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Shocking: The USA economy in a disastrous death spiral

FED
(Source: Hedgeye)
 

The FEDs and the government want you to believe that the US economy is in great shape and better than ever.

But you can ask yourself a simple question: Are you better off than 8 years ago?

If you answered yes, then why are we receiving horrible numbers from all corners of the US economic machine?

How come people are not spending? If they were inflation would skyrocket, but all we see is deflation.

Today, we just hit a record and it is not anything we should be proud of. This is a result of a Keynesian economy and teaching of getting ourselves into prosperity by spending a horrendous money via debt.

Yes, today, our national debt reached a staggering $19,005,034,217,418 dollars under Obama’s administration. That’s a bit over 19 trillion of debt. Our socialist government is the only one (and its followers) which believes that more debt solve the old debt.

I remember once when I was in Britain traveling in a public transportation I saw and advertisement providing a new loan to consolidate the old one. It even offered to borrow more, to pay the old debt and use the rest of the money for shopping. You could eliminate your old debt and even go and buy yourself some goodies!

WarningWell, never don’t try this at home! As goes the famous disclaimer. If you do try you will end up broke and maybe even in prison for fraud.

The national debt translates into $58,849.00 dollars per citizen and that includes babies, elderly, and welfare recipients. That’s more than real household annual income!

In 2007 the real median household income in the United States was $57,357.00 dollars. Today (or actually at the end of 2014 as we do not have 2015 data yet), it is $53,657. An average American household owes more that it can ever make!

 
FRED
 

The main reason for increased debt is growing federal spending mostly Social Security, Medicare, Medicaid, and Obamacare (Source: Daily Signal).

Unfortunately, it seems that we are not going to get any better soon. Let’s take a look at some other numbers:

US workforce (participation) in 2000: 154,575,324
US workforce (participation) today: 150,167,590

Manufacturing jobs in 2000: 19,629,554
Manufacturing jobs today: 12,349,931

The Congressional Budget Office (CBO) predicts that our debt will reach $26.3 trillion dollars by the end of 2020.

With raising interest rates it will be difficult for the FED and the US government to maintain such debt and it will lead to a financial meltdown never seen before.





4 responses to “Shocking: The USA economy in a disastrous death spiral”

  1. DivHut says:

    You paint a very grim picture. So what are we supposed to do. If things really come to a head dividends, stocks, cash, pretty much everything gets tossed out the window. It is scary but in the meantime all we can do is continue through the maze finding that elusive cheese.

    • Martin says:

      As a dividend growth investor I would rebalance the portfolio and get rid of the stocks which could be prone to dividend cut during crisis (such as banks, auto industry, transportation) and stick to the solid names which proved to hold on during crisis such as JNJ, O, KO, etc. And then ride it through. You are investing for the next 20 or 25 years right? I do! With that time horizon there is no problem. If the economy crashes, you will be adding cheap stocks to your portfolio and ride them up through the next recovery. Yes, it may take 10 years before we recover again, but I do not mind adding cheap stocks which pays nice dividends into my portfolio although sitting on a loss for the next 10 years.

      Thanks for stopping by!

  2. Scott says:

    That’s some scary stats right there!! We’re probably one of the faster growing countries in terms of immigration and we’re not yet on the Japanese level of low birth rate and yet we lost workforce participation?!

    Let’s just say that I hope Hillary does not win to continue this trend!!

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