Skip to comments.19 Signs That The U.S. Consumer Is Tapped Out: Years of declining incomes and rising debts
Posted on 03/15/2014 11:53:43 AM PDT by SeekAndFind
You can't get blood out of a rock. Traditionally the United States has had a consumer-driven economy, but now years of declining incomes and rising debts are really starting to catch up with us. In order to have an economy that is dependent on consumer spending, you need to have a large middle class. Unfortunately, the U.S. middle class is steadily shrinking, and unless that trend is reversed we are going to see massive economic changes in this country. For example, in poor neighborhoods all over America we are seeing bank branches, car dealerships and retail stores close down at an alarming rate. If you didn't know better, you might be tempted to think that "Space Available" was the hottest new retailer in some areas of the nation. On the other hand, if you live in San Francisco, New York City or Washington D.C., things are pretty good for the moment. But as a whole, the condition of the U.S. consumer continues to decline. Incomes are going down, the cost of living is going up, and debts are skyrocketing. The following are 19 signs that the U.S. consumer is tapped out...
#1 Real disposable income per capita continues to fall. In the fourth quarter of 2012, it was sitting at $37,265. By the time that the fourth quarter of 2013 had come around, it had dropped to $36,941. That means that average Americans have less money to go shopping with than they did previously.
#2 In January, real disposable income in the U.S. experienced the largest year over year decline that we have seen since 1974.
#3 As disposable income decreases, major retailers are closing thousands of stores all over the country. Some are even calling this "a retail apocalypse".
#4 From September 2013 to January 2014, the personal saving rate in the United States dropped by a staggering 16 percent.
#5 During the fourth quarter of 2013, we witnessed the largest increase in consumer debt in this country that we have seen since 2007.
#6 Fewer Americans are applying for mortgages these days. In fact, the MBA Purchase Applications Index is now the lowest that it has been since 1995.
#7 Overall, the rate of homeownership in the United States has fallen for eight years in a row.
#8 Many Americans are finding it increasingly difficult to afford a new car or truck. The following comes from a recent CNBC article...
A new study shows the average household in 24 of America's 25 largest metropolitan areas cannot afford to pay for the average priced new car or truck.
"Just because you can manage the monthly payment doesn't mean you should let a $30,000 or $40,000 ride gobble up such a huge share of your paycheck," said Mike Sante, managing editor of Interest.com. "Many people are spending money on a car payment that they could be saving."
#9 Incredibly, 56 percent of all Americans now have "subprime credit" at this point.
#10 Total consumer credit has risen by a whopping 22 percent over the past three years.
#11 In the third quarter of 2007, the student loan delinquency rate was 7.6 percent. Today, it is up to 11.5 percent.
#12 Overall, U.S. consumers are $11,360,000,000,000 in debt.
#13 While Barack Obama has been in the White House, median household income in the United States has fallen for five years in a row.
#14 U.S. workers are taking home the smallest share of the income pie that has ever been recorded.
#15 One recent study found that about 60 percent of the jobs that have been "created" since the end of the last recession pay $13.83 or less an hour.
#16 Middle-wage jobs accounted for 60 percent of the jobs lost during the last recession, but they have accounted for only 22 percent of the jobs created since then.
#17 According to one recent survey, only 35 percent of all Americans say that they are better off financially than they were a year ago.
#18 In 2008, 25 percent of all Americans in the 18 to 29-year-old age bracket considered themselves to be "lower class". In 2014, an astounding 49 percent of them do.
#19 The poverty rate in America has been at 15 percent or above for 3 consecutive years. That is the first time that has happened since 1965.
Despite what the mainstream media keeps telling them, most Americans know on a gut level that there is something fundamentally wrong with our economy.
According to Gallup, "Unemployment/Jobs" is the number one issue that Americans care about these days and the "Economy in general" is the number three issue that Americans care about these days.
Most people just want to work hard, make a decent living and take care of their families.
Sadly, that is becoming increasingly difficult to do.
And the numbers that I have shared above only tell part of the story. For a more personal side to all of this, I encourage you to read my previous article entitled "10 Stories From The Cold, Hard Streets Of America That Will Break Your Heart" if you have not done so already.
The really bad news is that this is about as good as things are going to get for the U.S. economy. The long-term trends that are eating away at our economy like cancer are intensifying, and our "leaders" just continue to act as if "business as usual" will somehow get the job done.
Most of them don't even realize that time is running out.
As I discussed yesterday, there is a lot of evidence that the massive financial bubble that the Federal Reserve has inflated is getting ready to burst.
When the next great financial crisis does strike, it is going to be absolutely disastrous. We are in far worse financial shape than we were back then, and this next round of financial trauma could truly be the "knockout blow" for the U.S. economy.
Let us hope for the best, but let us also prepare for the worst.
Once you go debt free you will see your standard of living rise. Go debt free.
America ran a greater than $300 billion deficit with China last year, a total which has been steadily increasing now for an entire generation.
Bring back AMERICAN jobs now.
Some members of my extended family have been living on credit cards. There wages have not kept up with inflation and two female family members lost jobs. Current part time job just doesn’t cut it.
Look for the American automakers to take a huge hit. They’ve been largely unsuccessful at either making prestige cars, and also trail at making desirable cheap cars.
The middle-class SUVs and pickups that make the profits for the Big Three are already unaffordable, but shaky loan practices have kept them in people’s driveways. Those days are coming to an end.
~~~#7 Overall, the rate of homeownership in the United States has fallen for eight years in a row.~~~
And will continue to do so, what with the destruction of the middle class, off-shoring jobs, retail chains closing huge numbers of store. As usual, it will affect some areas more so than others, but overall, it will continue to slide.
Until The Fed money bomb explodes. Then what, hyperinflation? A wheelbarrow of cash for a loaf of bread?
~ General MacArthur in his book "Reminiscences"
Can anyone tell me why gov’t inflation figures exclude food and energy? I’d say the very real increase in these two necessities are decimating the bottom sectors of the middle class.
What happens when middle class jobs are outsourced to overseas suppliers or insourced with lower cost “immigrants” is completely predictable.
And that includes paid off mortgage and no car payment....NO DEBT !
I call it living upper poor. It's still quite a good life in many parts of the US.
Yep, until it all crashes down.
Congratulations voters - you asked for this.
When it comes to consuming “stuff” women are the worst. Madison Ave knows that and for decades spent hundreds of millions on psychology studies to make their ads cause women to buy billions of stuff they do not really need but emotionally must have. 1950’s women had 13 sets of clothes for all occaisions. Even adjusting for workplace clothing women should not need more then 30 sets of clothes??!! No modern women would live to that limit. Any husband that points that out would be evisorated for being a cheap bastard one step from being divorced. Consumerism is killing this country and putting many into unnecessary debt and bankruptcy. Bringing back jobs is only half the solution, restoring good old fashion Yankee Frugality is the other.
If people became frugal, the economy collapses...The economy is based on having enough stupid people to keep it afloat.
Not necessarily, depends on your definition of frugal and collapse..
The economy didn't collapse back in the middle of the last century when people naturally lived frugally...
You know, they lived within their means !!
Yay! Another ‘list’ article! They’re all too common these days. Almost reminds me of TV commercials, given how they are usually titled.
” ‘X’Number of ‘X’ That shows ‘X’ “
Typically associated with impending doom, disaster, or the number of ways everything sucks!
Im part of the problem.
My wife died 13 years ago and my daughter moved out and married. I havent spent squat in a long time.
Most certainly no car payment. Pay off the house by making extra payments towards principal.
If people would add up how much they pay in interest each month and then figure what their lifestyle would be with that extra money they quickly get the concept.
They are not upper poor if their net bottom line is better off than the “rich guy” with the car payments and credit cards in his wallet.
....”if their net bottom line is better off than the rich guy with the car payments and credit cards in his wallet”....
Good statement...things really aren’t what they appear to be.
I live within my means and hopefully by summer will be debt free, maybe sooner in fact.
I know how it feels to have just one credit card to pay off now...less than a grand.... Amazing to have such a sense of freedom. Am going to celebrate when the last one goes!
Congrats. Make an extra push if you can.
I’ve been that way for a long time, it truly is refreshing, and if you want to know what freedom is, that is it. Took some hard work to do it. But worth it all. Still living completely within my means, older cars, eat at home, occasional movie or special occasion dinner out, but not often. We prefer to barbeque after church with family and friends - now that is fun. Almost every Sunday. Everyone brings something. Sometimes we meet at the park so kids go wild.
Debt free is only part of it. We have been debt free for many years, but the cost of everything keeps going up and up and up and our income... not so fast.
The other step of course is to save your money.
I had a rental house a couple years ago. One woman moved out and left dozens of boxes in the garage. After the waiting period I had the fun of disposing of her unwanted boxes and they were filled with clothes. Unworn with tags on many. She was broke and on every welfare imaginable so could afford the latest fashions every season.
That looks like a shopping center not far from my neighborhood. Storefront after storefront: vacant, and with no new tenants. Across the street from it: another few empty storefronts. This is in a “nice” neighborhood.
Incidentally, in that same shopping center are two juice bars (why two?). In one of them I saw a number of people who didn’t seem to be part of the health-conscious demographic. I then saw that one or two of them were showing their cell phones to the cashier when they placed their orders. As it turned out, the juice bar (part of a chain) was offering some downloadable coupon for free drinks, and these people were showing their cell phone screens to the cashier to pick up their free stuff.
Put gas back prices when W was in office.....they’ve increased by over 80% since junior took over.
Thank you...and I intend to push...which is exactly why I’m close to being debt free now.
One thing I found less difficult than thought...I stopped spending on anything but what I really needed no matter how good the deal.... in my mind was “what you spend is going to slow you down another month from your goal, so is it worth it?”. It worked!
My brother bought a beautiful home in the south....he and his wife decided to forgo any changes they wanted to make to the property and instead pay their house fully off beforehand. It took them 11 years and more than worth the sacrifice. Now they’re having fun planning the changes...new fence...extending the laundry room..etc.etc ...and this Mortgage Free!
You are right about not buying what you really don’t need and putting the money towards the house instead. For me that meant no money in vending machines, no coffee from the convenience store, nothing spent on anything but absolute necessities.
My friends used to rib me about it. My house is paid off and their’s is not. They now complain and tell me I have it easy.
We made the move to debt free about 10 years ago. Allowed me to retire early.
My “treat” on pay day was $1.00 pkg. of miniature Musketter candy bars for a long time!
It really becomes challenging to find other ways to save money you’d otherwise spend. THAT becomes your focus...also how you can improvise....
I stopped buying all cleaning products except Ammonia... Changed from shopping Major Grocery stores to Aldi’s and $stores....amazed how much I saved!
Stopped heating rooms except the living area....drive an older, smaller car. Moved to a smaller apartment...(cozier too)....no vacations out of town, rather go to State park 20 minutes away..Free!
The idea was cut, cut cut, cut,....and it sure worked for me...though at times I have missed some things the sacrifice has sooo paid off! All I have to do is look at my checkbook and “do not touch accounts” and smile....widely!
You heat rooms?!!! Well, okay, if you live where it gets really cold that's okay.
Yes...cold here still...had more than my share of below zero temps this winter.
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