9 charts showing Americans never recovered from the Great Recession: If you are wondering why people are so angry look no further.
The press is somewhat baffled as to why Americans are so angry this year. The stock market seems to be doing fine (too bad most Americans don’t own stock). Jobs are being added (too bad most jobs are in the low wage service sector). Housing values are up (too bad the homeownership rate is down because Americans can’t afford home prices at current levels). This is the state of our current economy. One that is mired in stagnation for the majority of people and the mainstream press is largely seen as a megaphone for the wealthy and connected. You don’t have to look too far to see that things are not all that great in the real economy contrary to the headlines. Let us look at a few charts to see how things really are.
Get used to an America where owning a home is not part of the dream: You cannot afford a home on that income!
Well congratulations America. Signs of another housing bubble are as clear as day. Loans with nothing down are back in the market. Incomes are stagnant so creative financing is necessary to buy more expensive homes. And homes are more expensive. The current home price data shows that across the country we have now surpassed the last bubble peak. Yet incomes are not keeping up with wild movements in prices. The end result is that the homeownership rate has collapsed yet somehow home prices went up. How can prices go up with fewer families buying homes? Easy, since the bailout funds allowed banks, hedge funds, and investors to pickup foreclosed homes from families and then turned them into rentals. Now we have many more people living in rental homes accumulating no equity and barely scraping by. Yet somehow with housing prices soaring, college tuition at crazy levels, and stagnant incomes we are led to believe that somehow we have no inflation. The current model of the American Dream involves no homeownership for the already shrinking middle class.
Student debt apocalypse: Median wages up 1.6% over last 25 years while median student debt is up 163.8%.
Student debt is out of control. Over $1.3 trillion in student debt is floating out in the current economic system. Most of this debt is saddled firmly on the backs of younger Americans who coincidentally are also entering into a job market with incredibly low wages. This idea of high tuition with low wages isn’t some made up propaganda to distract you. This is reality. The math behind this is all clear cut because inflation has eroded the standard of living of Americans to the point that the middle class is now a minority. Student debt carries larger implications than merely paying for a college education. Many younger Americans are unable to buy homes because of the amount of student debt they carry. Many are also delaying bigger purchases because of the large debt they already carry. This path is clearly unsustainable. Just take a look at wage growth and total student debt growth over the last 25 years.
Percent of Total Wealth Owned in the United States: Bottom 40% control -0.9% Meaning Close to Half the Country has a Negative Net Worth.
Wealth is an important measure of financial stability and success. Being able to have enough set aside for a rainy day can make the difference between weathering a minor storm to being in full upheaval because of an unexpected expense. Most Americans however live paycheck to paycheck. There is no emergency fund. It is troubling to see new data looking at the distribution of wealth in the United States because many Americans actually have a negative net worth. New data looking at wealth distribution highlights a growing gulf between Americans. Wealth inequality like that seen during the Gilded Age and the Roaring 20s led to massive disequilibrium that ended up in deep financial corrections. We are very much in a situation that rivals that period only this time the public is able to go into negative net worth territory through items like college loans, auto debt, and credit cards. The percent of total wealth owned in the United States might surprise you.