The evidence that the middle class in America is dying continues to mount. As you will see below, nearly half the country would be unable “to cover an unexpected $400 expense”, and about two-thirds of the population lives paycheck to paycheck at least part of the time. Of course the economy has not been doing that well overall in recent years. Barack Obama was the only president in all of U.S. history not to have a single year when the economy grew by at least 3 percent, and U.S. GDP growth during the first quarter of 2017 was an anemic 0.7 percent. During the Obama era, it is true that wealthy enclaves in New York, northern California and Washington D.C. did thrive, but meanwhile most of the rest of the country has been left behind.
Today, there are approximately 205 million working age Americans, and close to half of them have no financial cushion whatsoever. In fact, a new survey conducted by the Federal Reserve has found that 44 percent of Americans do not even have enough money “to cover an unexpected $400 expense”…
Nearly eight years into an economic recovery, nearly half of Americans didn’t have enough cash available to cover a $400 emergency. Specifically, the survey found that, in line with what the Fed had disclosed in previous years, 44% of respondents said they wouldn’t be able to cover an unexpected $400 expense like a car repair or medical bill, or would have to borrow money or sell something to meet it.
Not only that, the same survey discovered that 23 percent of U.S. adults will not be able to pay their bills this month…
Just as concerning were other findings from the study: just under one-fourth of adults, or 23%, are not able to pay all of their current month’s bills in full while 25% reported skipping medical treatments due to cost in the prior year. Additionally, 28% of adults who haven’t retired yet reported to being grossly unprepared, indicating they had no retirement savings or pension whatsoever.
But just because you can pay your bills does not mean that you are doing well. Tens of millions of Americans barely scrape by from paycheck to paycheck each and every month.
In fact, a survey by CareerBuilder discovered that 75 percent of all Americans live paycheck to paycheck at least some of the time…
Three-quarters of Americans (75 percent) are living paycheck-to-paycheck to make ends meet, according to a survey from CareerBuilder. Thirty-eight percent of employees said they sometimes live paycheck-to-paycheck, 15 percent said they usually do and 23 percent said they always do. While making ends meet is a struggle for many post-recession, those with minimum wage jobs continue to be hit the hardest. Of workers who currently have a minimum wage job or have held one in the past, 66 percent said they couldn’t make ends meet and 50 percent said they had to work more than one job to make it work.
So please don’t be fooled into thinking that the U.S. economy is doing well because the stock market has been hitting new record highs.
The stock market was soaring just before the financial crisis of 2008 too, and we remember how that turned out.
The truth is that the long-term trends that have been eating away at the foundations of the U.S. economy continue to accelerate, and the real economy is in substantially worse shape this year than it was last year.
Just about everywhere you look, businesses are struggling and stores are shutting down. Yes, there are a few wealthy enclaves where everything seems wonderful for the moment, but for most of the country it seems like the last recession never ended.
In a desperate attempt to stay afloat, a lot of families have been turning to debt to make ends meet. U.S. household debt has just hit a brand new all-time record high of 12.7 trillion dollars, but we are starting to see an alarming rise in auto loan defaults and consumer bankruptcies. This is precisely what we would expect to see if the U.S. economy was moving into another major recession.
In fact, we are seeing all sorts of signs that point to a major economic slowdown right now. Just check out the following from Wolf Richter’s latest article…
Over the past five decades, each time commercial and industrial loan balances at US banks shrank or stalled as companies cut back or as banks tightened their lending standards in reaction to the economy they found themselves in, a recession was either already in progress or would start soon. There has been no exception since the 1960s. Last time this happened was during the Financial Crisis.
Now it’s happening again – with a 1990/91 recession twist.
Commercial and industrial loans outstanding fell to $2.095 trillion on May 10, according to the Fed’s Board of Governors weekly report on Friday. That’s down 4.5% from the peak on November 16, 2016. It’s below the level of outstanding C&I loans on October 19. And it marks the 30th week in a row of no growth in C&I loans.
Perhaps we will be very fortunate and break this pattern that has held up all the way back to the 1960s.
But I wouldn’t count on it. Here is what Zero Hedge has to say about this alarming contraction in commercial and industrial loans…
Here’s the bottom line: unless there is a sharp rebound in loan growth in the next 3-6 months – whether due to greater demand or easier supply – this most accurate of leading economic indicators guarantees that a recession is now inevitable.
We are way overdue for a recession, the hard economic numbers are screaming that one is coming, and the financial markets are absolutely primed for a major crash.
As Americans, we tend to have such short memories. Every time a new financial bubble starts forming, a lot of people out there start behaving as if it can last indefinitely.
But of course no financial bubble is going to last forever. They all burst eventually, and now the biggest one in U.S. history is about to end in spectacular fashion.
Trump will get a lot of the blame since he is the current occupant of the White House, but the truth is that the conditions for the next crisis have been building up for many years, and the horrors that the U.S. economy is heading for were entirely predictable.
What you are about to see is more evidence that the growth of poverty in the United States is wildly out of control. It turns out that there is a tremendous amount of suffering in “the wealthiest nation on the planet”, and it is getting worse with each passing year. During this election season, politicians of all stripes are running around telling all of us how great we are, but is that really true? As you will see below, poverty is reaching unprecedented levels in this country, and the middle class is steadily dying. There aren’t enough good jobs to go around, dependence on the government has never been greater, and it is our children that are being hit the hardest. If we have this many people living on the edge of despair now, while times are “good”, what are things going to look like when our economy really starts falling apart? The following are 21 facts about the explosive growth of poverty in America that will blow your mind…
#1 The U.S. Census Bureau says that nearly 47 million Americans are living in poverty right now.
#2 Other numbers from the U.S. Census Bureau are also very disturbing. For example, in 2007 about one out of every eight children in America was on food stamps. Today, that number is one out of every five.
#3 According to Kathryn J. Edin and H. Luke Shaefer, the authors of a new book entitled “$2.00 a Day: Living on Almost Nothing in America“, there are 1.5 million “ultrapoor” households in the United States that live on less than two dollars a day. That number has doubled since 1996.
#4 46 million Americans use food banks each year, and lines start forming at some U.S. food banks as early as 6:30 in the morning because people want to get something before the food supplies run out.
#5 The number of homeless children in the U.S. has increased by 60 percent over the past six years.
#6 According to Poverty USA, 1.6 million American children slept in a homeless shelter or some other form of emergency housing last year.
#7 Police in New York City have identified 80 separate homeless encampments in the city, and the homeless crisis there has gotten so bad that it is being described as an “epidemic”.
#8 If you can believe it, more than half of all students in our public schools are poor enough to qualify for school lunch subsidies.
#9 According to a Census Bureau report that was released a while back, 65 percent of all children in the U.S. are living in a home that receives some form of aid from the federal government.
#10 According to a report that was published by UNICEF, almost one-third of all children in this country “live in households with an income below 60 percent of the national median income”.
#11 When it comes to child poverty, the United States ranks 36th out of the 41 “wealthy nations” that UNICEF looked at.
#12 The number of Americans that are living in concentrated areas of high poverty has doubled since the year 2000.
#13 An astounding 45 percent of all African-American children in the United States live in areas of “concentrated poverty”.
#14 40.9 percent of all children in the United States that are being raised by a single parent are living in poverty.
#15 An astounding 48.8 percent of all 25-year-old Americans still live at home with their parents.
#16 There are simply not enough good jobs to go around anymore. It may be hard to believe, but 51 percent of all American workers make less than $30,000 a year.
#17 There are 7.9 million working age Americans that are “officially unemployed” right now and another 94.7 million working age Americans that are considered to be “not in the labor force”. When you add those two numbers together, you get a grand total of 102.6 million working age Americans that do not have a job right now.
#18 Owning a home has traditionally been a signal that you belong to the middle class. That is why it is so alarming that the rate of homeownership in the United States has been falling for eight years in a row.
#19 According to a recent Pew survey, approximately 70 percent of all Americans believe that “debt is a necessity in their lives”.
#20 At this point, 25 percent of all Americans have a negative net worth. That means that the value of what they owe is greater than the value of everything that they own.
#21 The top 0.1 percent of all American families have about as much wealth as the bottom 90 percent of all American families combined.
If we truly are “the greatest nation on the planet”, then why can’t we even take care of our own people?
Why are there tens of millions of us living in poverty?
Perhaps we really aren’t so great after all.
It would be one thing if economic conditions were getting better and poverty was in decline. At least then we could be talking about the improvement we were making. But despite the fact that we are stealing more than a hundred million dollars from future generations of Americans every single hour of every single day, poverty just continues to grow like an aggressive form of cancer.
So what is wrong?
Why can’t we get this thing fixed?
Tell us what you think we should do as a nation to solve this problem by posting a comment below…
Since the depths of the last recession, the price of ground beef in the United States has doubled. Has your paycheck doubled since then? Even though the Federal Reserve insists that we are in a “low inflation” environment, the government’s own numbers show that the price of ground beef has been on an unprecedented run over the past six years. In early 2009, the average price of a pound of ground beef was hovering near 2 dollars. In February, it hit a brand new all-time record high of $4.238 per pound. Even just 12 months ago, the price of ground beef was sitting at $3.555 per pound. So we are talking about a huge increase. And this hits American families where they really live. Each year, the average American consumes approximately 270 pounds of meat. The only nation in the world that eats more meat than we do is Luxembourg. If the paychecks of American workers were going up fast enough to deal with this increase, it wouldn’t be that big of a deal. But of course that is not happening. In an article just last week, I showed that real median household income is a couple thousand dollars lower now than it was during the depths of the last recession. The middle class is being squeezed, and we are rapidly getting to the point where burgers are going to be considered a “luxury” item.
The following chart was posted by the Economic Policy Journal on Wednesday, and it incorporates the latest data from the Bureau of Labor Statistics. When I first saw it, I was rather stunned. I knew that the price of ground beef had become rather outrageous in my local grocery stores, but I had no idea just how much damage had been done over the past six years…
The biggest reason why the price of ground beef has been going up is the fact that the U.S. cattle herd has been shrinking. It shrunk seven years in a row, and on January 1st, 2014 it was the smallest that it had been since 1951.
The good news is that the decline appears to have stopped, at least for the moment. According to the Wall Street Journal, the size of the U.S. cattle herd actually increased by 1 percent last year…
The U.S. cattle herd expanded in 2014 for the first time in eight years, offering hope to consumers that beef prices could start to subside after soaring to a series of records.
The nation’s cattle supply increased 1% in the year through Jan. 1 to 89.8 million head, according to data released Friday by the U.S. Agriculture Department, reversing a steady decline fueled by prolonged drought in the southern U.S. Great Plains and industry consolidation that encouraged many ranchers to thin herds.
But an increase of 1 percent is just barely going to keep up with the official population growth rate. If you factor in illegal immigration, we are still losing ground.
And if we have another major drought in cattle country this summer, the cattle herd is going to start shrinking again.
In addition, the price of food overall has been steadily rising for years. Here is a chart that I shared the other day…
It boggles the mind that the Federal Reserve can claim that we are in a “low inflation” environment. Anyone that goes grocery shopping feels the pain of these rising prices every time that they go to the store.
In the list that I put together yesterday, I included the following statistic…
Almost half of all Americans (47 percent) do not put a single penny out of their paychecks into savings.
One of the primary reasons why so many Americans are not saving any money is because many families simply cannot save any money. Their paychecks are stagnant while the cost of living just keeps going up and up.
There simply are not enough “good jobs” out there anymore. Our economy continues to bleed middle class jobs and the competition for the jobs that remain is quite intense.
Do you know what the two most common occupations in America today are?
According to the Bureau of Labor Statistics, they are “retail sales clerk” and “cashier”.
And of course neither of those “occupations” pays even close to what is required to support a middle class family.
On average, a retail sales clerk makes $24,020 a year, and a cashier makes $20,670 a year.
Because the quality of our jobs has declined so much, there are millions of American families today in which both the mother and the father are working multiple jobs in a desperate attempt to make ends meet each month.
But don’t worry, the Federal Reserve says that we are nearly at “full employment“, and Barack Obama says that everything is going to be just fine.
Actually, the truth is that things are about to get a lot worse. At this point, we are even getting pessimistic numbers out of the Federal Reserve. Just this week we learned that the Fed is now projecting that economic growth for the first quarter of 2015 will be barely above zero…
From almost 2.5% GDP growth expectations in February, The Atlanta Fed’s GDPNow model has now collapsed its estimates of Q1 GDP growth to just 0.2% – plunging from +1.4% just 2 weeks ago. The reality of plunging capex and no decoupling is starting to rear its ugly head in the hard data and as the sun warms things up, weather will start to lose its ability to sway sentiment.
We are at a turning point. The bubble of false stability that we have been living in is rapidly coming to an end, and when people start to realize that another great economic crisis is coming there is going to be a lot of panic.
And as far as food prices go, they are just going to keep taking a bigger chunk out of all of our wallets.
As high as prices are already, the truth is that your food dollars are never going to go farther than they do right now.
So let us hope for the best, but let us also get prepared for the worst.
The gravy train is over for oil workers. All over North America, people that felt very secure about their jobs just a few weeks ago are now getting pink slips. There are even some people that I know personally that this has happened to. The economy is really starting to bleed oil patch jobs, and as long as the price of oil stays down at this level the job losses are going to continue. But this is what happens when a “boom” turns into a “bust”. Since 2003, drilling and extraction jobs in the United States have doubled. And these jobs typically pay very well. It is not uncommon for oil patch workers to make well over $100,000 a year, and these are precisely the types of jobs that we cannot afford to be losing. The middle class is struggling mightily as it is. And just like we witnessed in 2008, oil industry layoffs usually come before a downturn in employment for the overall economy. So if you think that it is tough to find a good job in America right now, you definitely will not like what comes next.
At one time, I encouraged those that were desperate for employment to check out states like North Dakota and Texas that were experiencing an oil boom. Unfortunately, the tremendous expansion that we witnessed is now reversing…
In states like North Dakota, Oklahoma and Texas, which have reaped the benefits of a domestic oil boom, the retrenchment is beginning.
“Drilling budgets are being slashed across the board,” said Ron Ness, president of the North Dakota Petroleum Council, which represents more than 500 companies working in the state’s Bakken oil patch.
Smaller budgets and less extraction activity means less jobs.
Often, the loss of a job in this industry can come without any warning whatsoever. Just check out the following example from a recent Bloomberg article…
The first thing oilfield geophysicist Emmanuel Osakwe noticed when he arrived back at work before 8 a.m. last month after a short vacation was all the darkened offices.
By that time of morning, the West Houston building of his oilfield services company was usually bustling with workers. A couple hours later, after a surprise call from Human Resources, Osakwe was adding to the emptiness: one of thousands of energy industry workers getting their pink slips as crude prices have plunged to less than $50 a barrel.
These jobs are not easy to replace. If oil industry veterans go down to the local Wal-Mart to get jobs, they will end up making only a very small fraction of what they once did. Every one of these jobs that gets lost is really going to hurt.
And at this point, the job losses in the oil industry are threatening to become an avalanche. The following are 12 signs that the economy is really starting to bleed oil patch jobs…
#1 It is being projected that the U.S. oil rig count will decline by 15 percent in the first quarter of 2015 alone. And when there are less rigs operating, less workers are needed so people get fired.
#2 Last week, 55 more oil rigs shut down. That was the largest single week decline in the United States in 24 years.
#3 Oilfield services provider Baker Hughes has announced that it plans to lay off 7,000 workers.
#4 Schlumberger, a big player in the energy industry, has announced plans to get rid of 9,000 workers.
#5 Suncor Energy is eliminating 1,000 workers from their oil projects up in Canada.
#6 Halliburton’s energy industry operations have slowed down dramatically, so they gave pink slips to 1,000 workers last month.
#7 Diamondback Energy just slashed their capital expenditure budget 40 percent to just $450 million.
#8 Elevation Resources plans to cut their capital expenditure budget from $227 million to $100 million.
#9 Concho Resources says that it plans to reduce the number of rigs that it is operating from 35 to 25.
#10 Tullow Oil has reduced their exploration budget from approximately a billion dollars to about 200 million dollars.
#11 Henry Resources President Danny Campbell has announced that his company is reducing activity “by up to 40 percent“.
#12 The Federal Reserve Bank of Dallas is projecting that 140,000 jobs related to the energy industry will be lost in the state of Texas alone during 2015.
And of course it isn’t just workers that are going to suffer.
Some states are extremely dependent on oil revenues. Just take the state of Alaska for instance. According to one recent news report, 90 percent of the budget of Alaska comes from oil revenue…
But oil is also a revenue source in more than two dozen states, especially for about a third of them. In Alaska, where up to 90 percent of the budget is funded by oil, new Gov. Bill Walker has ordered agency heads to start identifying spending cuts.
Sadly, it looks like oil is not going to rebound any time soon.
China, the biggest user of oil in the world, just reported that economic growth expanded at the slowest pace in 24 years. And concerns about oversupply drove the price of U.S. crude down another couple of dollars on Monday…
Oil declined about 5 percent on Tuesday after the International Monetary Fund cut its 2015 global economic forecast on lower fuel demand and key producer Iran hinted prices could drop to $25 a barrel without supportive OPEC action.
U.S. crude, also known as West Texas Intermediate or WTI, settled 4.7 percent lower at $46.39 a barrel, near its intraday bottom of $46.23.
There is only one other time in history when we have seen an oil price crash of this magnitude.
That was in 2008, just before the greatest financial crisis since the Great Depression.
Many believe that we are now on the verge of the next great financial crisis.
I hope that you are getting ready.
Did you know that 65 percent of all children in the United States live in a home that receives aid from the federal government? We live at a time when child poverty in America is exploding. Yes, the U.S. economy is experiencing a temporary bubble of false stability for the moment, but even during this period of false stability the gap between the wealthy and the poor continues to rapidly expand and the middle class is being systematically destroyed. And sadly, this is having a disproportionate impact on children. This is happening for a couple of reasons. First of all, poorer households tend to have more children than wealthier households. Secondly, most people tend to have children when they are in their young adult years, and right now young adults are being absolutely hammered by this economy. As a result, things just continue to get even worse for children living in this country. Here are 14 facts that show that the number of children in America living in poverty this Christmas is at an all-time record high…
#1 The National Center for Children in Poverty says that 45 percent of all U.S. children belong to low income families.
#2 According to a Census Bureau report that was released just this week, 65 percent of all children in America are living in a home that receives some form of aid from the federal government…
“Almost two-thirds (65 percent) of children,” said the Census Bureau, “lived in households that participated in at least one or more of the following government aid programs: Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP), the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Medicaid, and the National School Lunch Program.”
#3 According to a report recently released by UNICEF, almost one-third of all children in this country “live in households with an income below 60 percent of the national median income”.
#4 When it comes to child poverty, the United States ranks 36th out of the 41 “wealthy nations” that UNICEF looked at.
#5 An astounding 45 percent of all African-American children in America live in areas of “concentrated poverty”.
#6 40.9 percent of all children in the United States that are living with only one parent are living in poverty.
#7 These days, a lot of single mothers are really, really struggling to survive. A decade ago, the number of women in America that had jobs outnumbered the number of women in America on food stamps by more than a 2 to 1 margin. But now the number of women in America on food stamps actually exceeds the total number of women that have jobs.
#8 It is hard to believe, but right now 49 million Americans are dealing with food insecurity.
#9 According to a report that was released last month by the National Center on Family Homelessness, the number of homeless children in the United States has reached a new all-time high of 2.5 million.
#10 There are more than half a million homeless children in the state of California alone.
#11 One recent survey found that about 22 percent of all Americans have had to turn to a church food panty for assistance.
#12 This year, almost one out of every five households in the United States will go through the holiday season on food stamps.
#13 One of the primary reasons why kids are suffering so much is because their parents are simply not making enough money. This is especially true for parents of young children. For example, check out the following numbers from the Atlantic…
Since the Great Recession struck in 2007, the median wage for people between the ages of 25 and 34, adjusted for inflation, has fallen in every major industry except for health care.
These numbers come from an analysis of the Census Current Population Survey by Konrad Mugglestone, an economist with Young Invincibles.
In retail, wholesale, leisure, and hospitality—which together employ more than one quarter of this age group—real wages have fallen more than 10 percent since 2007. To be clear, this doesn’t mean that most of this cohort are seeing their pay slashed, year after year. Instead it suggests that wage growth is failing to keep up with inflation, and that, as twentysomethings pass into their thirties, they are earning less than their older peers did before the recession.
#14 Overall, the quality of the jobs in America continues to decline. At this point, most Americans do not bring home enough income to support a middle class lifestyle for their families. Below I have shared an excerpt from an article that I published a while back…
The following are some statistics about wages in the U.S. from a Social Security Administration report that was recently released…
-39 percent of American workers made less than $20,000 last year.
-52 percent of American workers made less than $30,000 last year.
-63 percent of American workers made less than $40,000 last year.
-72 percent of American workers made less than $50,000 last year.
In addition to all of these numbers, there is also a lot of anecdotal evidence that families with children are really struggling right now.
For example, McDonald’s has traditionally been a place where poor and middle class families have taken their children for a cheap meal. But the restaurant chain just released the worst sales numbers that we have seen in more than a decade.
And the really bad news is that this is just the beginning of the economic pain for families with children. The U.S. economy is in a bubble period right now, and the authorities have been trying with all of their might to keep the bubble inflated.
Just imagine a bodybuilder that is pressing with all of his might to do one more rep on the bench press. That is essentially where we are at. In a recent piece, Brian Pretti summarized some of the extraordinary measures that global central banks have taken to keep the economic bubble inflated…
Since early 2009, central banks globally have printed more than $13 trillion. In addition, governments across the planet have increased their borrowings at historic proportions (the US just crossed $18T – another new high!), all in an effort to stimulate economies and avoid deflationary pressures. Total US Federal debt has more than doubled in five years, an increase of $9.5 trillion and counting.
Despite all of these efforts, the best that we have achieved is economic stagnation.
And now it is becoming clear that the overwhelming deflationary forces around the globe are starting to win the battle. The central banks have used up their ammunition and they still have not turned things around. In fact, as Ambrose Evans-Pritchard so eloquently put it recently, what we see all around us is “evidence of a 1930s-style depression, albeit one that is still contained”…
What is clear is that the world has become addicted to central bank stimulus. Bank of America said 56pc of global GDP is currently supported by zero interest rates, and so are 83pc of the free-floating equities on global bourses. Half of all government bonds in the world yield less that 1pc. Roughly 1.4bn people are experiencing negative rates in one form or another.
These are astonishing figures, evidence of a 1930s-style depression, albeit one that is still contained. Nobody knows what will happen as the Fed tries to break out of the stimulus trap, including Fed officials themselves.
But will it still be contained once the next major financial crash strikes?
As I discussed yesterday, there has never been a time when conditions have been more ideal for a financial crisis since the last one happened in 2008.
So as bad as things are for the children of America right now, they are only going to get worse.
In the years ahead may we all have great compassion for these victims of our incredibly foolish economic mistakes.