Monday, January 8, 2018

So far Trump's consumer economy is the same as Obama's... all based on Americans racking up more debt

When you parse down the jobs numbers, and in particular manufacturing versus service, you find that there has only been a slight increase away from the minimum wage jobs that have been the poster child of the recovery to better paying one's during President Trump's first year.  And the estimated 2.5% increase in wages that took place in 2017 has been easily negated by the fact that price inflation is much higher than the mainstream has been saying.

No, if you look at the ground level you can see that the economy is still in rapid decline.  Record numbers of closing retail, bankruptcies, and emptier malls show that the consumer, who is the primary driver of our economy, is pretty much tapped out.

And now a new report on Jan. 8 shows that the recent surge in economic growth has been built upon the same foundations as during the latter stages of Obama's tenure... consumers using increasing amounts of debt to survive.

It's official: the reason behind the recent rebound in the economy can be explained with two words: "charge it." 
Readers may recall that one month ago, we reported that with Republicans in Washington on the verge of passing their first major piece of legislation in the form of comprehensive tax cuts that will allow Americans across the income spectrum to keep a little more of their hard earned cash in 2018, it appeared that U.S. consumers already "pre-spent" their savings using their credit cards.  
And now we have confirmation that this is precisely what happened, because in the month of November, between revolving, or credit card, and non-revolving debt, largely student and auto loans, according to the latest Fed data, total consumer debt rose by $28 billion, or the most since November 2001, to $3.827 trillion, an annualized increase of 8.8%, or roughly 4 times faster than the pace of overall GDP growth. - Zerohedge
So even with the expected windfall that most Americans will receive from the tax cut bill passed a couple of weeks ago, it will not keep up with the skyrocketing price inflation that appears to now be unleashed, and thus the 'growing economy' is only built on a house of credit cards that is reaching peak level. 


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