This Is What You Spent Your Entire Pay Raise On

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Posted on 15th April 2016 by Administrator in Economy |Politics |Social Issues

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Tyler Durden's picture

There has been some muted cheering at the Fed (and the Obama administration) when as a result of numerous statewide minimum wage hikes, average hourly earnings finally started to rise in early 2016, recently hitting a 2% annual increase, even if on a weekly basis they dropped to post-recession lows as the number of hours worked actually dropped confirming the decline in US output continues.

The news is worse if one steps away from government “data” and looks at third party research. According to a recent report by Sentier Research, median income wages rose only 1.4%. As MarketWatch calculates, on the 2015 median income of $56,746, a 1.4% gain would translate to about $66 more a month, before taxes, or about $48 after tax.

Here’s the problem. As we have repeatedly shown in the past, as a result of the death of the US housing dream, which has pushed the homeownership rate to record lows

… and as Americans are either unable to afford a house, or the bank just won’t give them the necessary mortgage, median asking rents have soared to record highs.

 

Furthermore, as we showed yesterday following the latest monthly CPI report, the cost of rent rose 3.7% compared to a year ago in March. That was the fourth straight month with such a strong gain, the highest since before the financial crisis.

 

So here’s the math: across the nation, the median rent for a two-bedroom apartment is $1,300, according to Apartment List. So a 3.7% rent rise, or about $48, which means that just the official rise in asking rent prices… swallowed the entire salary “gain”of $48 in after tax dollars.

Oh and that excludes Obamacare: as the government also reported, medial bills soared, in fact in February, medical care grew at the fastest rate in more than three years.

So the next time someone wonders why US households are spending far less than expected, tell them it’s because they need to live, preferably with a roof above their heads..


CUTTING THROUGH BLS BULLSHIT

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Posted on 1st April 2016 by Administrator in Economy

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The BLS just reported their monthly seasonally adjusted, birth death adjusted, bullshit guess of employment, designed to keep the sheeple in the dark. Amazingly, it wasn’t too bad or too good. The MSM says it was just right. The ongoing mantra is the job market has been strong and growing for years. Meanwhile, consumers don’t have money to spend. Maybe it’s the 2.3% annual wage increases when their living expenses go up by 5% or more.

Here are a few data points you won’t see on CNBC:

  • The establishment survey says 215,000 jobs were added in March. The good old birth death adjustment threw 65,000 new phantom jobs into that calculation for all the new small businesses opening up. Anyone with half a brain knows there have been more small businesses closing than opening for the last 4 years. The plus 65,000 is more likely minus 65,000. That would change the headline. Wouldn’t it?
  • The household survey shows 246,000 more people employed. What you won’t hear on CNBC is that it also shows 151,000 more people unemployed. It seems 206,000 people who were supposedly not in the labor force in February are suddenly back in. I thought the MSM said it was Boomers retiring creating the surge in people not in the labor force. I guess that was another false storyline.
  • Now for the good stuff. Table A-9 reveals the true health of this booming employment market. Of the 246,000 newly employed Americans, very few of the jobs were good paying secure positions, with benefits.
  • The number of self-employed people jumped by 194,000. So, selling shit on Ebay and Amway sales are propelling the job surge. Sounds promising.
  • The number of multiple job holders surged by 127,000 in March. So, Americans need to work two $7.50 an hour Obama jobs to make ends meet. This is truly a sign of a booming jobs market.
  • The number of employed men between the ages of 35 and 54 (prime earning years for men) dropped by 76,000 in March. It is lower than it was in January. When there are less bread winners working, the jobs recovery mantra is a fraud.
  • In a sure sign of a strong growing productive economy, 29,000 more manufacturing jobs disappeared for good. I’m sure China and Vietnam  appreciate the new manufacturing jobs sent their way.

  • At least the 26,000 newly unemployed, formerly well paid Americans, were able to get a waiter job at TGI Fridays, as the number of waiters and bartenders jumped by another 25,000. Our transition from a savings based producing society into a debt based consumption society is nearly complete. Thank you Obama.

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LIES, DAMN LIES, & BLS STATISTICS

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Posted on 4th March 2016 by Administrator in Economy

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“There are three types of lies — lies, damn lies, and statistics.” ― Benjamin Disraeli

It’s my favorite day of the month. The Bureau of Lies & Scams issues their double seasonally adjusted, massaged to provide a happy ending, birth death adjusted unemployment propaganda, designed to keep the masses in the dark about their own dire financial circumstances. Even though the equally manipulated GDP is at 1% or below, retail sales are plunging, corporate profits plummeted by 15% in the 4th quarter and Challenger & Grey corporate layoff announcements were up 42% in January versus last year, our fraudulent friends at the BLS announced glorious employment figures this morning.

The Establishment data that gets all the headlines blared that 242,000 net new jobs were created in February. Of course, 129,000 fake birth/death jobs were factored into that number. Anyone with a functioning brain (excludes Wall Street economists, CNBC shills, and any government apparatchik) knows that more businesses have been closing than opening for the last four years as Obamacare and government solutions destroy the economy. Rather than adding 129,000 jobs, small businesses likely subtracted 50,000 jobs in February. That would put the true number at about 60,000.

In a shocking coincidence, Trim Tabs, a privately run independent company that monitors actual real time payroll withholding tax info issued a report two days ago which said the number of new jobs created in February was between 55,000 and 85,000, based on actual withholding tax data. If you are employed, payroll taxes are automatically extracted. This data cannot be manipulated by the government propagandists. It reveals the truth. No seasonal adjustments, tweaks or phantom jobs added. It’s pure tax data.

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So You Don’t Like Trump Eh?

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Posted on 20th February 2016 by Administrator in Economy

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Guest Post by Karl Denninger

Well then, you must like losing your job to someone in Mexico who will make $3/hour.

Union leaders at an air conditioner factory in Indianapolis threatened with losing 1,400 jobs to Mexico said on Tuesday the plant’s owner expects to pay Mexican workers $3 an hour compared to an average of more than $20 an hour for the U.S. workers.

“We haven’t given up the fight yet,” said Chuck Jones, president of the United Steelworkers union local that represents workers at the Carrier Corp plant. “But Carrier has pretty well indicated that the wage differential is too great and there’s not much we can do.”

A spokeswoman for Carrier, a unit of United Technologies Corp (UTX.N), said the company pays a “competitive wage” based on local conditions and could not discuss pay levels.

So what do you do about this?

Without wage and environmental parity tariffs you do nothing about it, because you can’t.

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Super Bowl 50 – What Has Changed in the US Since 1967

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Posted on 6th February 2016 by Administrator in Economy

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Please note that men’s REAL median income has gone up by only 9% over the last 50 years, and that is using the blatantly fake CPI calculation. Using a true measure of inflation would reveal that men make less money today than they did in 1967. And the MSM & corrupt politicians wonder why so many people are so pissed off.

Infographic: Super Bowl 50 - What Has Changed in the US Since 1967 | Statista
You will find more statistics at Statista


Paul Ryan’s Express: US Public Debt Has Over Doubled Since Dec 2007, Average Wage Growth Down 28%

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Posted on 21st December 2015 by Administrator in Economy

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Guest Post by Anthony B. Sanders

House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell delivered a $1.1 TRILLION omnibus spending package to President Obama who signed it gleefully.

Yes, there was ample quantities of pork barrel spending, too long to list here. Here is the 2009 page omnibus (Or cronybus) spending bill. omnibus-spending-bill-text

budgetvre

Has Federal government spending (and debt) done any good? Other than those receiving boodle from the Federal government?

Since December 2007, US public debt has over doubled. Despite the prodigious debt issuance, M2 Money Velocity keeps crashing.

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CONSUMERS NOT FOLLOWING ORDERS

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Posted on 14th June 2015 by Administrator in Economy |Politics |Social Issues

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Last week the government reported personal income and spending for April. After months of blaming non-existent consumer spending on cold weather, shockingly occurring during the Winter, the captured mainstream media pundits, Ivy League educated Wall Street economist lackeys, and Keynesian loving money printers at the Fed have run out of propaganda to explain why Americans are not spending money they don’t have. The corporate mainstream media is now visibly angry with the American people for not doing what the Ivy League propagated Keynesian academic models say they should be doing.

The ultimate mouthpiece for the banking cabal, Jon Hilsenrath, who does the bidding of the Federal Reserve at the Rupert Murdoch owned Wall Street Journal, wrote an arrogant, condescending, putrid diatribe, directed at the middle class victims of Wall Street banker criminality and Federal Reserve acquiescence to the vested corporate interests that run this country. Here are the more disgusting portions of his denunciation of the formerly middle class working people of America.

We know you experienced a terrible shock when Lehman Brothers collapsed in 2008 and your employer responded by firing you. 

We also know you shouldn’t have taken out that large second mortgage during the housing boom to fix up your kitchen with granite counter-tops. 

You should feel lucky you’re not a Greek consumer.

Fed officials want to start raising the cost of your borrowing because they worry they’ve been giving you a free ride for too long with zero interest rates.

We listen to Fed officials all of the time here at The Wall Street Journal, and they just can’t figure you out.

Please let us know the problem.

The Wall Street Journal was swamped with thousands of angry responses from irate real people living in the real world, not the elite, QE enriched, oligarchs living in Manhattan penthouses, mansions on the Hamptons, or luxury condos in Washington, D.C. Hilsenrath presumes to know how the average American has been impacted by the criminal actions of sycophantic Ivy League educated central bankers and their avaricious Wall Street owners.

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THINGS ARE SO GREAT YOU GOTTA WEAR SHADES

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Posted on 6th February 2015 by Administrator in Economy |Politics |Social Issues

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The BLS reported the fabulous news this morning that the job market is fucking booming. Everyone has a job and we’re making gobs of dough. It does make you ponder why the Federal Reserve needs to keep interest rates at 0% if everything is so fucking fantastic. It does make you ponder why corporation after corporation is reporting shitty earnings and warning that 2015 will be worse. It does make you ponder why retailers keep going bankrupt if consumers are employed and flush with cash. After perusing the data, here are a couple observations:

  • The birth death spreadsheet adjustment which is supposed to capture new businesses hiring, was by far the most beneficial January adjustment in the last decade. How many new businesses starting up in your area?
  • There are 2.8 million more working age Americans than one year ago, while the number of employed is up 3 million. You would think the unemployment rate would only be slightly lower. Nope. It plunged from 6.6% to 5.7%. Because 1.1 million people leave the labor force during an economic recovery. Right?
  • Wages went up by 2.2% in the last year. So, when you factor in a true inflation rate of things you need to live your everyday life of at least 5%, real wages fell. Maybe that explains why Christmas spending was atrocious.
  • The labor participation rate of 62.9% is lower than last January and hovers near 30 year lows.
  • The employment to population ratio also hovers near 30 year lows. Who needs to work when you have foodstamps and Obamacare?

  • Of the supposedly 257,000 new jobs added, only 58,000 (22.5%) were goods producing jobs. The rest were low paying retail, social services, food services, healthcare, and education service jobs. Last January 54% of the new jobs were in goods producing industries. The layoffs in the high paying energy sector have just begun. There will be hundreds of thousands who lose their jobs due to the plunge in oil prices.

I await Janet Yellen having a surprise news conference to announce an interest rate increase because the jobs market is booming and wages are soaring. Wait for it. Bueller? Bueller?

January Payrolls Smash Expectations Rising By 257,000 As Hourly Earnings Surge Most Since November 2008

Tyler Durden's picture

So much for expectations that January, missing on 9 out of 10 previous occasions, will miss again, as the BLS just reported that in January a whopping 257K jobs were added, far above the 228K expected, and up from December’s 252K which was revised as part of the annual BLS data revision to 329K, a whopping 147K revision! More impressive: the household survey reported that a whopping 759K jobs were created in January.

The unemployment rate rose from 5.6% to 5.7%, above the 5.6% expected.

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WHAT THE FED HAS WROUGHT

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Posted on 16th November 2014 by Administrator in Economy |Politics |Social Issues

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The chart below might be the most powerful indictment of the Federal Reserve and our corporate fascist empire of debt ever created. Some people don’t get charts. Charts tell a story. This chart tells the story of elitist bankers supporting the agenda of a corporate fascist state, resulting in the gutting of the middle class. Anyone who views this chart in a positive manner is either a Federal Reserve banker or their paycheck is dependent upon the continuation of the pillaging of the working class. Corporate profits are at all-time highs. Profit margins have always reverted to the mean throughout modern history. If they remain at all-time highs then something is terribly wrong.

“Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system and it is not functioning properly.” Jeremy Grantham, Barron’s

Here is the story I see in that chart. Corporate profits as a percentage of GNP have averaged 6.5% over the last 67 years. As you can see, it is a volatile figure. Corporate profits rise during expansions and fall during recessions. That has been a given over time. The reason corporate profits have always reverted to the mean was due to the basic tenets of free market capitalism. When a company is generating outsized profits, that industry will then attract new competitors, resulting in price competition and lower profits. From 1950 through 1971, corporate profits as a percentage of GNP fluctuated in a narrow range between 5% and 7%. This was a reflection of a market driven by competition, a non-interventionist Federal Reserve, and a government not captured by corporate interests.

It is no coincidence since Nixon closed the gold window in 1971 and unleashed greedy bankers, feckless politicians, and self serving corporate executives to utilize easy money and prodigious amounts of debt to financialize our economic system and deform capitalism, corporate profits have boomed and busted. The Fed created booms and busts are clearly evident on the chart. Nixon toady Arthur Burns created an inflationary boom in corporate profits to 8% of GNP in the late 70’s followed by the collapse to 3% caused by Volcker having to raise rates to extreme levels to crush the Burns created runaway inflation.

You can see exactly when the Maestro assumed command at the Fed and proceeded to introduce the Greenspan Put, encouraging speculation, borrowing and mal-investment. His easy money boom led to the dot com bubble that doubled corporate profits from their 1987 low. Of course the profits vaporized in an instant and plunged to 4% of GNP in 2001. Greenspan and then Bernanke  proceeded to drive interest rates to record lows creating a prodigious housing bubble resulting in the greatest level of mal-investment and financial fraud in world history. Corporate profits as a percentage of GNP skyrocketed from 4% to 10% in the space of six years. The banking cabal had captured the system.

The Fed orchestra kept the music playing and Wall Street kept dancing the rumba with their corporate CEO dates. The Keynesian acolytes were ecstatic. The Austrians warned of the impending bust. No one listened. The collapse of the worldwide financial system was portrayed by the corporate mainstream media, bankers like Dimon, corporate CEOs like Immelt, billionaires like Buffet, captured government bureaucrats like Paulson, and politicians like McCain and Obama, as a systematic risk that required a taxpayer rescue of criminals.

The $800 billion gift to bankers and mega-corporations by the Washington DC Party of captured politicians was chicken feed compared to the $3.5 trillion of newly printed fiat handed to Wall Street and corporate America by Bernanke and Yellen. Five years of 0% interest rates have impoverished senior citizens and savers, but they have done wonders for Wall Street and mega-corporation profits, along with executive bonuses. Corporate profits soared from 4.5% of GNP to an all-time high of 10.5% in the space of three years and have remained at this elevated level.

Who Needs Wage Earners Anyway?

Is it a coincidence that corporate profits as a percentage of GNP are at record highs while employee compensation as a percentage of GNP is at record lows? Is it a coincidence that employee compensation as a percentage of GNP peaked at 51% in 1971? That year certainly seems to be a turning point in U.S. economic history. Gold’s purpose as a check on statists, Keynesians, politicians, bankers, and the military industrial complex couldn’t be any clearer. The decline has multiple causes, but the storyline about technology being the major cause is patently false. My observations are as follows:

  • From the end of World War II until the mid-1970s employee compensation as a percentage of GNP was consistently between 49% and 51%. The middle class saw their standard of living rise as wages outpaced inflation, savings rates were high and led to capital investment, debt was used for long term purchases like a home or automobile, and bankers accepted deposits and made safe loans. Technological progress over the thirty years was constant, but did not result in declining wages.
  • From the moment Nixon closed the gold window, employee compensation as percentage of GNP relentlessly declined for the next quarter of a century from 51% to 44%. Over this time frame our economy deformed from a goods producing system driven by savings and capital investment into a service/financial economy built upon consumer debt, conspicuous consumption and market gambling. Our iconic mega-corporations fired Americans and hired Chinese slave laborers, lobbied for tax breaks, invested in their own stock, kept wage increases below the level of true inflation, and paid extravagant compensation packages to their Harvard MBA executives.
  • The brief upturn created by Greenspan’s irrational exuberance 90’s boom was short lived. The relentless decline resumed after the dot com collapse, even as Greenspan and Bernanke blew their epic bubble. Their financial engineering machinations on behalf of Wall Street did nothing for the average worker on Main Street. Employee compensation as a percentage of GNP declined from 47% to 44% BEFORE the financial collapse.
  • Unequivocal proof that Bernanke’s sole purpose of QE and ZIRP was to benefit his Wall Street owners can be seen in the continued decline from 44% to 42% since 2008. There has been no recovery for the average American. Wall Street is rolling in dough. Corporate America is rolling in dough. Politicians are rolling in dough. The average American worker is rolling in dog shit.

The mouthpieces for the Deep State insist corporate profits have reached a permanently high plateau. It’s another new paradigm. Just like 1929, 1999, and 2007. Jeremy Grantham is right. The system is broken. The inmates are running the asylum. But financial engineering will not work permanently.  Baijnath Ramraika and Prashant Trivedi in their outstanding article Why Jeremy Grantham is Right about Corporate Profit Margins prove that corporate gross margins have not grown, technological advancement has not been a major factor, innovation and capital investment are non-existent, and corporate CEOs have utilized one time schemes to boost profits.

There are a few major reasons for record corporate profits. The Fed’s gift to banks and mega-corporations of zero interest rates have allowed S&P 500 corporations to refinance their existing debt and take on new debt at below market interest rates. The average interest rate paid by S&P 500 companies is now at all-time lows. Any normalization of interest rates would crush corporate profits.

Even though you hear constant propaganda from the corporate MSM, corporate CEOs, and captured politicians about the dreadful level of corporate taxes, the truth is that mega-corporations are paying record low levels of actual taxes. When profits are at record highs and tax payments at record lows you know they have captured the system. “Creative” tax avoidance and the FASB allowing banks to mark their assets to fantasy have played an enormous role in record profits.

The short term oriented casino mentality of corporate CEOs can be plainly seen in the fact depreciation expense as a percentage of revenue is at 25 year lows, resulting in short term profits but long-term decline. Instead of investing in capital to increase efficiency or expand their business, greedy myopic CEOs have chosen to buy back their own stock at all-time high prices. They did the same thing in 2005 – 2007. Driving up quarterly earnings per share to boost their own stock option compensation is how it rolls in corporate America today. Investing in their workers through higher wages isn’t even a consideration. They don’t teach that in Ivy League MBA programs. SG&A expenses as a percentage of revenue have been driven to all time lows, as outsourcing, downsizing, and working people to death have done wonders for corporate profits.

Ramraika and Trivedi reach damning conclusions of corporate America, based on their detailed unbiased research:

As the world moved increasingly towards the idea of shareholder-value maximization, time horizons for management and the shareholders have shortened. As Montier shows, the average lifespan of a company in the S&P 500 in the 1970s was about 27 years and is down to about 15 years now. In tandem, the average tenure of CEOs is down from about 10 years in the 1970s to about 6 years now. Combine this with the incentive systems prevalent today (think stock options), and it is only logical that a CEO who is going to be around for as few as six years and is going to get a large chunk of her rewards in stock options will want to see higher stock prices.

Cutting SGA expenses and postponing capital investments — actions that carry positive short-term earnings impact at the expense of a business’ competitiveness in the long-term — look promising to managers whose payoffs depend on stock prices in the short-term. Not surprisingly, the renters (there are hardly any owners any more) clamor for just such actions. The problem with this thinking is that the long-term eventually shows up. And when it does, profit margins will have no choice but to remember their long forgotten tendency to revert to mean.

Are interest rates going to be driven lower for corporations? Are taxes going to be driven lower? How many more people can corporations fire? Have economic downturns been eliminated by the Federal Reserve? Will record profits not result in increased competition and price wars? Can wages be driven even lower?

The financial, economic and political system has been captured by corporate fascist psychopaths. The Federal Reserve has aided and abetted this takeover. Their monetary manipulations have resulted in this deformity. Psychopaths always go too far. The American middle class has been murdered. Decades of declining real wages have left them virtually penniless, in debt up to their eyeballs, angry, frustrated, and unable to jump start our moribund economy by buying more Chinese produced crap. Yellen, her Wall Street puppeteers, and the corporate titans should enjoy those record profits and record stock market highs. It won’t last. Short-term profits will be wiped out, as long-term consequences always arrive when you least expect it. The artificial boom will lead to a real depression. Luckily for the oligarchs, most middle class Americans are already experiencing a depression and won’t notice the difference.

“True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.” – Ludwig von Mises

CHRISTMAS IN OCTOBER – DESPERATE MEASURES

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Posted on 25th October 2014 by Administrator in Economy |Politics |Social Issues

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The desperation of retailers grows by the day. I head to Wal-Mart and Giant in Harleysville every Sunday morning at 7:00 am. to do my weekly grocery shopping. I go to Wal-Mart at opening to avoid the freaks we see weekly on the People of Wal-Mart post. The workers at Wal-Mart are only a small step above the customers. They can barely communicate, rarely look you in the eye, and generally act like they are prisoners in an asylum.

I’m in winter/bad times ahead prep mode. I had a load of fire wood delivered yesterday which I wheelbarrowed to the back yard and stacked with my already decent sized stack. Last week I took an empty propane canister back to Wal-Mart to replace it with a full canister. That would give me three full propane tanks. I left the empty tank outside next to the propane cage and went in to pay. The old lady cashier with the gravelly smoker voice told me she would call for someone to get me a new tank.

I went over the cage and patiently waited for a Wal-Mart drone to come out, unlock the propane cage and give me a full tank. Two minutes, five minutes, and eventually ten minutes go by with no one coming out to help me. The cashier pokes her head out the door and shrugs her shoulders and says no one is responding to her calls. What a well oiled machine they have at Wal-Mart. Eventually the old lady abandoned her cashier post and in a painstakingly slow manner proceeded to unlock one bin after another until she found a full tank. I’m sure a line of unhappy customers were piling up at the only register in the garden center while she spent ten minutes getting me my propane tank.

A transaction that should have taken five minutes from start to finish ended up taking closer to twenty five minutes, with another five or six customers also dissatisfied with their extra long wait. This is a perfect example of how not to do business. Maybe Wal-Mart’s problems are bigger than households having less to spend. They are attempting to maintain their profit margins by reducing staff hours, hiring low quality people, and paying them shit wages. In the short run it may keep profits higher, but in the long-run customers will go elsewhere. Except most of the elsewhere stores closed up years ago when Wal-Mart arrived and underpriced them into bankruptcy.

My shopping experience at Giant is generally pleasant. The staff are nice, competent, and have been there for years. They know what they are doing and serve you with a smile. But their store is part of a worldwide conglomerate, so things have changed for the worse over the last four months. They renovated the entire store, creating bigger aisles and moving stuff around. That’s annoying, but after a while you figure out where they moved the stuff you want. The real negative change was the dreaded “Everyday Low Pricing”. This weasel phrase means you will be paying more. This is what the Apple idiot CEO – Ron Johnson – did at JC Penney. It put them on a rapid path to bankruptcy.

The weekly sale items at Giant have virtually disappeared. This has coincided with the drastic increase in beef, pork and fresh produce prices. Since “Every Day Low Pricing” went into affect our weekly grocery bill has gone up 20%. And I am buying far less beef and more chicken. In the past I would stock up on sale items and put beef, pork and whatever was on sale in our storage area freezer. Now I am stuck buying what we need that week. No bargains, just fully priced food items. Be forewarned, whenever you see a store announce “Everyday Low Pricing” you are getting screwed.

The Boos Begin in August & Bells Start Jingling in October

The desperation of Wal-Mart and most of the other mega-retail chains is no more clearly evident than in their relentlessly ridiculous acceleration of holiday marketing displays. I was flabbergasted when I saw Halloween candy, decorations and costumes in row after row BEFORE Labor Day at my local Wal-Mart. Selling Halloween candy two months before Halloween is idiotic and a sure sign of desperation. Retailers have run out of merchandising ideas. I wouldn’t even consider buying Halloween candy until the week before Halloween. Do Wal-Mart freaks of the week actually buy Halloween merchandise in September?

Holidays used to be special occasions that lent a sense of sales urgency for retailers for a week or two, to pump up sales. Now Wal-Mart and the rest of the dying retailers have Christmas, Easter, Fourth of July, and Halloween displays up for 80% of the year. There is no sense of urgency to buy. From September 1 though October 31 there are rows and rows of bags of corporate produced chemicals disguised as candy. I suppose the obese masses buy this crap in anticipation of Halloween, tell themselves they’ll only take one, and then shovel the entire bag down their gullets.

So last week, still a full two weeks before Halloween, Wal-Mart had already converted their entire garden center into a Christmas wonderland of cheap mass produced Chinese cookie cutter Christmas decorations and lights that will blow out after three hours of use. They had also converted aisles at the front of the store to Christmas displays. Who the hell shops for Christmas crap in October? There is nothing like having cheap Chinese Christmas crap available for over two months to create a sense of urgency to buy. Wal-Mart and the rest of the mega-retailers have got nothin. They have no original merchandising ideas. They don’t even try anymore. They source low quality goods from China and compete solely on price. I can’t wait for the Easter candy to appear on Wal-Mart’s shelves in late December.

Black Thanksgiving

Black Friday is dead. Long live Black Thanksgiving. The riots and stampedes by the ignorant masses for toasters and HDTVs on Black Friday are now being replaced by retailers and malls across America opening at 6:00 pm on Thanksgiving. It actually seems fitting. How better to give thanks for our mass consumption, debt financed, materialistic, iGadget addicted society than to open stores on Thanksgiving. Spending time with family is overrated anyway. If you had to spend six hours with cousin Eddie and aunt Bethany, you’d be looking forward to an early opening at Macy’s.

The bullshit message from the mega-retailers is: “We’re not opening on Thanksgiving out of desperation or greed. We’re doing it simply to satisfy the demands of our customers”. It’s a racist national holiday anyway. We should be going to an Indian run casino on Thanksgiving to make up for our past sins. Opening stores and forcing workers to work on Thanksgiving is pathetic, disgusting and a truly desperate measure in this consumer empire in decline. The law of diminishing returns has been invoked upon the mega-retailers that dominate our suburban sprawl paradise.

These retailers can start holiday merchandising three months before the actual holiday. They can open their doors on Thanksgiving, Easter and Christmas. It’s nothing more than shuffling the deck furniture on the Titanic. We’ve allowed bankers, politicians and corporate titans to financialize our economy, gutting the once thriving middle class, sending manufacturing jobs overseas, and convincing the clueless masses that consumer goods purchased with debt is equal to wealth. But, we’ve reached the point of no return. There are 248 million working age Americans and 102 million of them are not employed. Of the 146 million working Americans, 82 million of them make less than $30,000 per year.

While retailers have added billions of square feet since 1989, real median net worth is 5% lower over 24 years. Retailers are attempting to get blood from a stone. The stone is in debt, approaching retirement with no savings and dead broke.

We have one entity that deserves the most credit for destroying the American Dream. Real median household income is lower than it was in 1989. The 2008 collapse was caused by the easy money bubble machine at the Federal Reserve. We had the opportunity to hit the reset button, implement rational economic and monetary policies, take our lumps, and make the banking culprits pay for their crimes. Instead, the easily manipulated masses believed the Wall Street storyline and allowed the Federal Reserve and feckless politicians to save the banking cabal with extreme money printing and debt creation. This has pushed the middle class closer to the breaking point, while further enriching the oligarchs. The Federal Reserve saved their owners and lured the masses further into debt.

The Fed, Wall Street, and Washington DC have successfully driven consumer debt to an all-time high, blasting through the $3 trillion level. Declining real incomes and rising debt are a sure recipe for success.

Our entire economic paradigm is built upon desperate measures. Zero interest rates, $3 trillion of QE, systematic accounting fraud, fudged economic data, and doling out subprime loans to auto renters and University of Phoenix wannabes have failed to revive our moribund economy. Delusions don’t die easily. But they do die. We are reaching the limit of this delusionary dream built upon debt, denial, and deception. Make sure you wolf down that Thanksgiving feast before 5:00 pm. There are HDTV’s to fight for at 6:00 pm.

50% Of American Workers Make Less Than $28,031 A Year

6 comments

Posted on 25th October 2014 by Administrator in Economy |Politics |Social Issues

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Submitted by Michael Snyder of The Economic Collapse blog,

The Social Security Administration has just released wage statistics for 2013, and the numbers are startling.  Last year, 50 percent of all American workers made less than $28,031, and 39 percent of all American workers made less than $20,000.  If you worked a full-time job at $10 an hour all year long with two weeks off, you would make $20,000.  So the fact that 39 percent of all workers made less than that amount is rather telling.  This is more evidence of the declining quality of the jobs in this country.  In many homes in America today, both parents are working multiple jobs in a desperate attempt to make ends meet. Our paychecks are stagnant while the cost of living just continues to soar.  And the jobs that are being added to the economy pay a lot less than the jobs lost in the last recession.  In fact, it has been estimated that the jobs that have been created since the last recession pay an average of 23 percent less than the jobs that were lost.  We are witnessing the slow-motion destruction of the middle class, and very few of our leaders seem to care.

The “average” yearly wage in America last year was just $43,041.  But after accounting for inflation, that was actually worse than the year before

American paychecks shrank last year, just-released data show, further eroding the public’s purchasing power, which is so vital to economic growth.

 

Average pay for 2013 was $43,041 — down $79 from the previous year when measured in 2013 dollars. Worse, average pay fell $508 below the 2007 level, my analysis of the new Social Security Administration data shows.

 

Flat or declining average pay is a major reason so many Americans feel that the Great Recession never ended for them. A severe job shortage compounds that misery not just for workers but also for businesses trying to profit from selling goods and services.

 

Average pay declined in 59 of the 60 levels of worker pay the government reports each October.

And please keep in mind that “average pay” is really skewed by the millionaires and billionaires at the top end of the spectrum.

Median pay in 2013 was just $28,031.02.  That means that 50 percent of American workers made less than that number, and 50 percent of American workers made more than that number.

Here are some more numbers from the report that the Social Security Administration just released…

-39 percent of American workers made less than $20,000 last year.

 

-52 percent of American workers made less than $30,000 last year.

 

-63 percent of American workers made less than $40,000 last year.

 

-72 percent of American workers made less than $50,000 last year.

I don’t know about you, but those numbers are deeply troubling to me.

It has been estimated that it takes approximately $50,000 a year to support a middle class lifestyle for a family of four, and so the fact that 72 percent of all workers make less than that amount shows how difficult it is for families that try to get by with just a single breadwinner.

The way that our economy is structured now, both parents usually have to work as hard as they can just to pay the bills.

But there was one group of Americans that did see their incomes actually increase last year.

Those making over 50 million dollars had their pay increase by an average of $12.8 million in 2013.

For everyone else, the news was not good.

And of course this is a trend that has been going on for a long time.

Posted below is a chart that comes from the Federal Reserve.  It shows how real median household income in the United States has declined since the year 2000…

 

Meanwhile, the cost of living has continued to rise at a steady pace.

Needless to say, this is putting a tremendous squeeze on the middle class.  With each passing day, more Americans are losing their spots in the middle class and this has pushed government dependence to an all-time high.  According to the U.S. Census Bureau, 49 percent of all Americans now live in a home that receives money from the government each month.  This is completely and totally unsustainable, but our long-term economic problems just keep getting worse.

Our politicians have stood by as millions upon millions of good paying jobs have been shipped out of the country.  Millions of other middle class jobs have been lost to technology.  This has resulted in intense competition for the middle class jobs that remain.

And at this point we are even losing lots of lower paying retail jobs.  For example, it is being reported that Sears plans to close 110 more stores and lay off more than 6,000 workers.  Sears says that the report “isn’t accurate”, but it isn’t denying that stores will be closed either…

In an email to USA Today, Sears spokesman Howard Riefs said the store count and closures “isn’t accurate,” but did not provide store closures or layoff numbers.

 

“As we stated in our (second quarter earnings report), we disclosed that we would be closing unprofitable stores as leases expire and in some cases will accelerate closings when it is economically prudent. And that we would consider closing additional stores during the remainder of the year,” Riefs said. “Make no mistake, we believe the store will continue to play an integral role in our transformation, however, if a store is not generating a profit, it is straightforward that the store should be considered for closure.”

No matter how many stores Sears does end up closing over the next few months, the truth is that our economy is a complete and total mess at this point.

Our politicians and the mainstream media are trying to put a happy face on everything, but the cold, hard numbers prove that we are not anywhere close to where we were prior to the last recession.

Because it is so difficult to find a good job in America today, I often recommend to people that they should consider starting their own businesses.

But thanks to the bureaucratic control freaks in the Obama administration and in our state governments, small business ownership in America today is at an all-time low.  It is almost as if they don’t want the “little guy” to win.  Every avenue of prosperity for the middle class is under assault, and there does not appear to be much hope that this will change any time soon.

And the truly frightening thing is that this is about as good as things are going to get for the middle class.  We are rapidly approaching the next major wave of our long-term economic decline, but that is a topic for a future article.

IT’S GOOD TO BE RICH

21 comments

Posted on 22nd September 2014 by Administrator in Economy |Politics |Social Issues

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After reviewing the following charts I’ve concluded it is better to be rich than poor. There is no question the gap between the richest and poorest is widening. The facts show the rich getting richer, the poor staying poor, and the middle class becoming poorer. You’ll be happy to know pleasure aircraft was the fastest-growing category of all consumer spending in 2013. I guess those food stamp users are living it up. 

The facts don’t lie. The lies happen when you ask people why.

Why is this happening?

 

The Big Lebowski Housing Market

1 comment

Posted on 5th September 2014 by Administrator in Economy |Politics |Social Issues

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Guest Post by Anthony Sanders

The Big Lebowski Housing Market: Declining Purchasing Power And Wage Growth … With Rising Home Prices

It has been a rough ride since 2007.

Purchasing power of the US consumer continues to decline and now we have declining average wage earnings (YoY).

purchpoweravaage

These rotten economic indicators are reflected in declining mortgage purchase applications and single family housing starts.

20140904_housing

And to make matters worse for US consumers, house prices have been rising again after the 2008-2009 bust.

ppcs20

With declining purchase power and wage growth, it’s time to find that special rental unit like the one that Jeffrey Lebowski occupied.

Dude House 2

And you can attend a Masters of Real Estate Development (MRED) Program and become a HUD-approved landlord … like Marty!

landlord

And you too can perform a dance cycle for your friends!

dancecycle

TWO CANARIES IN THE CONSUMER COAL MINE

23 comments

Posted on 2nd September 2014 by Administrator in Economy |Politics |Social Issues

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First we have good old Darden Restaurants, purveyor of processed slop to the obese endless bread stick addicted middle class. They pre-announced that they will lose $20 million this quarter. It seems the problem was not just their recently shit canned Red Lobster division. If there really has been excellent job growth as we have been told by Obama and the MSM, why does traffic continue to plunge at the formerly popular Olive Garden and Longhorn Steakhouse? All those great jobs must translate into wage increases and disposable income. Right? The results of this middle class dining chain, along with the continued decline in McDonalds sales are a canary in the coal mine. The middle class has run out of disposable income and is no longer disposing of something it doesn’t have.

Look at the numbers in those charts. Look at how much lower the traffic is than total sales, particularly for Longhorn. Do you know what that means? Longhorn is a steakhouse. Beef prices are at all-time highs. These restaurants are jacking up prices big time. So not only has the middle class run out of disposable income, but real inflation in the real world is raging.

I had never heard of Conn’s until this morning. They are evidently a Texas based retailer with 86 stores selling appliances, furniture and electronics. They have been growing rapidly and opening stores at a healthy clip. They grew their sales by an amazing 29% over last year, with an 11% increase in same store sales. Wow!!! They must be a real sales juggernaut. Well not quite. Their stock dropped 29% this morning.

You see they are another canary in the coal mine of how hard goods retailers and car companies have generated fantastic sales in the last couple years. Subprime and 0% interest debt peddled at prodigious rates to anyone that can breath and scratch an X on a loan document can really juice the top line for awhile. But guess what? The ignorant masses with no jobs actually have to make the payments for it to work out in the end.

It seems Conn’s has generated all of their fabulous sales with 0% deferred plans made to questionable credit worthy customers. Their portfolio of credit receivables grew by 40% while sales grew by 29%. It seems when you make loans to people incapable of paying you back, they eventually default. The delinquency rate is soaring on their $1.2 billion portfolio. Bye Bye profits.

This is the same sale strategy used by the big automakers over the last two years. Those fantastic sales have been a fraud. The bad debt avalanche has just begun. You need income to eat out and you need income to make the debt payments on those 52 inch HDTVs. The middle class is tapped out and more debt will not cure what ails them. The canary is dead.

 

Darden Announces Expected Fiscal First Quarter Results

ORLANDO, Fla., Sept. 2, 2014 /PRNewswire/ — Darden Restaurants, Inc. DRI, +1.61% today reported that it expects diluted net loss per share from continuing operations for its fiscal first quarter ended August 24, 2014 to be approximately 13 to 15 cents.

Darden also reported that preliminary U.S. same-restaurant sales for the fiscal first quarter by month for Olive Garden and LongHorn Steakhouse were as follows:

Olive Garden June July August
Same-Restaurant Sales -1.0% -4.2% 0.8%
Same-Restaurant Traffic -0.9% -4.3% -2.3%

 

LongHorn Steakhouse June July August
Same-Restaurant Sales 3.3% 1.5% 3.2%
Same-Restaurant Traffic -1.1% -1.6% 0.2%

 

Conn’s, Inc. Reports Second-Quarter Fiscal 2015 Financial Results

THE WOODLANDS, Texas, Sep 02, 2014 (BUSINESS WIRE) — Conn’s, Inc. CONN, -28.62% a specialty retailer of furniture, mattresses, home appliances, consumer electronics and provider of consumer credit, today announced its financial results for the second quarter ended July 31, 2014.

Credit segment operating income declined $7.7 million to an operating loss of $0.2 million;
• The percentage of the customer portfolio balance 60+ days delinquent increased 70 basis points sequentially to 8.7% as of July 31, 2014;
• Credit segment provision for bad debts on an annualized basis was 13.9% of the average outstanding portfolio balance in the current quarter and 11.1% on an annualized basis for the first six months of fiscal 2015;
• Diluted earnings was $0.48 per share, compared to $0.52 per share in the prior year;
• Adjusted diluted earnings was $0.50 per share, compared to $0.52 per share a year ago; and
• Full-year fiscal 2015 guidance was updated to a range of $2.80 to $3.00 adjusted earnings per diluted share. The new full-year guidance reflects primarily the impact of higher expected provision for bad debts and the issuance of $250 million in 7.25% senior unsecured notes in July 2014.

“Overall results were not satisfactory. Our credit operations ran into unexpected headwinds, resulting in portfolio performance deterioration. Despite tighter underwriting, lower early-stage delinquency and improved collections staffing and execution, delinquency unexpectedly deteriorated across all credit quality levels, customer groups, product categories, geographic regions and years of origination. Tighter underwriting and better collections execution did not offset deterioration in our customer’s ability to resolve delinquency.

“Delinquency rates improved through May and increased modestly in June, consistent with typical seasonal trends. However, over sixty-day delinquency rates unexpectedly deteriorated a combined 90 basis points in July and August. We now expect future 60-plus day delinquency to increase to levels above our historical highs in the third and fourth quarter of fiscal 2015. Early stage delinquency remains lower than historical averages through August.

“We have made additional minor changes to tighten underwriting in August. Over time, more of the total portfolio will have been originated under the tighter underwriting policies implemented in late fiscal 2014 and early fiscal 2015. Declining sales of electronics as a percentage of total sales, slower expected originations growth and an expected reduction in the percentage of originations to new customers should also benefit future portfolio performance. Longer term, we believe the changes necessary to optimize portfolio performance are in place, although we may not return to credit loss rates of prior years.

“In response to higher delinquency, we are reducing the level of no-interest programs and raising the interest rates in some markets to increase portfolio yield.