Economic Growth in the U.S. Economy Looks Awfully Like an Economic Slowdown
We are told that there’s economic growth in the U.S. economy, and that there’s really nothing wrong. Don’t get boggled by this narrative. The reality could be completely different. A recession could be nearing.
Don’t get too complacent with the data that, on the surface, tells us that economic growth is in full gear. Sure, the U.S. unemployment rate is at its lowest since 2000, but that figure tells us very little.
Underneath the surface, there are a lot of problems, and they continued to get ignored.
You see, economic growth occurs when the standard of living for the average person increases. That is, their incomes are growing, they are saving, and they are generally happy with their current situations.
We are not seeing this in the U.S. economy; many Americans are struggling.
Study Shows That 51 Million Households Can’t Afford Much
Consider a recent study by the United Way ALICE Project. ALICE is an acronym for Asset Limited, Income Constrained, Employed.
According to this study, almost 51 million households in the U.S. don’t make enough money to afford housing, childcare, healthcare, food, a cell phone, and transportation on monthly basis. (Source: “Almost Half Of US Families Can’t Afford Basics Like Rent And Food,” CBS Miami, May 17, 2018.)
51 million households amount to 43% of all households in the U.S. economy!
Digging into the details…
- 16.1 million households are living in poverty.
- 34.7 million families are dubbed as “ALICE families” by the United Way.
- California, New Mexico, and Hawaii have highest number of struggling families.
- The struggling families usually include office assistants, store clerks, childcare workers, and home healthcare aides.
- About 66% of jobs in the U.S. economy pay less than $20.00 an hour.
Regarding the conditions of American families, Stephanie Hoopes, the project director of United Way ALICE Project said, “Despite seemingly positive economic signs, the ALICE data shows that financial hardship is still a pervasive problem.”
As for savings, Americans are not saving much. Their savings rate has tumbled 62% below the historical average.
U.S. Economic Outlook: Recession Could Be Ahead
Dear reader, as I said earlier, the data on the surface may not be telling the entire story.
Looking at the findings in the study by the United Way, if this is economic growth, one must wonder how an economic slowdown would look.
I have said several times in these pages already, the U.S. economy could be taking a turn for the worse. Understand this: American consumers have been behind all previous economic growth. Currently, they are struggling. This is not good.
Low interest rates may have improved things a bit after the financial crisis (they certainly helped the stock markets), but now, as the rates go higher, it may not be a pretty sight for the U.S. economy.
I remain skeptical. I believe there’s a perfect storm brewing for a recession in later 2018 or early 2019. Obviously, with time we will know more.