Bye Bye Middle Class: The Rate Of Homeownership In The United States Has Hit The Lowest Level Ever

Abandoned House - Public DomainThe percentage of Americans that own a home has fallen to the lowest level ever recorded.  During the second quarter of 2016, the non-seasonally adjusted homeownership rate fell to just 62.9 percent, which was exactly where it was at when the U.S. Census began publishing this measurement back in 1965.  This is not what a “recovery” looks like.  All throughout the Obama years, the percentage of Americans that own a home has gotten smaller and smaller and smaller.  The reason for this, of course, is that the middle class in America is dying.  Last year, we learned that middle class Americans now make up a minority of the population for the first time ever.  In order to have a high rate of homeownership, you need a thriving middle class, and you can’t have a thriving middle class without good paying middle class jobs.  This is why I write about the evisceration of the middle class so extensively, because the U.S. economy is systematically being hollowed out and most Americans don’t understand what is happening.

Traditionally, owning a home has been a sign that you have arrived as a member of the middle class, but under Barack Obama the percentage of Americans that own a home has fallen every single year.  In the past, we have talked about how it had fallen to the lowest level in decades, but now it has officially fallen to the lowest level ever.  The following comes from CNBC

After rising just over a decade ago to its highest level ever, the nation’s homeownership rate fell to match its all-time low and could drop even further in the months to come.

In the second quarter of this year, the rate fell to 62.9 percent, not seasonally adjusted, which is the same as it was in 1965, when the U.S. Census started tracking the metric. During the epic housing boom in the mid-2000s, the rate soared as high as 69.2 percent. That was when politicians touted the so-called “ownership society.”

So why is this happening?

Well, according to Wolf Richter analysts are blaming many factors…

  • Rising home prices in an economy of stagnant wages (for the lower 80%) have pushed entry-level homes out of reach for many people.
  • Lower priced homes in many urban areas entail a huge and costly ($ and time) commute every day. And even then, these homes may be too much of stretch for big parts of the population in expensive urban areas.
  • First time buyers are having trouble saving for a down payment since they spend their last available dime to meet soaring rents.
  • Millennials have been blamed. They always get blamed for everything. They saw their parents deal with the American Dream as it turned into the American Nightmare, and they learned their lesson early in life.
  • The super-low interest rate environment hasn’t made homes more affordable because home prices, in response to super-low interest rates, have soared, and in the end, mortgage payments are higher than they were before.
  • Higher home prices entail other costs that are higher, including taxes, brokerage fees, and insurance.

Certainly all of those points are legitimate, but the truth is that what we are facing is much broader than all of that.  The middle class in the United States has been dying for decades, and in recent years the long-term trends that have been slowly eating away at the middle class like cancer have accelerated significantly.  Just consider these numbers…

-In America today, nobody has a job in one out of every five families.

-At this moment, 102 million working age Americans do not have a job.

-According to the Social Security Administration, 51 percent of American workers currently make less than $30,000 a year.

-In 1970, the middle class brought home approximately 62 percent of all income. Today, that number has plunged to just 43 percent.

-The Federal Reserve says that 47 percent of Americans could not pay an unexpected $400 emergency room bill without borrowing the money from somewhere or selling something.

-One recent survey discovered that 62 percent of all Americans have less than $1,000 in savings.

-If you currently have no debt and you also have ten dollars in your pocket, that gives you a greater net worth than about 25 percent of all Americans.

-According to Kathryn J. Edin and H. Luke Shaefer, the authors of a 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.  If you can believe it, that number has doubled since 1996.

-Back in 2007, approximately one out of every eight children in America was on food stamps. Today, that number is one out of every five.

-Things continue to get worse for the middle class as we head into the second half of 2016.  Gallup’s U.S. economic confidence index just hit the lowest level so far this year.

I could keep quoting numbers at you all day, but hopefully you are getting the picture.

The middle class in America just keeps getting smaller and smaller and smaller, and our politicians just keep on conducting business as usual.  They don’t seem to care that they are strangling the life out of what was once the largest and most thriving middle class in the history of the planet.

And things could soon get much worse for the middle class as this new global economic crisis accelerates.  In fact, highly respected economist Peter Schiff believes that a major downturn in the U.S. is imminent

HERE IS THE REALITY: The world has caught on, and the gig is up. Under Obama’s stewardship, the U.S. national debt has gone from $10 Trillion, to what will be $20 Trillion by the time he leaves office, with nothing more than 100 MILLION Americans out of work, and 50 MILLION in poverty and on food stamps. That’s what cheap money bought for us. It was all “borrowed” cheap money too, making it infinitely worse, and the world is tired of lending.

There are so many families out there that are really struggling right now, and more than two-thirds of all Americans believe that the country is on the wrong track.

I would like to tell you that happy days are here again and that the best times for America are just around the corner, but unlike the politicians at the Republican and Democratic national conventions, I am not going to lie to you.

Very rough times are coming, and things are going to get much harder for the middle class.

Plan accordingly, and get prepared while you still can.

Unemployment Claims Spike Again As We Get More Scientific Evidence The Middle Class Is Shrinking

Despair And Unemployment - Public DomainAs the U.S. economy slows down, we would expect to start to see evidence of this in the employment numbers, and that is precisely what has begun to happen.  During the week before last, initial claims for unemployment benefits jumped by 17,000, which was the largest increase that we had seen in over a year.  Well, last week we witnessed an even bigger spike.  Seasonally adjusted initial claims shot up 20,000 more to a total of 294,000.  Of course it makes perfect sense that more Americans are applying for unemployment benefits, because firms are laying people off at a much faster pace these days.  Just a couple days ago I reported that job cut announcements at major firms are running 24 percent higher this year compared to the first four months of last year.  So we should fully expect that the number of Americans seeking unemployment benefits will continue to accelerate.

Personally, I am a bit surprised by how quickly these numbers are getting worse.  The following comes directly from the Department of Labor

In the week ending May 7, the advance figure for seasonally adjusted initial claims was 294,000, an increase of 20,000 from the previous week’s unrevised level of 274,000. This is the highest level for initial claims since February 28, 2015 when it was 310,000. The 4-week moving average was 268,250, an increase of 10,250 from the previous week’s unrevised average of 258,000.

For a long time, initial claims for unemployment benefits were running quite low, and this was one of the few bright spots for the U.S. economy.

Unfortunately, that is now changing, and this is just more confirmation that a significant economic slowdown has already started.  For many more numbers that back up this claim, please see my previous article entitled “11 Signs That The U.S. Economy Is Rapidly Deteriorating Even As The Stock Market Soars“.

But whether the economy has been doing good or bad in recent years, the long-term trend of the decline of the middle class in America has continued unabated.

This week, we got even more evidence that the middle class is steadily disappearing from the Pew Research Center

The American middle class is losing ground in metropolitan areas across the country, affecting communities from Boston to Seattle and from Dallas to Milwaukee. From 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas examined in a new Pew Research Center analysis of government data. The decrease in the middle-class share was often substantial, measuring 6 percentage points or more in 53 metropolitan areas, compared with a 4-point drop nationally.

Do you understand what that is saying?

It says that the middle class got smaller in 203 out of 229 U.S. metropolitan areas between 2000 and 2014.  This means that the death of the middle class is very widespread and it is happening all over the country.

But it isn’t just the middle class that is suffering.  According to that same report, household incomes have been falling for Americans in all income brackets…

American households in all income tiers experienced a decline in their incomes from 1999 to 2014. Nationally, the median income of middle-income households decreased from $77,898 in 1999 to $72,919 in 2014, a loss of 6%. The median incomes of lower-income and upper-income households fell by 10% and 7%, respectively, over this period.

The systematic evisceration of the middle class has been a continuing theme that I have been writing about for many years.  And without a doubt, one of the biggest reasons for the decline of the middle class has been the disappearance of middle class jobs.

Thanks to “free trade agreements” that have been pushed by Bill Clinton, George W. Bush and Barack Obama, the U.S. economy has been steadily merged into the emerging one world economic system.  As a result, U.S. workers are now forced to directly compete for jobs with workers on the other side of the planet that live in countries where it is legal to pay slave labor wages.

It was inevitable that good paying jobs would leave areas where labor was expensive and go to places were labor was very cheap.  Over the past couple of decades, the U.S. has seen tens of thousands of manufacturing facilities shut down and we have lost millions of middle class jobs.

One of those middle class jobs was lost by a factory worker named Wendell Nolen

Wendell Nolen, 52, has experienced the slide from middle-class status first-hand. Eight years ago, he was earning $28 an hour as a factory worker for Detroit’s American Axle and Manufacturing Holdings, assembling axles for pickup trucks and SUVs.

But early in 2008, the good life unraveled. After a three-month strike, Nolen took a buyout rather than a pay cut. Less than a year later, the plant was closed and American Axle shipped much of its work to Mexico.

Now Nolen makes $17 an hour in the shipping department of a Detroit steel fabricator, about 40 percent less than he made at the axle plant.

America is losing jobs because of the free trade stuff,’ Nolen said. ‘They’re selling America out.’

I couldn’t have said it better myself.

If you step back and take a longer-term view of things, what has happened to our middle class is abolutely staggering.

For example, one study found that the middle class in America became a minority last year for the first time in our history.

And if you go back to 1970, the middle class took home close to 62 percent of all income, but today that number has dropped to just 43 percent.

This is a problem that has been crying out for a solution for a very long time, and yet our politicians have been sitting on their hands.

Now the next crisis is here, and the plight of the middle class is about to get a whole lot worse.

For months, my regular readers have been listening to me go on and on about how the U.S. economy is deteriorating, but now even the mainstream media is saying it.

For example, a Bloomberg article that just came out admits that “the next president will probably face a recession” no matter who wins the election…

Talk about a poisoned chalice. No matter who is elected to the White House in November, the next president will probably face a recession.

And an article that was just published by CNBC is even more pessimistic about the economy…

We are in the midst of a deceleration in the economy, and the chain of dominoes leading to a recession has started to fall. First, it was a weak global economy. Then, multinationals and business-to-business companies were hit by the resulting decline in global trade and commodity prices. Now, consumers are starting to feel the repercussions as they draw down their growth in spending on discretionary goods and services, which we saw reflected in the first-quarter GDP report.

This is the foreshadowing of a recession. We saw similar indicators prior to recessions in 2001 and 2008. Although there is potential for economic indicators to flip, the current momentum and indicators suggest that the U.S. economy will get worse before it gets better.

This is precisely what I have been saying.  The exact same indicators that told us that recessions were coming in 2001 and 2008 have been flashing bright red, but most people don’t seem to understand what is happening.

It doesn’t matter how much faith you may have in Barack Obama, Hillary Clinton, Bernie Sanders or Donald Trump.  None of them can stop what is already in the process of happening.

Without a doubt, we truly are “in the midst of a deceleration in the economy”, and it is most certainly true that “the next president will probably face a recession”.

In fact, we would be exceedingly fortunate if it is just a recession that we will be dealing with.

The largest and most important economy on the planet is teetering on the brink, and it is not going to take much to push us into a full-blown disaster.

So let us hope for some sort of economic miracle to take place, because we could really use one right about now.

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