The working class appears to be in recession
By working class, I mean roughly the bottom 80%. By recession, I mean things are getting worse.
There is no official, agreed upon statistic for my claim. So I can't prove beyond a doubt that the working class is in recession.
Nor am I saying the economy in general is in recession. After all, the wealthiest three people have as much wealth as the bottom 50%, so the GDP can rise even when the bottom 80% sinks.
That being said, a strong case can be made that the working class is currently in recession.
#1 Wages and debt
Seventy-eight percent of full-time workers said they live paycheck to paycheck, up from 75 percent last year, according to a recent report from CareerBuilder.
Overall, 71 percent of all U.S. workers said they're now in debt, up from 68 percent a year ago, CareerBuilder said.
#2 Tapped out
A scary little statistic is buried beneath the US economy's apparent stability: Consumer-debt levels are now well above those seen before the Great Recession.
As of June, US households were more than half a trillion dollars deeper in debt than they were a year earlier, according to the latest figures from the Federal Reserve. Total household debt now totals $12.84 trillion — also, incidentally, about two-thirds of gross domestic product...
"Most consumers, especially those in the bottom 80%, are tapped out," he told Business Insider.
If it feels like the rent keeps going up, you’re not alone: The share of U.S. disposable income that went toward such spending totaled 3.81 percent in the third quarter, marking the highest share in data going back almost six decades.
Rising shelter costs have accounted for most of the inflation in the U.S. during this economic expansion. While part of the rising rental share of spending may result from falling homeownership in recent years, the price index for rental of tenant-occupied nonfarm housing rose 3.7 percent in the year through September, according to data published Monday by the Commerce Department, near the fastest pace seen in the last decade.
Eighteen percent of respondents couldn’t pay the full rent due in at least one of the past three months, according to the poll of 40,000 renters. Of those who have registered for the listing site this year, 3.3 percent said they had been evicted in the past, up from 2.8 percent in 2015.
...Seven percent of renter households failed to pay all or part of the rent in the preceding three months, according to the survey, which didn’t include a question on delinquent payments in 2015.
The three take-aways from this are a) the working class is struggling, b) their financial condition has deteriorated over the past 3 month to a year, and c) the lower you go, the worse people have it.
Consider homelessness in L.A.
The number of homeless people in Los Angeles has jumped to a new record, as city officials grapple with a humanitarian crisis of proportions remarkable for a modern American metropolis.
Municipal leaders said that a recent count over several nights found 55,188 homeless people living in a survey region comprising most of Los Angeles County, up more than 25% from last year.
And New York.
When Rudy Giuliani entered City Hall in 1994, 24,000 people lived in shelters. About 31,000 lived in them when Mike Bloomberg became mayor in 2002. When Bill de Blasio entered City Hall in 2014, 51,500 did. The number of homeless people now in shelters is around 63,000.
The number of homeless children in our country has increased by 60 percent since 2009.
The recent hurricanes will give the GDP a boost, but it is also another body-blow to the working class.
In tracking its internal debit- and credit-card data, Bank of America observed that much of the September upside surprise in consumption was propelled by building materials and gasoline. Immediate repairs, rushed deliveries of goods and supplies, and storm-victim relocations undoubtedly drove these sales.
In October, Bank of America's data showed payback in these areas but strength in furniture stores and discretionary goods. That also makes sense given how many of those who were dislocated have begun to move back into their homes or outfit new, temporary living arrangements.
That's the good news. Here's the bad news.
In September, according to Black Knight, the number of mortgages either past due or in foreclosure rose by 214,000, or 9 percent, compared with August....
October’s numbers have brought the picture more clearly into focus. More than 229,000 past-due mortgages are tied to the storms. Hurricane Irma accounted for 163,000 and Harvey, 66,000.
The economy has also enjoyed a rush of car sales as sufficiently-collateralized and insured drivers immediately replaced vehicles destroyed by the storms. According to the latest retail data, car sales slowed to a 0.7 percent growth rate in October, far below September’s blistering 4.6-percent pace.
At the same time, at 3.4 percent, the personal saving rate implies many households have depleted a good portion of their safety cushions. The current rate is not only the lowest since 2007, but one of the lowest on record since 1900.
Hoisington Asset Management’s chief economist Lacy Hunt said that in real per capita terms, disposable income fell at a 0.2 percent rate in the third quarter, 0.5 percent below where it stood a year prior.
Wall Street is still going gangbusters, and that's what the news media and the wealthy care about.
But the 80% or so of the rest of the nation are not just struggling, but sinking further.