To assess an economy’s health and its direction, you have to look at how the general public is doing. You must ask if their standard of living is improving. Are they optimistic about their future prospects?
As it stands, the average American Joe is suffering, and he’s making a solid case against economic growth, despite what we are hearing from the politicians and swayed government statistics.
According to a poll by Gallup about Americans’ top financial worries, 59% are worried about not having enough money for retirement. Breaking down the data, of those between the ages of 50 and 64 years old, 68% said they were moderately or very worried about not having enough money for retirement. (Source: Gallup, April 22, 2014.) That’s two-thirds of all baby boomers saying they are worried about not having enough money for retirement.
The reason Americans are worried about retirement is that they are saving less.
In March of this year, the annual personal savings rate in the U.S. was 3.8% (this is money saved as a percentage of income after taxes). This was the lowest savings rate since January of 2013, and prior to that, a savings rate that low was last seen back in August of 2008. (Source: Federal Reserve Bank of St. Louis web site, last accessed May 1, 2014.)
One would expect the savings rate to increase in a period of economic growth…but that’s just not happening in 2014, so you really have to question if there is economic growth in the system.
Another indicator that tells us economic growth is just a myth for the U.S. economy is that a massive number of Americans cannot bring food to their table. According to Feeding America, a hunger-relief charity, in 2012, 49 million Americans lived in households with “food insecurity.” (Source: Feeding America web site, last accessed May 1, 2014.) Of course, you won’t hear about this in the mainstream news.
It’s very clear: the U.S. economy isn’t growing. From my standpoint, as I dig deeper into the data, it suggests there’s simply no economic growth. The fact is that the middle class never really recovered from the economic slowdown of 2009. The Federal Reserve’s easy money policies of the past five years have made the rich richer—there has been very little in terms of a trickle-down effect on the middle class.
I reiterate my take: key stock indices hitting new all-time highs is just a mirage that distracts from reality. When you look at the ground level, it seems there’s a widespread economic slowdown with economic growth nowhere to be found.