Feeling rich through debt: Modern banking has replaced real economic prosperity with massive levels of debt. Housing affordability reaches multi-decade highs while household incomes retreat to 1990s levels.
One of the biggest headlines right now is how the housing market is pulling the entire market up. Housing prices are soaring while the stock market is making record highs. Yet a large portion of the housing run-up is being caused by easy money that has been created by the Federal Reserve. Banks are out-bidding [...]
One of the common views regarding the labor participation rate declining is that many baby boomers are retiring and leaving the work force. Unfortunately many are finding that retirement is a myth when you are broke and many will be working deep into their later years. So when we examine the numbers we actually find [...]
US households are tapped out on debt: While US households are forced to eat austerity measures financial institutions load up on debt and purchase assets at rock bottom prices.
US households are tapped out with debt. Debt matters. Contrary to what is being spouted out over the airwaves having too much debt does cause problems. American households tipped over this point when total household debt reached annual GDP. This is a critical juncture and results in massive deleveraging. There doesn’t seem to be answer [...]
The coming deleveraging for Canada – Unit labor costs in manufacturing above US labor costs and household debt-to-income at 160 percent.
Our neighbors to the north in Canada are going to face a serious deleveraging shortly. This isn’t hyperbole or some off the wall call but based on evidence of what happens when economies get into too much back breaking debt. If the largest trading blocs, the US and Europe had to have their day of [...]
Does inflation matter? The real cost of living for middle class Americans. Fed on path to growing balance sheet to $4 trillion.
Does inflation matter? If you ask this question to the Fed, it appears like it doesn’t. The Fed is doing everything it can to stoke the fires of inflation. Instead, what it is doing is causing further asset bubbles and misallocation of capital in markets. For most people the cost of living is becoming more [...]
Food service workers at a record high in US economy: Record percent of Americans now employed in food services as a share of total employment coupled with peak food stamp usage.
One of biggest contributors to jobs over the last few years has come from the low-wage food service sector. A record 7.6 percent of Americans now work in food services and drinking places. Given that we have 47+ million Americans on food stamps and this figure has boomed in the last decade, it should come [...]
Where did the American worker go? 663,000 people were removed from the labor force pushing the figure to 90 million Americans not looking for work.
The employment report was very weak no matter how you sliced it. The unemployment rate fell but this was largely driven by an incredibly large number of people dropping out of the labor force. This recession has been extremely tough on US households. The recession was technically over in the summer of 2009 which seems [...]
The un-American savings rate: Americans savings rate heads to a record low. Americans saving about 2 percent per year and the near extinct pension.
For a brief period during the height of the recession, Americans resorted to saving more money as credit markets around the world tightened up. As data is now showing, this turned out to be a very brief anomaly in the market. Americans are back to not saving money. The debt markets are creeping back in [...]
The bailout of the wealthy: stock market sham, income inequality, and crushed consumer sentiment. Peak debt, peak Dow, peak inequality.
In the midst of the stock market reaching record levels the Federal Reserve has increased its balance sheet to well over $3.2 trillion. The Fed continues to be the primary buyer of mortgage backed securities. This strategy has caused a flood of easy money from big banks into residential real estate as funds start chasing [...]
The long slog ahead for jobs: We are 9.45 million jobs short of where we should be and are unlikely to reach normal levels of employment before 2019.
Employment is the most important indicator of a healthy economy. The recession has left a deep scar and has set us back into a lost decade. Primarily for this reason many Americans are having a hard time jumping on this recovery that officially will reach a four year anniversary this summer. The long term projections [...]