Taking an exit from the labor force: Over the last ten years 16 million Americans have dropped out of the labor force.
The US economy has not recovered in typical fashion. Following the Great Recession, we witnessed a large growth in those not in the labor force. Part of this has to do with an older population but that does not address the issue completely. The US has added 16 million people to the “not in the labor force†category over the last decade and this trend has also assisted in padding the unemployment numbers. How so? If you are not in the labor force, you are not counted therefore the rate miraculously drops. It would be one thing if all older Americans were entering retirement age with adequate savings. This is simply not the case. Many Americans are simply broke and their version of retirement includes working until you drop. You would think that things got better since the recession officially ended back in 2009. The opposite is true since 12 million people have dropped out of the labor force within the last five years alone. In other words, the bulk of the people dropping out of the labor force occurred during a labeled recovery.
The thriving cronyism of the stock market: 81 percent of stock market wealth held in the hands by 10 percent of the population. Housing also being snatched from middle class families.
Most Americans are confronting a system where the deck is stacked against their interests. Most Americans saw the true colors of the system during the Great Recession panic when government joined forces with Wall Street to essentially fire the middle class with explicit and hidden bailouts. There is unfortunately a large amount of cronyism embedded in the current system. Most Americans have very little in stock market wealth. Over 81 percent of stock wealth is held by the top 10 percent of the population.  This is why for most, retirement is largely one pipe dream. Yet the problem of the bailouts was the split of corporate welfare for connected institutions and austerity measures for the rest of the country. Wall Street is driven by profits and companies were able to slash their way into profitability while boosting earnings and using large safety nets and golden parachutes for those at the top. Banks that should have failed survived thanks to the too big to fail mantra. This is why, after a record stock market run since 2009 many Americans still view the economy as performing poorly. For them it is. You also have Wall Street invading the one asset where Americans used as a forced savings account, housing. Even in this one asset class Americans are being pushed out.
The price of learning from expensive books: The cost of educational books has soared by 150 percent since 2000 while the cost of recreational books has fallen.
There are many reasons why college costs are soaring even well beyond the regular rate of inflation. Schools are adding immense amenities to attract students. Student debt backed by the government allows schools to push prices higher since students simply go into deeper debt with little analysis on ability to pay at a later date. Similar to hospital charging outrageous prices for a standard Aspirin, book publishers realize that they can get away with charging more for textbooks as well. Any college student can tell you that the cost of a college text can eat deep into your budget. Many science books cost hundreds of dollars. Publishers quickly realized years ago that savvy students could photocopy and pass books around. The way around this? Requiring students to purchase access codes in conjunction with the book virtually forced students to always pay market prices for access to course content. So it should come as no surprise to you that since 2000, the cost of educational books has soared while the cost of recreational books has actually fallen.
The return of the stock market bubble: In a world with clear risk, investors are acting as if the market is completely risk free.
Some investors tend to believe the stock market is a perfect and balanced barometer of the underlying economy. Even with the recent bubbles in technology stocks and real estate, some still have this misguided assumption that stock values are always priced right. Most of the movement in the market is being driven by institutional investors since roughly half of Americans own absolutely no stocks outright.  It should be rather obvious to those that read a few newspapers outside of the country that there are some major risk factors hitting the world right now: the Ebola outbreak, the conflict between Ukraine and Russia, and the Middle East. You also have anemic economic growth in Europe. In the US 92 million Americans have dropped out of the labor force. Yet somehow, the stock market is making new highs. Why? A large part of profits have come from firing workers, slashing wages, cutting benefits, and using cheap QE funding to juice up stocks. The market cares only about profits, not long-term sustainability. Yet if you were looking at the volatility index you would think that there was absolutely no risk in the current market. This market is looking very bubbly.