The trend for part-time work sweeping the world: Part-time work dominating jobs in the United States, Canada, and Japan.
The employment statistics do a good job concealing the true nature of the workforce. The unemployment rate has dropped dramatically since the recession ended largely because millions of Americans are now no longer considered part of the workforce. This is an easy way to boost the employment rate without actually creating new jobs. Another trend that seems to be growing around the world is that of part-time work. Part-time work and low wage labor go hand and hand. Part-time workers usually are not afforded the same benefits as those working full-time. They are also brought on with a just in time attitude and are treated as such when no longer needed. Part-time work has been growing before the recession and continues to do so today. In Canada, part-time work has been the dominant sector of employment growth. Low wage labor and part-time work go together like peas in a pod. Is this a trend we should be concerned about?
Will subprime auto loans ignite another credit crisis? Fed reports $101 billion in new auto loans between April and June with a sizable portion being in the form of subprime debt.
Buying a car is a big deal given that the sticker price of an automobile is close to the annual per capita income of an American worker. The average car in the US now costs $31,000. That is a healthy amount of money for a regular working person. Since incomes have gone stagnant for well over a decade, Americans have peppered over their loss of purchasing power by going deep into debt. Many are priced out of the housing market which at least provides some sort of equity building over your lifetime. Big banks have crowded into the housing market making it difficult for regular households to compete. However, the desire for easy lending profits has gotten Wall Street all excited once again. The current hot debt sectors are auto loans and student debt. Let us focus on auto debt today since the quarterly household report from the Fed was released this week. The report is stunning because it shows a massive jump in auto debt. In the last quarter, auto debt jumped by $101 billion. Total outstanding auto debt now stands at $905 billion. In other words total auto debt jumped 12 percent in one quarter alone. More troubling of course is that a sizable portion of this debt is in the form of subprime debt. Without a doubt, many of these loans will default. So what are the financial ramifications here now that a giant portion of auto debt is in the subprime variety?
Average Salary in US: What does the average salary in the USA have to do with economic issues for a consumption based economy?
What is the average salary in the US? It is a challenge to get your hands on this data since a big portion of income figures are reported via median household income. In the US, the latest Census figures from 2008 to 2012 show that a typical household earned $53,000. Per capita income in the last 12 months came in at $28,000. This tends to surprise people especially with the high cost of living that has been brought on by the slow process of inflation. One of the better ways for looking at average income is by going into Social Security figures since this looks at all income earned in the country. According to the latest Social Security figures the average salary in the US is $44,321. Yet Social Security income data comes with a cap at $117,000 for 2014, the maximum taxable earnings limit. The average income in the US according to the Census is $81,400 and this goes beyond the Social Security cap rates. That however is a big difference from the per capita income of $28,000 being reported by the Census. Why? Well the Social Security and Census data for averages also looks at high income earners that will certainly skew income figures to the higher end, much more so in Census figures. For the purposes of economic discussion, the most important income figures are per capita income and household median income. For a consumption based economy, what does it say when the average American is not seeing their income grow?
Masters of debt easing access to debt again: FICO score adjustments will allow people to take on more leverage at market peaks.
It is no coincidence that as the market gets long in the tooth, the crafty financial sector is looking for ways to offload products onto the public. This is the modus operandi of Wall Street in that after a historic bull run brought on by massive financial assistance from the government and Fed, it is now time to repeat the cycle and rid some of these assets onto the public. The latest consumer data shows that revolving credit grew very slowly in the last quarter while auto debt and student debt continued to soar. No surprise in the two areas where incomes don’t matter, credit is booming. In housing, we see mortgage debt hitting a wall because consumers are tapped out and income growth is simply not occurring. A massive portion of home buying since the stock market put on the afterburners was brought on by non-traditional buyers in the form of banks and hedge funds. Looking to keep the market rolling, debt needs to be extended in spite of poor income growth. The almighty FICO score looks like it will be adjusted to give people a nice little push up. In other words, time to move the goal posts and let people that are cash strapped access to more debt. Forget about the recent report that showed a huge number of Americans have had one or more accounts in collection.