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Charting The 2015 State Of The Union
Submitted by Lance Roberts via STA Wealth Management,
It is that time of the year when the President of the United States delivers his annual "State Of The Union" address. Over the weekend, the Associated Press discussed President Obama's retooled message stating:
"For most of last year, President Barack Obama tempered his pitch on the economy: It may be improving, he would say, but millions of Americans had yet to benefit from the rebound.
But now that caveat is gone, replaced by a bullish new message as Obama marches into his second-to-last year. 'American resurgence is real,' he says. 'Don't let anybody tell you otherwise.'"
This will be the primary message delivered by the President in the upcoming speech as his focus, according to the President's aides is:
"The two-thirds of voters who were too disgruntled to cast ballots in November."
It was the beating that Democrats took in the last election, as many traditionally Democratic states elected conservative representatives, that sent a clear message to the White House. With the 2016 Presidential elections rapidly approaching, it is imperative to regain those votes. It is from this priority that the President will paint a decisively positive economic picture during his upcoming speech. He hopes that by pointing to a falling unemployment rates, economic growth and higher confidence levels; it will give voters a sense of confidence in the President's accomplishments.
The question is whether the majority of the voting public will agree with the President's message?
Before the President takes to the podium with his bullish optimism, he might want to consider the following charts.
Government Debt
Since 2009, Government debt has surged by $7 Trillion (through Q3-2014) while real economic growth has risen by just $1.8 Trillion. However, even this number is inaccurate as the current government debt levels do not include other liabilities of the government such as social security and other social welfare programs.
The following chart quantifies it a bit better when you look at cumulative increases in debt and real, inflation adjusted, GDP.
Yes, the economy is growing, however, that growth has come at a huge cost of a debt burden that will be amplified when borrowing costs begin to rise with increases in interest rates. Furthermore, considering that President Obama admonished the previous administration's increase in debt, the explosion in the amount of debt required to generate economic growth is unsustainable longer term.
Employment
While the current Bureau of Labor Statistics employment reports currently shows the unemployment rate has fallen to just 5.6%, that number is obfuscated by the roughly 93 million workers that are currently not counted as part of the labor force. As I have discussed previously, when it comes to economic strength it is full-time labor that leads to household formation and higher consumption. The chart below shows the amount of full-time labor as a ratio of the working age population.
Importantly, when the employment-to-population ratio or the labor-force participation rate is discussed, the plunging levels in these ratios are often dismissed simply as a function of the "baby boomers" heading into retirement. However, if we factor out those individuals by only looking at the employee-to-population ratio of 16-54 aged individuals as a percent of that age group the picture fails to improve.
While the unemployment rate has certainly plunged to just 5.6%, one would be hard pressed to find that 94.4% of the population that "want to work" are actually working.
Personal Incomes
The annual rate of change in personal incomes has been on a decline since the turn of the century. This is a function of both the structural shift in employment (higher productivity = less employment and lower wage growth) and the drive to increase corporate profitability in the midst of weaker consumption.
The chart below shows the disparity between corporate profits and employment and wages. (Full a complete discussion on this issue read "Corporate Profits & Income Equality.")
The recent bounce in the wages to profits ratio was NOT a function of an increase in wages but a plunge in profits due to the exceptionally cold winter at the end of 2013. As you can see, since then the trend lower has resumed.
Government Assistance
The issue of declining incomes and rising "income inequality" is really best shown by the level of social benefits as a percentage of disposable incomes today. Today, roughly 1-in-3 households receive some form of government assistance.
It is here that the President will be most challenged in presenting his "economic" story. While he will point to rising asset prices, improved headline employment numbers and economic growth as reasons to be "optimistic," with almost 80% of the country living roughly paycheck-to-paycheck it will be a hard argument to win.
Housing
When it comes to the economy, it is home ownership that is the reflection of economic well-being. Since 2009, the government has poured trillions of taxpayer dollars into the housing market to try and increase activity. The effect of those injections have been marginal to say the least.
However, as I stated above, it is ultimately household formation that leads to higher levels of consumption and stronger economic growth. The chart below is from the recent missive on this issue entitled "Housing - Outside Of Prices, Not Much Recovery." What this chart shows is that the surge in housing activity was NOT by individuals buying homes to live in, but rather speculators buying homes, primarily for cash, and turning them into rentals. With homeownership currently near its lowest levels since the early 1980's, it does not suggest a resurgent economy is in the making.
Economic Prosperity
However, it is the economic prosperity of an individual that truly determines how they will vote at the polls. A recent Fed Reserve survey of consumer finances shows the real disconnect between Wall Street and Main Street economics.
With net worth, incomes, financial assets and business equity ownership at levels substantially below where they were when the President took office, it is not surprising that the Administration is focused on changing their views.
While the data, as reported by government agencies, has been massaged, tweaked, and recalibrated to provide more optimistic output, it is hard to fudge the economic standards by which the majority of the country lives with. Like a game of "Civilization," the recent mid-term elections sent a pretty clear message that the "serfs" are not happy in the "kingdom."
Defining The State Of The Union
While the President will do his best to put a positive spin on the current economic environment, and the success of his policies, when he gives his "State of the Union" address, it would be worth remembering whom he is actually addressing. This is a point not lost even on Democrats as represented by Elizabeth Warren last week in her address to the AFL-CIO:
"For tens of millions of working families who are the backbone of this country, this economy isn't working. These families are working harder than ever, but they can't get ahead. Opportunity is slipping away."
As with all things - it is the lens from which you view the world that defines what you see. For WallStreet, things could not be better. For Main Street, most everything could be better. The President has a lot of "convincing" to do if he expects to change voter's attitudes between now and the 2016 Presidential election.
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Where's the chart showing ratings for the Kardashians show? Also, the one showing the success of Taylor Swift's hit song?
Come on let's not forget what really matters to America.
(yes I'm ashamed I know who Taylor Swift is)
Who is he ?
I'm not good at sitting still. Pass the time checking out groceries.
Bought some more long term storage food today. Will be target shooting later this evening. Stack is still there. Should stock up on more water though...
... we can't sit still ... remember, ZH is a fight club :) ...
... but Before the Nobel Pis-prized Wiener takes to the podium with his bullish optimism, he might want to consider the following ...
... there are Pulitzer Prize-winning journalists out there who cannot be bullied ... >>> "DOJ won't ask Risen to testify at espionage trial" >>> http://rt.com/usa/222231-risen-testimony-source-trial/ ...
... note: "Pulitzer Prize-winning journalist James Risen will not be asked to testify at the upcoming trial of a suspected source, former CIA employee Jeffrey Sterling, ending for now the writer’s seven-year-long ordeal with the Department of Justice."
Matters not what he says. There is no truth in him.
... >>> "There is no truth in him."
... but he is Risen ... :)
... seriously, my point is, he fought the DoJ for seven long years and he appears to be winning (and still alive for that matter) ... a difficult task to do against the Deep State ... I'd give Mr. Risen credit for standing up to the bullies in Washington (regardless of whether there is truth to his writings or not) ...
I'm guessing "hope and change" isn't working anymore. How about BOHICA?
ERRATA: in the article above "bullish optimism" is to be read in fact "bullshit optimism". Apologies for the unintended error...
The state of the union is simple, it sucks like a Hoover on meth......
I think ghostzapper hits the nail on the head. There is always going to be that segment of society that will never really do anything to better themselves. They will blame others. They will escape by watching mind-numbing television. They lack discipline. So as much as ZH readers do watch these numbers, the rest of the country seems to live like ferral dogs only worried about their next meal, tweet or Facebook like.
"We have before us the opportunity to forge for ourselves and for future generations a new world order–a world where the rule of law, not the law of the jungle, governs the conduct of nations. When we are successful–and we will be–we have a real chance at this new world order."
-George H cocksucker Bush.
Trying to suspend the laws of Nature and physics has been tried before.
Moral hazard? What's that? Commiting fraud on a massive scale never before seen is hardly a good thing.
hedge accordingly.
But it's the only thing they know and and they think they can get away with it because they are the 'special' elites who are they smartest people on earth....
...well then, here's to hoping they taste like chicken...
More like pork....
The FED is going to have to start sending tax-free monthly checks to people instead of Wall Street.
"Hahahahahah. Putin."
That would be my speech.
The problem is that the USA, and most of the developed world, is fucked. Not like any prez can just come up and say we cannot expand debt anymore and the last 40 years of debt fueled growth is coming to an implosive end.
I detest O more than most, but this is a big shit sandwich that is decades in the making.
pods
Yup, any talk of balancing the budget is bunk. The debt must grow at an exponential rate, or the system collapses. Of course, that growth in debt is hitting the wall with respect to real growth, which will cause the system to collapse anyway, but none of the toads in DC want to be known as the guy who pulled the plug, so they all will get the distinction of being the ones who fucked it up now.
Correct. the other thing your "leadership" will never admit is the fact that there simply is no monetary, fiscal, or political solution to resource scarcity. There never has been and never will be. The theft/fraud will continue until the supply lines simply break (as it always as in the past). One reason I fear they are doing everything to make it appear that oil is abundant and cheap. FYI- we are still consuming almost 20 million barrels per day.
My tribe and I have been having a great time either way. Same as it ever was...
Evolve or die motherfuckers.
The current low commodity prices belie your "resource scarcity" theory.
Resources are scarce, the only thing you see now is the de-financializaton of commodities.
pods
Please wake up, trying to actually "price" anything is a fool's errand in the absence of price discovery.
Do tell, how long do you anticipate these "prices" will last? Enlighten us.
If I had a son, he would look like Charlie Hebdo.
What? Obama is the President? I thought Jamie Dimon was.
Jamie reports to Tel Aviv.
Pandering to special interest groups, half-truths, outright lies, and more than a little narcissistic back-slapping.
We've heard this speech 6 times already.
Union ? There is no union. Just a bunch of regions with mcD and Walmart etc as there only thing in common. While a bunch of criminals ruin what's left of their good name
http://www.globaldeflationnews.com/the-principle-of-spending-money-to-be...
I will not be watching. It's not just a rosy speech anymore. It's an affront to the intelligence of the citizenry. "Don't you believe what you are living every day. This economy is doing GREAT!" Sure. Every roaring economy has come with double-digit % increases in # of people on food stamps.
"It's an affront to the intelligence of the citizenry."
Correction:
It's an affront to the intelligence of the 2% of the citizenry that understand math and economics."
Fixed
Maybe it will be a short speach. If he has a man date?
The president's credibility will unwind in a major way, in similar fashion to the economic unwind already in motion. By this time next year however, it probably won't matter anyway, as there will be more pressing 'street-level' issues to worry about.
Another potential future flashpoint. The cops that shot James Boyd are being charged:
http://www.koat.com/news/da-to-seek-murder-charges-in-james-boyd-shootin...
Lets see how it plays out, if either the judge rules that there is no probable cause, or if they get acquitted. I seriously doubt they will get convicted.
This is also coming on the heels of the DA being investigated for bribing witnesses, which she claims is APD trying to put pressure on her because they knew she was leaning towards prosecuting the cops.
Go long today and short tomarrow?
Same old same old- the chasm deepens between haves & have nots.
This is how THE CONTROLLERS like it.
Long Live GREED, POWER & muhahahah WEALTH (for the few) -
Bohemian Grove, Bilderberg Group, Skull and Bones, Illuminati, Council on Foreign Relations, Trilateral Commission, FreeMasonry,........the USA is the epitome of the "I got mine - you get yours ECONOMY"
Dear Leader Obama excerpted: "Lie, lie, half-truth. I, me, I, half-truth, lie. Because of me, lie, I, half truth, lie, I. You didn't build that, lie, me, I. Half truth, you can keep your doctor if you like your doctor, me. I, lie, half truth, I, me, your health insurance premiums will go down by $2500 per year, not up thousands of dollars per year, lie, lie, me, I. Those who slander my prophet will not get ahead, lie, I, lie, me, I, half truth."
"Yes, the economy is growing, however, that growth has come at a huge cost of a debt burden that will be amplified when borrowing costs begin to rise with increases in interest rates"
Have none of these pundits heard of Japan?
Going to need a double-dose of xanax, a bottle of whiskey, and a huge rip on the bong to watch O blowing smoke up the collective muppetry's ass...
Just flush those down the loo, that buzz kill will put you past sober into the brink of insanity.
49% approval rating, my bet it goes up, his stage delivery to his congregation makes Streisand blush.
http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll