11 Nasty Trends That Will Test America's Resilience

Tyler Durden's picture

Originally posted at Investors.com,

The resilience that has long been one of America's remarkable traits was on display in 2013. Not only did businesses create 2 million jobs, but the struggling economy actually grew and profits and stock prices soared to near-record levels.

Still, five years into the Obama presidency, the economy is grossly underperforming. Contrary to the dominant media narrative, it's not bad luck or the financial crisis to blame, but bad policies — from the $860 billion "stimulus" that didn't stimulate to the Dodd-Frank financial reform that killed lending.

Last year was a challenging one for entrepreneurs and other productive Americans. No fewer than 13 new taxes were put into place. Big government now consumes one of every four dollars of our GDP and is getting bigger.

Entering 2014, we face problems, including taxes and spending, that neither the White House nor Congress is addressing. In the following charts, we look at a few of the more alarming and intractable ones.


Extremely Limited Prosperity

The president talks endlessly about the need to reduce income inequality, and claims it will be the focus of his remaining years in office.

As this chart shows, since the U.S. recession bottomed in June 2009, stock prices have been on a tear — fueled by a powerful rise in corporate profits. The bellwether S&P 500 index has climbed more than 90%, as U.S. investors added more than $5 trillion in stock market wealth.

But Obama's slow-growth economic policies have taken a toll. Yes, corporate profits have increased, but companies worried about what lies ahead under Obama are holding on to cash or buying back stock rather than hiring workers. And the Fed's endless stimulus efforts have managed to lift stock prices to new heights.

These gains have largely bypassed the struggling middle class. In fact, median household income remains well below where it was when the recovery started.


A Wide Economic Growth Gap

The Obama recovery is the most feeble since the Great Depression. GDP growth is far below the average recovery since World War II, and even below the average growth of the past three recoveries.

In dollar terms, if Obama's recovery had been merely average, the economy would be $1.3 trillion — or 8% — bigger today than it is.

Put another way, every American alive today — workers, non-workers, children — is $4,100 less well off than he or she would have been if growth had only been normal. Consider it a tax we all pay for voting poorly in recent elections.

This is more than just a matter of numbers. America's highest-in-the-world standard of living has been built on economic growth. Without it, we'll all be worse off.

Unfortunately, the policies put in place by tax-and-spend leftists in the administration and a Democrat-dominated Congress have stalled the U.S. growth machine.


A Massive Ongoing Jobs Gap

The jobless rate is coming down and will likely continue to fall in 2014. But the tepid recovery has left millions who would otherwise have jobs languishing in the unemployment line.

By this time in past recoveries, the economy had churned out at least a 10% gain in net new jobs. This time, the hamstrung economy has managed just over 4%.

Worse, the total number of payroll jobs — 136.765 million as of November — remains 1.3 million below the level when the economy first went into the tank in December 2007. By comparison, our population has grown by 13 million over the same stretch. Statistically, this is the worst job slump since the Great Depression.


Dependency Growing, Not Jobs

Obama's policies have also created a wide disparity between self-sufficiency and dependency. As this chart shows, food stamp and disability enrollment have climbed at a much faster pace than jobs since June 2009.

Today, 47 million people are on food stamps, up from about 28 million when Obama was sworn in. And disability rolls have swollen by 2 million.

This has not only increased our federal budget deficit as welfare spending has risen sharply.

It has also led to a startling surge in Americans' dependence on government handouts — a radical altering of the country's traditional culture of self-reliance and hard work.


America's Global Strength Wanes

For more than a decade, the IBD/TIPP Poll has asked Americans about the U.S. position in the world. Our final poll of 2013 is in, and opinions have never been lower.

Whether it's the bumbling over Egypt and Syria, the Benghazi scandal, Iran's burgeoning nuclear program, Russia's and China's growing challenges or the cavalier treatment by the Obama White House of old allies, Americans feel our global standing has weakened.

This doesn't bode well for future engagement in the world economy and trade, or for U.S. influence.



Workers Leave Labor Force

The administration has pointed proudly to the decline in unemployment from above 10% to a current level of 7%. What it doesn't say is how that was achieved.

It came about largely as a result of millions of workers leaving the workforce. As the chart shows, labor force participation has dropped steeply since the financial crisis — from 66% to 63%.

The difference may not seem large, but it is. The number of people who tell the government they are not in the labor force has jumped by 10 million since Obama took office, and 91.5 million Americans are not working at all.

If the labor force had remained relatively stable over the past five years, the unemployment rate today would be over 10%.


America, The Biggest Debtor Ever

This chart may look innocent, but it's anything but. It shows how our debt has surged. As recently as 2008, total U.S. public debt totaled just over 60% of GDP — not low, but certainly manageable.

Today, our total debt is right at 100% — a level that many economists believe endangers future economic growth. The bad news is, it could rise to 150% or higher in coming decades. That's national insolvency.

As Americans pay increasing amounts to service their massive debt obligations, businesses will have less capital available to grow — and will hire fewer workers.



Real Jobless Rate? Double Digits

As mentioned earlier, nominal unemployment has fallen from 10% to 7%. But that's not the only measure for joblessness.

The government's U6 rate — which adds in those who are only marginally employed, or working part time but want full-time work — pegs the unemployment rate at a hefty 13.2%.

That's down from 17.1% when the recovery began in June 2009. But as the chart shows, today's level is much higher than it's been in nearly two decades.

Coupled with more long-term unemployed than ever, this chart paints a picture of labor force distress that will disappear only when normal economic growth resumes.


Regulation Is Huge Hidden Tax

Politicians like to make laws; it's what they do. And when they make laws, the unelected bureaucracies go to work, filling in all the gaps with new regulations. They are, in a real sense, the real lawmakers.

This is not without cost. Indeed, it's the most significant cost to consumers and businesses in America.

According to the respected Competitive Enterprise Institute, regulations are an annual tax on the U.S. economy equal to $1.5 trillion. As the chart shows, that's more than all corporate and income taxes combined. And it's roughly equal to all corporate pretax profits. This is yet another huge tax you pay, without knowing it.


What America Really Owes

We constantly hear that we have trillion-dollar deficits. And we do. We also have $17 trillion in total debt, nearly a third bigger than when Barack Obama entered office.

Yet that doesn't even scratch the surface of what we really owe. Economists look at all the promises government has made, then at the expected revenues to satisfy those promises, and find we come up way short.

They call this the long-term fiscal gap. Depending on how it's counted, over the next 75 years the U.S. must find $54 trillion to $200 trillion to pay for all our promises.


Long-Term Fiscal Outlook Is Ugly

America's long-term fiscal outlook is grim. Based on the nonpartisan Congressional Budget Office's "alternative scenario" — the one it actually thinks is most likely — federal spending will continue to soar out of control, eventually gobbling up more than 35% of all economic output. Fast-growing entitlement spending is at the heart of the spending boom.

Yet, based on long-term experience, federal revenues won't keep pace. The result: A massive deficit of nearly 20% of GDP. At that level, all capital available for spending or investment will go to finance the government's red ink. As the government itself says, it's "unsustainable."



Members of both parties will have to act soon — or risk national bankruptcy and fiscal collapse.

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LetThemEatRand's picture

Thanks, Central Banks.

acetinker's picture

Hey Rand, was worried you went away, again.  Lots of pretty charts in this post, but the author lost me in the first paragraph. One of four dollars goes to taxes?  Fuck this fuck.  I try not to make money, if you know what I mean, but Uncle still gets almost half of what I generate.  Fuck these motherfuckers who wanna tell me that what I see is not real, and that the ever growing monkey on my back is just a figment of my imagination.

LetThemEatRand's picture

Let's start with ending the Fed.  

acetinker's picture

By nominating Yellen, part of me wants to think that the fed wants to end the fed.  However, the IMF is waiting in the wings, and after that, the BIS.  Ironically, it seems that the ECB and the PBOC may thwart their efforts.  If we're lucky, we'll just sit here and watch them hash it out.

If not, we may get WWIII.

markmotive's picture

NSA apparently brought down a plot to destroy all of America's computers.

Yup...no more fapping to Baywatch re-runs. How's that for a test of resilience.


q99x2's picture

Drones, DHS, NSA, Al-queda forces and Foreign Bank bailouts all cost money. You don't get these for free. Someone has to pay.

LetThemEatRand's picture

El Banco Centro?  Pass me a banana.

acetinker's picture

Harbanger was right,  You are a girl.  It's cool, I very much like girls.

AGuy's picture

" I try not to make money, if you know what I mean, but Uncle still gets almost half of what I generate."

Yuuup! Perhaps because 50% of americans pay no income tax, so you get to pay double.

My Plan: Drop out an go Galt. I am tired of busting my but, when my tax dollars are used to take away my liberties. Its like I am working to pay for the prison they are building for me, or digging my own grave.

I probably would not be as pissed off with the current tax rate, if they just left me alone.



acetinker's picture

Yes, but that's what they can't do...  Leave you alone.  They find it incumbent upon themselves to meddle in your affairs.  Their existence depends on you- the tax slave.  At what point do we say, fuck 'em?

wmbz's picture

I have been a tree top flier since the late 80's and will be until my final day. Fuck the gubmint and all of it's leaches!

JerseyJoe's picture

And that is just the Federal Gubamint...then you have state and county and imbedded fees and regulatory costs passed on to the consumer.

I had a number issues with some of the soft peddle in this but this one had me say BULLSHIT!:

The number of people who tell the government they are not in the labor force has jumped by 10 million since Obama took office, and 91.5 million Americans are not working at all.

This just pure BULLSHIT - people don't tell the gubamint anything - the Gubamint conveniently assumes it because it helps hide the truth.   Most workers fall off the U3 unemployment stats when their bennies run out.   SO BULLSHIT!  

Investors.com is trying to play political nicey-nice or they are complete idiots (which is doubtful).  They just don't want hate mail from Obama-drones or be audited by the IRS.   Nothing will put the kabash on free speech than an IRS audit...or two like happen to an outspoken Obama critic...  His tax attorneys were one of the biggest and best in the US and they had NEVER HEARD of a back-to-back double audit.  CHICKEN SHITS!!!  STAND UP TO GUBAMINT OPPRESSION!  


doctor10's picture

Disastrous failure of American leadership.


Capital once found America the most hospitable country on earth. It is now worthless in the USA-and will remain so until the NSA/CIA/FBI/ATF are caged by the Fourth Amendment and  until the regulatory and taxation burden business carries is relieved.  The combination of the above basically strangles the baby in the cradle-shutting down the job machine.


Obamacare is the most divisive piece of legislation any legislative body anywhere ever has passed. You simply do not even bring to a vote, a piece of legislation affecting EVERY American with only a 50/50 passage. Such legislation, affecting EVERY american, better at least be 65/35 or  70/30


drendebe10's picture

Lets give a hand for the arrogant, narcissist, lying illegal alien kenyan monkeybot and   his wookie Ho for livinf a grand imperial life style while all the serfa and peasants eat cake.

Carpenter1's picture

All government stats, meaningless.


One day we'll know what was really going on and all this will make sense.

zerohedgejjxxzz12's picture

This day may never come, just like who killed JFK and who really blew up the World Trade Centre Buildings  1,2 &7 and thePentagon.

As well as who is Obamba's (or any Presidents) Puppetier!

We now know the NSA spies on congress, Im sure the president as well. I am also convinced they spy on themselves, but who do they answer to? who is really in charge?

This is the real question that needs to be answered.

Homerpalooza's picture

Lower taxes does not create jobs. That is the upwind battle no President (or congress) can fix as long as it is cheaper to manufacture in Communist countries.

lolmao500's picture

If they gave lower taxes to the poor folks and middle class, people would have more available income to spend, creating more jobs. Giving tax breaks to rich people who just stack their billions away in bank vaults or start companies to exploit poor people to work for minimum wages don't create jobs. Give tax breaks to people who REALLY NEED THEM. Hell I earn 20k a year working full time yet I'm taxed 20% of my pay for fuck sake. And then you add the consumption tax and I'm fucking taxed at 35%... I work all day 6/7 a week and I still can't make cash reserves... and there's a SHITLOAD of folks worse off than me... the only difference is I'm not buying everything on credit like all these folks who are just digging the hole deeper... At 20k a year with NO FUCKING TAXES I could have some savings... with taxes? No fucking way.

Musashi Miyamoto's picture

The only solution is to find a cash job. Taxes are only going up.

Umh's picture

The people who make a little bit more than the poor are suppporting them. The poor make money on their federal taxes.

Musashi Miyamoto's picture

The people who make a little bit more than the poor are giving them EBT cards. Once the music stops we will have 50 million rioting. Every county in the country will go up in flames.

Women's March on Versailles
Southern Bread Riots
Rice Riots of 1918
1977 Egyptian Bread Riots
1989 riots in Argentina
2007 West Bengal food riots
2010 Arab Spring

Think its charity? Think again.

Nick Jihad's picture

This is the part where I always encourage people to stop mocking the French, and really look out how voluntaryists there deal with the welfare state. We tend to think that something dramatic must happen, if the state swells any larger, but France demonstrates that this is not so.

Anusocracy's picture

Minus the cost of government, 20k would be a comfortable life.

barroter's picture

"Giving tax breaks to rich people who just stack their billions away in bank vaults or start companies to exploit poor people to work for minimum wages don't create jobs. Give tax breaks to people who REALLY NEED THEM."


I love when these "articles" come out demanding we free the rich, who will in turn save us all.  We've seen what the rich do when untethered.  Also Bernanke's QE has been the greatest Welfare Check ever written to these poor put-upon rich and what have they done with it? Not spur the economy, that's what.

Omen IV's picture

The entire article is complete Bullshit!

when taxes were high in the 50/60/70's we had growth in per capita income - so lower taxes for the corporations and rich only produces the lower growth we have seen since the 90's -

the banking laws under Glass Steagall were much more draconian than Dodd Frank - and we had substantial lending since 1933 - with the introduction of derivatives unchecked and entry into commodities (98" & 99') the banks have no reason for the infrastructure of local bank lending - margins are not there when all you need is 100 guys in a trading room and make ten times as much

no the problem isnt current  - bank laws or taxes  - its a rigged system grounded in the WTO enactment which ships production off shore and elimination of Glass Stegall -  once the TPP is passed the depression in this country will be incredible within 10 years


Kayman's picture


You are living through the American tragedy- you would earn far more than working on someone's legitimate payroll if you went on welfare and worked cash jobs.

These pinko government phallus lickers just don't want to get it.

acetinker's picture

It's not cheaper, Homer.  China has a central bank, too.  They subsidize manufacturing, while our FedRes subsidizes banksterism and the PBOC via the petrodollar.  There's no way this ends without bloodshed.


I see alot of rice and beans in our future. Burrito anyone?

IridiumRebel's picture

Good to see you invest in natural gas...

El Vaquero's picture

Dude, while I prefer meat in my burritos, I can make a killer bean burrito.  Then again, where I live is cleaner than Old Mexico by virtue of the fact that it has New as the first word of its name.  I grew up on burritos.

Colonel Klink's picture

I've lived in New Mexico and you're right it's just a little cleaner than old Mexico.  How's the 505?

El Vaquero's picture

Get rid of the dirty cops and things would be great.  Get rid of property taxes too and they would be even better.  Oh, there's still the old school patron system in certain parts of the state.  That's a Hispanic crony system that has been a part of the state for longer than it has been a state for you uninitiated.  But we can still carry guns, and once you get away from the greater Albuquerque area, people care a lot less about some shit that would land you in a federal pen in other parts of the country.  Same'ole same'ole. 


On the brighter side, the chile is getting hotter again.  It's more like it was when it was when I was a kid.  I either grow green chile myself, or I tend to get from farms that don't sell nationally, and it resembles what I grew up with.  The flavor isn't quite what it used to be, but that is coming back.  Somebody asked me "Where's the best place to get green chile" not too long ago.  I told him "Blake's."  I don't prefer it habanero hot, but I do want some heat.  I like it where my nose just starts to run. 


(Then there's the red.  I'm not going to tell you about the red that I made this Christmas.)

Colonel Klink's picture

Ah yes, I know Albuquerque well.  Never really encountered much contact with the police, nor the crony system.  I'm just happy to have made it out of there alive.  Being a gringo and all.

Agree about the green chili, can't find anything decent here in Florida.  Can't even find the large cans of Hatch chilis.  About the most I can take is medium hot.  Anything more and it burns as much on the way out, as in.

Stay safe and if I'm ever back in town, I'll give you a shout.  I always see my "homies" when I'm in town too.

JerseyJoe's picture

Black beans, corn, chopped onions, chopped avacadoes and a health dose of salsa to taste.  I can eat it all day come the Zombiepocalypse (the modern euphemism for complete societal breack down.)   Of course, meat would be nice...but if it means buying chicken meat from China - forget it.  And Fukashima fish are already off the menu - but how do we know?   

Here's one to chew on...if the Chinese play hard ball on debt, they can leverage the debt to reduce certain requirements - like "country of origin" for say the large Pork packager they bought in the US.  

Oh sure, we will buy another $500B in your worthless T-bills - just get rid of "country of origin" on food products because we can't even get our on people to eat this shit.  Deal?  

You can see it happen.  

dizzyfingers's picture

JerseyJoe: China pork may already  be appearing here...

Bobbyrib's picture

Yeah, vegetarian burrito as meat will be way too pricey.

lolmao500's picture

They are not addressing those crisis because they are waiting for them to become so urgent everyone wants a deal, whatever deal, real fast... so they can fuck you over... see : bank bailouts, budgets, etc... That's how they roll.

Tulpa's picture

And once the politicians and lobbyists and banksters have looted all they can from the treasury, we will be told it is time for "shared sacrifice".

Caveman93's picture

"Members of both parties will have to act soon — or risk national bankruptcy and fiscal collapse."


-Think they've done enough already eh? No thanks!

Nick Jihad's picture

Indeed - politicos will have to act soon, to take the US to French levels of state intervention, and Japanese levels of debt.

Frankie Carbone's picture

Problem Tyler. Most sheep don't know how to read a chart, and until there is a chart-reading app that comes out on the iPhone, they'll have little inclination to ever want to learn.

Why learn to read a chart when the TEE-VEE news tells them everything they need to know?

I am Jobe's picture

NSA says that Amerikans are Zombies. Reading chrts, no way they teach that in schools. All the bullshit and APPS is what sheeples will follow. Forward thinking


Professorlocknload's picture

 "Members of both parties will have to act soon" 


Frightening thought!

Umh's picture

They are good at acting like they care.

akarc's picture

They are always acting. Theater of the absurd at it's best.

Professorlocknload's picture

Beat me to it there, Cave.

I am Jobe's picture

Karl Marx for President of Amerika

More wars , More drones 

Dixie Rect's picture

Where have you been, Jobe? He was (s)elected in 2008, and reselected in 2012

akarc's picture

And he appointed Jeffery Immelt Job Czar?????