Have you ever thought about what comes after the bubble? In 2008 we got a short preview of what life will be like, but most Americans seem to have come to the conclusion that the last financial crisis was just a minor bump in the road toward endless economic prosperity. But of course the truth is that the ridiculously high debt-fueled standard of living that we are enjoying now is not sustainable, and after this bubble bursts it will be an extremely painful adjustment for our society.
Since the last financial crisis, the U.S. national debt has nearly doubled, corporate debt has doubled, stock valuations have reachedexceedingly ridiculous extremes, the student loan debt bubble has surpassed a trillion dollars, we are facing the largest unfunded pension crisis in U.S. history, and in many parts of the country (particularly the west coast) we are facing a housing bubble that is even worse than the one that burst in 2007 and 2008.
And even with all of these bubbles, U.S. GDP growth has been absolutely anemic. Even if you believe the grossly manipulated numbers that the federal government puts out, the U.S. economy grew at a “miserably low” rate of just 1.6 percent in 2016…
In terms of GDP, the fourth quarter was revised up slightly, but there were adjustments for prior quarters, and overall GDP growth for the year 2016 remained at a miserably low 1.6%. We’ve come to call this the “stall speed.” It’s difficult for the US economy to stay aloft at this slow speed. As Q4 gutted any hopes for a strong finish, GDP growth in 2016 matched the worst year since the Great Recession.
And corporate profits, despite a stock market that has been surging for years, are even worse. A lot worse. They’ve declined for years. In fact, they declined for years during the prior two stock market bubbles, the dotcom bubble and the pre-Financial-Crisis bubble. Both ended in crashes.
Things have continued to get even worse early in 2016. At this point, it is being projected that U.S. GDP will grow at an annual rate of just 0.9 percent during the first quarter of 2017.
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4 comments:
My own personal standard of living hasn't been very good since the recession started in 2008. I now make half of what I used to earn. Grateful for this, but I also had to sell off things and dip into savings to pay off some of my loans.
Since 2008, the cost of living has gone up. Car prices are higher, Food prices are also much higher, and during the obama years gas prices were almost 4 dollars per gallon. At least they are now down to the prices they were during the Bush years. Housing and rents are so high now, that my adult sons are still living with me. They are working, but with student loans and the poor wages they are paid, they have no choice but to stay with me.
I lost a good paying job due to outsourcing to both India and China. My brother who worked at Superfresh for 20 plus years also lost his job during this time and went from 20 per hour to only 9 dollars per hour at Giant and was forced to find some kind of public housing because he could no longer afford to stay where he was at. Few places are paying the wages that we used to make. We are both over fifty, it's doubtful we will ever find jobs that pay a decent wage again. The thing that is troubling is that government and public service workers now make on average more than those in the private sector, even with college degrees. I think that really needs to change.
I have tried to do without luxuries like Cable TV, and going out to eat. We don't exchange presents for Christmas anymore, but just get together for dinner.
It you want to see just how bad things are, look at those who lost their jobs during their prime working years from 30 to 65. Look at the number of young people and those 30 to 65 either working part time or have totally dropped out of the work force because they have given up looking. There are others who have given up and are using drugs. The Heroin epidemic is exploding. Especially with young people. I lost a cousin who was only 32 years old, who was unemployed to a heroin overdose. There were few programs out there to help her, and getting this drug is as easy as buying alcohol if you know where to look. This country is going down. I voted for Trump, but the damage has been done. Nothing is going to prevent the stock market or the economy from imploding.
Therein or is it Herein (Snicker) lies the problem. When everyone "adjusted" lifestyles because of the recession, it tanked the economy. No spending kills any economy. No jobs kills the economy. Thousands of college grads + no jobs = instant loan debt. No jobs with a middle to late aged demographic = debt/foreclosures.
Of course its easy to Monday morning QB all of this since its 2017, but many talking TV heads have said the jobs engine needed to start so folks would spend spend spend. Still at an impasse given almost 10 (TEN) years of stagnant growth or movement. Now we are double digit TRILLION in debt, still minimal jobs for college grads and folks are still turning to vices to get by in life (smoking, drinking and drugs).
A let me say this state/fed governments - raising the min wage to $15 will NOT help!
Low interest rates have helped 2 groups: government and Wall Street
It has hurt seniors on fixed income and didn't do anything for housing starts because of over-regulation and no banks were lending.
so, now that the Fed has ended the quantitative easing (pushing the rope) and the house of cards we call the stock market, will come tumbling down.
Have some dry powder in the keg when it does and get in there and buy!
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