I
don’t believe the statistics put together by federal government employees but
it is however the only way to judge the nation’s economy as a whole. Over the
years the baseline for each statistic has changed since they change the
parameters, criteria or definitions
We
do however know of our own economic turmoil and that felt by our sphere of
influence.
We
really don’t need statistics to tell us that we are in a national downward spiral
only to get worse. But the media and statistics are telling us a positive economic
story – so who is correct?
I
understand why you might not buy into my theories after all it is only me and
like-minded people against the IRS, BLS, EPA, DOJ, HUD, Administration,
Congress, main stream media and 24-hour cable news.
Is
the economy getting better for you? I pray that it is but for most of us – not
so much.
Can
we not reach out to those in need or have we lost our own hearts and souls
along the way?
Regardless
of your circumstance, let’s consider the nation as a whole and review some
statistics. Bureau of Labor Statistics is the source for most of the data. You
have to draw your own conclusions based on your own research but comparing current
data to 1980 should open your eyes!!
For
ease of reference, in the late ‘70’s and early ‘80’s we had a deep recession;
the worst since the Depression until now! The early 80’s was a devastating
period of time for housing and is in stark comparison to now except for a few
key stats.
1980
2010 2012 2014
Employment to
population Ratio 60% 58.5% (3/10) 58.5% (3/12) 59.2% (12/14)
Calculation
of the Ratio: Labor
Force Employed / Total Population
1980
Population 230,176,000
Employed 138,000,000
2014
Population 325,127,000
Employed 192,000,000
This
is a half full or half empty conversation. The problem is that there are about
100,000,000 more Americans in 2014 than in 1980. Of this population increase,
only 50% are employed.
More importantly, the
1980 statistics represent a deep recession and in 2014 we are 6-years into the “recovery”.
Median Income $17,710 $53,469 $52,117
$52,250 (2013)
2014
median income data will be released in September 2015
4th
quarter 2005 median weekly earning $658
4th
quarter 2014 median weekly earning $796
The
spin – Median income has increased over 20% since 2005.
The
reality – WHEN is the last time you received a raise? Income has remained flat
over the past 6-years.
National Debt 32.5% 87.1% (1/10) 99.4% (6/12) 101.5% (12/14)
as Percentage of GDP
USA
debt OVER $17,000,000,000,000
World
population 7,000,000,000
If every human on the
face of the planet contributed $2,400 to pay off our debt, we could start over!
However, the world median income is less than $2,000 PER YEAR!
Reality
– are your credit cards charged to the maximum? What do YOU do? (a) add another
credit card to your wallet and start buying more stuff OR (b) start paying off
your credit balances
In
most cases, the interest rate for a credit card stays constant but extremely
high.
For
the nation’s debt the interest rate can change – what will happen if the
interest rates goes up 1%?
1980 2010 2012 2014
Inflation Rate
14.8%
(3/1980) 1.24% (7/10) 1.41% (7/12) 0.8% (12/13)
Ground Beef $ / lbs $1.29 $2.49 $3.08 $4.15 (1/15)
Interest Rate 18.10% (7/1980) 4.75% (2/10) 3.50%
(7/12) 3.65% (1/15)
Housing Starts 888,100 587,000 780,000 947,000
The
Great Recession ended in June 2009.
Over
the past 30-years on average, inflation has been below 3.0% and interest rates above
6%
Please
tell me that you see a stark difference between 1980 and 2014 for inflation,
interest rates and housing starts.
What
will happen to housing as the Fed starts to raise interest rates? We will see a
jump start in sales because buyers will get off the fence but then we will hit
a brick wall – enter another recession or worse!
The pent-up demand for
housing and the lack of housing supply are staggering.
Median price * $67,000 (12/80) $241,200
(12/10) $258,300 (12/12) $298,100 (12/14)
of Ex. Homes
*
Source:
Census.gov
For
historical reference: the median price of
homes peaked at $262,600 in March 2007.
I
had a weekly series of posts on why there was a 15.4% housing price increase
over the past 2-years if you are interested in knowing more, let me know and I
will send you the information.
At
what annual salary do you need to buy the 2014 $298,100
median priced home?
3.5% down payment $18,800 (+ $6,000
for closing costs) $25,000 cash needed
Mortgage
amount $279,300
@3.65%
interest rate Salary needed between: $59,600 - $99,400 Median Income: $52,250 (2013)
1.
Buyers do not have the cash for a down payment.
2.
Buyers have too much debt
3.
Buyers have been lulled into a comfort zone and have lost the best time to buy
a home.
4.
Interest rates will eventually have to be raised and housing affordability will
turn into “Where will our children live”?
Inflation
Source: Wikipedia, the free encyclopedia
Economists
generally agree that high rates of inflation and hyperinflation are caused by
an excessive growth of the money supply.
The consensus view is
that a long sustained period of inflation is caused by money supply growing
faster than the rate of economic growth.
Deflation
Source Wikipedia, the free encyclopedia
Deflation
discourages investment and spending, because there is no reason to risk on
future profits when the expectation of profits may be negative and the
expectation of future prices is lower
A
deflationary spiral is a situation where decreases in price lead to
lower production, which in turn leads to lower wages and demand, which leads to
further decreases in price. NOTE: has the drop in gas prices changed your
driving habits?
A combination of excessive money supply and over regulation
can lead to stagflation.
What
statistics do you believe?
Are
you complacent and could careless?
Do
you think we are in an economic dilemma?
Do
you believe anything our inside the
beltway elected officials tell us?
Consider
my conclusions which you may or may not agree with. Your opinions are valuable
to the discussion:
We are turning into a “What about Me” society
Our personal responsibilities are being
eroded away daily
The Fed is between the sword and the wall.
My economic expertise is limited to my
experiences during past recessions and analyzing current data to form an
opinion:
We are in a deflationary period but once the
Fed raises interest rates, the Fed will not be able to stop inflation which in
turn will lead to another deep recession.
This will happen before the next Presidential
election.
