The True State of the U.S. Economy
Flatly, the state of the economy is poor.
Despite general media rainbow-blowing “optimism”, the actual facts, as well as what we as real people experience and hear about on a daily basis, paint a much different picture. Here are some cold hard facts about the current state of the U.S. economy (circa this article’s publishing date):
- Industrial production has declined for over 9 months straight, something which has never happened in the history of the U.S.
- Commercial bankruptcies are up 51% since September, 2015.
- Commercial loan delinquency rates have been rising for over a year and a half.
- Factory orders have dropped for over a year and a half.
- Federal and state tax receipts are starting to fall, which happens before every downturn.
- Layoff announcements at major firms are up 24% than this time last year.
These are just a few of the markers (noted by zerohedge.com).
As we all should know, the unemployment rate is highly manipulated, or, if you prefer, at the very least so contrived as to be accurately defined as possibly misleading. Here are a few facts about the “unemployment rate” as stated in most major news broadcasts:
- People who are not “actively seeking work” are not counted as being in the labor force.
- The number is built on a “survey” of 60,000 “random” households.
When media outlets state the official Bureau of Labor Statistics’ number of a 7% unemployment rate, it can arrive at that number as such:
The Bureau randomly samples 60,000 households.
There are 100,000 people of working age in the homes.
70,000 of these people are “actively seeking work”.
Of those 70,000 people seeking work, 4900 state they are unemployed.
(70,000 x 0.07 (7%) = 4900)
The BLS will cite THIS scenario as a 7% unemployment rate.
Critics of this system wonder: “What about the other 30,000 people who aren’t working??”
A fair question. If you count those 30,000 who “aren’t in the labor force” because they “aren’t actively seeking employment” (whether that’s by choice or consequence; after a certain time on government benefits, for example, people are automatically dropped off the “actively seeking employment” roles, so one can’t say these are all just stay-at-home-moms-by-choice), then we add in the 4900 who admit they are seeking, but unable to find employment – now you have as many as 34,900 unemployed people out of 100,000 who are not working; the unemployed, not by choice.
In reality, given the above scenario, the unemployment rate could be as high as 35%. Yet the official number tossed about on all major media venues will be 7%. Remember that.
There is a lot of controversy over how the unemployment rate is calculated among people who are in the know. Perhaps people think the current system for calculating unemployment is reasonable, but it’s easy to see how there may be some room for improvement, or at least debate, in order to arrive at a more accurate number. As usual, the truth is most often in the middle. Numerous financial/market-type peoples (such as Peter Schiff and Ron Paul) agree that the actual unemployment rate is likely more accurately sitting around 18-22%.
The Invisible Poor
Another item to consider, beyond the mere unemployment rate, is how normal people are doing day to day. A startling statistic I came across the other day is that only 1 in 10 Americans could lay their hands on $1000.oo within 24 hours. A country could have a 0% unemployment rate, but if the citizens have no disposable income, no savings – what good is it?
We’ve all seen the pictures from the American Depression in the 1930’s where there are bread lines sprawled around corners of dirty downtown areas. However, today there are no bread lines. No starving throngs of people waiting for the soup kitchen. What a terrible picture that would be for the evening news on a daily basis to see such suffering, while others enjoy baseball games, dancing at the club, and dining out.
Enter the EBT card, or Electronic Benefits Transfer. It looks and spends like a credit card, but certain things, such as big screen TVs and jewelry, are off limits. It’s supposed to be used for necessary, life-giving food stuffs. It’s the new “food stamps” issued to America’s under-financed electronically on a monthly basis.
As of March 2016, there are 44,344,259 Americans using EBT cards. There are approximately 180,000,000 people of working age in the U.S., putting the percentage of working age Americans using EBT at around 25% of the population. The number of people actually using EBT benefits by eating their fruits for daily sustenance or otherwise benefiting from EBT, naturally, is even higher – perhaps higher than 40%.
If that 40% of the population had to leave their home on a daily basis and travel to a food distribution center, i.e., soup kitchen or breadline, we would be seeing throngs of people “starving” in the streets just like we did during the Great Depression.
The difference, the secret, is how the soup kitchen now works.
You can’t tell whether the person in front of you at Walmart is using a credit card or an EBT card. The poverty, the need, the under-employment is now invisible. Check out this info graphic which is representative of what a Walmart would look like on a daily basis if people had to wait in a specific “benefits” line rather than check out like an average paying customer would:
Debt, Debt, and More Debt
We hear the words “National Debt” and “spending” on a weekly basis. It conjures a bleak feeling for anyone who is even remotely aware of national politics and the world, regardless of their actual knowledge of the facts. We understand that the U.S. has a huge national debt and that it is constantly growing at an exponential rate.
We have the general knowledge that the country holds large amounts of debt and that we are spending more than we make as a country – but, we hear about it so often and life just seems to continue on pretty much as normal, so we let it ride. “Forget about it!” Right?
Wrong. The fact remains that by every technical definition, the U.S. is bankrupt. At current interest rates on the current debt, it is mathematically impossible for us to tax our way out of the debt we have already incurred. Let that sink in – mathematically impossible.
Everyone knows you can’t use a credit card to spend your way out of debt. It doesn’t work that way, but that is exactly what “we” are doing, i.e., that’s what our representatives have been doing for the past 40+ years. The fact is this: the market will correct itself. It must.
Instead of citing boring facts and stats, check out this video which is quite eye opening. Even if you confiscated all the profits and earnings of all companies and individuals in the U.S., we still couldn’t pay for what we are buying. Please watch, understand, and pass on:
Be prepared (mentally and physically), not scared.
The point of this article isn’t to scare you. The point is to understand reality.
The reality is that the U.S. economic situation is not good.
In fact, it’s a powder keg ready to blow – and to justify that statement, I offer that you only have to look at the social and cultural situation here in the States.
Should the U.S. government be unable to fund EBT cards, food riots will likely develop in short order.
Creating even more new money to try and spend our way further out of debt only leads to hyperinflation. At that point the problem starts hitting non-EBT receiving Americans in the form of $5-10 gas, $10 milk, and possibly even the unavailability of some foodstuffs.
No one remembers the grand U.S. having to ration things during WWII. A war we won. A war that wasn’t on our own land. It still had deep economic effects and at that time we were in really good shape both in terms of debt and industrial jobs.
Just because we haven’t known true economic hardship for a generation or more, doesn’t mean we are immune to it. It certainly can happen here. And it will.