Wot Recovery?

Half of America is in or near poverty. The United States has one of the highest poverty rates in the developed world. It's much worse since the recession, especially for blacks and Hispanics. An investor report from J.P. Morgan noted a direct correlation between record profits and cutbacks in wages. The U.S. has one of the highest relative child poverty rates in the developed world.  Almost half of black children under the age of six are living in poverty.

Low-wage jobs ($7.69 to $13.83 per hour), which made up just 1/5 of the jobs lost to the recession, accounted for nearly 3/5 of the jobs regained during the recovery. And it's getting worse. Nine out of ten of the fastest-growing occupations are considered low-wage, generally not requiring a college degree including food service, health care, housekeeping, and retail sales.

The National Low Income Housing Coalition concluded that an average American renter would need to earn $18.92 per hour -- well over twice the minimum wage -- to afford a two-bedroom apartment. "In no state," their report says, "can a full-time minimum wage worker afford a one-bedroom or a two-bedroom rental unit at Fair Market Rent." Over one-eighth of the nation’s supply of low income housing has been permanently lost since 2001. The U.S. homeownership rate has been steadying declining, from 69 percent in 2004 to 64.4 percent in the third quarter of 2014.  For Blacks, the homeownership rate fell from 45.6 percent in 2010 to 42.9 percent in the third quarter of 2014.  Based on inflation, the minimum wage should be nearly three times its current level. Little wonder that so many people are homeless: over 600,000 on any January night in the U.S., tens of thousands of children. The number of homeless children has risen by  50 percent in less than ten years.  Tens of thousands of veterans, and one of every five suffering from mental illness. The poor are criminalized for lying down or sleeping in public; for sharing food; for simply having nowhere to go.

T  banking industry, which takes an average of $2,412 each year from underserved households for interest and fees on alternative financial services; by rental centers that charge effective annual interest rates over 100 percent; by  payday lenders who charge effective annual  interest rates of over 1,000 percent. Over 40 million people have student debt averaging $33,000.  And over 43 million households are holding medical debt.

While people of all races saw their net worth implode during the recesssion, white wealth has slightly recovered. This is because whites own more financial assets, such as stocks and bonds, which have rebounded since 2009.  Meanwhile home values, which represent the largest share of assets for households of color, have not rebounded at the same rate. According to a new Pew Research Center analysis, the 2013 median wealth of white households is 13 times greater than the median wealth of Black households, up from 8 times greater in 2010.  White households have 10 times more wealth than Hispanic households, up from 9 times greater in 2007. Median wealth for Black households in 2013 was $11,000, down from $16,600, a staggering decline of 33.7 percent.  For white households, the median wealth was $141,900, up from $138,600 in 2010, an increase of 2.4 percent. Between 2010 and 2013, the median wealth of white households declined 14.3 percent, from $16,000 to $13,700.

The US stock market is 20 percent bigger than what it was back in 2007, while current per capita income is 1 percent higher than what it was in 2007. We have a bubble that is even bigger than what we had back in 2007 without any fundamental aspects of the economy changing. The unfortunate thing is that we cannot predict the timing very well, and I cannot tell you exactly when this is going to happen, one year later, two years later, who knows? But when this happens, we'll be in an even bigger mess, because last time, at least the governments could run some debt and kind of counter the downturn in private sector activities. This time around, many governments are not going to be able to do even that, so we are in for big trouble.