Jan 15 2015

Which state has half of its eligible adults not working? The dismal employment participation rate across the United States.

People have a hard time wrapping their minds around the fact that 93 million Americans are not in the labor.  In December alone we added over 451,000 to this category.  Much of this figure comes from people retiring and those simply not eligible to work but there is a disturbingly large number of people that are eligible for work and are simply lacking a job.  There seems to be a perception that all of the people hitting retirement age are somehow prepared to weather the years of older age with a sizable nest egg.  Nothing could be further from the truth.  Half of older Americans would be out on the streets if it were not for Social Security.  The participation rate tells us a different story regarding the economy.  It is telling that for the first time in the history of the Labor Department’s tracking of this metric that one state actually has half of its adult population not participating in the labor force.

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Jan 13 2015

Only 4 out of 10 Americans has enough in their savings to pay for an unexpected expense: Half of the country is living paycheck to paycheck with no retirement plans.

There is little motivation to save when your local bank is offering close to zero percent on your savings account. And most Americans simply do not invest in the stock market. When it comes to saving money it is crucial to get into the habit of putting funds away for unforeseen events and expenses. Life has a way of bringing on unexpected expenses. The transmission falls apart, an unexpected illness, or having the roof blown off during a storm. All of these cause short-term disruptions to your balance sheet. Contrary to what the media portrays, most Americans are horrible savers. In fact, only 4 out of 10 Americans have enough in their savings accounts to pay for an unexpected expense. So it should also come as no surprise that half this country is not adequately preparing for retirement and will be depend on Social Security as their main, and for many only source of income in old age. Why do Americans save so little?

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Jan 10 2015

Record 93 million Americans now not in the labor force: The non-working American recovery added 451,000 to the not in the labor force category in December alone.

The employment report came out today and what you would take as good news sent the market moving lower.  Why?  A large number of the jobs added were in retail and food services.  The growth in low wage employment caused the overall wage level to dip.  But what was more telling and what continues to be ignored by the press is that we now have nearly 93 million Americans in the “not in the labor force” category.  In December alone this category surged by 451,000.  The market turned sour on a variety of fronts but the labor force participation rate also took a tumble.  The spin is that we have many people hitting retirement age and many are going into the sun with large nest eggs.  But the reality is, most older Americans are relying on Social Security to keep them one step away from poverty.  We just hit a new record for those not in the labor force.

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Jan 6 2015

The American Dream no longer involves owning a home: Record number of young living at home and rents increase while income falls.

Inflation is an insidious money grabber. When incomes are stagnant or falling, any tiny amount of inflation is tantamount to a wage a cut. The largest expense for Americans is housing payments. This can be in the form of rent paid to a landlord or mortgages paid to a bank. Either way, money is getting funneled out for shelter. While incomes have been stagnant, rents have been soaring and the number of households renting has surged thanks to banks crowding out regular families in the single family home market. Wall Street has been chasing yield and thanks to generous bailout policies, the American public is subsidizing this low rate environment on the backs of this debt fueled low wage recovery. Many Americans are now sour to the notion of owning a home. How many young adults lost their homes or saw their parents struggle to make the monthly mortgage payment? The mindless banter of “housing never goes down” is now lost on this current generation. What is interesting is that home values have gone up, rents have gone up, but the overall homeownership rate has fallen in line with incomes. And of course, rents are being jacked up while incomes flutter.

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