Latin America, etc.

The question is, that can juxtaposition last another 25 years—or even another five? It’s something I’ve been thinking about a lot lately, particularly as I delve into New Yorker writer Evan Osnos’ very interesting new book on China, “Age of Ambition: Chasing Fortune, Truth and Faith in the New China” (FSG). The core premise of the book is that individual ambition and authoritarianism in countries like China will inevitably come into conflict with one another. As people get richer, they want more freedom, and they put pressure on their governments to deliver it. The problem is that these governments are often much better at delivering wealth than they are at delivering anything close to liberal democracy.

I think we may be reaching a tipping point in the next few years around that juxtaposition between growth and choice in the emerging world. China is, as always, the most dramatic example of this. The recent cyber-hacking scandal, for example, was portrayed by many pundits as yet another example of how the Middle Kingdom is leaping ahead of U.S. government and business interests, stealing American intellectual property and using it to gain a competitive edge. But as I argued, China’s IP theft actually underscores what a “me too” economy the Middle Kingdom still is. China is good, very good, at copycatting other people’s ideas (Osnos’ stories of various Chinese entrepreneurs, like the village woman behind the Chinese version of match.com, are fascinating on this score), but it has yet to create many global brands–aside from Lenovo’s computers and the college mini-fridges made by the low-end white goods producer Haier.

I think the lack of a top-shelf innovation culture has a lot to do with the lack of choice in Chinese society. I once spoke to a Wal-Mart executive in China who told me that he had trouble getting employees in one department to address basic problems in another–picking up boxes that had fallen off a shelf, or order new supplies, for example–because they were afraid of stepping out of their silos. That’s not about work ethic–the Chinese have that in spades–but a culture of compliance. In China, it’s important, sometimes deadly important, to swim in your own lane.

Another issue with the growth of higher end Chinese business is that entrepreneurs don’t trust the stability of the government. I’ve heard time and time again from wealthy people in China (many of whom are looking to get their money out – witness the percentage of high end property purchases in luxury real estate markets worldwide that are made by the Chinese) is that it doesn’t pay to develop businesses for the long haul here, because uncertainly and political risk is so high. People tend to get in, get out, and become serial entrepreneurs, rather than spending decades working on innovation, a la developed countries like the U.S., Japan, or Germany.

How will all this affect China? If the Middle Kingdom can’t make the leap to the “middle income” stage of development, which history shows is the trickiest one (only a handful of developing countries globally have made it), then unemployment will rise and social stability will fall. How will that affect Americans? In a sense, it already is. Trade tensions mean many U.S. companies are rethinking how, or if, they’ll do business in China, with myriad ramifications for us all. For more on all of that, as well as the economic legacy of the Tiananmen event, listen to my radio show, Money Talking, on WNYC this week.

TIME Economy

Economy Shrinks for First Time Since 2011

A rail mounted gantry crane, center, as well as a Straddle Carrier, right, used to unload and load a container ship at the Norfolk International Terminal in Norfolk, Va. on March 26, 2014.
A rail mounted gantry crane, center, as well as a Straddle Carrier, right, used to unload and load a container ship at the Norfolk International Terminal in Norfolk, Va. on March 26, 2014. Steve Helber—AP

The U.S.' Gross Domestic Product contracted by 1 percent in the first quarter of 2014, marking the first contraction in years as government economists revised earlier figures by taking stock of additional glum measures

The U.S. economy shrunk by 1% in the first quarter of 2014, according to government data released Thursday, marking the first economic contraction in three years.

The figure, from revised estimates released by the Commerce Department, was revised downwards from an earlier estimate of 0.1% growth in gross domestic product, as government economists took stock of additional glum measures. The Commerce Department noted that on top of a winter wallop to retail and construction, real GDP was dragged down further by a rise in imports and a marked decline in inventory growth. The last time real GDP contracted was in the first quarter of 2011 at the tail end of a punishing recession.

Corporate profits also declined by an estimated 9.8%, the largest drop recorded by the Commerce Department since the fourth quarter of 2008.

Still, analysts predicted that the contraction, while unsettling, would not last into the second quarter. Recent monthly data points to signs of economic life, including a drop in jobless claims and jumps in durable good orders and retail sales.

TIME Religion

The Economy Is More Important Than Fighting Over Evolution

An evolutionist went fly-fishing with Tea Partiers, and they had more in common than she thought.

Last week, the New York Times reported that yet another Christian school—this time Tennessee’s Bryan College—is embroiled in a debate about the instruction of evolution on its campus. As a theologian, pastor, and seminary president I believe in evolution, and we certainly don’t teach creationism here at Union Theological Seminary. I also know that for this and many other issues you can’t just go to the Bible and find a passage that tells you exactly what to think.

However, reading the article left me feeling confused. Why, almost a century after the Scopes trial, are Christians still fighting about evolution—an issue wholly unrelated to Jesus’ gospel charge—while ignoring the egregious sin of systemic wealth inequality? When it comes to economic justice and the abolition of poverty, you don’t need any interpretive tools to approach the Christian Scriptures. Each page in our Holy Book addresses economic realities and makes clear to those gathered under the gracious arms of God what kind of world we should seek: a world where there is no poverty. It is not ambiguous.

Since I was three years-old, my family and I have jigsawed ourselves into the proverbial station wagon every summer and driven into the wilderness for three weeks of fly fishing. This past summer, I couldn’t find anyone who would agree to go along, and—mostly because I needed the kind of soul renewal that comes with it—I decided I was going to do it by myself. I signed up to go twenty miles into the Bob Marshall Wilderness on horseback with a group of people I didn’t know to fly fish for 10 days. We were an amazing, offbeat coterie and we got to know each other really well, really quickly. It wasn’t until the third day that I accidentally found out that everyone in the group was a member of the Tea Party.

There was great laughter when everyone realized that I had discovered it. They confessed that they quickly realized I was a liberal Yankee. What struck me most about our conversations around issues of economics was that the language and concerns that were spoken did not, on the whole, sound very different at all from those that I hear from my students here at Union, one of the most socially and politically progressive seminaries in the country. During Occupy Wall Street, 62 students went down from Union to Zuccotti Park, set up their tents, built their camp fires, and lived there for three months to bear witness to their desire for a new economic reality.

Among my new Tea Party friends and my long-beloved students, I heard three things passionately echo over and over again, with little discrepancy.

First, there is a shared conviction that the economic system in which we presently live is completely corrupt, and that Wall Street and the leaders of corporate America are not concerned about the flourishing of common people.

Second, there is a deep concern about the failure of our political system to work on behalf of the United States citizenry. Both Tea Partiers and Occupiers demand a government that is truly of the people, not one that merely masquerades as such.

Third, there is an anxiety about the destruction of the values of community—the values that mark how we care for our children; how we decide what we eat; how we build homes for ourselves; and how we constitute communities where we feel safe.

I travel with a flyer in my pocket that I was able to pull out several more days into the trip and share with them. It’s called the Freedom Budget for All Americans, drafted in 1966 by the A. Philip Randolph Institute in Atlanta under the leadership of Reverend Dr. Martin Luther King, Jr. and Bayard Rustin. This manifesto for economic change reminds me of the work ahead.

“We are budgeting our resources,” it says, “so that our nation can achieve freedom from want.” It’s not a complicated socialist or communist vision: guaranteed full employment, full production and high economic growth, an adequate minimum wage, farm income parity, guaranteed income for all who are unable to work, a decent home for every American family, modern health services for all, full educational opportunities for all, updated social security and welfare programs, equitable tax and money policies. It’s a Christian vision of economic justice in which people thrive because their basic human needs are met.

It is startling that fifty years later we have not—on a national level—taken steps toward the realization of any of these desires. In fact, in some areas, we’ve moved backwards. We must be better.

Perhaps what we need are more fly fishing moments, where our perceptions are challenged and we glimpse the possibility of a movement. Anything less than the abolition of poverty is too costly.

Serene Jones is President of Union Theological Seminary in the City of New York where she holds the Johnston Family Chair in Religion and Democracy. She is Vice President of the American Academy of Religion, an ordained minister in the United Church of Christ and the Christian Church (Disciples of Christ), and author of Trauma and Grace: Theology in a Ruptured World. This piece is adapted from one of her recent sermons, preached at Trinity Episcopal Cathedral in Cleveland. She tweets online at @SereneJones.

TIME housing

Huge Jump in Housing Recovery

It’s finally fair to call a real estate bull market.

This month’s S&P/Case-Shiller Home Price Index was up 0.9% month-over-month (comparing data for March, just released today, to February). That’s a good data point, but Case-Shiller — an index of housing prices in 20 metropolitan areas around the country — is notoriously tough to read from any one data point.

The algorithm that generates the data is proprietary, and the index seems to be more volatile than many other measures of housing prices, particularly in terms of reporting higher highs and lower lows. The government number, for instance, the Federal Housing Finance Agency House Price Index, shows price up 6.6% in the first quarter of 2014 from a year ago; Case-Shiller’s analogous number is up 10.3%.

The extreme sensitivity is great for journalists, because the Case-Shiller index is always “crashing” or “plummeting” or “leaping” or “surging.” It’s much tougher for consumers, who are generally trying to get an idea of what’s happening to the prices of the asset class into which they’ve sunk much, if not all, of their hard-earned money.

In an attempt to read those tea leaves last month, and separate the caffeinated from the decaf, I had written that Chicago might well be a bellwether for how real estate was behaving “throughout the nation.” From the current Case-Shiller data, we learn that it’s both leaping and surging, up 0.7% in March over the previous month, and up 11.5% year-over-year. To put that in perspective, Chicago Real Estate Daily notes that the jump is “the biggest increase in 25 years.”

To be fair, Chicago (like many cities in the U.S.) is in a very low-inventory situation, so prices are being pushed upwards by eager shoppers fighting over the last properties on the shelves. For an even better read on that market, we’ll need to see if these high prices induce sellers to list their homes, and watch the subsequent behavior of prices.

But for now, all looks sunny, with each and every one of the twenty cities in Case-Shiller reporting higher prices than a year ago. The leaders were out West, with Las Vegas up 21.2% over a year ago, San Francisco up 20.9%, and San Diego up 18.9%. The smallest gains were registered by New York (up 6.6% year-over-year), Charlotte (up 4.9%), and Cleveland (up 3.9%). Month-over-month, only New York declined, down 0.3% from February to March. Anyone watching the reports of record Manhattan condo prices might question why New York dropped at all, and why the annual gain isn’t in the double-digits — but the answer is that apartment sales aren’t included in Case-Shiller calculations.

Taking a glance at the finer-grained FHFA numbers, 71 of the 100 metro areas tracked showed price appreciation from the last quarter of 2013, even after seasonal adjustments. FHFA noted in a release that the index has increase for “23 of the last 24 months.” Seems like the bulls are running.

TIME Egypt

A Tale of Two Sisis

Egypt's Military Chief Visits Moscow
Field Marshal Abdul Fattah al-Sisi Sasha Mordovets—Getty Images

The extraordinary rise of Abdul Fattah al-Sisi will be complete this week with his all-but-certain election to Egypt's presidency. But the story of a man who shares his last name illustrates the enormous challenges facing the former military commander when he takes office

For Abdul Fattah al-Sisi, life has gotten better and better since the overthrow of Hosni Mubarak.

The career military man was doing well even before the popular revolt of January 2011 ended the three-decade reign of the Egyptian president: al-Sisi sat on the general staff, holding the delicate portfolio for military intelligence.

But he was just getting started. When the Muslim Brotherhood’s Mohamed Morsi was elected president in 2012, al-Sisi was named minister of defense, as well as chief of general staff. And when Morsi fell out of favor with Egyptians a year later, with millions marching for his removal last June 30, al-Sisi rose to the occasion, removing the country’s first and only freely-elected president in a coup that most Egyptians call a second revolution.

In January he was promoted to Field Marshal, and polls say that in balloting that begins Monday, he will be elected president.

The scope of the challenge now facing the next president might best be understood by the post-Revolution experience of another al-Sisi. Mohamed Mahmoud al-Sisi shares the family name with the candidate, but that’s all. In 2011, he had his own business selling finely crafted gold jewelry made in a shop he owned. He commuted daily from a Cairo suburb, and says he took home 5,000 Egyptian pounds a month, worth about $870 at the time. His wife and four daughters, aged 12 to 3, ate fish one night, chicken the next, beef when they liked. Money was not a problem—he had so much, he says, he was investing in the Egyptian stock market–but governance was. So he joined the throngs in Tahrir Square, chanting the slogan of the Revolution, “Bread, Freedom, Dignity, Social Justice,” and cheered when Mubarak surrendered his office.

Then his troubles began, he says. First, the stocks collapsed. The father of four had invested in companies that looked rock solid under Mubarak, including Ezz Steel; its shares plummeted from $25 just before Tahrir to $5 after its president, a Mubarak man, was convicted of money-laundering.

Egypt became a dangerous place, and not just to investors. The political uncertainty created a security vacuum, and crime rates soared. One day men with knives confronted al-Sisi as he left his workshop, carrying finished gold jewelry to client shops. The thieves took it all.

“I was a gold maker and I had my own workshop, and I lost all my money and now I’m doing this,” says al-Sisi.

He stands in a Cairo alley, holding a platter. On the platter are paper plates. Some hold peanuts. Others, chick peas. Each plate sells for two Egyptian pounds, or about 23 cents. His government ID card still reads “gold maker” but al-Sisi, 40, spends his workdays moving through the side streets of Zamalek, a relatively prosperous island in the Nile, imploring people smoking water pipes to buy one of his snacks.

On a good night, he makes 70 Egyptian pounds, or $10. On a bad night, 50 pounds, or $7. “From bad to worse,” he says. “The economy is going lower and lower and lower.”

His monthly income, which formerly approached $900, now ranges from $84 to $125. Most nights the girls eat macaroni and rice. “Some vegetables, but not much,” he says. The family has meat only on feast days, two or three times a year. “Now fruit is the third priority. I know it’s important to my children, but first I have to feed them,” al-Sisi says. “My children love apples, the red and the yellow. Now when they are asking for it, I just cry. I cannot afford it any more.”

The candidate al-Sisi is asked constantly about the economy. By some measures, 25 percent of Egyptians live in poverty. By others, the measure approaches 50 percent. A poll released Thursday by Pew Research Center found that 76 percent of Egyptians describe the economy as “bad,” up from 64 percent just after the revolution. Tourism is staggering, and hard currency is so scarce the government has been failing to pay the international firms that pump its oil.

“If things go according to the plan we have prepared, we will see an improvement in two years,” the former field marshal told Sky News Arabia in a May 11 interview. Except for championing energy-saving lightbulbs, however, he has declined to share his economic plan with Egyptians, or anything else that would constitute a platform.

A few days before balloting began, his campaign released a color-coded “Map of the Future,” which appeared to recycle a 30-year-old plan to create a band of cities in what is now desert. Critics say the expense would be beyond Egypt’s means, already burdened by subsidies that keep the prices of food and fuel artificially low, and deter investment.

The al-Sisi selling peanuts says he might not even vote. “Most likely he will be like Mubarak,” he says, of the candidate who shares his name. “This is their nature, the men from the army.” He admits only to the dimmest flicker of hope, rising from the general’s personal religious piety. “Yes,” he says, “this is a very good and important point, and yes it gives hope. But only if the whole system is changing. Otherwise it’s not enough.”

“I will not speak big words,” Mohamed al-Sisi says. “All I care about is that they give people the minimum wage, not less. And that they cast a kind look to the poor people. Social justice.”

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