Sep 23 2015

The increasing odds that you will die working: The extinction of retirement and the growing old age labor force.

I was greeted by an older gentleman at a local Target store.  He slowly smiled and said hello.  I nodded and said hello as he proceeded to greet other shoppers.  Leaving the store I was greeted by an older cashier.  Over the last decade, the retail labor force is seeing a growing number of older Americans.  Many don’t envision retirement as working in a low-wage job but that is simply the way of life for many.  The BLS estimates that labor force participation rate for those 65 to 74 years of age is going to increase to 31.9 percent in 2022.  That is an incredibly high number of older Americans eligible for Social Security still working in the labor force.  This is happening as younger Americans make up a smaller portion of the labor force and as many more Americans enter into college.  Yet one thing that is rarely discussed is that many older Americans are going to work until they die out of necessity.  Not a few.  Not a couple.  A large portion of older Americans are working deep into old age because they can’t afford to retire.

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Sep 20 2015

Census data shows a record 46.7 million Americans live in poverty. Over 40,000 dollar stores now permeate the United States.

Census data is always released in September for the previous year.  As far as comprehensive data goes the Census is one of the best measures that we have.  The latest Census figures merely reflect an economy that is crushing the American Dream.  It also helps to highlight why so many people have profound doubts regarding this so-called recovery.  The latest Census figures show that a record number of Americans now live in poverty.  The total number of Americans living in poverty is 46.7 million.  We also have a large number of Americans working in low-wage jobs and being perilously close to being in poverty.  This is not what people have in mind when we talk about a recovery.  The problem, of course, is the financialization of the system where a massive bull run in stocks simply went to consolidated wealth into fewer hands.  Big banks got bigger while household income reverted back to where it was in 1989.

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Sep 16 2015

How subprime loans keep the bubble going: Subprime auto loans continue to grow as credit worthy customers drop out of the market.

Low interest rates create an environment that encourages debt based spending.  In regards to monetary policy, this is how you grease the wheels to get the economic engine spinning.  As part of your financial arsenal this can be used in moderation but the Fed has been using maximum credit leverage since the economy imploded and this short-term fix is now running into its seventh year.  The outcomes are expected with inflation running rampant in credit heavy items like housing, cars, and college tuition.  But with housing, big banks and investors have crowded out regular buyers thus pushing the homeownership rate lower.  So credit based spending has been in full effect with auto loans and student debt.  As many credit worthy Americans were deep in debt, the temptation to go into subprime loans has accelerated dramatically.  Subprime auto debt is running rampant.  Student debt is now the most delinquent debt class in America.  Subprime debt is once again super charging the debt fueled market.

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Sep 12 2015

The American Dream deferred: Looking at the 4 horsemen of middle class destruction. Student debt, household income, low wage jobs, and FIRE economy dominance.

The angst that is being manifested in the political arena is largely being brought on by economic uncertainty.  There is a general underlying anxiety of living in a United States with a weakened and invisible middle class.  We are heading directly into that scenario with both eyes fully wide open.  Many of the new jobs added since the Great Recession ended have come in the form of low wage employmentLow wage jobs are largely made up by lower wages of course but also, a lack of employment security and rising healthcare costs are forcing families to shoulder a larger financial burden as employers shift costs directly onto them.  The problem with rising costs is reflected by stagnant income growth for households.  Adjusting for inflation, American families are making what they did in the 1980s.  Our young workers looking for better opportunities go to college but then leave with an insurmountable level of student loans.  This debt burden delays household formation and puts a clamp on consumer spending.  Finally, it would seem for the last couple of decades, the only segment of the economy thriving is that of the financial and banking sector.  In other words, the American Dream that once rewarded hard work in mass is becoming a mere mirage in the midst of crony capitalism and financial speculation.

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Sep 7 2015

Record shattering 94 Million Americans not in the labor force: The army of non-working Americans continues to grow.

The employment numbers released a few days ago left much to be desired right before entering into the nationally celebrated Labor Day holiday.  Not many people can enjoy the “labor” part of the holiday since those not in the labor force has hit another stunning record.  The latest gloomy figures show that 94 million Americans are not in the labor force.  This category added a stunning 261,000 people while overall jobs added came in at a lackluster 173k.  When we dig into the employment figures we find that many of the jobs being added are also coming in the form of low wage jobs.  The market is coming to the grim realization that something is fishy with how the employment figures are reported.  We supposedly have the lowest unemployment rate in seven years yet somehow we now have 94 million Americans not in the labor force with hundreds of thousands of people dropping out each month.  Those finding work are largely in McJobs with low pay, no benefits, and job security that resembles the lifespan of a fly.  The army of non-working Americans continues to grow.

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Sep 3 2015

A closer look at the cost of living between 2000 and 2015: Looking at tuition at USC and the typical priced US home.


We keep hearing that the Fed is tepid about raising interest rates because there is no sign of inflation.  In fact, they assume that wages are keeping up for most families and that is not true.  Inflation is running rampant.  You don’t need giant price increases to disrupt lifestyles when many of the new jobs are being added in the low wage service sector.  Numbers mean little without actual case examples.  So today we are going to look at tuition at a big private university and the cost of buying a home.  These are big ticket items and many people need a college degree to even have a remote chance of not falling into the low wage hamster wheel.  But choosing a school and managing costs is like navigating through a landmine field.  This is why total outstanding college debt is now at $1.36 trillion and growing.  While nominal wages have gone up since 2000 all of the gains have been stripped by the rising cost of items.  People try to keep up by going into debt to finance these purchases.  This is why inflation is a slow dollar killer.  Let us look at this in practice.

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Aug 30 2015

Social Security supports 1 out of every 5 Americans: Most retirees heavily depend on Social Security for their retirement income.

It is great that people overall are living longer but adding years to your life can get costly.  Retirement can be a long time.  For some, retirement can last as long as their working career. With a pension people didn’t have to worry about longevity as if this was a bad thing.  Yet pensions are rare in our current low wage environment.  Social Security has become the backbone of income for millions of retirees.  Numbers can be daunting but as I dug deep into the Social Security figures, we now have more than 64 million Americans receiving some form of Social Security.  In other words, 1 out of 5 Americans is receiving funds from a system that heavily relies on those actually working.  The challenge is now emerging where many young Americans are being pushed into low wage jobs while older Americans scrimp by on their monthly benefit payment.  Things work until they don’t and math eventually catches up.

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