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For 90% Of Americans: There Has Been No Recovery
Submitted by Lance Roberts of STA Wealth Management,
Every three years the Federal Reserve releases a survey of consumer finances that is a stockpile of data on everything from household net worth to incomes. The 2013 survey confirms statements I have made previously regarding the Fed's monetary interventions leaving the majority of Americans behind:
"While the ongoing interventions by the Federal Reserve have certainly boosted asset prices higher, the only real accomplishment has been a widening of the wealth gap between the top 10% of individuals that have dollars invested in the financial markets and everyone else. What monetary interventions have failed to accomplish is an increase in production to foster higher levels of economic activity.
With the average American still living well beyond their means, the reality is that economic growth will remain mired at lower levels as savings continue to be diverted from productive investment into debt service. The issue, of course, is not just a central theme to the U.S. but to the global economy as well. After five years of excessive monetary interventions, global debt levels have yet to be resolved."
The full report can be found here. I have selected a few of the more important charts for the purpose of this post.
While the mainstream media continues to tout that the economy is on the mend, real (inflation-adjusted) median net worth suggests that this is not the case overall.
However, when broken down into age groups, the story becomes a bit more interesting.
While many economists have tried to explain that the plunging labor force participation rate (LFPR) was a function of "baby boomers" entering into retirement. This is hardly the case when considering that the net worth of individuals 65-74 fallen since 2007. It is even a more dire story for individuals approaching retirement (55-64) that have seen their net worth plunge by almost 50% during the same time frame.
The "economic recovery" story is also extremely fragmented when looking at median incomes. According to the Fed survey, median household before-tax incomes have fallen from near $52,000 annually to roughly $47,000 currently.
Again, the story deepens when viewed by age groups.
Interestingly, the ONLY age-group where incomes have improved is for those between the ages of 65-74. Again, this suggests that the plunge in the LFPR is not a function of "retirement" as individuals are working well into their retirement years, not because of a desire to work, but due to necessity.
Another mainstream media theme has been that the surging stock market, driven by the Federal Reserve's monetary interventions, has provided a boost to the overall economy. However, as I have suggested previously, given that the bulk of the population either does not, or only marginally, participates in the financial markets, the "boost" has remained concentrated in the upper 10%. The Federal Reserve study breaks the data down in several ways, but the story remains the same.
The median value of financial assets for families has fallen sharply since the turn of the century.
Except for those in the top 10 percent of the population.
While the Federal Reserve hoped that inflating asset prices would boost consumer confidence, consumption and economic growth, the problem is that with falling incomes and rising costs of living, the ability to save and invest eluded the majority of families. (Note: I am only showing "pooled" investment funds since that is what is most commonly held.)
Again, the benefit of the Federal Reserve's interventions was clearly concentrated in the top 10%.
When looking at the financial landscape of families, the future does not look bright. The percentage of families with retirement accounts has fallen since 2007, despite surging asset prices. Again, this is a function of the disparity between incomes and the cost of living.
But once again, for the top 10% the last five years has been a windfall. However, it is interesting to note that values dropped in 2013 despite the surge in asset prices. The 80th percentile performed better.
Lastly, as I discussed recently in relation to the Bureau Of Labor Statistics adjustments to the employment report, there is little evidence to support the "birth/death" model. Since 2009, the "birth/death" adjustment has added 3.5 million jobs to the employment roll. The assumption is that each month individuals are either starting or closing a business that is not reflected in the more normalized employment data. The problem, however, is that the number of families that owned equity has plummeted during that same period.
Well, except for those in the top 10%.
The wealth gap is clearly evident across all data points. However, it has been the very policies of the current administration that has fostered that wealth divide more than anything else. While the ongoing interventions by the Federal Reserve propelled asset prices higher and fueled the demand for risks, the majority of American families were left behind.
The data clearly explains why many Americans, as shown in a recent WSJ poll, believe that the economy is headed in the wrong direction.
While the financial media incessantly drones on about the rise of the stock market, what is missed is that after two devastating bear markets many families no longer have the capacity to participate (particularly after following Wall Street advice).
Furthermore, the structural transformation that has occurred in recent years has likely permanately changed the financial underpinnings of the economy as a whole. This would suggest that the current state of slow economic growth is likely to be with us for far longer than most anticipate. It also puts into question just how much room the Fed has to extract its monetary support before the cracks in the economic foundation begin to widen.
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just spending our savings now.
savings?
I am Jack's complete lack of surprise.
BK, the savings being spent now is the previous wealth that America created over many prior generations. That wealth, both finanical and political, is being spent at a rapid pace and will soon be exhausted. The eventual dollar collapse will occur when the last of America's wealth is gone, and all that is left is paper assets and banker debt.
This is exactly correct.
It is also the reason that it is taking so "long" for things to fall apart. There is an enormous built up pool of wealth that is being tapped and drained. Until the bottom is reached, the RaceMarxist looks all kewl and fine, and the party rages on.
Until the bottom is reached...
If Japan is any example this could take a while.
"At first you go bankrupt slowly, then all at once". - Mark Twain
For 99% of Americans there will be no chance of them giving up on their irrational belief in government
Many serfs loved their King and Queen, this is why America was settled and founded. The circle is almost complete now.
The Cheap Bastard Household [CBH] has cut back 40-60% on most discretionary spending. It's a new and even cheaper way of life I never thought possible. But it's not only possible, it's fun and challenging to see what CB I can be! If anything is not reduced AT LEAST 80% we don't even glance twice.
Same goes for houses and stocks which we in the CBH feel are seriously overvalued right now. Why be the Sucker stuck with an overpriced anything when the market corrects and reverts to the norm?
I'd rather be called "Cheap" now, then a "Big Suckka" later.
Perhaps we'll be a Scottish colony one day.
I'll admit this made me chuckle.
When do the vengeful bankruptcies happen?
So obviously this info is very available at the highest levels of government finance and corporate America, but these dipshits continue down the same path, I'm mean "what should we do, reverse course, or try something different?"
I hope this time, when this shit unfolds, people just let it burn, but I suppose they will have another reason we should save the rich again, that everyone will rally around!!
So obviously this info is very available at the highest levels of government finance and corporate America, but these dipshits continue down the same path, I'm mean "what should we do, reverse course, or try something different?"
Reverse course? Things are going great for the people who matter. Stocks up, taxes down, jails overflowing & major war on the horizon. All win!
No, government is "failing!" Really!
I hope to someday live in a world where people judge others based upon qui bono rather than some Kool-Aid splattered script.
Not holding my breath, though.
The choice is coming down to a "Kool-Aid splattered script." or a Blood spattered reality.
Get ready for the choice.
James_Cole Reverse course? Things are going great for the people who matter. Stocks up, taxes down, jails overflowing & major war on the horizon. All win!
---
Taxes down? Hardly. I pay more taxes now. Any cuts from the Feds is an increase in state taxes. States are dependent on Fed subsidies and when that gets cut, then states raise their tax to make up for it.
the fed doesn't give a flying fuck about families or fairness or free markets or any of that crap.
They don't even know anyone who isn't in banking.
Why should they? They're a private bank. The problem is Congress telling people this isn't a PONZI, Banana ass Refuglik...and perpetuating the myth that is American exceptionalism.
In that context, the Fed fits right there in perfect ponzi harmony.
This report clearly illustrates the need for the following:
Save our children! End the FED!!!
Welcome back to the new medieval society, you are either the noble (the top 1%) or peasants (the 99%).
Even in medieval times (the era, not the theme restaurant), there was a middle class of sorts. Just big enough to service the rich.
Your job today is to scratch and claw and step over the bodies if necessary to stay in the middle class.
Oh, and by the way, Go! Clock's running.
10% recovered tremendously! They own more and control more than ever! Time for a reaping and cleansing!
Hanging on, but blessed beyond our needs. Down-sized that 3100 sq ft house on the course for a 1200 sq ft home in the hood. It's all good for us so far; I wished I could say the same for everyone.
So, printing money and handing it out to a select group of people/corporations who don't pay interest (ZIRP policy) on that "money" isn't a good foundation for a sound monetary system?
< shocker >
Peasants....... Pfffffftt... Let them eat pink slime.
http://finance.yahoo.com/news/investing-101--why-share-buybacks-are-on-t...
if you give me a big enough lever i can move the world, if you give enough credit i can take over the world
if you give me a big enough lever i can move the world, if you give me the power to create money from nothing and enforce that power i can take over the world
Fixed it
For a so-called Judeo-Christian Nation, Washington has no idea of what SIN is.
They pretend everything is freedom and democracy, and are busy exporting it with our children's blood, their futures, and our money!
A Shame!
Hopefully, they will find out what happens to sinners, before it is too late!
The ONLY thing we have to fear is CAMPAIGN SLOGANS and Talkint Points. Fabricating these is the only growth industry.
What Obama will be speechifying about tonight! Where is the NFL when we need it, with a Wednesday Night Game.
I guess I'll just throw on some Sizzla and blaze another spliff.
Serf's up, bredren!
Same in Europe... and probaly in Japan too.... will this create a problem...??? I´ll guess it will start in Europe...
Hyperinflation is often associated with bank runs. In our country the banks have it covered. Nobody has any money to withdraw. An EBT card run? Maybe...
I am getting so sick of articles like this. The only folks who read this blog know all this already. We need info on how to correct this, what individuals and groups can do, not how bad it is.
"The percentage of families with retirement accounts has fallen since 2007, despite surging asset prices."
eating your seed corn
how many people lost a good wage job with benefits and had to replace with lower pay no benefit one?
Go (further) into debt ... or raid nest egg ... and hope truck hits you on day you're tapped out
90% of the people need to get a military and elect a government.
But, But, But Krugman said bubbles make us all feel prosperous. Its so confusing.
probably got a nice raise due to inflated princeton endowment
what part of the word "DEPRESSION" do the bureaucrats not understand?
A society that penalises competence ends up in debt bondage .
This has happened repeatedly .
See
http://andreswhy.blogspot.com/2012/08/the-long-revenge.html
"While the Federal Reserve hoped that inflating asset prices would boost consumer confidence, consumption and economic growth,"
yeah, well the geniuses at the Federal Reserve should have known that commodities are assets too ... and $$s would flow there, as well.
The top quintile don't mind higher food/fuel prices much because their 401Ks are kicking butt.
The bottom 80% get stuck paying those same higher prices, but no offsetting rising assets.
Dopes
While the Federal Reserve hoped that inflating asset prices would boost consumer confidence, consumption and economic growth
The Federal Reserve didn't "hoped" for an M'Fn thing. Realize you are talking about Loyd Blankfein and Jamie Dimon here and not some benevolent F'n financial terrorist organization.
Ah...these central planners...(sigh)...
WHY do they so love data, statistics, footnotes, citations, charts, graphs, surveys, quotes, references, authorities...?
All they had to do is a)OPEN EYES, b)WALK DOWN STREETS and c)ASK PEOPLE QUESTIONS.
There are 4 lights.
https://www.youtube.com/watch?v=ChYIm6MW39k
"All they had to do is a)OPEN EYES, b)WALK DOWN STREETS and c)ASK PEOPLE QUESTIONS."
Because they think they know better. What their doing is for the good of the world.
I have heard it before, we don't see the big picture but they do. Same with the subprime loans. It was for the good of the poor people.
Wait a few more years, alpo anyone?
Things will indeed get worse. You folks have not seen anything yet...it's going to get third world bad. Be prepared.
http://newamerica-now.blogspot.com/2014/02/beyond-collapse.html
“net worth” fluctuated alot from the beginning of 2007 to the end of 2008.
Government can take 'net worth' anytime Government wants to take 'net worth'.
"just spending our savings now."
Just spending money we don't have.
I just bought books about sausage making. You KNOW what I'm thinkin....
Long pig?
Have it all's V the have nothing much at all's
hopey changey is just around the corner, right yellen?
hope for change in your pocket since 2008. I havent had any kind of health insurance or regular income since 2009 when I lost best job of my life. 22 years of service up in smoke. I rep for 3 differnt companies in sales in two different industries. Knocking on doors at 59 is no fun. I am healty,, sound minded and am able. So I work. I do however have a problem feeding able bodied people with food stamps who have no intention of ever looking for work. they need to clean the parks and freeways and city streets. 9 to 5,,, you won't work? No support. They will find a paying job or go hungry or steal from the working which they are already doing anyway. Rant off,,,,
Retirement accounts for the 90% have dropped because they have been spending what was in these accounts to buy Alpo for their families.
sunny: I am getting so sick of articles like this. The only folks who read this blog know all this already. We need info on how to correct this..................................
That's actually the easy part but no one is addressing it.
Step one : take tomorrow off from work
step two: repeat step one
step three: repeat step two...
Do this for a month and shit will get real... fuck it....have any real PRODUCERS do this for ten days and you can dick slap Yellen in the face on day 11.
Remember, the takers make money off of the producers. Those at the top who skim, and those at the bottom who suck get to do so by those in the middle who produce.
No violent revolution needed, just sit the fuck home for two weeks.
"do this for ten days and you can dick slap Yellen in the face on day 11."
My dick shriveled at just the thought of that !
No recovery? No shit!
The other 10% didn't even know there was a problem
Duc888....
I've been saying this for years. Everyone stops going to work and it's the end of story real quick.
Most will say "What about the Bills" and I say don't pay them. No one goes back to work until the bills are deleted. Simple and peaceful.
People have a lot of power if they would only use it. It's a numbers game and we have the advantage. Doing nothing means nothing will change.
Let "them" eat bull excrement. We own them....
The chart shows the 55-64 crowd took a huge hit. I suspect at that age there's no way to recover completely. Just need to cut back and live like a Cheap Bastard.
global debt levels have yet to be resolved
The wrong underlying assumption which makes the whole point moot, is that TPTB want to resolve anything in regards to debt.
I think it's well to remember that when Wall Street blew up the economy just a few years ago, and "our" representitives in "Con gress" rushed in to bail them out, the American people it was reported voted over 200 to 1 against such a move ...