Here’s a summary of the Federal Reserve’s and Obama’s new economy without the media hype.
First, health care. Health care costs are 17 percent of GDP, the highest in the world, anything but affordable.
Second, education. Globally, the U.S. ranks 20th or less depending on the subject.
What’s the government’s solution? Throw $1 trillion via student loans into the coffers of higher education. Result, no improvement in global standings, but college costs up three times the rate of inflation, graduates burdened with debt, and a lot of college graduates who have degrees, but can’t find a decent paying job.
Third, the job market. A reduction in the unemployment rate because of an onslaught of part-time jobs and because the participation rate is at a 35-year low (ages 20-24, it’s at a 42-year low). The average hourly workweek is 34 hours compared to 39 hours in the 1970s. There are 138 million workers (nonfarm payroll), some only part-time, supporting 66 million on Social Security and Supplemental Security Income programs (the 66 million doesn’t include those on welfare programs).
Bottom line, the work force is shrinking at the same time those on government assistance programs is rising. Eventually, something has to give.
Forth, the housing market. Thirty percent of home purchases are cash because investors are heavily involved in the residential housing market due to easy Fed money. The homeownership rate is at an 18-year low (65 percent) even with ultra low interest rates.
Fifth, the stock market hitting new highs when over 50 percent of Americans feel we’re still in recession. With low interest rates manufactured by the Federal Reserve, large corporations are able to borrow and buy back stock increasing earnings per share ($1.7 trillion of buybacks in the past five years).
Sixth, the bond market. The Federal Reserve buys half of all newly issued long-term U.S. government debt.
Meaning, very few investors want to own long-term government debt. The national debt has literally doubled in just the last seven years ($8.7 trillion to $17.5 trillion).
Lastly, in 2010 (latest data) the top 1 percent got 93 percent of the income growth. Or to put it another way, the bottom 99 percent shared only 7 percent of the income growth (Obama, like the Pied Piper, is a master at bamboozling the public.).
Spin this letter left or right, but the inference will be the same: This so-called recovery stinks.