Economic Reality: Bottom 50% Of Americans No Longer Matter

Tyler Durden's picture

Authored by Mike Shedlock via,

The Fed likes to brag about the “We saved the world” recovery.

However, the unfortunate truth of the matter is a record Half of American Families Live Paycheck to Paycheck.

Does it Matter? Let’s investigate.

Unprepared for Nearly Anything

  • 50% are woefully unprepared for a financial emergency.
  • Nearly 1 in 5 (19%) Americans have nothing set aside to cover an unexpected emergency.
  • Nearly 1 in 3 (31%) Americans don’t have at least $500 set aside to cover an unexpected emergency expense, according to a survey released Tuesday by HomeServe USA, a home repair service.
  • A separate survey released Monday by insurance company MetLife found that 49% of employees are “concerned, anxious or fearful about their current financial well-being.”

Deleveraging? Where?

A Fed study shows U.S. Households Will Soon Have as Much Debt as They had in 2008.

The Federal Reserve announced Friday that the U.S. has $1 trillion in credit-card debt. Consumers hit that number in the fourth quarter of 2016, but eased on revolving credit during January 2017. The Fed announcement showed revolving consumer credit hit more than $1 trillion once again in February 2017.


“Credit card debt is rising quickly, but delinquencies are still really low,” said Matt Schulz, a senior industry analyst at the credit cards site “Many Americans are doing a good job of controlling their debts, but eventually with big debts and rising interest rates, it’s likely that something will have to give.”

Paycheck to Paycheck “Good Job”

Excuse me for asking but if half the nation lives paycheck to paycheck, is that really indicative of doing a good job at managing debt.

And as for “low delinquencies”, I remind you of my April 26 article Subprime Credit Card Losses Bite Capital One: Income Down 20%, Charge-Offs Up 30%.

Nonetheless, I remind you of an important perception.

We Saved the World

Two Reasons Not to Worry

  1. The stock market and housing are still going strong. We heard the same thing in 2007 but it’s different this time.
  2. The bottom 50% of the economy simply do not matter.

The real crux of the matter is point number two.

The Fed does not give a damn about the bottom half of the economy even though it spouts continual lies about “income inequality.

The Bottom 50% Do Not Matter

As long as the Fed can keep stocks and home prices elevated, there is no concern about the food-stamp, rent-subsidized, Medicaid-supplement, disability-income, Obamacare-subsidized 50% of Americans struggling paycheck-to-paycheck.

That money rolls in guaranteed, month after month!

That 50% cannot afford a house is irrelevant as long as suckers keep paying $500,000 to two-bedroom shacks in LA.

The game is to keep asset prices up so that the top 50% keep spending. The bottom 50% are taken care of by government (taxpayer) subsidies noted above.

Here’s the real deal: Fed Expects a Second Quarter Rebound, Higher Equity Prices.

Repeat Performance

The Fed needs to keep asset prices elevated even though it’s pretty clear concerns are mounting over bubbles.

Can the Fed save the world again?

Previously, the bottom third did not matter. Then the bottom 40% did not matter. Now the bottom 50% do not matter.

That statement is a bit over the top. By how much I don’t know. But the trend is clear, as is the fly in the ointment.

Brexit was the first warning shot. Trump was the second.

As soon as the bottom 65% don’t matter, those 65% may vote to take matters into their own hands.

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SweetDougisaTwat's picture

A barkingcat will perform oral on you for mere pennies on the dollar.'s picture

BTW...stop the boring icons.  Here's help.  I expect results within one week.

MEFOBILLS's picture

If the bottom 50% don't matter, then despotism has taken over.

1946 archive film:

GreatUncle's picture

It was always there, they played the trick of Keynesian economics to pretend so many had skin in the game.

Lol ... they ran out of money and either they write down / cancel the debt written in the taxpayers name.

FreedomWriter's picture

Sweet, must post more .... now

clade7's picture

Small business owner here...I work with American Mfgs...YOY down 75%...Wife is mid 60's and I'm in late 50's....Listed the house today!  Looking at a nice C class RV!  Thanks be to God I listened to the ZH membership these past years and squirrelled away some Get out of Dodge finances!  Plus, I can fix anything, so hey, everything is looking just dandy!  I'm in the bottom 65% and this train is about to run me the hell over if I dont get off the tracks!

divingengineer's picture

Shuck and jive, like the .01%. And never apologize.

vq1's picture

Any reason you say that besides cost and depreciation? I'm looking at new and used 25' and the price difference is only a few thousand. A small price for a home. 2 year warranty sounds kinda nice so I don't need to worry if an appliance dies on me.

tmosley's picture

Shop around. If used RVs are only a few thousand less than new, you are in a bad area to buy used. This is the case where I live. A 12 hour round trip netted me a 40 ft travel trailer and a 1 ton truck to haul it with for as much as I would have paid for just the trailer at home.

My advice would be to spring for the 5th wheel with a taller ceiling. The bumper pulls are nice for a while, but if you are in it for more than a few days, they start to get claustraphobic. Nice to be able to stretch your arms over your head.

clade7's picture

Yep!  Like I said, Im mechanical as hell...developed an old school analytical trouble shooting mind from growing up on a farm......travelled the World fixing big equipment for a multinational....built houses and boats, familar with a lot of disciplines in those regards...broad spectrum skills...I can even short order cook if needed...or trap muskrats, whatever...


My current autos have over 200k on them and run just fine...Anyway, yeah...Used RV for sure...thanks for your reply...doing my best here to stay positive and hoping my health will hold out and that me and the Wife of 38yrs will have a nice time wandering....I just dont have the income to afford to keep this place and all the crapola that comes along with it...squeezed out of the traditional 'American Dream', so off to find another!

Raging Debate's picture

I love the idea of an RV, a new view every couple of weeks and I can work out of if for my job. My wife is anchored as she does have a really good nursing job. 

Justin Case's picture

Change the gear oil (synthetic) in the rear axle and make sure the seal on the pinion isn't leaking. Take the rear wheels and brake drums off to check the axle shaft seals are good.

Use a pure synthetic engine oil and add a by-pass filter system for long engine life. Flush the cooling system as well.

The drive train in RV's are worked hard and need to be taken care off most, for happy motoring. At fill ups check fluids and also check underneath the RV for leaks.

vq1's picture

I'm looking into this as well. Are you planning on living in it full time? Will you do dishes and laundry by hand? Serious question, thanks.

clade7's picture

No problem!  95% of the Worlds Humans do their dishes and laundry by hand...this is the least of my concerns...I will NEVER own another home...I might build another one someday though....after the Wife departs this Planet, hopefully in some modicum of comfort and tranquility...a hole in the ground or boxes and tarps most likely...its all I really need...


Good Luck on your adventure and read some of Bob Wells posts on youtube about RV Living for a start...those will springboard you into all sorts of other vids that apply...



tmosley's picture

You can get a countertop dishwasher for $200 on Amazon. Don't even need to turn on the water heater--it has its own. Got mine on Craigslist. Haven't tried it out yet though.

You can also get a small form clothes washer and spin dryer that will work for small loads. You will have to hang your clothes out to dry though. Haven't used one myself, but they get good reviews.

vq1's picture

Thank you guys! I have to be creative. I'm not willing to continue to rent, neither will i get into 250k+ debt

GlassHouse101's picture

Just make sure you own the land you park it on . . Gas may not always be available.

Dead Indiana Sky's picture

The RV solution seems to be an emerging theme here in the ZH comments over the last couple of weeks.  It's been Mrs. Sky's dream to get one and cruise the country after retirement.  We may need to move that up about 20 years.

clade7's picture

You are lucky!  Mrs Clade aint all that gung ho at the moment, I have inadvertantly protected her from the incoming 'weather' so to speak, with the vigor of as to not let her worry....I thought I could buck my way through this mess since 08, outwork, outlast, we have seen some hard times in the past, but I always found a way to keep her happy and comfortable...She knows what I can do and is appreciative...but I protect her from the incoming maybe a bit too much?


Well, this approaching shitstorm on the horizon is just beyond my capabilities to survive in any conventional manner...I know this... so I gotta run and make it a fun adventure for thats the deal here...My only reason for living and working...

Justin Case's picture

Soon the Gov't will make it mandatory for people in RV's to have a location transponder to keep track of their herd or untill they get the cashless thing up soon. If yoar naughty they can block you access to funds, until you pay a visit to resolve the matter. Even if it wasn't you that they was lookin fer.

monad's picture

Arm the bottom 50% do train them first this time, swine

geno-econ's picture

It's called a Trickle Down Dum-Dum Economy.   

Xena fobe's picture

Sorry but the bottom 50% are definitely not taken care of by govt subsidies. Poor working people subsidize the poor and the rich.  

stljoe's picture

Roughly the bottom 50% don't even pay any taxes outside of FICA. How is that subsidizing anyone except the greedy elderly. 

NihilistZerO___'s picture

Inflation tax hits poor the hardest. Anyone who owns a home bought before 2001 is paying half the equivalent rent the working poor pay if they receive no rent subsidy. The lower income workers, even if they receive benefits, are propping up the asset bubble via the inflation tax. Sadly they are oblivious to this for the most part and buy into Bernie Sanders like solutions that will only make the problem worse.

ElTerco's picture

They are subsidizing the poor and rich by producing *real* goods and labor, and not just paper pushing. Without those people doing real work, *everyone* would be fucked.

NaturalOnly's picture

What is sick is that I've build a little business and have a loss to carry forward.

 I don't have to pay income taxes, but I DO have to pay social security taxes. I just finally pull out of the hole and the government is standing there holding their hand out for their 15% to go in the deep hole. So I owe about $6K, even though I am still in debt.

Any ideas on what to do?

darteaus's picture

Keep rolling your cash flow into the business to avoid income tax.  No way to avaoid the "self employment" tax - except to stop paying yourself.  Deduct every conceivable expense from the business, and give yourself a corresponding pay cut.

If I still had a business, that's what I'd do.

NaturalOnly's picture

I do make as many things a business expense as I can, or I would really be in it now. How do I roll my cash flow into the business? Other than business expenses, I don't know how to do that.

silverer's picture

I still think a civil war and total destruction is the best way. Politicians never fix anything.

divingengineer's picture

How many people a year are we losing to medical blunders, overdoses, cops, suicides and other manifestations of our new serfdom?
What would the break even be?

darteaus's picture

Good point: look at the toll on both sides.

When I do, I see a lot more innocent deaths occur during a civil war.

UmbilicalMosqueSweeper's picture

No one is "innocent" except animals and children.

Sick Underbelly's picture

The point is to organize enough people to be mobile to hunt down and eliminate the elite:

a) they will have private means of, helicopters, planes, plenty of fuel for any situation

b) they will go to places they think are safe....compounds, at-ready forces, probably well-armed and -entrenched

c) since they are decently paranoid and pay others to be paranoid for them, they probably have diversion squads to throw off those tracking them

If you catch one, you need to be prepared to aggressively interrogate and extract as much information from them.  This you cannot do well if you aren't trained...a number of seasoned water-board-trained, professional interrogators is necessary as part of the "team".

Snipers...yes.   EOD...need plenty.  Tacticians and map-readers...definitely necessary.

My thoughts are that a few of them would be stupid enough to hole up in the same compound.  

The secret, I think, is to eliminate them before they can escape to some remote island, or backwoods bunker in some obscure country.

The point in all of this:  don't kill your brethren, when killing the psychopathic enslavers and replacing the system with Constitution 2.0 code that is more air-tight and less "hackable" are what we all really want.

darteaus's picture

and when Mugabe takes power, all will be well with Rhodesia...

NaturalOnly's picture

Over 100,000 people a year die to PROPERLY prescribed drugs in this country. So this does not count the mistakes they make.

They admit to this 100K people. It is part of their stats.

High prices to be paid to kill people for a living.

UmbilicalMosqueSweeper's picture

A lot of shit-for-brains and parasites are also eliminated. LIBERTY HAS ITS PRICE!

UmbilicalMosqueSweeper's picture

Just eliminate the banksters, lawyers, politicians, criminals, commies, etc,. etc., etc., and all will be well. Pass the ammo and gruel, please.

Gunga's picture

The "elite" manipulate us to fight amongst ourselves. We don' t need a civil war, we just need to get in our pickup trucks, drive to Washington DC and drag about 500 people out of their offices and into the street. We could solve all of our problems by lunch tomorrow.

Sick Underbelly's picture

Sometimes, you have to do shit for people who are too fucking stupid, dumb and/or undereducated enough to know what must be done.

Someone really needs to hunt down Soros, ALL Rothschilds (and whatever variation thereof), and the "dual citizens" of the US...and maybe not in that order.

Killing your countrymen is what they want.  They don't want to be killed.  We really need them "drug into the street", as you say.

Overhaul the shit-mess that is our "Fed Gov", and then abdicate the revolutionary control of the government, returning it to the hands of the people.


A. Boaty's picture

We have finally solved the business cycle problem, i.e., no more recessions! Get ready for growth for eva!

jamesmmu's picture
8 Major Systemic Risks That Will Potentially Crash The Economy And Stock Market

oobilly's picture

when 65% are affected..... the power will be in the streets waiting fr someone to pick it up.

Winston Churchill's picture

The American revolutionary war barely had 20% popular approval at the time.

Just where did 65% come from ?

Cloud9.5's picture

According to Adams, one third of the population supported the revolution and one third was ambivalent.   Looking at the numbers, about 3 percent of the population actually took up arms.  The popular assumption is that we Americans would not have won without the French Navy.  I submit that assumption was put to rest in round two of the Revolution in the War of 1812.  European plans of reconquest died outside of New Orleans under the expert marksmanship of Jackson’s riflemen.



Sick Underbelly's picture says the population in the US Census of 1810 was 7.24 Million. 3% = 217,200

As of 2015, we had 321.4 Million US citizens, and .03 of that is:  9.642 Million people.

That's tremendously more than the people in the military, or the whole of all federal government workers.

How do you organize that many people when the lights are out, gas isn't available, internet is gone, etc?   Horse couriers?

Cloud9.5's picture

First off, I don’t think the three percent today know themselves who they are until they are triggered. In 1775, Colonel Francis Smith triggered the three percent of his day when his troops shot up the Lexington Militia in an effort to confiscate arms and ammunition.  What followed next was the accumulation of a swarm that came pouring in from the neighboring towns.  That swarm shot up the British Army as it retreated back to Boston and placed it under siege.  This swarm was not organized.  There were no four star generals on the American side making battle plans.  There were no ridged lines of battle.  What happened was the consequence of a trigger that caused a significant portion of the three percent to converge on a single target at a single moment in history.

Any number of factors could trigger a modern day three percent.  At the top of the list of possible triggers is overt gun confiscation as it was attempted in 1775.

As pointed out, the three percent consists of a little better than 9.6 million.  They can be triggered by crooked local political machines.  Such an event took place in Athens, Tennessee in 1946.  Or, they can be triggered by a government massacre like the one that wiped out the Davidians in Waco.  Tim McVeigh. Terry Nichols and Michael Fortier killed 168 people and wounded over 600.  These men are typically referred to as lone wolves.  This is a misnomer.  They were in fact part of that ever present three percent that resides within the population today.  What is important to glean from this event is the outsized amount of deaths, injuries and property damage these men inflicted upon their perceived enemy.

Piss of three or four of these guys and they may take down one of your buildings.  A hundred or so may put the local law enforcement in their own jail and elect a new mayor and chief of police.  A few thousand will shut down the nation.


The wisest step for government is to understand the import of this minority and not trigger this group. The best way to do this is to scale back its own excesses and not provide the triggers in the first place.