Did you know that there are nearly 102 million working age Americans that do not have a job right now? And 20 percent of all families in the United States do not have a single member that is employed. So how in the world can the government claim that the unemployment rate has “dropped” to “6.3 percent”? Well, it all comes down to how you define who is “unemployed”. For example, last month the government moved another 988,000 Americans into the “not in the labor force” category. According to the government, at this moment there are 9.75 million Americans that are “unemployed” and there are 92.02 million Americans that are “not in the labor force” for a grand total of 101.77 million working age Americans that do not have a job. Back in April 2000, only 5.48 million Americans were unemployed and only 69.27 million Americans were “not in the labor force” for a grand total of 74.75 million Americans without a job. That means that the number of working age Americans without a job has risen by 27 million since the year 2000. Any way that you want to slice that, it is bad news.
Well, what about as a percentage of the population?
Has the percentage of working age Americans that have a job been increasing or decreasing?
As you can see from the chart posted below, the percentage of working age Americans with a job has been in a long-term downward trend. As the year 2000 began, we were sitting at 64.6 percent. By the time the great financial crisis of 2008 struck, we were hovering around 63 percent. During the last recession, we fell dramatically to under 59 percent and we have stayed there ever since…
And the numbers behind this chart also show that employment in America did not increase last month.
In March, 58.9 percent of all working age Americans had a job.
In April, 58.9 percent of all working age Americans had a job.
Things are not getting worse (at least for the moment), but things are also definitely not getting better.
The month that Barack Obama entered the White House, we were in the midst of the worst economic downturn since the Great Depression and only 60.6 percent of all working age Americans had a job.
Since only 58.9 percent of all working age Americans have a job now, that means that the employment situation in America is still significantly worse than it was the day Barack Obama took office.
So don’t let anyone fool you with talk of an “employment recovery”. It simply is not happening. The official unemployment rate bears so little relation to economic reality at this point that it has essentially become meaningless.
Look, how in the world can we have an “unemployment rate” of just “6.3 percent” when 20 percent of all American families do n0t have a single member that is working?
Here is how that 20 percent figure was arrived at…
A family, as defined by the BLS, is a group of two or more people who live together and who are related by birth, adoption or marriage. In 2013, there were 80,445,000 families in the United States and in 16,127,000—or 20 percent–no one had a job.
So if one out of every five families is completely unemployed, then why is the official government unemployment rate not up at Great Depression era levels?
Could it be that the government is manipulating the numbers to make them look much better than they actually are?
Why don’t they just go ahead and get it over with? They can just define every American that is not working as “not in the labor force” and then we can have “0.0 percent unemployment”. Then we can all have a giant party and celebrate how wonderful the U.S. economy is.
And don’t be fooled by the “288,000 jobs” that were added to the U.S. economy last month. For workers under the age of 55, the number of jobs actually dropped by a whopping 259,000.
If we were using honest numbers, the official unemployment rate would look a lot scarier. John Williams of shadowstats.com has calculated that the unemployment rate should be about 23 percent. I don’t think that is too far off.
Meanwhile, the quality of the jobs in our economy continues to go down. The House Ways and Means Committee says that seven out of every eight jobs that have been “added” to the economy under Barack Obama have been part-time jobs. But you can’t raise a family or plan a career around a part-time job. To be honest, it is very hard for a single person to even survive on a part-time wage in this economic environment.
As the quality of our jobs goes down, so do our incomes. The median household income has declined for five years in a row, and the middle class is falling apart.
Without middle class incomes, you can’t have a middle class. Considering what we have been watching happen, it should be no surprise that the homeownership rate in the United States has dropped to the lowest level in 19 years or that the number of Americans receiving money from the government each month exceeds the number of full-time workers in the private sector by more than 60 million.
For many more statistics like this, please see my previous article entitled “17 Facts To Show To Anyone That Believes That The U.S. Economy Is Just Fine“.
At a gut level, most Americans understand that things are much worse than they used to be.
The Pew Research Center recently asked people what “class” they consider themselves to be. The results were shocking.
Back in 2008, only 25 percent of all Americans considered themselves to be “lower middle class” or “poor”.
Earlier this year, an astounding 40 percent of all Americans chose one of those designations.
We are in the midst of a long-term economic decline, and no amount of propaganda is going to change that.
But based on the “happy numbers” being trumpeted by the mainstream media, the Federal Reserve is slowly bringing their quantitative easing program to an end.
When quantitative easing is finally totally cut off, we shall see how the financial markets and the U.S. economy perform without artificial life support.
Personally, I don’t think that it is going to be pretty.
There are hundreds of formerly prosperous communities all over America that are being steadily transformed into rotting, decaying hellholes. The good paying middle class jobs that once supported those communities are long gone, and they have been replaced with low paying service jobs if they have been replaced at all. When you visit those communities, it is almost as if all of the hope has been sucked right out of the air. It can be absolutely heartbreaking to look into the hollow eyes of someone that has totally given in to despair, but unfortunately the number of Americans that are giving up on the economy continues to grow. Today, the labor participation rate is the lowest that it has been in 35 years, and more than 100 million Americans are enrolled in at least one welfare program. It is easy to say that they should just “get a job”, but as I have written about repeatedly, our economy simply is not producing enough jobs for everyone anymore. The percentage of working age Americans with a job has remained at the same level that it was at during the worst days of the last recession, and meanwhile the quality of our jobs has continued to steadily decline. Median household income has fallen for five years in a row, but the cost of living continues to rise rapidly. The middle class is being systematically shredded, and poverty is growing at an alarming rate. The U.S. economy has been in decline for a long time, and the really bad news is that it appears that this decline is about to accelerate.
We are a nation that consumes far more wealth than we produce. We are a nation that buys far more from the rest of the world than they buy from us. We are a nation that has a “buy now, pay later” mentality.
As a nation, we have accumulated the largest mountain of debt in the history of the world. 40 years ago, the total amount of debt in our system (government, business and consumer) was about 2 trillion dollars. Today, it is more than 56 trillion dollars.
The consequences of decades of incredibly foolish decisions are starting to catch up with us, and it is those at the bottom of the food chain that will suffer the most.
I could spend the rest of this article quoting 30 or 40 more statistics that show how bad things are, but today I wanted to do something different. Today, I wanted to share some quotes from some of my readers about what they are seeing where they live. The following are 20 quotes from ordinary Americans about the economic despair that is rapidly growing like a cancer all around us…
“Yes, the American economy is in the pits. I know five languages, have three degrees (including two graduate degrees), and have lived overseas for 16 years and I still can’t find a job in the USA. Everything is broken in America. Maybe I should give up my American citizenship.”
“I’ve been struggling since I finished college in the summer of 2010. My dream is to work in the courts, law enforcement but it’s almost impossible to get a call back for an interview. I interviewed with Garland, Texas PD for a position in the city jail and I made the final 30 of 300 applicants that applied for the 3 positions.”
“I have two Master’s degrees, am 61 years old and earning $10 per hour. What does that say about the current economy?”
#4 Cincinnati Dave:
“I work for one of the banks mentioned in your article. I was in mortgages. I saw all of this coming, so several months ago I asked to get into another area of the bank and fortunately, for me, they granted by request. A lot of people are losing their jobs and there is really no prospects out there for anything else whereby the same kind of money could be made. I will make nothing near what I had been earning but am at the least grateful to be employed. This is all so sad to watch happen.”
“I used to work for WF processing mortgages. The week that the rates went up, I was out of work, not one extra week of work.”
“The U.S. economy is producing mostly part-time, low-wage jobs. These jobs barely pay enough to put food on the table.”
“What I am aware of, is every person I know, who had to switch jobs in the last five years took a pay cut. The smallest cut among my friends was 10%, the average was closer to 18%. No we are heading down a bad road, and we are past the point of no return.”
“After spending most of my life in the middle class, I now consider myself lower class due to age and income. Nothing wrong with that. I am still able to provide myself with what I need and some of my ‘wants’. I am like most retirees today.”
“As many of you already know (but maybe some new members of this blog don’t) – I live in Phoenix, Arizona. Where you live here, determines (to a great extent) your economic well being. Those in the “East Valley” – Chandler, Gilbert, Scottsdale, etc – have the jobs, the opportunities and the transportation. Those in the wealthier areas of the “West Valley” also have these benefits.
The remainder – those who live in the older west side of town, and the south side of town – are mainly forgotten and left to struggle. Many are hard working citizens who just want a chance. Unfortunately, chance costs money, in the view of many people, and as far as the municipal government is concerned, there’s no money for us. It’s cheaper to let them live in a tent in the park, where the cops at least have an excuse to evict them.”
“We are no longer the land of opportunity where anyone can make it.”
“There is no middle class here in the Florida Panhandle. Only folks who have money are the retired and they hate everyone. They own all the antique stores [big business] and most thriving businesses and restuarants. Military is big here, they spend every dime they have on stupid stuff and taxis. Tourist are way down since the spill. Now for the good news. A major food chain here is going out of business [Food World] Another is losing 20k a month to theft. Every other property it seems is up for sale. There are tons of empty real estate [store fronts] There are thrift stores opening everywhere. People are selling goods on the streets, only to be run off by the cops. Crime is getting out of hand. Most don’t go out after dark. Police are beating up the homeless at the beaches. Panhandling now is mainly younger people. Where did all the older ones go?”
“In my area which is SW Florida, it’s been getting tighter for my customers so on a case by case basis I lower my price when they need auto repairs. I still find road signs advertising homes for sale (cash only). Many are advertised as foreclosed.
I’ve started seeing people living out of their cars. It’s not a daily occurrence but I have been noticing it.”
I have been looking after the homeless now for 4 years. Last winter I had an encounter where I was told that I could not hand out blankets and sleeping bags in the dead of winter and that I would be arrested for trespassing if “me and my friends” didn’t move along.
So, I adopted the policy that I would pull up next to them, have them get in the car and we would go for a drive. I would find a place to pull over and give them what they needed then I would drop them off in a different place.
“Around where I live in the SE, things seem ok but I live in a university town. Go to some of the surrounding small towns and it is desolate. Car dealerships closed. Entire streets with abandoned stores. The only activity is a one clerk post office. I know people in our church who are a paycheck away from going over the edge or going over due to a spouse dying and losing one of their social security checks. I see grim. More homeless. A local church is feeding many more including some folks living out of their cars—lots of children. Mostly minimum wage jobs in the area. If it were not for the university and its 34,000 students, this place would look as bad as the smaller communities.”
#15 TN Gal:
“Here in southeast TN we have jobs, mostly part-time or low wage. Our problem these days are so many people dependent on government programs no one wants to work. They do better on programs than working partying and paying for insurance. Housing still very depressed. Seeing more homeless around and local churches straining to provide food. Crime is up and drugs, which were down, are coming back with a vengeance. Middle class here are senior citizens on SS, younger retirees not the older ones. Older ones seem to be struggling. Sad.”
Michael, I live in North Central Illinois. About 60 miles southeast of Chicago. The town we live in has about 8,000 in it. Very “middle class” farm community. Unemployment is high and so is underemployment. We know many people living off 2 part time jobs. That seems to be the norm around here. Or people taking jobs that they would never of considered in the past, just to get by. My son used to work for CAT in Aurora, but was “let go” in order to bring in new workers at a lower pay scale. It took him over a year(which really isn’t bad) to find a part time job with 3M.
“Drive around Los Angeles at 3:00 AM any day and you will see the devastating and pervasive homelessness from 8 to 80 year olds. And the massage parlors and hookers on the streets of used to be ‘high-end’ neighborhoods are exploding. No other way to make a living.”
“A couple of years ago it was reported 9K people a night slept in their cars here in San Diego County. Special car parks are set up in some church parking lots. The cops look the other way. Wonder what the figure is now?”
“My own viewpoint is that a collapse of the current economic system is inevitable and imminent.”
#20 El Pollo de Oro:
“During a conversation on prepping, someone recently said to me, ‘If things get half as bad as these preppers think they will, I don’t want to be alive.’ So, how bad will things will get? Real unemployment is already at Great Depression levels (John Williams’ Shadow Statistics contradicts the BLS’ bogus figures), but when this depression deepens, I think we’ll be looking at 50% or 60% unemployment easily. Much worse than the 1930s. It will be absolute hell for millions of Americans, and when the money stops flowing down to the man on the street, the blood will flow in the streets (Gerald Celente). Lots of it.”
Are we heading for a major stock market decline? Warnings about a crash of the financial markets are quite common these days, and usually they don’t materialize. But this time may be different. A number of top analysts are pointing out the fact that the biggest cluster of “Hindenburg Omens” has appeared since the last stock market crash. And those that have studied this insist that the more “Hindenburg Omens” there are in a cluster, the stronger the signal is. Meanwhile, another very disturbing sign is the fact that the yield on 10 year U.S. Treasuries is starting to soar again. On Tuesday it shot up from 2.62% to 2.727%. As I have written about previously, the yield on 10 year U.S. Treasuries is the most important number in the U.S. economy right now. If that number continues to rise, it is going to be very, very bad news for the financial system.
But before I discuss rising interest rates any further, I want to talk about this unusual cluster of Hindenburg Omens that we have just witnessed. In a previous article, I shared a list of the criteria that are commonly used to determine whether a Hindenburg Omen has appeared or not…
1. The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
2. The smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.
3. That the NYSE 10 Week moving average is rising.
4. That the McClellan Oscillator ( a market breadth indicator used to evaluate the rate of money entering or leaving the market and interpretively indicate overbought or oversold conditions of the market)is negative on that same day.
5. That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs).
When the Hindenburg Omen makes an appearance, it is supposedly a signal that the U.S. stock market will likely experience a significant decline within the next 40 days.
But of course this has not always happened when a Hindenburg Omen has appeared. However, what we are seeing right now is a highly concentrated cluster of Hindenburg Omens. According to SentimenTrader’s Jason Goepfert, the last time such a cluster appeared was before the last stock market crash…
Sometimes a topic in the market takes hold and it’s hard to shake it off. One of those is the technical “market crash” signal called the Hindenburg Omen.
It has its boosters and its detractors, and we’re not going to get caught up in debating its merits. We’ve discussed it for 12 years, always with the same arguments.
On June 10th, we outlined the market’s historical performance after suffering at least 5 signals from the Hindenburg Omen within a two-week period. Stocks were consistently weak afterward, and proved to be so again, at least for a while.
With the latest market rally, the Omens are flaring up again.There have been 5 Omens triggered out of the past 8 trading sessions (your data may vary—we’re using the same sources we’ve always used for historical data). That’s actually the closest-grouped cluster since early November 2007.
It’s extremely rare to see as many Omens occurring together as we’ve seen over the past 50 days. The last time was prior to the bear market in 2007.
The time before that was prior to the bear market in 2000.
Will the pattern hold up this time?
But without a doubt we have been witnessing some very unusual activity in the markets over the past couple of weeks. In fact, according to Tyler Durden of Zero Hedge, we have now seen a Hindenburg Omen occur five times in the last seven trading days…
For the 5th time in the last 7 days, equity market internals have triggered an anxiety-implying Hindenburg Omen. Based on our data, this is the most concentrated cluster of new highs, new lows, advancing/declining based confusion on record. The last few occurrences have not ended well (though obviously not disastrously) but as the creator of the ‘Omen’ notes, the more occurrences that cluster, the stronger the signal.
But the Hindenburg Omen is not the only sign that a stock market crash may be coming. Marc Faber, the publisher of the Gloom, Boom & Doom Report, says that the markets are repeating the exact same pattern that we saw just before the stock market crash of 1987…
“In 1987, we had a very powerful rally, but also earnings were no longer rising substantially, and the market became very overbought,” Faber said on Thursday’s “Futures Now.” “The final rally into Aug. 25 occurred with a diminishing number of stocks hitting 52-week highs. In other words, the new-high list was contracting, and we have several breaks in different stocks.”
Faber says that’s exactly where we find ourselves this August.
Faber is projecting a stock market decline of “20 percent, maybe more” in the month ahead.
Meanwhile, as I mentioned at the top of the article, the yield on 10 year U.S. Treasuries shot up to 2.727% today. The Federal Reserve is starting to lose control of long-term interest rates, and the only way that Fed officials are going to be able to get control back is to substantially raise the level of quantitative easing that they are doing, but of course that would create a whole bunch of other problems.
For now, the Fed keeps dropping hints that “tapering” is coming. But if the Fed does “taper”, there might not be any support for bond prices from the private sector. BAML credit strategist Hans Mikkelsen recently detailed why this is the case…
Since the financial crisis, Treasuries have been supported by numerous types of investors, including mutual funds/ETFs, banks, [emerging market] central banks and the foreign official sector (in addition to the Fed of course). However, these four sources of Treasury demand are unlikely to support the market in the short term going forward.
First, with continued outflows from non-short term high grade bond funds, money managers are unlikely to provide support for Treasuries any time soon.
Second, with increasing loan demand reducing the need for banks to support profitability by buying Treasuries, as well as significant mark-to-market losses in [available-for-sale] portfolios that in the future will count against capital, banks are unlikely to add long-duration assets in a rising interest rate environment.
Third, in light of continued depreciation of [emerging market] currencies, it appears unlikely that [emerging market] countries are experiencing inflows that need to be reinvested in Treasuries.
Finally, custody holdings of Treasuries continue to decline, suggesting foreign official sales of Treasuries.
If the yield on 10 year U.S. Treasuries continues to rise sharply over the coming months, that could potentially cause the 441 trillion dollar interest rate derivatives bubble to implode. As John Embry recently told King World News, that would be “disastrous” for the global financial system…
Interest rates have already risen dramatically, so any tapering will simply throw gasoline on that fire and torch the banking system which is up to its eyeballs in interest rate derivatives. This would be disastrous for the entire financial system.
Someone recently suggested that there was already a $4 trillion hole in the European banking system. If we look at the Japanese situation, that is totally unstable as well. So the destruction of paper money will only accelerate, and this is what you are seeing reflected today in the prices of gold and silver.
We also have this shortage of physical gold, which is reflected by the fact that the gold lease rates have been negative for 25 consecutive days. We then had the revelation that the Bank of England had dumped a staggering 1,300 tons of physical gold into the market that they were supposed to be safely storing for other countries. The Bank of England wouldn’t even comment, they just pleaded the 5th.
Hopefully these Hindenburg Omens will pass and nothing will happen.
Hopefully the yield on 10 year U.S. Treasuries will not continue to rise.
But you know what they say – hope for the best but prepare for the worst.
I hope that you are getting prepared for the worst while you still can.
Is “discretionary income” rapidly becoming a thing of the past for most American families? Right now, there are a lot of signs that we are on the verge of a nightmarish consumer spending drought. Incomes are down, taxes are up, many large retail chains are deeply struggling because of the lack of customers, and at this point nearly a quarter of all Americans have more credit card debt than money in the bank. Considering the fact that consumer spending is such a large percentage of the U.S. economy, that is very bad news. How will we ever have a sustained economic recovery if consumers don’t have much money to spend? Well, the truth is that we aren’t ever going to have a sustained economic recovery. In fact, this debt-fueled bubble of false hope that we are experiencing right now is as good as things are going to get. Things are going to go downhill from here, and if you think that consumer spending is bad now, just wait until you see what happens over the next several years.
Even though the Dow is surging toward a record high right now, everyone knows that things are not good for the middle class. A recent quote from CPA Howard Dvorkin kind of summarizes our current state of affairs very nicely…
“The fact of the matter is that America is broke — whether it’s mortgages, student loans or credit cards, we are broke. The old rule of thumb is that people should have six months’ of savings,” Dvorkin says.”If you talk to people, most don’t have two pennies.”
These days most Americans are living from paycheck to paycheck, and thanks to rising prices and rising taxes, those paychecks are getting squeezed tighter and tighter. Many families have had to cut back on unnecessary expenses, and some families no longer have any discretionary income at all.
The following are 16 signs that the middle class is rapidly running out of money…
#1 According to one brand new survey, 24 percent of all Americans have more credit card debt than money in the bank.
#2 J.C. Penney was once an unstoppable retail powerhouse, but now J.C. Penney has just posted its lowest annual retail sales in more than 20 years…
J.C. Penney Co. (JCP) slid the most in more than three decades after the department-store chain lost $4.3 billion in sales in the first year of Chief Executive Officer Ron Johnson’s turnaround plan.
The shares fell 18 percent to $17.40 at 11:28 a.m. in New York after earlier declining 22 percent, the biggest intraday drop since at least 1980, according to data compiled by Bloomberg. J.C. Penney yesterday said its net loss in the quarter ended Feb. 2 widened to $552 million from $87 million a year earlier. The Plano, Texas-based retailer’s annual revenue slid 25 percent to $13 billion, the lowest since at least 1987.
How much worse can things get? At this point the decline has become so steep for J.C. Penney that Jim Cramer of CNBC is declaring that they are in “a true tailspin“.
#3 In the United States today, a new car has become out of reach for most middle class Americans according to the 2013 Car Affordability Study…
Looking to buy a new car, truck or crossover? You may find it more difficult to stretch the household budget than you expected, according to a new study that finds median-income families in only one major U.S. city actually can afford the typical new vehicle.
The typical new vehicle is now more expensive than ever, averaging $30,500 in 2012, according to TrueCar.com data, and heading up again as makers curb the incentives that helped make their products more affordable during the recession when they were desperate for sales. According to the 2013 Car Affordability Study by Interest.com, only in Washington could the typical household swing the payments, the median income there running $86,680 a year.
#4 The founder of Subway Restaurants, Fred Deluca, says that the recent tax increases are having a noticeable impact on his business…
“The payroll tax is affecting sales. It’s causing sales declines,” he said, estimating a decline of about 2 percentage points off sales at his restaurants. “There are a lot of pressures on consumers,” Deluca said, adding “I think this is on the permanent side, but I think business will adjust to it.”
#5 Many other large restaurant chains are also struggling in this tough economic environment…
Darden Restaurants, which owns the casual dining chains Oliver Garden, LongHorn Steakhouse and Red Lobster, said blended same-store sales at its three eateries would be 4.5 percent lower during its fiscal third quarter.
Clarence Otis, Darden’s chairman and chief executive, said that “while results midway through the third quarter were encouraging, there were difficult macro-economic headwinds during the last month of the quarter.”
“Two of the most prominent were increased payroll taxes and rising gasoline prices, which together put meaningful pressure on the discretionary purchasing power of our guests,” he added.
#6 The CFO of Family Dollar recently admitted to CNBC that this is a “challenging time” because of reduced consumer spending…
At Family Dollar where the average customer makes less than $40,000 a year, the combination of a two-percent hike in the payroll tax, rising gas prices and delayed tax refunds has created a “challenging time and an uncertain time for the consumer right now,” said Mary Winston, the company’s chief financial officer.
“In our case, anything that takes money out of our customer’s wallet gives them less money to spend in our stores,” she told CNBC. “So I think all of those things create nervousness for the consumer, and I think there are sometimes political dynamics going on that they might not even fully understand the details, but they know it’s not good.”
#7 Even Wal-Mart is really struggling right now. According to a recent Bloomberg article, Wal-Mart is struggling “to restock store shelves as U.S. sales slump“…
Evelin Cruz, a department manager at the Wal-Mart Supercenter in Pico Rivera, California, said Simon’s comments from the officers’ meeting were “dead on.”
“There are gaps where merchandise is missing,” Cruz said in a telephone interview. “We are not talking about a couple of empty shelves. This is throughout the store in every store. Some places look like they’re going out of business.”
This all comes on the heels of an internal Wal-Mart memo that was leaked to the press earlier this month that described February sales as a “total disaster”.
#8 Electronics retailer Best Buy continues to struggle mightily. Best Buy just announced that it will be eliminating 400 jobs at its headquarters in Richfield, Minnesota.
#9 It is being projected that many of the largest retail chains in America, including Best Buy, will close down hundreds of stores during 2013. The following is a list of projected store closings for 2013 that I included in a previous article…
Forecast store closings: 200 to 250
Sears Holding Corp.
Forecast store closings: Kmart 175 to 225, Sears 100 to 125
Forecast store closings: 300 to 350
Forecast store closings: 125 to 150
Barnes & Noble
Forecast store closings: 190 to 240, per company comments
Forecast store closings: 500 to 600
Forecast store closings: 150 to 175
Forecast store closings: 450 to 550
#10 Another sign that consumer spending is slowing down is the fact that less stuff is being moved around in our economy. As I have mentioned previously, freight shipment volumes have hit their lowest level in two years, and freight expenditures have gone negative for the first time since the last recession.
#11 Many young adults have no discretionary income to spend because they are absolutely drowning in student loan debt. According to the New York Federal Reserve, student loan debt nearly tripled between 2004 and 2012.
#12 The student loan delinquency rate in the United States is now at an all-time high. It is only a matter of time before the student loan debt bubble bursts.
#13 Due to a lack of jobs and high levels of debt, poverty among young adults in America is absolutely exploding. Today, U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.
#14 According to one recent survey, 62 percent of all middle class Americans say that they have had to reduce household spending over the past year.
#15 Median household income in the United States has fallen for four consecutive years. Overall, it has declined by more than $4000 during that time span.
#16 According to the U.S. Census Bureau, the middle class is currently taking home a smaller share of the overall income pie than has ever been recorded before.
Are you starting to get the picture?
Retailers are desperate for sales, but you can’t squeeze blood out of a rock.
For much more on how the middle class is absolutely drowning in debt, please see this article: “Money Is A Form Of Social Control And Most Americans Are Debt Slaves“.
But if you listen to the mainstream media, they would have you believe that happy days are here again.
Right now, everyone seems to be quite giddy about the fact that the Dow is marching toward an all-time high. And I actually do believe that the Dow will blow right past it. In fact, it is even possible that we could see the Dow hit 15,000 before everything starts falling apart.
But at some point, the financial markets will catch up with economic reality. It is just a matter of time.
In the meanwhile, those that are wise are taking advantage of these times of plenty to prepare for the great economic drought that is coming.
Don’t be caught living paycheck to paycheck and totally unprepared when the next wave of the economic collapse strikes. Anyone that believes that this debt-fueled bubble of false hope can last indefinitely is just being delusional.
Historically, small businesses have been the primary engine of new job creation in the United States. If the economy was getting healthy, we would expect to see the number of jobs at new businesses rise. Instead, we are witnessing just the opposite. We are told that the economy is supposed to be “recovering”, but the number of “startup jobs” at new businesses has fallen for five years in a row. According to an analysis of U.S. Department of Labor data performed by economist Tim Kane, there were almost 12 startup jobs per 1000 Americans back in the year 2006. By 2011, that figure had fallen to less than 8 startup jobs per 1000 Americans. According to Kane, the number of jobs in the United States at businesses that are less than one year old has fallen from 4.1 million in 1994 to 2.5 million in 2010. Overall, the number of “new entrepreneurs and business owners” has fallen by more than 50 percent as a percentage of the population since 1977. The United States was once known as “the land of opportunity”, but now that is fundamentally changing. At this point we truly do have a “crisis of entrepreneurship” in this country, and that is a huge reason why America is in decline. We are witnessing the slow death of the small business in America, and that is incredibly bad news for all of us.
Unfortunately, the problems that small businesses are experiencing right now have been building up for decades. The economic environment for small businesses in America has become incredibly toxic. Sadly, we can see this in the numbers. According to Kane, the following is how the decline in the number of startup jobs per 1000 Americans breaks down by presidential administration…
Bush Sr.: 11.3
Bush Jr.: 10.8
Obviously, we are headed very much in the wrong direction. Kane speculates about why this may be happening in his paper…
There is anecdotal evidence that the U.S. policy environment has become inadvertently hostile to entrepreneurial employment. At the federal level, high taxes and higher uncertainty about taxes are undoubtedly inhibiting entrepreneurship, but to what degree is unknown. The dominant factor may be new regulations on labor. The passage of the Affordable Care Act is creating a sweeping alteration of the regulatory environment that directly changes how employers engage their workforces, and it will be some time until those changes are understood by employers or scholars. Separately, there has been a federal crackdown since 2009 by the Internal Revenue Service on U.S. employers that hire U.S. workers as independent contractors rather than employees, raising the question of mandatory benefits. New firms tend to use part-time and contract staffing rather than full-time employees during the startup stage. According to Labor Department data, the typical American today only takes home 70 percent of compensation as pay, while the rest is absorbed by the spiraling cost of benefits (e.g., health insurance). The dilemma for U.S. policy is that an American entrepreneur has zero tax or regulatory burden when hiring a consultant/contractor who resides abroad. But that same employer is subject to paperwork, taxation, and possible IRS harassment if employing U.S.-based contractors. Finally, there has been a steady barrier erected to entrepreneurs at the local policy level. Brink Lindsey points out in his book Human Capitalism that the rise of occupational licensing is destroying startup opportunities for poor and middle class Americans.
Kane raises some very good points in his analysis. Without a doubt, small businesses in the United States are being taxed into oblivion. If you doubt this, just read this article.
And the regulatory environment for small businesses is more suffocating than it has ever been before. Unfortunately, our politicians never seem to learn that lesson. During his first term, Obama piled on mountains of new regulations, and now that he has won a second term he is preparing to unleash another massive wave of new regulations.
But many times the worst offenders are politicians on the state and local level. There are some areas of the country (such as California) that have created absolutely nightmarish conditions for small businesses. California had the worst “small business failure rate” in the country in 2010. It was 69 percent higher than the national average. And in 2011, the state of California ranked 50th out of all 50 states in new business creation.
Yet the politicians in California just continue to pile on even more regulations and even more taxes.
Sadly, this kind of thing is happening from coast to coast and it is killing off hordes of small businesses. Just consider the following statistics…
-According to the U.S. Census Bureau, the U.S. economy lost more than 220,000 small businesses during the last recession.
-As a share of the population, the percentage of Americans that are self-employed fell by more than 20 percent between 1991 and 2010.
-As a share of the population, the percentage of “new entrepreneurs and business owners” dropped by a staggering 53 percent between 1977 and 2010.
-The average pay for self-employed Americans declined by $3,721 between 2006 and 2010.
So what needs to be done?
Well, first of all, the tax burden and the regulatory burden on small businesses both need to be greatly reduced.
Secondly, the balance of power in our nation needs to be dramatically shifted. Conservatives run around talking about the need to reduce the power of government and liberals run around talking about the need to reduce the power of corporations, and actually both of them are right.
Our founding fathers intended to establish a Republic where power would never be concentrated in the hands of just a few. That is why they tried to strictly limit the power of the federal government in the U.S. Constitution, and that is why they greatly restricted the size and scope of corporations in early America. For much more on this, please see this article: “Corporatism Is Not Capitalism: 7 Things About The Monolithic Predator Corporations That Dominate Our Economy That Every American Should Know“.
Our founding fathers wanted to empower individual citizens and small businesses. They never intended for us to have a system where big government and big corporations dominate everything and crush the “little guy” at every opportunity.
Even as we witness the death of the small business in America, corporations are absolutely thriving. The following chart shows how corporate profits after tax have exploded to new record highs in recent years…
So has this been good for workers? No, it has not translated into more jobs and higher wages. In fact, wages and salaries as a percentage of GDP are now at an all-time low…
That is why it is imperative that we change “the rules of the game” so that the balance of power is shifted back in the direction of individual citizens and small businesses. We desperately need to turn back to the principles that this nation was founded upon.
If nothing is done, these trends are going to get even worse. Barack Obama certainly has no plans to reduce the size and the power of the government. Since he was elected, an average of 101 new federal employees have been added to the government payroll every single day…
In the 1,420 days since he took the oath of office, the federal government has daily hired on average 101 new employees. Every day. Seven days a week. All 202 weeks. That makes 143,000 more federal workers than when Obama talked forever on that cold day in January of 2009.
And if nothing is done, the monolithic predator corporations that dominate our economy will just get even larger and even more powerful. Meanwhile, hundreds of thousands more small businesses will close up shop all over the country.
Unfortunately, most Americans seem totally apathetic about these issues. They seem content to wear “meggings“, watch “Honey Boo Boo” on television and let our government and corporate overlords run everything. Most of them have even been brainwashed into believing that this is the American way of doing things.
So where do we go from here?
Well, this nation will probably continue to keep doing the same things that it has been doing, and it will continue to get the same results.
The death of small business in America is happening right in front of our eyes, and everybody can see it happening, but very few people are doing anything to stop it.
The American people have spoken. It is estimated that approximately 6 billion dollars was spent on political campaigns in 2012, and we ended up exactly in the same place that we were before. Barack Obama is still in the White House, the Democrats still have solid control of the U.S. Senate and the Republicans still have solid control of the U.S. House of Representatives. Clearly, the American people want more of the same, and that is really bad news. The path that we have been on will only lead to unprecedented disaster, and now it is abundantly clear that there are not going to be any solutions to our problems on the national level. Not that things would be that much different if we reversed things and gave Republicans control of the White House and the Senate and we gave Democrats control of the U.S. House of Representatives. Over the past several decades, nothing has really seemed to get any better no matter what faces we have sent to Washington. But this time there is really a feeling of “finality” to things. The American people have made their choices, and those choices are going to have consequences. There is no turning back now. The politicians that we have chosen reflect who we are as a nation. It is not just our leaders that have turned their backs on the U.S. Constitution and on the principles that this country was founded upon – the truth is that the majority of the American people have rejected them. We have willingly chosen our destiny, and there are no more excuses.
What Barack Obama has pulled off is absolutely mind blowing. First of all, I must acknowledge that the Obama campaign had the best “ground game” in the history of American politics. Their ability to deliver their voters to the polls was absolutely amazing. Yes, the election was close, but I thought it would be much closer. The Obama “ground game” made a significant difference.
Having said that, it says a lot about who we are as a nation that the American people would willingly send Barack Obama back to the White House for a second term. You could almost excuse the American people for having the wool pulled over their eyes the first time, but at this point American voters have had four years to evaluate Barack Obama and learn what he is all about.
Barack Obama, like many of our politicians, is a con man. He just doesn’t have a few skeletons in his closet – he has a whole army of them. Over the course of two presidential campaigns he has refused to release his school records, there are very serious irregularities concerning his Social Security number, and he has managed to keep vast stretches of his past a total secret to the American people. Anyone applying for a decent job or trying to get into a decent school would have been required to disclose more background information than Barack Obama has revealed to the American people. What Obama has pulled off is completely and totally absurd. I truly believe that Barack Obama will someday be regarded as one of the greatest con men of all time.
But even setting all of that aside, the outrageous things that Barack Obama has publicly said and done should be more than enough for every American that loves the U.S. Constitution to reject him. The truth is that no American should have ever cast a single vote for him for any political office under any circumstances.
And yet now he is headed for a second term in the White House, and now he will feel absolutely no accountability to the voters since he will not be running in 2016. He can do whatever he wants over the next four years, and nobody can do anything about it.
Not that Mitt Romney would have been much different. Out of all of the Republican candidates, the Republicans selected the candidate that was most similar to Barack Obama. During primary season, in many of my articles I pleaded with the Republicans not to choose Mitt Romney. I warned that large numbers of very conservative voters would refuse to support him in the general election. I was horrified by how Romney treated Ron Paul and his supporters during the primaries. It turns out that Romney desperately could have used their help in swing states that Romney barely lost like Ohio, Virginia and Florida.
In the end, Mitt Romney ran one of the most inept campaigns in modern American political history. Except for his one brief shining moment during the first debate, Romney just seemed to keep falling flat on his face over and over. He seemed to have absolutely no idea how to attack Obama’s track record, and he kept shifting positions every five minutes. To be honest, his campaign was an embarrassment to the Republican Party.
I know that a lot of Republicans are mourning today, but things would not have been much different under a Romney administration. Romney was perhaps the most liberal candidate the Republicans have ever nominated for president, and Obama and Romney were perhaps the two most similar candidates that we have ever seen run against each other on the national stage.
The fact that the Republicans picked Mitt Romney says a whole lot about the Republican Party just like the fact that the Democrats picked Barack Obama says a whole lot about who they are.
But let us not overlook the other choices that the American people made yesterday either.
The U.S. Senate has been an abysmal failure for years, and yet the American people just keep voting for more of the same.
If you can believe it, the U.S. Senate has not passed a budget in over 1,200 days.
In fact, the last time the U.S. Senate passed a budget, there was no such thing as an iPad.
But not only did the American people allow Democrats to keep control of the U.S. Senate, the Democrats actually gained a couple of extra seats, and several of the newly elected Senators are extremely liberal.
And keep in mind that all of the new Senators that were elected yesterday will not be up for re-election until 2018.
That is very frightening to think about.
The funny thing is that the American people also gave the Republicans very firm control of the U.S. House of Representatives once again. It is almost as if they were saying that they want things to remain exactly the same as they are right now.
So we can definitely expect more gridlock in Washington. And perhaps that is a small piece of good news to come out of all this.
If we can get our politicians fighting with each other so much that they can’t get anything done, perhaps they will have less of a chance of messing this country up even worse than it already is.
This election season was the last, best chance that the American people had to bring about changes on the national level. Unfortunately, the Republicans, the Democrats and the American people all failed miserably in this regard.
As far as the economy is concerned (after all, this is a column about economics), we will continue to steamroll toward collapse at record speed. It is now glaringly obvious that there will be no political solutions to our problems on the national level.
So you better brace for impact, because a crash is coming.
And I think we just got a preview of coming attractions. The Dow was down by more than 300 points on Wednesday.
I wish that I could be more optimistic, but the truth is that there is no hope on the horizon on the national level. The American people have spoken, and they have made their choices.
Now we all get to pay the price.