Economic Data Suggest U.S. Economy Could Get Uglier
I can’t stress this enough: look at the economic data, specifically the data related to consumers. Sadly, the data say the U.S. economy was already in trouble prior to the COVID-19 pandemic, and now things have really taken a very wrong turn.
It could get much uglier in the coming months and quarters.
First, look at where the U.S. economy stood prior to the pandemic.
Income wasn’t that great. In 2019, 56.5% of all wage earners in the country had an average net compensation of $37,449.37. (Source: “Wage Statistics for 2019,” U.S. Social Security Administration, last accessed November 5, 2020.)
That works out to roughly $3,120.0 per month. Take out taxes and other deductions and you’re looking at an amount that’s much lower.
If you go back a few years (2018, 2017, 2016, etc.), this figure is relatively the same. A large portion of wage earners in the U.S. economy have been making less than $40,000 a year.
Could you live well with just $3,000 in income per month? If you live in a major city, just your rent could be way more than half of your paycheck.
Savings by Americans have been minimal, to say the least. In mid-2019, three in 10 Americans had no emergency savings! (Source: “A Growing Percentage of Americans Have No Emergency Savings Whatsoever,” Bankrate, July 1, 2019.)
Second, look at the U.S. economy now.
Since the pandemic began, unemployment in the U.S. has skyrocketed. As per the most recent data (October 24), more than seven million Americans continued to file for unemployment benefits. (Source: “Continued Claims (Insured Unemployment),” Federal Reserve Bank of St. Louis, last accessed November 5, 2020.)
As of April 2020, 43 million Americans were using food stamps. (Source: “Supplemental Nutrition Assistance Program,” U.S. Department of Agriculture, July 10, 2020.)
Since then, it’s very likely that foot stamp usage has surged a lot.
Since many Americans don’t have jobs, it’s likely that evictions could rise. Currently most evictions are banned in the U.S., but they’re expected to climb to a very large number because many Americans are strapped for cash and can’t make rent.
U.S. Economic Outlook
Dear reader, I don’t want to be the bearer of bad news, but it’s critical that you understand what’s really happening in the U.S. economy. As I said earlier, look at the economic data relating to consumers. They’re telling a very scary tale.
Going into the pandemic, the average consumer in the U.S. wasn’t doing too well. Keep in mind, consumers are hands-down the biggest forces behind the U.S. economy. If they are not well financially, a severe economic slowdown will follow.
Easy money and U.S. government spending has helped the situation in the short term, but long-term, there could be detrimental effects.
I’m keeping a close watch on consumer sentiment and consumer spending data. If they continue to fall, the U.S. economy could go from bad to worse very quickly.