Economic Reality: Bottom 50% of Americans No Longer Matter

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 CreditCards.com. “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.

Mike “Mish” Shedlock

Photo: Franco Folini Homeless Couple with Dog in San Francisco via photopin (license)

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  • JohnDille

    IF YOU SEE THE TYPICAL TRADING REPORT ESSAY AS LEFT WING PROPAGANDA, THEN YOU PROBABLY SEE MEIN KAMPF AS BEING LIBERAL LITERATURE! NO WONDER YOU RIGHT WING MORONS VOTED FOR TRUMP… HE IS THE CLOSEST THING TO A WHITE SUPREMACIST FASCIST FUERHER AVAILABLE TO YOU IN THE NORMAL US ELECTION CYCLE!!!

  • Girls_club

    The ‘Trading Report’ has turned into a alt-left media outlet. I just come here for a laugh……………..

  • JohnDille

    WRONG YET AGAIN!!! I BASE MY OPINIONS ON ACTUAL REAL WORLD DATA AND HISTORY, AND ON THE LOGICAL AND DOCUMENTABLE IMPLICATIONS OF THAT DATA. AND HISTORY!!! AND THAT DATA… MUCH OF IT GOING BACK 75 TO 150 YEARS AND EVEN MORE, AND THE HISTOY… GOING BACK THOSUANDS OF YEARS…. TELLS ME VERY CLEARLY THAT CONSERVATIVE AND NOW REPUBLICAN ECONOMIC AND SOCIAL AND POLITICAL POLICES… SERVES THE RICH… AND ONLY THE RICH! EXCEPT IN RECENT DECADES, REPUBLICAN POLICIES HAVE SERVED THE COMMUNIST CHINESE VERY VERY WELL!!! AND OVER THE PAST 40 YEARS OR SO, REPUBLICAN POLICIES HAVE ALSO SERVED ILLEGAL IMMIGRANTS VERY WELL, ALSO… IF YOU CALL GETTING HIRED BY SOME ARROGANT SELFISH SELF CENTERED RICH REPUBLICAN, AND HAVING HIM CHEAT YOU AND BULLY YOU AND EXTORT YOU, A GOOD THING!

  • Ricky Peavey

    You are an indoctrinated fool Odille, and it appears that you will die the same.

  • JohnDille

    SO… YOU KNOW NOTHING ABOUT REAL WORLD ECONOMICS AND POLITICS???? OBVIOUSLY NOT… YOU KEEP HIDING BEHIND YOUR PHONY RELIGION AND YOUR RIGHT WING BALONEY FILLED BELIEFS!!! MAYBE WHEN YOU FINALLY GROW UP AND STOP READING YOUR RIGHT WING AND PHONY RELIGION COMIC BOOKS… AND FINALLY GET A REAL JOB AND HAVE TO LIVE IN THE REAL WORLD AND THINK AND BEHAVE LIKE A REAL WORKING ADULT… MAYBE THEN YOU WILL FINALLY WISE UP!!! MAYBE… BUT I HAVE MY DOUBTS!!!

  • JohnDille

    WELL… FINALLY SOMEONE AT THIS TRADING REPORT OUTFIT GETS IT…. REPUBLICAN ECONOMIC POLICIES OVER THE LAST 45 YEARS OR SO… AND MOST ESPECIALLY SINCE RONALD REAGAN TOOK OFFICE… HAVE ABSOLUTELY DEVASTATED THE LARGE MAJORITY OF AMERICANS, MOST ESPECALLY THOSE IN THE BOTTOM 60 TO 75% OF THE ECONOMIC LADDER!!! THE NUMBERS ARE APPALLING…. TOO BAD REPUBLICANS ARE TOO STUPID TO UNDERSTAND EVEN BASIC ARITHMETIC, OR THEY COULD SEE CLEARLY, WITH THEIR OWN EYES… JUST HOW BAD REPUBLICAN ECONOMIC POLICIES HAVE BEEN FOR MOST AMERICANS! BUT REALLY GREAT FOR THE RICH AND THE TOP 5% OR SO… AND THAT IS ALL THAT SEEMS TO MATTER TO REPUBLICANS AND THEIR BRAIN DEAD PUPPET WORKING CLASS SUPPORTERS!!!

  • Dr. Michael Cesar

    I thought the ‘Trading Report’ was a newsletter that discussed money management.
    However, it is nothing more than another mainstream ‘lame-stream’ liberal media outlet.
    The confused liberal author of the above article laments, weeps, and wrings his hands over the plight of the lower class and wonders what our Federal Government can do to solve the problem. The sorry truth is that 80+ years of liberal, progressive, ‘big-government’ policies are what killed the middle class. These limousine, leer jet liberals have altered the playing field and have taxed, defrauded, and pilfered working, family minded, traditional Americans out of their hard earned income. Then they have the gall to point the finger at small businesses and call them greedy. The Holy Bible says : they frame mischief by a law. In other words, they write legislation that permits them to conduct their nefarious deeds and then say ‘we are a nation of laws’. But in fact, they are crooked laws written by progressive, liberal crooks. America did just fine from 1776 – 1900. It was the infiltration of progressive liberalism (from Europe) that slowly drove the average American’s life and heritage into the ditch. If you want a clear perspective of our history get “A Basic History of America” by Clarence Carson (and stop reading this website).
    By the way, there is hope: his name is Jesus Christ. He will soon return and “execute vengeance in anger and fury upon the heathen, such as they have not heard.” Then He will rule and reign in righteousness for ever.
    Get to know Him : Read the gospel of John and the book of Romans.