U.S. Economy Improving: How When 70% of Americans Don’t Have $1,000?
Truth be told, there isn’t any economic growth in the U.S. economy and that’s because the average American is struggling to the extreme.
In fact, according to a poll done by the Associated Press-NORC Center for Public Affairs, about 70% of Americans would have trouble coming up with $1,000 to cover an emergency!
In the same survey, 46% of Americans said their wages have remained stagnant in the past five years, while 16% said their salaries have actually seen cuts.
Please look at the chart below of median household income to see how dire the situation has become in the U.S. economy:
Source: Federal Reserve Bank of St. Louis, last accessed July 6, 2016
Personal household income has been declining in the U.S. economy for 14 years now and the rate of decline has become steep since the Great Recession.
Dear reader, the U.S. economy is far from fine. Look around and you will see plenty more misery in the U.S. economy than before.
For instance, consider food stamp usage in the U.S. economy. As of March 2016, there were 44.24 million individuals, or 21.92 million households, using food stamps—well above what it was prior to the financial crisis of 2008 and 2009. (Source: “Supplemental Nutrition Assistance Program (SNAP),” United States Department of Agriculture, June 10, 2016.)
What does this mean? Roughly 15% of the U.S. population needs help putting food on the table. That’s the same amount of people living in Spain!
Even the Federal Reserve has been cutting its growth prospects for the U.S. economy. The table below shows the Fed’s forecasts for U.S. gross domestic product (GDP) growth for 2016 as predicted going back as far as December 2014.
| Date of Forecast | GDP Forecast for 2016 (upper end of the range) |
| December 2014 | 3.0% |
| March 2015 | 2.7% |
| June 2015 | 2.5% |
| September 2015 | 2.3% |
| December 2015 | 2.4% |
| March 2016 | 2.2% |
| June 2016 | 2.0% |
Data source: “Meeting calendars, statements, and minutes,” Federal Reserve, last accessed July 6, 2016.
The Federal Reserve continues to lower its guidance for growth for the U.S. economy. Since the end of 2014, its forecasts for 2016 GDP have been slashed 33%.
U.S. Economic Outlook: Misery for Investors Ahead?
The average American facing hardships is not good for the U.S. economy as consumer spending makes up two-thirds of U.S. GDP.
For stock investors, you need to be careful about the general stock market. I would only be investing in gold producing companies because as the economy gets worse, we will either see more paper money printing or negative interest rates.
The other sector I would look at is tech, either established companies or breakthrough companies. Why? Because tech companies are the only ones posting double-digit growth despite a weakening U.S. economy.
