Have we really recovered or is this just an illusion? Take a look at the 9 data points below and see what you think. These number reflect the economic trends since the recovery began back in 2008. As you can see the trends are quite concerning. What is really happening… Just like in your own family budget, if you were to keep charging up your credit card things can seem pretty great. Consumer and Government continue to accumulate more debt to smooth things over.
The shaded red identifies the Obama presidency....
Source: Zero Hedge
Let’s look at a few of the numbers:
Students loans – Some 40 Percent of Borrows aren’t making payments. The total outstanding student debt is around 1.35 Trillion dollars. That’s trillion with a T. As college cost continue to increase exponentially, look for this number to keep climbing. While it is not shown on this diagram, auto loan debt has skyrocketed. Dealers now provide 84 month loans.
Labor Participation Rate – The BLS came out with the unemployment number this past Friday (June 3rd 2016. The headline number is that we are at full employment with a 4.7% unemployment rate. Let’s pull back the onion a little bit. The proportion of adults working or looking for work dropped in May to 62.6 percent, near four-decade lows. This low level of participation is based on those individuals who can’t find jobs and quite looking. But the headline number is what people talk about.
Federal Debt – The Federal Debt is quickly approaching $20 Trillion. If you get a chance go to the debt clock website- www.usdebtclock.org. The Government continues to ignore the elephant in the room.
What are the underlying repercussions of this debt? 1) We see that neither Republicans or Democrats want to deal with it. Hence, the Presidential race is become quite entertaining. 2) Janet Yellen keeps declaring that the Federal Reserve is preparing to raise interest rates. The Fed may be able to raise the rates 25 more basis points, but that will be it. We can’t afford the interest payments. 3) Finally, the US is beholden to China, Russia, Saudi Arbia to name a few. If these countries were ever to sell some of their holdings, this oculd trigger a World Economic meltdown.
The Great Recession of 2008 was a difficult time in our counties history. However, I do not believe we have successfully tackled the issues at hand. The consequences are fast approaching. Prepare!!