According to the BLS, the unemployment rate is roughly 5%. Shadow statistics, on the other hand, states that as of Dec 2015, the unemployment rate stands at 22.9%.[/color-box]
American economy & Wage stagnation
Real wages have been declining since 2000. In fact, $22.41 today has the same purchasing power an hourly salary of $4.03 cents hand in 1973. Median Income continues to drop; the middle-class has been decimated since the financial crisis of 2008. This trend is going to continue for the foreseeable future.
Another factor contributing to lower wages is corporate greed. Corporations are using billions of dollars to buy back shares instead of investing and growing their companies. When you buy back shares you artificially boost the earnings per share metric (EPS); this is alchemy as its best. This is done without spending money on new equipment or hiring new workers. It is fast, simple and fraudulent but the government is not prosecuting anyone so this trend will continue. We covered this recently in an article titled “share buybacks just another Wall Street Scam”
Is the American economy improving?
This chart illustrates how the situation has been getting progressively worse over the years and it’s not only restricted to the recession of 2008-2009. The number of individuals in need of government assistance to put food on the table has continued to rise during this so-called economic recovery. When the economy is improving, fewer individuals seek out government help and not more. This chart indicates that the situation is going from bad to worse. When you flood the markets with money, only the very wealthy benefit as it creates an environment that punishes savers and rewards speculators. This article titled “Oops we did it again” explains this in more detail.
Lastly, Student debt is a time bomb waiting to explode. It stands at $1.3 trillion and is growing roughly at a rate of $2,800 every second. As of June 2015, 11.5% of the debt was delinquent for at least 90 days according to Bloomberg. 40 million American now are carrying some form of student loans. 70% of college students graduate with debt, and there is no guarantee of landing a job upon graduation. The department of education has stated that by 2025 this debt is set to surge to almost$2.5 trillion. A massive default here will make the financial crisis of 2008 appear to be a walk in the park.
Random Notes on The markets Sept 2019
It takes zero effort to panic and the reward is exactly zero; those that panic in the face of adversity are given what they deserve. In terms of the market that means less than zero, as the masses always sell at the bottom and buy at the top. The astute individual that does not panic walks away with a huge reward and that is how it’s been for millennia and nothing is going to change for another 1000 years.
There is no law or set rules when it comes to the markets other than having the ability to adapt to a given situation. We are dealing with emotions and when emotions run amok, all hell breaks loose, that is why like cattle, the masses always stampede when the markets sell-off and all of them jump in when the bubble is about to pop. Hundreds of years have passed since the Tulip bubble and nothing has changed.
You need to take control of your life and not hope or expect the government or any private entity to bail you out. This means you should live 1-2 standards below your means and put this extra money to work for you in the stock market. Look at it this way, you were going to spend this money anyway buying crap you did not need to impress people you do not like, with money you really cannot afford to spend.
Other articles of interest
Stock Market Bull 2019 & Forever QE (June 13)