It's Tough Out There

If you have a job, a thriving business, a reliable income, some hefty savings, or all of the above, be thankful. If you were an American, one in five of you would be unemployed.

This from the Wall Street Journal:

 The income of the typical American family — long the envy of much of the world — has dropped for the third year in a row and is now roughly where it was in 1996 when adjusted for inflation.

The income of a household considered to be at the statistical middle fell 2.3% to an inflation-adjusted $49,445 in 2010, which is 7.1% below its 1999 peak, the Census Bureau said.

The Census Bureau’s annual snapshot of living standards offered a new set of statistics to show how devastating the recession was and how disappointing the recovery has been. For a huge swath of American families, the gains of the boom of the 2000s have been wiped out.

Earnings of the typical man who works full-time year round fell, and are lower — adjusted for inflation — than in 1978. Earnings for women, meanwhile, are a relative bright spot: Median incomes have been rising in recent years and rose again last year, though women still make 77 cents for every dollar earned by comparably employed men.

The fraction of Americans living in poverty clicked up to 15.1% of the population, and 22% of children are now living below the poverty line, the biggest percentage since 1993.

The article goes on to say that 46.2 million people are below the poverty line, more than any time in the last 50 years.

Around 70% of the USA economy is driven by consumer spending. How can these people be big consumers so the economy can get back on track? It just cannot happen. We are in uncharted territory when it comes to economics. The numbers show that we are not in a recovery, a slump, a recession, or a depression. I believe the correct word would be "a correction", where we have to re-think how to do economy. The old ways will no longer work, that is expansion through spending and borrowing. As soon as our leaders recognise this, we might be able to stop the free fall.