One Of The Big Reasons So Many Families Are Feeling Extreme Financial Stress

When the cost of living rises faster than paychecks do year after year, eventually that becomes a very big problem.  For quite some time I have been writing about the shrinking middle class, and one of the biggest culprits is inflation.  Every month, tens of millions of American families struggle to pay the bills, and most of them don’t even understand the economic forces that are putting so much pressure on them.  The United States never had a persistent, ongoing problem with inflation until the debt-based Federal Reserve system was introduced in 1913.  Since that time, we have had non-stop inflation and the U.S. dollar has lost more than 98 percent of its value.  If our paychecks were increasing faster than inflation this wouldn’t be a problem, but in recent years this has definitely not been the case for most Americans.

And unfortunately inflation is starting to accelerate once again.  In fact, it is being reported that inflation rose at the fastest pace in four years in January…

The prices Americans pay for goods and services surged in January by the largest amount in four years, mostly reflecting a rebound in the cost of gasoline that’s taking a bigger chunk out of household incomes.

The consumer price index, or cost of living, rose by a seasonally adjusted 0.6% in January, the government said Wednesday.

Meanwhile, our incomes have been incredibly stagnant.   In fact, we just learned that median household income did not go up at all during 2016.

This is one of the reasons why we consistently see families fall out of the middle class month after month.  Even if you keep the same job year after year, your standard of living is going to steadily go down unless your pay goes up.

The things that we all spend money on month after month just keep going up in price.  I am talking about food, housing, medical care and other essentials.  If there is one thing that we can always count on, it is the fact that things are going to cost more tomorrow than they do today.

Let’s talk about food for a moment.  Whenever I go to the grocery store, I am almost always shocked.  I still remember a time when I could get everything that I needed for an entire week for about 20 bucks, but these days you can’t even fill up one cart for 100 dollars.

That is because food prices have been rising aggressively for many years.  The following is a list that was posted on The Economic Policy Journal that shows how much some food and grocery items have increased over the past decade…

1. Tobacco and smoking products

-Price increase: 90.4%

2. Margarine

-Price increase: 63.6%

3. Uncooked ground beef

-Price increase: 46.3%

4. Shelf stable fish and seafood
-Price increase: 45.0%

5. Prescription drugs
-Price increase: 43.5%

6. Rice, pasta, cornmeal
-Price increase: 40.3%

7. Bread
-Price increase: 38.9%

8. Snacks
-Price increase: 38.4%

9. Miscellaneous poultry including turkey
-Price increase: 37.0%

10. Apples
-Price increase: 36.6%

11. Frankfurters
-Price increase: 35.8%

12. Canned vegetables
-Price increase: 35.3%

13. Salt and other seasonings and spices
-Price increase: 34.0%

14. Miscellaneous fats and oils including peanut butter
-Price increase: 34.0%

15. Miscellaneous processed fruits and vegetables including dried
-Price increase: 33.7%

16. Bacon and related products
-Price increase: 33.2%

17. Fresh whole chicken
-Price increase: 32.5%

18. Cakes, cupcakes, and cookies
-Price increase: 32.1%

19. Flour and prepared flour mixes
-Price increase: 32.1%

20. Canned fruits
-Price increase: 32.0%

And thanks to out of control government spending and reckless manipulation by the Federal Reserve, we have come to a time when inflation is starting to accelerate once again.

According to John Williams of shadowstats.com, if honest numbers were being used the government would be telling us that inflation is rising at a 6 percent annual rate for the first time since 2011.

At the same time, evidence is mounting that U.S. consumers are simply tapped out.  Previously, I have explained that interest rates are going up, consumer bankruptcies are rising, and lending standards for consumers are really tightening up.

All of those are things we would expect to see if a new recession was starting.

And today we learned that the number of Americans refinancing their homes has fallen to the lowest level that we have seen since 2009

A slowdown in refinancing pulled down the total mortgage application volume last week as changes to certain government-loan programs made refinances less lucrative. Refinance volume now stands at its lowest level since June 2009.

If you will remember, we also saw a slowdown in mortgage refinancing just before the great financial crisis of 2008.

For mortgage applications overall, they are now down almost 31 percent from where they were a year ago…

Total mortgage application volume fell 3.7 percent on a seasonally adjusted basis last week from the previous week, and are nearly 31 percent lower than the same week a year ago, according to the Mortgage Bankers Association.

A 31 percent decline in a single year is catastrophic.

If this continues, it won’t be too long before everyone is talking about a new housing crash.

And we also learned this week that FHA mortgage delinquencies increased during the fourth quarter “for the first time since 2006″

Federal Housing Administration mortgage delinquencies jumped in the fourth quarter for the first time since 2006, the Mortgage Bankers Association reported Wednesday. The FHA insures low down-payment loans and is a favorite among first-time homebuyers.

The seasonally adjusted FHA delinquency rate increased to 9.02 percent in the fourth quarter from 8.3 percent in the third quarter, MBA data show.

So many things are happening right now that we have not seen happen in many years, but most people are choosing not to see the red flags that are popping up all around us.

None of our long-term economic problems have been fixed.  And even though Donald Trump won the election, the truth is that our economy is in the worst shape it has been since the last financial crisis.  I continue to encourage all of my readers to get prepared for very hard times, but just like back in 2007 we are experiencing a wave of tremendous optimism right now and most people think that the party can somehow continue indefinitely.

Whether Donald Trump won the election or not, the truth is that a major economic downturn was going to come anyway.  You see, Donald Trump is not some magician that can just wave a wand and somehow make the consequences of decades of very foolish decisions instantly disappear.

We have been on the biggest debt binge in human history, and there is going to be a great price to pay when this immense debt bubble finally bursts.

Unfortunately, most people are not going to acknowledge the truth until it is too late.

Photo: NoHoDamon Empty Wallet via photopin (license)

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  • D. Light

    That 25% unemployment was a carry over from Carter. Reagan had the longest peacetime economic growth in quite sometime up till then. I do not believe Republicans would kill off business growth. The over regulating dumbacrats are always known for that.

  • cars1971

    We’re at the bottom of a recession. It started when oil crashed the summer of 2015, then in January 2016, China had a hard landing which created a global recession.

  • JohnDille

    WHY ARE YOU LYING??? DO YOU THINK THAT EVERYONE IS AS STUPID AS YOU REPUBLICANS ARE??? DO YOU THINK THAT EVERYONE BELIEVES YOUR REPUBLICAN LIES??? I LIVED THROUGH THAT ERA, TOO, AND INFLATION WAS HIGH… LIKE IT HAD BEEN FOR THE 5 OR 6 YEARS PRIOR TO CARTER EVEN TAKING OFFICE… BECAUSE OIL PRICES SOARED MORE THAN 10 FOLD, BACK AT A TIME WHEN THE UNITED STATES WAS FAR MORE INDUSTRIALIZED AND DEPENDENT ON ENERGY INTENSIVE INDUSTRIES, AND BASED ON VERY ENERGY INTENSIVE PRIMARY INDUSTRIES THAN IT IS NOW, NOW THAT REPUBLICANS HAVE SHUT DOWN MOST OF OUR MANUFACTURING AND PRIMARY INDUSTRIES!! AS FOR 25% UNEMPLOYMENT… YOU ARE THINKING OF THE RONALD REAGAN ERA, AND EVEN THEN, 25% UNEMPLOYMENT WAS COMMON ONLY IN A COUPLE OF REALLY HARD HIT… HEAVILY REPUBLICAN… STATES!!!

  • D. Light

    I am convinced you are insane. Under Jimmy Carter we had 15% inflation, 25% interest rates and massive unemployment. I know because I was a victim of all of it. All the dumbacrats could offer was their usual handouts if you vote for them. The feds are guilty of creating the huge debt we have now that served their wallets and other countries as well as illegal immigrants while forsaking americans. Stop blaming Republicans for everything when that is blatantly untrue. Please seek professional help asap.

  • JohnDille

    GEE… 40 YEARS OF REPUBLICANS DOING ALL THEY COULD TO DRIVE DOWN WAGES, AND TO RIP OFF AMERICAN CONSUMERS IN EVERY WAY POSSIBLE, HAD NOTHING TO DO WITH AMERICANS FEELING FINANCIALLY STRESSED???? NOT QUITE 40 YEARS AGO, DEMOCRATIC POLICIES HAD MANAGED TO GET THE NATIONS SHARE OF INCOME GOING TO THE TOP 1% DOWN TO ABOUT 8% OF ALL INCOME,,, WAY WAY DOWN FROM ITS PRE GREAT DEPRESSION PEAK OF ALMOST 30%!!! BUT… THANKS TO REPUBLICANS, THE TOP 1% NOW TAKE HOME ALMOST 25% OF ALL INCOME…. AND ALL OF THAT HAS COME AT THE EXPENSE OF THE BOTTOM 95%… BUT ESPECIALLY THE BOTTOM 60 TO 80%!!! RELATIVE TO INCOME SHARES SINCE THE LATE 1970’S… WHEN JIMMY CARTER WAS IN OFFICE AND AMERICAN INCOME WAS AT ITS MOST EQUAL DISTRIBUTIONS… EVER… THE TOP 5%… AND MOST ESPECIALLY THE TOP 1%… HAVE GAINED $25 TRILLION IN CUMULATIVE INCOME… AND MORE THAN 50 TRILLION IN NET WORTH…MOSTLY AT THE EXPENSE OF THE MIDDLE CLASS!!! WE HAVE TO WONDER WHY REPUBLICANS NEVER TELL US THAT… AND REFUSE TO EVEN ACKNOWLEDGE THAT!!! OH YEAH… RIGHT… REPUBLICANS HAVE KNOWINGLY AND DELIBERATELY CAUSED THAT MASSIVE SHIFT IN INCOME AND THE RESULTANT MASSIVE SHIFT IN NET WORTH! AND THEY MANAGE TO GET THEIR BRAINLESS PUPPETS TO BLAME DEMOCRATS FOR CRIMES AND TREASONS CARRIED OUT… TOTALLY… BY REPUBLICANS!!! SAD!!!