Dec 2 2014

No inflation they say: Increases from 2007 include rent going up by 27 percent, food increasing 12 percent, health insurance 42 percent.

Inflation has a slow methodical pattern of crushing every little dollar you have in your wallet.  Even a moderate level of inflation is an enormous change when incomes go stagnant.  There is talk about how spending this year isn’t all that great.  This is a big deal considering that our economy runs on non-stop spending and a large part of spending happens during the holiday months.  But Americans are still constrained from the Great Recession’s echo impact.  The lingering financial problems remain and many Americans have swapped good paying jobs with many in low wage service jobs.  The end result should not be a surprise but there is less to spend even with credit card access and more debt being thrown on cash strapped households.  We keep hearing about how controlled inflation is but in reality, we are seeing price increases in many important segments of our society.  No inflation they say.  Let us look at some key items.

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Nov 28 2014

What happens when 100 million Americans are not in the labor force? More pressure is being added on the one-third of working Americans supporting two-thirds of the population.

It is hard to believe but we have over 92 million Americans not in the labor force.  I’ve paid close attention as to how the media presents this group and they usually attribute it to older Americans retiring.  The problem with this narrative is that it gives the impression that many have the means to retire and also, that many of these are older people.  That is not true.  Many older Americans are dropping out and fully relying on Social Security so they do not fall into a life of financial destitute.  Many others including younger workers are oscillating in and out of the low wage economy.  This entire shadow group which is getting close to one-third of our nation is largely discounted in the media.  The unemployment rate looks fantastic because every month, we have more Americans simply being erased off the financial ledger.  At this current rate, we will have 100 million Americans not in the labor force by 2020.

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Nov 24 2014

Economic goals of young and old pulling in diverging directions: times will only get tougher for young Americans.

Older Americans tend to vote in larger numbers and are more interested in politics than younger Americans.  In the past the older voting cohort was not as large so politicians were cautious about deviating too far for one group alone.  Today, we are having a large number of older Americans living longer into old age.  Social Security has become the default retirement plan for many older Americans.  It should come as no surprise that priorities of the young and the old diverge dramatically.  Younger Americans are interested in education while older Americans are interested in Social Security and military defense.  Yet each group needs each other to accomplish their goals.  The young fight wars and Social Security is paid out via current payroll taxes.  Education requires teachers and those willing to enlighten future generations.  Unfortunately people vote myopically and in many cases, setup systems that are detrimental to their own children.

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Nov 20 2014

Multi-generational living is here to stay in a low wage economy: Over 57 million Americans live in multi-generational households.

The Great Recession might be officially over on paper, but the social impact continues to be felt today. The structural changes are deep and profound and have caused a major rise in multi-generational households. Many young Americans burdened by low wage jobs and college debt may have no other option but to move back home with parents. The number of people living in such households has doubled since 1980. More than 18 percent of the population now lives in this arrangement. A large push has come from those 25 to 34 given that 1 in 4 now live in a household with multiple generations. Money is tight and rising living expenses including rents have kept many from venturing out on their own. The economy has been adding jobs but many of these jobs are coming from the low wage sector and are simply not providing a base for moving out. This latest election was driven by people unhappy with the economy but also wanting higher wages.

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