If the economy is getting better, why do so many people feel they’re struggling?
On the positive side: The official data say that we’ve had some growth in jobs. And, while the federal deficit is still high, it has begun to drop (due both to rising tax receipts, and the GOP’s insistence that we have at least some fiscal discipline). And the stock market is making new highs.
On the negative side: The growth in jobs is so anemic that if a Republican were president, the media would be screeching nonstop about the “jobless recovery”. And the stock market’s rise flies in the face of weakening fundamentals, suggesting that the rise is just a “bubble” process (or a process of inflation).
Moreover, as Peter Schiff writes, imports are dropping while real consumer costs rise, which fits a pattern of declining living standards (people having to spend more on necessities). His argument is long, but worth considering:
Tyson Foods…announced that although their top line sales revenue increased by almost 2% (roughly in line with U.S. GDP growth), operating margins collapsed by almost 50%, leading to a 43% decline in profit. Consumer shifts away from relatively higher priced/higher margin beef and pork products to lower cost/lower margin chicken products were to blame….
According to government statisticians, the Tyson announcement would reveal modest growth and low inflation. After all, revenue at the company grew and spending on their products had increased modestly. But rising prices were obscured by consumers purchasing lower quality products. Not only are consumers avoiding the beef and pork that they otherwise may have preferred, but they are opting out of the convenience of prepared foods…This is known as getting poorer.
The trend corresponds with the steady increase in the share of income that Americans devote to food and energy…in 2002 Americans spent about 17.8% of income on food and energy. In the first quarter of 2013 the share had risen…to 21.3% of income…In the poorest countries almost all of income is devoted to such things.
…[A sharp drop in imports has meant that] our trade deficit with China in March dropped by a whopping 23.6%…[but overall] personal spending [still rose] in March. If we are buying less stuff from abroad, where are Americans spending the extra money? …Americans are buying fewer Chinese products because they are spending more money on food, rent, utilities, healthcare, insurance, and other necessities that can’t be imported. Again, this is consistent with a falling standard of living…
The combination of these symptoms suggests that the extent to which people are being impoverished by accelerating inflation is not reflected in official government measurements. This explains why unemployment remains high even as GDP appears to rise…the unprecedented expansion of the money supply under the current Fed leadership is pushing up prices for stocks, bonds, real estate, and consumer goods. Market indices neatly capture the price increases for all of these categories except for the latter, which has been concealed by an overly adjusted CPI.
If consumer inflation data were reported more accurately, it would be revealed that much of the apparent growth is an illusion.