"We Haven't Seen This Since The Great Depression" - Gallup CEO Destroys The "Recovery" Lie

Tyler Durden's picture

By Jim Clifton, Chairman and CEO at Gallup

The Invisible American

I've been reading a lot about a "recovering" economy. It was even trumpeted on Page 1 of The New York Times and Financial Times last week.

I don't think it's true.

The percentage of Americans who say they are in the middle or upper-middle class has fallen 10 percentage points, from a 61% average between 2000 and 2008 to 51% today.


Ten percent of 250 million adults in the U.S. is 25 million people whose economic lives have crashed.

What the media is missing is that these 25 million people are invisible in the widely reported 4.9% official U.S. unemployment rate.

Let's say someone has a good middle-class job that pays $65,000 a year. That job goes away in a changing, disrupted world, and his new full-time job pays $14 per hour -- or about $28,000 per year. That devastated American remains counted as "full-time employed" because he still has full-time work -- although with drastically reduced pay and benefits. He has fallen out of the middle class and is invisible in current reporting.

More disastrous is the emotional toll on the person -- the sudden loss of household income can cause a crash of self-esteem and dignity, leading to an environment of desperation that we haven't seen since the Great Depression.

Millions of Americans, even if they themselves are gainfully employed in good jobs, are just one degree away from someone who is experiencing either unemployment, underemployment or falling wages. We know them all.

There are three serious metrics that need to be turned around or we'll lose the whole middle class.

  1. According to the U.S. Bureau of Labor Statistics, the percentage of the total U.S. adult population that has a full-time job has been hovering around 48% since 2010 -- this is the lowest full-time employment level since 1983.
  2. The number of publicly listed companies trading on U.S. exchanges has been cut almost in half in the past 20 years -- from about 7,300 to 3,700. Because firms can't grow organically -- that is, build more business from new and existing customers -- they give up and pay high prices to acquire their competitors, thus drastically shrinking the number of U.S. public companies. This seriously contributes to the massive loss of U.S. middle-class jobs.
  3. New business startups are at historical lows. Americans have stopped starting businesses. And the businesses that do start are growing at historically slow rates.

Free enterprise is in free fall -- but it is fixable. Small business can save America and restore the middle class.

Gallup finds that small businesses -- startups plus "shootups," those that grow big -- are the engine of new economic energy. According to the U.S. Small Business Administration, 65% of all new jobs are created by small businesses, not large ones.

Here's the crisis: The deaths of small businesses recently outnumbered the births of small businesses. The U.S. Census Bureau reports that the total number of business startups and business closures per year crossed for the first time in 2008. In the nearly 30 years before that, the U.S. consistently averaged a surplus of almost 120,000 more business births than deaths each year. But from 2008 to 2011, an average of 420,000 businesses were born annually, while an average of 450,000 per year were dying.

Bottom line: The two most trusted institutions in the U.S. are the military and small business. Most people know about our military's importance, but not as many appreciate the role small business plays in creating the majority of new jobs and in national security itself.

America needs small business to boom again. Small businesses are our best hope for badly needed economic growth, great jobs and ultimately accelerated human development. When we get small business to boom, we can save America, restore our middle class and once again lead the world.

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AC_Doctor's picture

Three cheers for the US Ministry of Proganda!  Even the broke dicks think they are wealthy!!!

froze25's picture

You must let the destruction part of the Creative destruction cycle happen, that is what they have been fighting since 2007 with the asset inflation through the bailouts and QE. Its all artificial to prevent the correction that needs to take place for the re-building/ expansion part of the cycle to happen. The bad debts must be written off and the lenders / Bond holders have to take the hit, they took a risk and need to take the lose if its necessary. Not propped up at the Tax payers expense. All we have now is a zombie economy with totally artificial asset prices. It will correct, the sooner the better. Trump 2016

johngaltfla's picture

IF CNNMSNBCFBNFNCNBCCBSCNBCABC etc. don't report it, it can not be true, right?

After all, all their news is cleared through the Federal Reserve AND United Stated Ministry of Information.

Sheesh, remember, service means citizenship.

Shocker's picture

We currently are in a economic depression.... so so so far from a recovery


Layoff List: http://www.dailyjobcuts.com


FireBrander's picture

In 2016 you're "working class" if:

1. You live in a McMansion.

2. Your family of 4 spends $3000 on new iphones every 2 years and has a $200/month cell phone "family plan".

3. You've got $100,000 worth of cars/trucks/SUV's in your driveway because there's so much shit in your garage you can't get the cars in there.

4. You spend $250 a month on your cable bill.

5. The Mrs of the house spends $300 a month getting her hair and nails done.

6. You're so fucking stressed out because you're "always short on money", working 50hrs/week and still can't "keep up with the Jones's"

That's the new "working class" and it ain't your Granpaps "working class"...


Creative_Destruct's picture

Absolutely. Love how petty status-seeking douchebags spend themselves into oblivion and then poor-mouth and reach for the Xanex.

bamawatson's picture

tough crowd tonight; two early downvotes for a spot on comment

oops's picture

QE systematically destroyed American society. https://goo.gl/IoiSjv

Mr. Universe's picture

Let's see how things stack up for a Californian who now knows better.

In 2016 you're "working class" if:

1. You live in a McMansion.  Nope, same 1,800sqft house for 25 years

2. Your family of 4 spends $3000 on new iphones every 2 years and has a $200/month cell phone "family plan".

Wife is semi-guilty of this one, why 2 grown kids are still on plan, it beats me. I'm not even on it, have a burner phone $100 a year.

3. You've got $100,000 worth of cars/trucks/SUV's in your driveway because there's so much shit in your garage you can't get the cars in there.

Not even close. All 3 free and clear including my latest, a beater yoda. Never a car loan again.

4. You spend $250 a month on your cable bill. Freaking Comcast charges me $60 just for internet. Antenna on roof gets HDTV free.

5. The Mrs of the house spends $300 a month getting her hair and nails done. less than $50 for the lot of us.

6. You're so fucking stressed out because you're "always short on money", working 50hrs/week and still can't "keep up with the Jones's"

Fuck the Joneses and the Mercedes Benz they rode in on.

Creative_Destruct's picture

Must'a hit a nerve with somebody.

JRobby's picture

7. You will get very sick soon or if you are lucky, die suddenly without racking up bankrupting medical bills but fortunately you managed to keep up with your life insurance premiums so your family might get that.

Are you ready yet?

A Nanny Moose's picture

Working 50 hrs a week? Sounds more like the average dindu, here in socal. Got an EBT card, but can afford $6000 in rims and tires for their SUV (to drive on shitty roads)

willwork4food's picture

Who can afford $6000 rims if they're on EBT cards unless they stea... Oh, never mind.

autofixer's picture

They rent them.  I know a chick who rents a mattress.  

MissCellany's picture

Good Christ on a cracker... If that's a list of "working class" nowadays, then what the hell do you call those of us who bust our asses but still haven't had the cash to get a $15 haircut at the Walmart salon even once in the last four or five years?

IRC162's picture

My heart goes out to you, nowadays one can find himself in this situation through no fault of his own.  The loyalty/bond between employee and employer has been broken, and people get canned and lives ruined so upper management can meet numbers.  It could be anyone in that boat, almost like a form of Russian Roulette.

A guy came into my office yesterday.  He was humble, nervous, and had resume in hand.  He was looking for anything, any job.  He was a QC specialist for FMC Technologies,  and he was replaced with a cheaper employee.  We both agreed that if the employer had brains, heart and balls, then he would have offered the guy a pay cut instead of showing him the door.  I hugged him and tried to reassure him of his worth.  GD  companies just don't care about anyone anymore.  

Please be kind out there to those trying to better their situation through action, a little kindness and  empathy can make a huge difference when someone is at their low.  Love your neighbor*.

*screw the layabout (d)estroyers voters, they deserve what's coming.

Mustafa Kemal's picture

I bet I have more shit in my sheds than you do. Am not allowed to throw it out.

Rentier88's picture

1.  Nope, 23xx sqft and paid off years ago.

2.  Nope last phone was S4 i get new phone every 3 to 4 years and my family plan is $105 month and includes my parents(cheaper to have them added as phone vs. them having their own plan).

3.  Own 2 cars both paid cash for and bought used (2yrs old when bought let some other sucker take the new car price hit), both fit in garage with motorcycle too.

4.  Don't have cable, haven't had in over 8 years.  Only Roku, over the air and bittorrent.

5.  Now here I plead the fifth on.

6.  Zero stress baby, is all paid for and got over 1 mill in retirement assets.  I work about 9 months a year, have so much sick and vac. time I get.  Jones's?  Who the hell are them?  Don't give a shit what others have or don't.

We do take lots of vacation and trips.

Moe Howard's picture

Paid off house that's small.

$50 phone, had it about 5 years now, pay $8 a month avg for service.

Two cars, own 'em, 98 MB SLK 230, 03 Nissan 350z. Guess which one has rust all over the undercarriage.

No cable.

I get a haircut every 6 to 9 months.

I take a trip when I need to.

Ace Ventura's picture

dammit I'll bite.....which car has rusted nether-regions?

neilhorn's picture

Been there, done that. It doesn't work anymore. That was what inspired the middle class through the ninety's. Since then the monthly credit card payments outweigh the monthly income. I gotta make a change or go on welfare. If you got a Clinton govt contract and a contact call me.

Memedada's picture

As usual terms are emptied of meaning in the US. “Working class” is also the majority of the middle- and upper-middle class. The distinction between the proletariat, the working class and capitalist class is much more simple:

The proletariat: owns nothing/very little and earns nothing/very little (a growing part of the US population – including “the working poor”).

The working class: works for the ownership class/the capitalists and/or serves the oligarchy through a public office (that – in a fascist society – is made for and by the ownership class). Sometimes owns a house, a car and some other trinkets (but more often they do not – the bank does). A member of the working class can be (very) well-paid.

The capitalist class/the owners of the system/bourgeoisie: owns the means of production. Employs the working class to extract surplus value from their work. Some upper-middle class members think they belong to this class – but in reality are just well-compensated members of the working class.   

To be “working class” has nothing to do with being destitute or poor – yes, that has historically been the condition of the working class but since they started organizing, societies became more democratic (they got voting rights for a starter) and information/knowledge about society became more widespread the working class’ living conditions have improved (until now – now the oligarchy believes themselves safe. They have indoctrinated the population to such a degree that they don’t think a revolution will ever be organized = no need anymore to throw to many crumbs at the poor to keep them from revolting).


de3de8's picture

I didnt Know I had a twin

GunnerySgtHartman's picture

Well stated, sir!

Your family of 4 spends $3000 on new iphones every 2 years and has a $200/month cell phone "family plan".

Which is totally nuts.  I have a $37/month prepaid no-contract plan for an Android 4.4 smartphone with LTE service/unlimited talk/unlimited text, and I never use all of the data.  People gotta have bragging rights, I suppose.

Rubicon727's picture

Meanwhile, what we've known for several months, if not years, Mr. Clifton of Gallup is just now recognizing?

He must be part of the 1% elite.

Creative_Destruct's picture


May I use that also? :)

johngaltfla's picture

Any time. I used put "CNBS" in there but it confused people that they thought it was Fox.

Panafrican Funktron Robot's picture

Wait, you couldn't possibly be telling me that when shit returns to their reasonable value, it's costs a lot less up front capital to start a business?  Get out of town!  And to think, I thought all we had to do to boost employment was reduce those incredibly stupid negative incentives to employing people, such as payroll taxes, and generally eliminating regulation written by large corps to keep small players from competing! (and fuck, am I crazy to suggest that!)

Creative_Destruct's picture

I guess you and I both need to be Pauly-Krugmanized....NEVER!

Creative_Destruct's picture

Thanks for sayin this. Nicely captures the point of my avatar:

"You must let the destruction part of the Creative destruction cycle happen, that is what they have been fighting since 2007 with the asset inflation through the bailouts and QE."


Malinvestments are the disease we have.

agNau's picture

We must give credit where credit is due. The maestro gamed the system to where he knew it would be impossible to look good any longer, then bowed out to applause. That's when the ropes should have come out.

Creative_Destruct's picture

True. He knew when to bail. But at least some of the masses seem to be seeing his primacy in the bubble disasters.

Many now think like I do: justice would be served by hanging him by the scrotum in Battery Park.

jadan's picture

What do you suppose reducing 7300 to 3700 is if it is't creative destruction?

Creative_Destruct's picture

7,300 to 3,700 publicly traded companies. On the face of it, seems like a good point. But this is due to a buy-out binge induced from a combination of super-cheap ZIRP money, plus the inability to grow organically, plus the fact that some, not all, of the bought out companies, were companies formed during the bubble booms and represent malinvestments themseves. Therefore, even though a significant percentage of the bought out companies no longer exist as separate entities, they are still incorrectly indirectly perpetuated by the false signals induced by easy money. And the ones that weren't malinvestment were also assimilated into larger entities. So it looks like destruction based on the numbers, but it's really perpetuation.

Why are some of these bought out companies necessarily malinvestments, you may ask. Good question. Because without the LONG 30+ year bubble boom economy that Greenspan created, the Natural Real Output of the economy would not have supported the level of credit induced consumption required to support them.

As Paul Volker wrote in 1999, when economic growth had been juiced like a MoFo by Greenie in complicity with Clinton:

"This is unsustainable, the mature U.S. economy grows on average by 2.5% per year." He was dead nuts on. That man had the integrity and courage to be the adult in the room , unlike Greenspan who pandered to the elite for their favor and accolades.

We've been living a profligate, easy money-induced la-la-land LIE for decades. It's like a LOOONG drunken party. It will take MUCHO time to recover from the head and soul-splitting hangover. And it will be painful to the people who's expectations were raised dishonestly.

Creative destruction needs to allowed to operate continuously and uniterrruptedly with real natural supply demand feed-back signals from the economy. This is done by NOT pumping money. Otherwise you accumulate MASSIVE amounts of unsustainable malinvestment that people depend upon. And when it inevitably goes away in the inevitable bust, you either have to prop it up artificially like we're doing now, or you have a Social disaster. In other words, once you addict the economy and society to easy money bubblized growth, the withdrawl to a natural state risks violent Social upheaval. Unfortunately, that is where we are now.

newbie vampire's picture

"What do you suppose reducing 7300 to 3700 is if it is't creative destruction?"


Then they "restructure".   It always ends with chopping head count.   And thats when you see the human casualties with their pink slips.

adanata's picture


Corporations don't like competition. They can afford to buy the "laws" and "regulations" they need to crush small business/start-ups and they have been doing just that for a very long time. The Trumpster needs to roll 'em back and clear the way for new business. That's something he should likely understand and  helping small businesses to get started will royally piss off the repugs political class and their buddies. This could be fun.

crossroaddemon's picture

And what do you think happens if he tries any of that shit? He'll end up dead or framed for something. Even if he has good intentions he's going to have no choice but to fall into line.

Creative_Destruct's picture

Good possibilty. But he's pretty cagey. Hopefully he can survive.

Creative_Destruct's picture

"They can afford to buy the "laws" and "regulations" they need to crush small business/start-ups and they have been doing just that for a very long time. The Trumpster needs to roll 'em back and clear the way for new business."

YES, and the BIG bonus is, as you point out: "royally piss off the repugs political class and their buddies."

Killdo's picture

has this preventing of correection ever happened before? I don't think I have ever seen it before

photonsoflight's picture

They have damned the river. Someday it will not be able to hold back the tidal wave behind it.

stacking12321's picture

no, they have dammed the river, but they have damned us.

RafterManFMJ's picture

Why start a business, work 90 hours per week just so you're a target and a slave of the tick classes?

Sorry folks I'll be poolside with a nice drink, watching this fucker burn!

crossroaddemon's picture

You don't. You get good at something people will pay you a good chunk of change to do, and then do exactly enough of it to make the money you need. Not one second more. Me, I teach guitar and mix live sound.

Mustafa Kemal's picture

I read a recent post here where a guy said that he went and spent $30K to get trained to machine racing engines. Then he said he started out in the $20Ks and within a few years he was making $92K. Indeed, develop a skill somebody is willing to pay you to do. In my neighborhood there a shortage of plumbers.

neilhorn's picture

I know how to fix pipe, and I know how to lay pipe. I'm your plumber, man.

neilhorn's picture

I also know how to place pipe 14,000 in the ground, cement it, perforate it and frac the shit out of the rock around it. But that makes me evil.

The thing is, as I always look at it, is that evil is th absence of God; just as cold is the absence of heat and dark is the absence of light. So...

whatamaroon's picture

George Mitchell was a godsend.