04/03/2017

This Economy Is Ruined For Many Americans

Wolf Richter, Wolf Street

Here’s a mystery: Has this “wealth-effect” economy that the Fed so beautifully engineered since the Financial Crisis gotten a lot riskier, scarier, and uglier in some profound ways for lower-income Americans, those making $30,000 or less a year?

One of the questions that Gallup posed was this:

Next, I’m going to read a list of problems facing the country. For each one, please tell me if you personally worry about this problem a great deal, a fair amount, only a little, or not at all? First, how much do you personally worry about –

Then came 13 issues, including “hunger and homelessness.”

Turns out, among Americans making $30,000 or less a year, 67% worry “a great deal” about hunger and homelessness! Food and shelter, two of the most basic human needs. That’s the highest percentage ever in Gallup’s data series on this question going back to 2001.

It’s up from 52% in 2001/2004; up from 56% in 2007/2008; and up from 51% in 2010/2011.

Median annual household income in February was $58,714, according to Sentier Research. On an inflation-adjusted basis, this was about flat with February 2016 and below February 2000. Median income means 50% make more and 50% make less. Other studies have shown that incomes have risen sharply at the upper end of the spectrum, but have fallen at the lower end, with the gap widening. Thus the median might have stagnated, but for many of those below the median, things haven’t turned out so well. And there are a lot of them!

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For [early immigrants] America was truly the land of opportunity. For the first time in their lives, many were truly free to pursue their own objectives. That freedom released the human energies which created the United States. There were few government programs to turn to and nobody expected them. But also there were few rules and regulations. There were no licenses, no permits, no red tape to restrict them. They found, in fact, a free market, and most of them thrived on it. 

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