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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Wahooo's picture

Mine and yours apparently, since we pay for it.

Wahooo's picture

Mine and yours apparently, since we pay for it.'s picture

you posted:

despite working hard for a living and actually bringing in a reasonable income -- recklessly live WAY beyond their means and rack up so much credit card debt that the monthly interest alone is staggering.  They go from default to bankruptcy at their own hands.  NOW -- whose fault is THAT?


Good question.  I would postulate that the majority of the blame lies with the Madison Ave. marketing machine.  The average schmo is totally outgunned on all levels.  The marketing machine employs the cream de la cream of psychologists and psychologists to keep the sheep scratching the itch. 

az_patriot's picture

If it's the marketing machine's fault, then why are there so many of us out there who are unaffected by it?  And what about personal responsibility?  Anyone who allows themselves to succomb to advertising to the point that they recklessly manage their finances has greater issues.'s picture

If it's the marketing machine's fault, then why are there so many of us out there who are unaffected by it?  And what about personal responsibility?  Anyone who allows themselves to succomb to advertising to the point that they recklessly manage their finances has greater issues.


my response:

... "so many"?  Not really. 

“Think of how stupid the average person is, and realize half of them are stupider than that.”Carlin

Normal 0 MicrosoftInternetExplorer4 Normal 0 MicrosoftInternetExplorer4

I can be such an uppity slave sometimes.

crossroaddemon's picture

You forget that the average IQ is 100. People in general are mouth breathing morons who don't think about anything EVER.

Aubiekong's picture

95% of the moronic poor have a cell phone that costs hundreds of dollars with a monthly bill that exceeds $100 per month.  There are phones that can be bought for less than $20 and unlimited calling and texting for about $10 per month.  They are poor because they make stupid decisions with their money on a daily basis...

ToSoft4Truth's picture

Poor people 'need' cell phones "in case of emergency"....  just like the credit card they have 'in case of emergency'. 


crossroaddemon's picture

You can't work anymore without a cellphone and an internet connection. You know that as well as I do.

Aubiekong's picture

yes poor need a phone and texting so go to puretalk USA flip phone $25 unlimitted talk and text $10 per month...

Ozlo's picture

Don't get mad at the victims close the doors to all the useless public schools. They never taught us one thing about managing or investing money.

Jack Oliver's picture

They are simply trying to keep up with media imposed societal expectations !

The ' you simply must have one ' to FIT in mentality !!

homebody's picture

When the bottom 65% can vote themselves more welfare, we are all screwed.  The end.


edit  I must clarify that the welfare I refer to is a wide set of benefits beyond just cash each month.   Free education, no fed taxes, subsidized healthcare insurance, food stamps, ... just the beginning of the list. 

crossroaddemon's picture

Maybe it's different in other places, but at least where I'm at you make it sound easier than it is. Yeah, food stamps aren't that hard to get but I know what the income cutoffs look like and if you qualify for the food stamps you probably need them. Most people I know on EBT are WORKING. But have you looked at the cost of food lately? Medical assistance... once again, if you qualify you couldn't afford to pay for insurance. Same with housing assistance, and don't forget housing assistance is income dependant. I know a family living in a state-owned subsidized house and they're paying almost as much per month as my mortgage was.

Cash assistance is actually fucking hard to get. There's a ton of paperwork and proofs, and you have to actively work with local employment services to find a job in order to get it. Free education... not that easy either unless oyu count subsidized loans. 

And BTW all of the above is if you have kids. If you're an adult with no dependants it's very hard to get anything unless you have a provable disability. My ex is getting everything paid for, but she had to jump through hoops to get disability coverage.

Honestly, I know lots of people on assistance but they are all working and they all really need it. The problem is that living wages are so 20th century...

HumanMan's picture

I knew a working man who took the hand-up from all of these programs. His job consisted of walking in to big box stores, filling his cart with multiples of the most expensive merch not behind glass, and walking out without paying so he could sell it cheap on ebay.

gregga777's picture

Benjamin Shalom Bernanke and the Goldman Sachs Feral Reserve System saved their owners, the banking gangsters, and CON Street Swindlers.  Now nearly 4 out of every 10 American household cannot afford to own their homes.  But, home prices are higher than ever benefitting the uber rich and the well-connected who get their money for free from the Goldman Sachs Feral Reserve System criminals.



bugoutbagzyklonB's picture

welcome to the bernankification of amerikka currently known as yellenification

swampmanlives's picture

That's because they are expendable and replaceable. Robots and AI are coming, and they have no hope in hell of being able to compete.

Peon14's picture

Reality is, unless you are putting BIG MONEY in one of the crooked politicians pocket that's running our country you don't matter.

CHX13's picture

Now that they've been thoroughly milked and looted to the max they are becoming a nuisance, what a drag...

TuPhat's picture

But Mish, you said we would all have self driving electric cars soon.  How could anyone care about the little problems in this article?  The bottom 50% don't need to work you said the robots would do all of that for us.  All hail the robot masters in the robot utopia.

crossroaddemon's picture

Trouble is, the elites aren't going to replace us with robots and then just hand out free money for all to live on. My guess is that with automation there's also a side dish of genocide being planned...

Angry White Guy's picture

A good life may literally end well by taking as many of them with you as possible.  It's not an unlikely scenario at this point, at least in my humble opinion.

ToSoft4Truth's picture

Trump is a self-made Billionaire.  Only lazy people cannot become at least a millionaire. 


Obama comes from a Ghetto-Rat who liked to bang black guys, not unsimilar to Palin, and he became POTUS.



Blanco Diablo's picture

Despite what Trump may espouse, his success would have been in no way possible without his father, the general public, and the US government, and Yes Obomba is a Muslim Ghetto Rat from Africa.

crossroaddemon's picture

Seriously? If Trump hadn't been born rich he'd be sitting here bitching on the internet same as the rest of us.

Sandmann's picture

Without Erdogan's money laundered through Bayrock Trump would be bust. He needed to become President to keep his creditors at bay

fishwharf's picture

Happy Law Day people.

In most of the world today is a holiday - May Day/International Workers Day.  In many places it's a big deal, with parades, parties and children with May poles.  Here in America its just another work day, and as I write this at 7:54 Pacific Standard time millions commuters on the West Coast are fighting traffic to get to their cubicles on time.  So glad I got out in time and live far away from the maddening crowds.

My favorite story of the past week has been the Fyre Festival debacle, where thousands of snowflakes were taken for a ride.

crossroaddemon's picture

Pink Vaginas Matter.

Armed Resistance's picture

I like my vaginas like my steak... Dark on the outside, pink in the middle.

SAE6065's picture

In my way of thinking the ONLY way to end the FED is by REVOLUTION.  PLAIN AND SIMPLE. 


Armed Resistance's picture

Unfortunately it's true. There is no other way out. Although it has to be a peaceful and non-violent revolution. We can not be the aggressors but we need to stop participating in this fake paradigm.

I'd love to see an orchestrated bank run where there's a declared day that everyone just takes the maximum out of their local ATM.

crossroaddemon's picture

Look, I can think of any number of things we could do that would be 100% effective without a shot ever being fired. My favorite fantasy is that everyone voluntarily walks away from wage slavery forever. Trouble is that none of these things will happen.

ToSoft4Truth's picture

You must be very overindulged.


The article states, "half the nation lives paycheck to paycheck".


50% of everyone you see today do not have anything in the ATM.  The ATM for them is empty.

Sandmann's picture

2016 showed you elections don't matter

fishwharf's picture

That's why we are allowed to vote.

UndertheDRADIS's picture

It's going to really suck when people begin voting with bullets under Rule 308.

decentralisedscrutinizer's picture


Almost all the world’s economic and political problems revolve around the hegemony of a global corporate cartel, which is headquartered in the US because this is where their military force resides. The only way to regain our sovereignty as a constitutional republic is to severely curtail the privileges of any corporation doing business here. As a free nation, we really have to stop granting corporate charters to just any “suit” that comes along without fulfilling a defined social value in return. The "Divine Right Of Kings” should not apply to fictitious entities just because they are “Too Big To Fail”. We can't take the incorporation of private transnational banks for granted anymore. The government must be held responsible only to the electorate, not fictitious entities, if we are ever to restore sanity, much less prosperity, to the world.




It was a loophole in our Constitution that allowed corporate charters to be so easily obtained it created a swamp of corruption around our capital. It is a swamp that can't be drained at this point because the Constitution  doesn’t provide a drain. This 28th amendment is intended to install that drain so Congress can pull the plug ASAP. As a matter of political practicality, because they defend each other with battalions of corporate lawyers, and because said corporations virtually constitute a global empire, we can't outlaw corporations through the States’ amendment process but must rely on the Article 5 Convention for which the electorate will need to prepare for consensus beforehand. Seriously; an Article 5 Constitutional Convention could solve that problem in days. This is what I think it will take to save the world; and nobody gets hurt:




28th Amendment


Corporations are not persons in any sense of the word and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to:


1, prohibitions against any corporation;


a, owning another corporation,


b, becoming economically indispensable or monopolistic, or


c, otherwise distorting the general economy;


2, prohibitions against any form of interference in the affairs of;


a, government,


b, education, or


c, news media, and


3, provisions for;


a, the auditing of standardized, current, and transparent account books, and


b, the establishment of a state and municipal-owned banking system


c, civil and criminal penalties to be suffered by corporate executives for violation of the terms of a corporate charter.




Think about it: The Founders had to fight a bloody Revolutionary War to win our right to incorporate as a nation – the USA. But then, out of legislative inexperience, our Founders granted unrestricted corporate charters, (with enough potential capital & power to compete with the several States, smaller sovereign nations, and eventually buy out the Federal government itself) to thieves and con men. Ooooops! Now they all got together and want to buy the whole shrinking Planet, coalition armies and all! How whacky is that?!


crossroaddemon's picture

Dude, we get it. Personally I think the very concept of a corporation... profit without responsibility... is offensive. But you know this shit is never going to happen no matter how many threads you paste it into.

Ace006's picture

Evil profit! Eek.

The essence of the corporation is collaboration in pursuit of useful endeavors wirh sharing of and limitation of risk. Most small corporations fit that mold. The few that turn ino ConAgra or Walmart need to be dealt with by antitrust laws and prohibition if political activity.

Unions the same.

Big everything is the enemy, not the corporate device itself.

decentralisedscrutinizer's picture


Where does my amendment say that either banks or corporations would be abolished?




You didn’t read it did you?


Anopheles's picture

Corporations are responsible to their shareholders.  

What so many people don't realize is the biggest shareholders are pension funds, including government pensions and sovereign wealth funds. Without profitable corporations, their pensions would be FURTHER down the toilet.  I'm talking largely of all the public sector and those suckling the public teet. 


decentralisedscrutinizer's picture


Where does my amendment say that either banks or corporations would be abolished?




You didn’t read it did you?


Sandmann's picture

US is exactly where it would have been without WW2 and the Cold War. Fear of Communism and the Cold War spending on guns and butter gave Americans 30 years of very good living before the collapse of the USSR provided huge dollops of illegal funds to the FIRE sector to keep them booming and screwed the rest of the population.

Without huge injections of stolen funds from China and Soviet Union after 1991 the whole US and UK Financial System would have cratered long before 2007. The Fed simply spun out more lifeline by pushing more households under water to keep the Oligarchs afloat.

Ace006's picture

Stolen funds? Oh, you mean like all that Iraqi oul we are getting.

Solio's picture

Everything that I had worked my life to accomplish is now in the accounts of the naked-short sellers, banksters, or broken-up and sent away by kangaroo courts (my family.) I have re-invented myself many times in order to alway keep working, to no avail. I have no more energy to put into these frauds.

Anopheles's picture

Ever hear the phrase "You're working too hard to make any money..." ?

Hard work is only a part of success.  Need to work smart too.   

I don't get (too) angry with the banksters, etc,  Instead, I use that energy and try and figure out a way to take advantage of them...   

Ace006's picture

Condescending of you.