American Despair

Life expectancy in the US declined for the third consecutive year in 2017. Americans could expect to live to 78.6 years, down from 78.7 years in 2016. In all, life expectancy fell 0.3 years from 2014 to 2017. Most alarmingly, rates of death even increased among adults between the ages of 25 to 34.

It was a rather stunning development since successive declines of that sort had not been witnessed since World War I, a span of 100 years. At that time, the world was gripped by a global flu pandemic. Since then, life expectancy had been continually progressing due to medical advances and better-coordinated public health efforts.

The opioid epidemic, suicide and alcoholism (i.e., alcohol overdoses, cirrhosis) are all driving this steady decline in life expectancy. The rates of these types of death are all surging.

There were 70,237 drug overdose deaths in the US in 2017, according to the CDC, a 10 percent increase from 2016. That amounts to 192 overdose deaths every single day.

The national suicide rate increased 33 percent between 1999 and 2017, according to the CDC. In 2017, 47,173 Americans died by suicide, an average of 129 suicides per day. Suicide is at its highest point in 50 years and is now the second-leading cause of death for Americans under the age of 35.

Even alcohol-related deaths are on the rise. An estimated 88,000 people die from alcohol-related causes annually, which makes alcohol the fourth-leading preventable cause of death in the United States, according to the National Institute on Alcohol Abuse and Alcoholism.

These are all indicators of widespread, national despair.

What’s driving this? It’s likely a number of factors.

In what has to qualify as a national emergency, 61 percent of Americans don't have enough savings to cover a $1,000 emergency. Since this is the status of the majority, you may well be one of them. If so, you know just how stressful this is. It’s like a weight that’s never lifted.

It isn’t that much of a surprise when you consider how little the typical American earns. The median (middle) income per capita in 2017 was just $31,786, according to Census Bureau data. The most stunning thing about it is that half of Americans earn even less!

The real average wage of American workers (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. In fact, the $4.03-an-hour rate recorded in January 1973 had the same purchasing power that $23.68 would today, according to Pew Research.

Additionally, the share of wealth held by the bottom 90 percent of Americans fell from just over 33 percent to less than 23 percent from 1989 to 2016.

With stagnant wages and a shrinking piece of the wealth pie, debts are growing.

As of the last quarter of 2018, total US household debt stood at $13.58 trillion, nearly a trillion dollars above its pre-recession peak.

Experian data from the fourth quarter of 2018 revealed record-setting debt in several credit categories:

• Mortgage debt reached a new high of $9.4 trillion.

• Student loan debt reached a record high of $1.37 trillion.

• Auto loan balances hit $1.27 trillion, an all-time high, coupled with a new record for the average monthly auto payment, at $523.

• Credit card debt reached an all-time high of $834 billion.

• Personal loan debt totaled $291 billion and was the fastest-growing type of consumer debt in the past year.

Keep in mind that these figures are from the fourth quarter of 2018; they’ve only grown larger since then.

Remember what a big news story it was when student debt topped $1 trillion back in 2011? Well, it’s now over $1.5 trillion. That means it’s risen an additional 50 percent in less than a decade.

But Americans’ problems go well beyond money and finances. We all know that Congress doesn’t give a damn about what we think. Our elected officials in Washington serve only their corporate masters.

Professors Martin Gilens of Princeton University and Benjamin Page from Northwestern University looked at more than 20 years worth of data and found that the opinions of 90 percent of Americans have essentially no impact at all. As the professors noted, "The preferences of the average American appear to have only a miniscule, near-zero, statistically non-significant impact upon public policy.” What does have influence? You guessed it -- money.

Americans feel powerless and at the mercy of corporate and government forces much larger than them. It’s like David versus Goliath. The deck is stacked and Americans feel that their battles are already lost.

Trust in institutions has been deeply eroded or nearly ruined. Public confidence in Congress, the presidency, the Supreme Court, Big Business, banks, newspapers, TV news, the medical system, churches/religion and the criminal justice system are all at deplorable levels.

Speaking of the criminal justice system, the United States easily tops all nations in incarceration rates, with over 700 people behind bars per 100,000 in the population as a whole. Russia incarcerates about 500 per 100,000; Singapore just under 250; France about 100; and well toward the bottom is Japan, at 55.

Americans are feeling more lonely, too, despite the prevalence of social media.

Researchers recently conducted a study examining the lives of over 20,000 American adults. The results were shocking. Among other things, the findings revealed that 46 percent of respondents feel alone either sometimes or always, and 43 percent say that their relationships are meaningless.

About 60 percent of adults under age 35 now live without a spouse or a partner. One in three adults in this age range live with their parents, making that the most common living arrangement for the cohort. Think about that for a moment: a third of adults under 35 still live with their parents. That’s not liberating.

This is a seismic change in American culture. In 1978, 59 percent of 18-34 year olds were married. By 2018, that figure had plunged to 29 percent.

In 2017, the US census reported 110.6 million unmarried people over the age of 18 — that’s 45.2 percent of the American adult population. It's the highest number in US history.

Yet, studies have shown that married people tend to be healthier and live longer, though the reasons why are still not clearly understood.

Our health is not all that good, especially given the amount of money the nation spends on healthcare. Health spending per person in the U.S. was $10,224 in 2017, which was 28% higher than Switzerland, the next highest per capita spender.

On average, other wealthy countries spend about half as much per person on health as the U.S. spends. It's not money well spent.

The CDC reported in 2016 that obesity affected about 93.3 million US adults, or 40 percent of the adult population. In all, 72 precent of the adult population is either overweight or obese.

Financial costs aside, this has horrible impacts on our national health. For example, more than 100 million adults in the US are now living with diabetes or pre-diabetes, according to a 2017 report from the CDC.

Being obese and having diabetes, for example, create more than just physical consequences; they are stressful and depressing states.

No single thing could drive this 21st Century American despair. Instead, it is the convergence of a multitude of factors that have led to a perfect storm of misery.

Examined through this lens, the surge in overdose deaths and suicides, and the commensurate decline in life expectancy is not all that surprising, though it is still quite alarming.

Too many Americans are facing financial distress and poor job prospects, despite the fact that unemployment remains historically low. They have massive debts that may seem insurmountable. They see the rich getting richer, while the masses struggle to tread water. They see corporate and other special interests controlling the political system and public policy. They trust almost no institutions anymore. Many adults live alone or with their parents, and they feel quite lonely. Too many are obese, sick and out of hope.

Taken as a whole, this is a recipe for disaster and despair. It’s led us to addiction and abuse, suicide and declining life expectancy, at a time when we should instead expect life spans to be increasing.

We need each other. We need our families and our friends, and we need to remember that we are not alone in our struggles. Ultimately, we can take better care of ourselves, and of each other.

National Debt Reaches $22 Trillion; Washington Shows No Concern

The national debt has surpassed $22 trillion for the first time in U.S. history, according to new Treasury Department data. And trillion dollar annual deficits are now the norm, according to the Congressional Budget Office (CBO), which has issued some rather gloomy projections for the years ahead.

The CBO estimates the deficit will average $1.2 trillion each year from 2019 and 2028, for a total of $12.4 trillion. At the current rate, the nation will tack on another $10 trillion in new debt in the next eight-plus years.

This explosion in debt has occurred despite the fact that the economy has grown in each of the past nine years. In fact, this is the second-longest economic expansion since World War II ended. Employment and job creation continue to be robust. Just imagine what happens when the next recession or financial crisis unfolds and the government decides to implement another emergency spending package.

Annual deficits exploded during the Great Recession, when the government stepped in to fill the gaping void left by the crippled private sector. Yet, though we are no longer in an economic crisis, massive deficits continue because tax revenue has fallen (due to tax cuts) and federal spending continues to rise. This combination is a recipe for disaster.

The U.S. now pays an average of $1 billion every day in interest on the debt, which is money that could otherwise be spent on infrastructure, healthcare, education or anything else. The CBO projects that the costs of servicing the debt will surpass defense spending by 2025.

The public has been able to ignore this explosion in debt because interest rates are historically low, as I've previously illustrated. For example, at the beginning of this century, the yield on the 10-year Treasury averaged 6.03 percent. It fell to an average of just 1.80 percent in 2012 and is averaging 2.71 percent this year. If the 10-year were to revert to its average in 2000, the effects would be widely felt and impossible to ignore.

Higher interest rates would lead to higher borrowing costs across the economy and would surely slow economic growth, which would only worsen the effects of nation’s debt burden.

Who owns (or is owed) the U.S. debt? Most of it is owned domestically by individual banks and investors, the Federal Reserve, state and local governments, mutual funds, pension funds and insurance companies. However, 30 percent of the national debt is held by foreign governments and investors.

In a fiscal squeeze, the U.S. government will likely give precedence to foreign borrowers, otherwise they would stop lending. The government can always add new taxes on its own citizens and hope that inflation lessens the burden of the debt, even while it imposes heavy burdens on the citizenry.

Some argue that the debt isn’t such a big deal since the economy continues to grow right along with the debt. According to this argument, it’s the debt-to-GDP ratio that really matters. The U.S. economy will produce an estimated output of $21.5 trillion this year, while the debt is already above $22 trillion in February.

However, the U.S. doesn’t fund its annual budget with the entire economy -- it pays for it with tax revenues, which continually come up short. The nation must finance these annual shortfalls by selling Treasuries (aka, debt). Naturally, the country can’t service its debt with tax collections. In essence, the government issues new debt just to pay off old debt, like borrowing from Peter to pay Paul. If the U.S. could finance its budget and deficit with its entire economy, we wouldn't be in this financial mess in the first place.

So, where is the reasonable concern in D.C. about this debt mountain? It’s nowhere to be found. While the GOP used to howl about the debt in past years, it has suddenly fallen silent.

The Daily Beast reported that when senior officials attempted to warn the president of the impending debt crisis in early 2017, Trump replied, “Yeah, but I won’t be here.”

That’s shirking his responsibility in a horribly negligent manner, but it merely echoes the sentiments of many elected representatives in Congress and the White House for the past few decades. Most have played a game of “kick the can,” passing along the fiscal responsibility -- and a looming crisis -- to some future group of officials.

Have no doubt, however, a debt crisis is speeding our way, like a freight train with no brakes.

Is This Really the "Greatest Economy Ever"?

"This is an incredible time for our nation. We have the best economy in history. The stock market is at record highs. Unemployment is at historic lows. And more Americans are working today than ever, ever, ever before.” — Donald Trump, addressing a political rally in Billings, Montana, September 6

Such remarks are a recurring theme for Trump. All summer long, he has made some variation of this claim:

"We have the strongest economy in the history of our nation." -- Trump, in remarks to reporters, June 15

"We have the greatest economy in the history of our country." -- Trump, in an interview with Sean Hannity on Fox News, July 16

"We're having the best economy we've ever had in the history of our country." -- Trump, in a speech at a steel plant in Illinois, July 26

"This is the greatest economy that we've had in our history, the best." -- Trump, in a rally in Charleston, W.Va., Aug. 21

"You know, we have the best economy we've ever had, in the history of our country." -- Trump, in an interview on "Fox and Friends," Aug. 23

"It's said now that our economy is the strongest it's ever been in the history of our country, and you just have to take a look at the numbers." -- Trump, in remarks on a White House vlog, Aug. 24

“We have the best economy the country's ever had and it's getting better." -- Trump, in an interview with the Daily Caller, Sept. 3

Do these claims square with reality?

Last year (2017), the US economy expanded just 2.2 percent.

In the first quarter of 2018, gross domestic product (GDP) registered 2.2 percent. Economic growth in the second quarter came in at 4.2 percent. However, quarterly measures are mere snapshots of economic health and they are volatile. Annual GDP measures are more illustrative and revealing.

Economists broadly expect growth to slow in the coming months, to round out the year at about 3%. Estimates for the current quarter range widely, from a forecast of 2% growth in the third quarter by the Federal Reserve Bank of New York, to 4.6% from the Federal Reserve Bank of Atlanta.

Historically, the GDP growth rate in the US averaged 3.22 percent from 1947 through 2018, reaching an all time high of 18.9 percent in 1942, during World War II.

Yet, over the last two decades, as with many other developed nations, our growth rates have been decreasing. In the 1950’s and 60’s the average growth rate was above 4 percent. In the 70’s and 80’s it dropped to around 3 percent. It has dropped even further in the 21st century.

Since 2001, GDP has reached at least 3 percent in just two years: 2004 (3.8 percent) and 2005 (3.4 percent). In every other year, through 2017, GDP failed to crack even 3 percent, a number that was once considered customary.

So, if GDP cracks 3 percent this year, it would be reason to celebrate. Yet, even if it somehow reaches 4 percent, it would still be nowhere near the record. Look at these double-digit growth rates from previous years:

1934 - 10.8 percent
1936 - 12.9 percent
1941 - 17.7 percent
1942 - 18.9 percent
1943 - 17.0 percent

It makes sense that the economy benefitted from the pent up demand of the Great Depression and the massive output generated by World War II.

Since 1943, the US economy has never again experienced double-digit growth. However, there were some very robust years, nonetheless.

The best year for the U.S. economy since 1943 came in 1950, when the economy expanded by 8.7%.

Here are the years since 1943 that GDP growth registered at least 5 percent:

1944 - 8.0 percent
1950 - 8.7 percent
1951 - 8.0 percent
1955 - 7.1 percent
1959 - 6.9 percent
1962 - 6.1 percent
1964 - 5.8 percent
1965 - 6.5 percent
1966 - 6.6 percent
1972 - 5.3 percent
1973 - 5.6 percent
1976 - 5.4 percent
1978 - 5.5 percent
1984 - 7.2 percent

It may have been tedious reading all of those yearly GDP numbers, but I listed them to illustrate a point: very clearly and demonstrably, this is NOT “the greatest,” “the strongest” or “the best” economy in US history. Since 1934, there were 19 years in which GDP significantly outpaced what we are experiencing in 2018.

Trump counts on his supporters naively and willingly believing everything that comes out of his mouth. However, his boastful claims are easily disproven.

How about unemployment?

The US unemployment rate was unchanged at 3.9 percent in August; the jobless rate ticked up slightly from the 3.8 percent low in May. However, those are quarterly snapshots. What matters is consistency — the unemployment rate for the entire year.

The unemployment rate in 2017 was 4.1 percent. The lowest annual unemployment rate this century was 3.9 percent in 2000. So, the current unemployment rate isn't even the lowest of this century.

To smooth out the distortions from the Great Depression and WWII, let’s look at the years since 1950 in which the unemployment rate fell to 4 percent or less:

1951 - 3.1 percent
1952 - 2.7 percent
1965 - 4.0 percent
1966 - 3.8 percent
1967 - 3.8 percent
1968 - 3.4 percent
1969 - 3.5 percent
1999 - 4.0 percent
2000 - 3.9 percent

Once again, Trump is full of it. The unemployment rate is NOT at historic lows. It would be wonderful if the annual unemployment rate finishes the year at or below 4 percent, but it will not be historic or “the greatest” or “the strongest” or “the best” ever.

How about the suggestion that, “More Americans are working today than ever, ever, ever before”?

In 2017, about 125.97 million people were employed on a full-time basis in the US. The number of full-time employees in the US has increased by almost 20 million people since 1991. In 1990, there were 98.67 million full-time employees.

However, the US population has grown considerably since 1990 and this must be taken into account. Since there are more people, surely there should be more working people.

US Population by Year:

1990 - 249.6 million
2000 - 282.1 million
2010 - 309.3 million
2018 - 327.2 million

In the past 28 years, the population has grown by 77.6 million. The fact that there are more people working today is not the least bit surprising. In fact, it is entirely predictable.

However, the labor force participation rate in August was 62.7, which tied the lowest rate this year. However, in January 2008, it was 66.2. The rate had reached an all time high of 67.30 percent in January of 2000.

The Bureau of Labor Statistics defines the labor force participation rate as the percentage of the civilian labor force, ages 16 years and over, currently employed or seeking employment.

Labor Force Participation Rate by Year:

1990 - 66.5 percent
2000 - 67.1 percent
2010 - 64.7 percent
2017 - 62.9 percent

Though the number of working Americans has grown due to population growth, the participation rate continues an alarming tumble. Additionally, the number of persons employed part time for economic reasons (referred to as involuntary part-time workers) stood at 4.4 million in August.

Yes, the retirement of the Boomers affects the participation rate, but the Millennials are now the largest generation in the US labor force.

The president can try to spin this, but the reality is that 96.3 million working-age people were not in the labor force in August. Add in the 4.4 million people involuntarily working part-time jobs and we’ve got a big problem.

Lastly, lets examine the record high stock market the president regularly brags about.

The Dow Jones Industrial Average closed at an all-time high of 26,616.71 on January 26, 2018. It now trading at about 25,900, well off that high, but still robust, nonetheless.

The S&P 500 closed above 2,900 for the first time on August 29, 2018.

The NASDAQ Composite closed at a record high of 8,109.69 on August 29, 2018.

This is all great news… for those who are invested in the US stock market.

The reality is that a huge segment of Americans have little, if anything, in the market.

The Chicago Tribune put it this way:

Nearly half of country has $0 invested in the market, according to the Federal Reserve and numerous surveys by groups such as Gallup and Bankrate. That means people have no money in pension funds, 401(k) retirement plans, IRAs, mutual funds or ETFs. They certainly don’t own individual stocks such as Facebook or Apple. Wall Street is not Main Street.

The rich are far more likely to own stocks than middle or working-class families. Eighty-nine percent of families with incomes over $100,000 have at least some money in the stock market, compared with just 21 percent of households earning $30,000 or less, a recent Gallup survey found.

Stock ownership before 2008 was 62 percent, Gallup found. Even after recent inflows, only 54 percent of Americans are invested now. More adults in the United States own homes than stocks.

People overseas seem to be benefitting, however. Foreign holdings of US securities rose to a record $18.4 trillion at the end of June, according to the Treasury.

It’s been said time and time again: the stock market is not the economy.

In truth, the stock market is not an accurate measure of the health and strength of the economy. The markets are simply a bet on the future performances of a select group of companies listed on a few stock exchanges.

Most American companies aren't even publicly traded. In fact, less than 1 percent of the 27 million businesses in the U.S. are publicly traded on the major exchanges.

Additionally, the number of public companies in the U.S. decreased by nearly 50 percent from 1996 to 2014, according to the National Bureau of Economic Research.

So, in reality, Wall St. is not a true reflection of how the average American worker, or the average family, is faring.

The following is an excerpt from the New York Times. Ask yourself if this sounds like a healthy stock market:

The US stock market is half the size of its mid-1990s peak, and 25 percent smaller than it was in 1976. In the mid-1990s, there were more than 8,000 publicly traded companies on exchanges in the United States. By 2016, there were only 3,627.

Profits are increasingly concentrated in the cluster of giants — with Apple at the forefront — that dominate the market. In 2015, for example, the top 200 companies by earnings accounted for all of the profits in the stock market. In aggregate, the remaining 3,281 publicly listed companies lost money.

Aside from the top 200 companies, the rest of the market, as a whole, is burning, not earning, money.

In sum, the economy is indeed healthier now than it was 10 years ago, during the throes of the Great Recession. But, unless you take an exceptionally narrow view of the economy — that the stock market is the end all, be all — it is primarily serving corporations.

Corporate profits in the US are now at record highs. Profits increased in the second quarter by $47.3 billion, or 2.4 percent, to an all-time high of over $2.12 trillion, following an 8.2 percent jump in the previous quarter.

Meanwhile, median household net worth remains below where it stood in 1998, according to the Federal Reserve, even as households take on more debt than ever before.

Household debt grew for the 16th consecutive quarter in the April-to-June period, rising by 0.6 percent, or $82 billion, to $13.29 trillion, the New York Fed reported. Overall household debt is now 19.2 percent above the post-financial-crisis trough.

That’s not a sign of health. Excessive indebtedness spurred the last economic collapse and it is now even higher.

Rising prices have erased US workers’ meager wage gains. The cost of living was up 2.9 percent from July 2017 to July 2018, according to the Labor Department, outstripping a 2.7 percent increase in wages over the same period.

This occurred despite the fact that the US economy continues to grow. However, that growth just isn’t trickling down to workers. It's part of a 40-year trend. After adjusting for inflation, today’s average hourly wage has just about the same purchasing power it did in 1978.

In short, if you’re part of the top 1 percent, this economy probably seems great. Otherwise, you’re probably not buying all of Trump’s boasts about this being “the greatest,” “the strongest” or “the best” economy in US history.

That’s because it’s not.

Many Will Be Blind When the Next Recession Unfolds

According to the U.S. National Bureau of Economic Research (the official arbiter of U.S. recessions) the Great Recession began in December 2007 and ended in June 2009, a period of 19 months.

Yet, many Americans (economists and policy-makers included) didn’t realize that the economy was truly in trouble until the financial crisis unfolded in September of 2008. By that time, the recession has been underway for nine months.

That's not uncommon. Recessions have a tendency to be underway for a while before they are fully recognized. That's partly due to the way a recession is defined.

The technical definition of a recession is two consecutive quarters of contracting gross domestic product, which is often referred to as negative growth (an oxymoron).

However, this does not necessarily need to occur for the National Bureau of Economic Research to call a recession.

According to the NBER, "a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."

One primary indicator of recession is a rising unemployment rate. However, unemployment is a lagging indicator of a recession. Employment may remain elevated months after a recession has begun, as it did after the Great Recession began. Corporate profits are another lagging indicator. And, since it takes a month for the first estimate to be made and another month for the second estimate, GDP is itself a lagging indicator.

A recession typically lasts from six to 18 months, according to Investopedia. Economists say there have been 33 recessions in the United States since 1854.

Since 1960, the U.S. has gone through eight recessions -- an average of one or two recessions per decade. To be specific: one in 1960s, two in the 1970s, two in the 1980s, one in the 1990s and two in the 2000s.

The fact that the U.S. hasn't undergone a recession in nine years is kind of odd, at least by historical measures.

The period from March 1991 to March 2001, a 120 month stretch, was the longest period of economic expansion in U.S. history. The current expansion has been underway since June 2009, a span of 110 months.

This expansion will become the longest on record in July 2019, based on National Bureau of Economic Research figures that go back to the 1850s.

Simply put, this expansion is getting long in the tooth. Expansions don’t last indefinitely and the longer this one continues, the closer we are to the next inevitable recession.

When it arrives, don’t be surprised if the media, policy makers, economists and the some segments of the public don’t fully realize it for a while.

Interest Rates, Supply, Demand and Home Prices

Though the Federal Reserve doesn’t actually set mortgage rates, it determines the federal funds rate, which generally affects short-term and variable (adjustable) interest rates.

The federal funds rate is, perhaps, the most important benchmark in financial markets. This interest rate is used as a regulatory tool to control how freely the U.S. economy operates.

The funds rate is the interest rate banks charge each other for overnight loans. When the federal funds rate increases, it becomes more expensive for banks to borrow from other banks. Those higher costs are typically passed on to consumers in the form of higher interest rates on lines of credit, auto loans and, to some extent, mortgages.

The funds rate was raised to an all-time high of 20 percent in 1980 and 1981 to combat double-digit inflation.

In response, the average 30-year fixed-mortgage rate in 1981 reached an all-time high of 16.63 percent. Consider that for a moment; such an extraordinary rate was paid by some of our parents back then, which is unimaginable today.

Mortgage rates continually fell over the ensuing years, finally dropping into the single digits in 1991, and finished the decade at around 7 percent. The downward trajectory continued in the 2000s, when rates dipped as low as 5 percent, which of course sparked the housing bubble and resulting Great Recession.

The Federal Reserve cut the funds rate to an all-time low of 0-0.25 percent on December 17, 2008, in response to the financial crisis. Before this, the lowest federal funds rate had ever been was 1.0 percent in 2003, to combat the 2001 recession.

The Fed didn't raise the funds rate until December 2015 -- an extraordinary span of seven years. The central bank subsequently raised the funds rate once in 2016 and three times in 2017. The Fed has, so far, raised its benchmark rate twice in 2018 (March and June), and noted that two more rate hikes are appropriate this year.

At its June meeting, the Federal Open Market Committee set the funds rate to a range of 1.75-2.00 percent. As of August 30, the federal funds rate was 1.92 percent.

So, how has the series of rate hikes since 2015 affected mortgage rates?

In 2012, the average 30-year fixed-mortgage rate was 3.66 percent, the lowest annual average on record, according to Freddie Mac.

In 2015, the annual average was 3.85 percent. In 2016, it was 3.65 percent and in 2017 it was 3.99 percent. Through July, 2018, the 30-year fixed-mortgage rate averaged 4.42 percent. As of August 31, it is 4.53 percent.

The trend is clear: mortgage rates are steadily rising, right along with the funds rate.

A little history, according to Freddie Mac:

In 2008, the average 30-year fixed-mortgage rate was 6.03 percent.

In 2000, the average 30-year fixed-mortgage rate was 8.05 percent.

In 1990, the average 30-year fixed-mortgage rate was 10.13 percent.

In 1981, the average 30-year fixed-mortgage rate reached an all-time high of 16.63 percent.

Though mortgage rates are still historically low, they have been steadily rising since 2016, after the Fed began raising the funds rate.

Historically, mortgage rates can affect home prices, with an inverse relationship. As rates rise, prices may fall. Conversely, as rates fall, prices may rise. Low interest rates make money cheap. The lower cost of borrowing allows people to purchase more expensive homes. Realtors (and, consequently, home sellers) understand this and jack up prices to meet the capacity of the market.

Though incremental changes to mortgage rates may not affect home prices very much, rising rates over a longer period can result in weaker demand. Less competition for homes can, in turn, lower prices or, at the least, moderate price growth.

Of course, inventory affects prices (supply and demand) and the market has been tight in recent years. Simply put, there have been more buyers than sellers, so demand has outstripped supply. Consequently, after declining for a few years in the aftermath of the crash, home prices have climbed back above the levels they were before the bubble began to burst in 2006.

Interestingly, mortgage rates and home prices have been rising in tandem over the past couple of years. Yet, rates are still remarkably low by historical standards. Remember, back in 2000, the average 30-year fixed-mortgage rate was 8.05 percent. In essence, the present rate would have to double to climb back above that figure once again.

So, incrementally rising rates may not be enough to push down home prices. For that to occur, a lot more supply will have to come onto the market, something that doesn’t appear likely any time soon.

The US is Nowhere Near Full Employment

The US unemployment fell to a 17-year low of 3.9 percent in April.

While, on its face, that seems like good news, the unemployment rate has been falling for years because out-of-work Americans have exited the labor force.

Unfortunately, 236,000 people left the labor force in April, adding to the 158,000 who quit in March. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 62.8 percent last month from 62.9 percent in March. It was the second straight monthly drop in the participation rate.

There is something deeply wrong with, and misleading about, an unemployment reading that improves because people stop looking for work. That's on top of the fact that it's absurd to count people who aren't even working as part of the labor force simply because they are looking for a job.

The so-called U-6 unemployment rate -- which is a broader measure of unemployment because it includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment -- dropped to 7.8 percent last month, the lowest level since July 2001, from 8.0 percent in March.

Yet, that's twice the official U-3 unemployment rate, which the government prefers to reference, for obvious reasons.

The labor force participation rate reached an all time high of 67.30 percent in January of 2000 and a record low of 58.10 percent in December of 1954.

The participation rate fell for many years as women entered the labor force in mass in the 1960s. That led to a much larger pool of working-age Americans.

The labor force participation rate has averaged 62.99 percent since 1950, which is almost exactly where it is now. Yet, there are a lot more women who want or need to work today, which is why that current number is so troubling.

Some Americans don't want or need to work, but millions of people who want jobs can't find one. A total of 6.4 million Americans remain unemployed, yet it's even worse than that.

A whopping 5 million people were employed part time for economic reasons in April. These are sometimes referred to as involuntary part-time workers. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or because they were unable to find full-time jobs, according to the US Bureau of Labor Statistics.

Additionally, 1.4 million people were marginally attached to the labor force. This means they "wanted and were available for work, and had looked for a job sometime in the prior 12 months." They were not counted as unemployed because they had not searched for work in the four weeks preceding the survey.

No one who wants to be taken seriously should be uttering the term "full employment" right now. That's disingenuous and insincere, at best. At worst, it's just plain misleading.

More job training would help and a public/private partnership could get it done. Over and over, it's been widely reported that employers can't find skilled workers. The Federal Reserve backs that contention, saying that there are labor shortages all over the country.

We need a program to close the skills gap and get workers prepared for the jobs of today.

That would require political will and consensus, little of which exists in the nation's capitol.

Public Pension Crisis Looming Across US

Across the country, state retirement systems are woefully underfunded. Yet, that’s just the tip of the iceberg — so are city retirement funds, county retirement funds and teacher retirement funds. Aside from being underfunded, one thing they all have in common is that they are all backed by taxpayers.

Already, taxes are being raised and services are being lowered, and you can expect this trend to continue in the years ahead.

Cumulatively, unfunded state and local pension liabilities now exceed $5 trillion. Take a moment to let that sink in.

Not a single US state had a fully funded pension plan as of last year. In fact, 11 states’ pension systems are funded at less than 60 percent and a whopping 43 sates saw their pension funding worsen in 2016.

Here’s how Bloomberg described the matter:

"The news continues to worsen for America’s public pensions and for the people who depend on them. The median funding ratio — the percentage of assets states have available for future payments to retirees — declined to 71.1 percent in 2016, from 74.5 percent in 2015 and 75.6 percent in 2014. Only six states and the District of Columbia have narrowed their funding gaps."

By the way, these shortfalls are occurring during the biggest and longest bull market for the Dow post-WWII, according to Leuthold Group. The Dow has quadrupled during this bull market, which turned 9 in March. The fiscal positions of all public pensions will be disastrous when this bull finally ends its run and the bear comes out of its long hibernation.

It will inevitably mean higher taxes, less services and the likelihood of defaults — even bankruptcies. Remember Detroit ($18 billion), Jefferson County, AL ($4 billion), Orange County, CA ($2 billion), Stockton, CA ($1 billion) and San Bernardino, CA ($500 million)?

When the stock market eventually tanks, which it always does, many states will face some awful choices, as well as costly legal battles. Pensioners expect to be paid, even if their pensions were unrealistic or outrageous from the outset. In most cases, public pensions are legal obligations. We’ll see how far tax payers can be pushed. After all, you can’t extract blood from a stone.

For example, Illinois — a state that is absolute financial mess -- has 63,000 public employees with salaries of at least $100,000. This includes truck drivers, tree trimmers, and streetlight-repair workers. These tens of thousands of workers are in line for some rather large pensions, based on their high salaries.

The California Public Employee Retirement System (CalPERS) is the USA’s largest pension fund, with $301 billion in assets. CalPERS has 21,862 public employee retirees who receive a pension of $100,000 or more. This costs California taxpayers $2.8 billion annually.

Steve Westly, a former voting member of the CalPers board and a former state Controller, recently tweeted the following:

"The pension crisis is inching closer by the day. CalPERS just voted to increase the amount cities must pay to the agency. Cities point to possible insolvency if payments keep rising but CalPERS is near insolvency itself. It may be reform or bailout soon.”

Here’s the biggest concern: Illinois and California are not alone and they are not unique. Similar funding crises are starting to bubble up in numerous states, counties and cities, and the taxpayers are all on the hook.

This affects nearly all of us, whether you receive a public pension or not.

Our Debt is Slowly Crushing Us

If you’re not highly concerned about our nation's debt problem, you should be.

The Great Recession and 2008 financial crisis were sparked by an excess of debt in an overly connected global financial system.

Today, the total amount of debt is even greater at the federal, corporate and consumer levels, while state and local debt is enough to be catastrophic in the next recession. In essence, the solution to the debt crisis was to create even more debt.

Next time will be different, because it will be worse.

This most obvious concern is the national debt, which has surpassed $21 trillion. This whopping debt is serviced by borrowing even more money, creating a sort of black hole of debt that can never be escaped.

According to a Congressional Budget Office report released this month, trillion dollar deficits are now the norm. Congress recently voted to both reduce revenues by cutting taxes and to increase spending. Those can only be described as acts of insanity.

As the debt has steadily grown, an annual deficit of 3 percent (which was long viewed as a stable) results in ever-expanding debt payments. For example, 3 percent of a $100 billion deficit is $3 billion. However, 3 percent of a $1 trillion deficit is $30 billion. As a result, the growth in federal debt has become exponential.

People often measure the national debt in relation to the size of the economy — the so-called debt-to-GDP ratio. However, the government doesn’t service its debt with the entire economy; it services it with tax collections, which are now smaller and actually adding to the debt.

Yet, our troubles aren’t confined to the federal government.

At the end of 2017, the 50 US states had a cumulative debt of $1.176 trillion. When local debt is added, the figure leaps to more than $3 trillion. Most states have constitutional requirements stipulating that they maintain balanced budgets, yet none of them manage to do that.

Even the most financiallly healthy states face substantial long-term challenges related to their pension and healthcare benefits systems.

Additionally, total corporate debt has reached an unprecedented level and is currently at three-and-a-half times GDP. Even a moderate drop in the value of corporate bonds would result in wealth losses equivalent to a large fraction of GDP. For example, a 10 percent decline in the value of corporate debt would wipe out an amount of wealth equal to 35 percent of GDP. That would mean absolutely massive losses for bond holders, such as pensions and 401ks. That should make you queasy.

The chart below shows the additional economic output (GDP) generated by each additional dollar of business debt in the US. As you can see, debt has become steadily less stimulative over the last several decades. Despite low interest rates and a massive debt binge, the stimulative affect of debt is back down where it was during the lows of the Great Recession. That’s troubling.



Furthermore, total household debt rose to an all-time high of $13.15 trillion at year-end 2017, according to the Federal Reserve Bank of New York. It was fifth consecutive year of annual household debt growth, with increases in the mortgage, student, auto and credit card categories.

Our economy is addicted to debt for growth; it can't function without it. But, like any addict, our addiction is slowly killing us. We need more and more of the drug (debt) to get a continually weakening effect. Without our government’s deficit spending, our economy would likely be in a depression.

This policy of debt-induced economic expansion is baked into the cake; it is the very essence of our economic system. However, spending a dollar to get anything less than a dollar of return is not productive.

As Chris Martenson at Peak Prosperity notes, debt has been growing twice as fast as GDP for nearly five decades. That’s not sustainable. Debt expansion only works if it is exceeded by GDP growth.



Eventually, this will end very badly and it will be terribly disruptive to our economy, our national security and our way of life. There is no cure or recourse, other than a massive deflation.

Yet, that’s exactly what our financial masters at the Fed and on Wall St. are desperately trying to avoid… until they no longer can.

Federal Budget Crisis Speeding Ahead Like Runway Train

The national debt now exceeds $21 trillion. Consequently, the interest payments on that debt are rather massive.

Case in point, the Treasury Dept. this week had to borrow nearly $300 billion, the most for any single week since the financial crisis in 2008. It’s worth noting that as recently at 2007, the federal deficit was just $161 billion. Consider that: the government is now borrowing nearly twice that amount in just one week.

Federal revenues are declining due to the Republican tax bill. All by itself, aside from any new spending, the law will add $2.3 trillion to the debt over the next 10 years, according to the Treasury Dept. Of course, the Trump Administration argues that the cuts will spur the economy and thereby pay for themselves. That’s a spurious argument since it has been tried repeatedly and has never worked, except in the short term.

Despite this, spending goes on, unabated.

Just last week, the House and Senate passed a massive 2,232-page, $1.3 trillion spending bill that significantly increased federal spending. The bill boosts domestic spending by $128 billion and defense spending by $160 billion over two years.

Where are the Tea Party Republicans when you need them? Congress and the White House are controlled by the GOP. Remember when they used to call themselves "fiscal conservatives" and "fiscally responsible," and some people took them seriously?

So, the government is simultaneously reducing revenues while increasing spending. It is a terribly reckless policy.

Remember, this is being done willfully, as opposed to during an economic crisis, when the government can’t control the collapse in revenue. The prescription in those times, in the absence of consumer and corporate/business spending, is typically a temporary increase in federal spending to uphold the economy.

It’s as if the government is trying to hasten an economic and fiscal crisis.

This all comes at a time when Donald Trump is threatening a trade war with China, which holds $1.17 trillion of US debt, In fact, China owns of more Treasury bonds than any other foreign country.

Meanwhile, the Federal Reserve is finally ending the bond-buying program it initiated during the financial crisis. Yet, somebody has to finance America’s deficit spending, which is only increasing. The United States ran a $215 billion deficit in February, the biggest in six years.

The federal government is on track to borrow nearly $1 trillion this fiscal year, the highest amount of borrowing in six years and almost double what it borrowed in fiscal 2017.

According to the Congressional Budget Office, trillion dollar deficits are now the norm and stretch into the future as far as the eye can see.

The Committee for a Responsible Federal Budget, a fiscal watchdog group, recently warned that interest payments on US debt could quadruple to $1.05 trillion by 2028 if the current course is maintained.

This is like one of those Hollywood thrillers, in which a speeding train is on course for a massive collision. All of the rail and public safety officials know it, and everyone is rushing to avert a tragedy.

However, our current predicament isn’t a fictionalized Hollywood tale and there isn’t a hero who will save us in the end. This speeding fiscal train is heading for a cataclysmic disaster and, just like the Hollywood version, all the officials know it.

The difference is that this inept, selfish group of officials (Congress and the White House) is doing nothing to stop it. To the contrary, they’re speeding up the train.

A Government Shutdown is a Government Failure

Government funding shouldn't be treated as a hostage negotiation.

The extraordinary level of dysfunction on Capitol Hill is on display once again. Congress has just days to act before a government shutdown takes place. It never should have come to this; Congress had far too much time to agree on a budget for their backs to now be against the wall.

The federal government's fiscal year -- its accounting period -- runs from Oct. 1 to Sept. 30 of the following year. So, fiscal 2018 began on Oct. 1, 2017.

Passing an annual budget is the fundamental job of Congress. There are twelve standard appropriations bills that fund the federal government's discretionary programs each fiscal year. They are supposed to be enacted into law by Oct. 1.

Yet, 3 1/2 months into this fiscal year, Congress has failed to pass a budget... again.

When Congress and the president fail to agree on and pass appropriations bills, a continuing resolution must instead be passed. This has already been done three times since Oct. 1. Congress must continually turn to these stopgap measures because they can’t even agree on their basic function — how to fund the government.

Without passing a budget or, at the least, another continuing resolution, the federal government will shut down at midnight on Friday, January 19.

The government has only shut down once in this century, in 2013. Prior to that, the last shutdown was from Dec. 1995 to Jan. 1996.

Republicans want to lift spending caps on defense, while Democrats want to lift the caps for domestic programs. Those caps are the remnants of the 2013 sequester, which was supposed to enact some constraints on federal spending. It would trigger an automatic $6 billion in cuts this fiscal year. But no one in Congress truly wants to cut spending; they just want to increase it.

That’s on top of the fact that the new GOP tax law will increase the nation’s debt by more than $1.4 trillion over the next decade, according to an analysis by the Joint Committee on Taxation, a congressional scorekeeper. It is wildly hypocritical for Republicans to have consistently sounded alarms about deficits in recent years and then vote for their deficit-inducing tax proposal.

The federal government is already more than $20 trillion in debt. Yet, no one seems to care in the slightest.

Republicans say they will have to pass another continuing resolution, which would probably last until mid-February, because there is no budget deal currently in place. Even if there was, they wouldn’t have enough time to draft a bill.

This is government at its most dysfunctional. Congress can’t even perform its most basic duty. Republicans love to complain about “unelected bureaucrats” in government, but they are not the problem; the elected bureaucrats are.

It cannot be overlooked that Republicans currently control the White House, the Senate and the House. The government has never been shut down when it is controlled by one party. Such a shutdown would be unprecedented and the Republicans surely know that.

In May, 2015, the GOP-led Congress passed a full budget for the first time in six years. In other words, this kind of obstinance and narrow-mindedness has a long history in the capitol.

The Senate did not pass a budget resolution for FY2011, FY2012, or FY2013 and it passed the FY2014 budget resolution on March 23, 2013, 23 days before the April 15 deadline set by the No Budget, No Pay Act of 2013. Yes, it took the threat of temporary salary restrictions to get Congress to act.

Government funding now seems to be tied to DACA (Deferred Action for Childhood Arrivals), which affects nearly 800,000 undocumented immigrants illegally brought to the US, as children, by their parents. It’s fair to say that these people were simply along for the ride and are living with the consequences of their parent’s actions.

No matter your view on DACA, government funding should not be tied to this or any other non-spending issue. If Congress is going to engage in customary horse trading, as it has for hundreds of years, it should pertain only to budget/spending matters. Bi-partisan legislation regarding the so-called “dreamers” should be an entirely separate proceeding.

The cost of another government shutdown would be significant.

In December, S&P Global analysts said a shutdown would cost the economy about $6.5 billion per week. S&P predicts a shutdown would increase the deficit because of the added cost required to stop and start federal programs. In essence, it is more expensive to shut the doors of government than to keep them open.

The 2013 shutdown cost $24 billion in lost economic output, or 0.6 percent of projected annualized GDP growth, according to the Standard and Poor’s ratings agency. Similarly, Moody’s Analytics estimated the impact at $23 billion.

The White House Council of Economic Advisers estimated that during that shutdown, the economy created 120,000 fewer private-sector jobs than it otherwise might have that October.

In other words, another shutdown would have real and potentially lasting effects.

Yet, here we are... again. The only thing standing between yet another shutdown is yet another continuing resolution, which would temporarily keep the government operating.

A continuing resolution basically keeps government agencies funded at the same level as the previous year, even if the needs of a given agency have changed. Under this arrangement, Congress cannot reduce or eliminate programs that have run their course.

Yet, the federal government has been operating under continuing resolutions more than one-third of the time for the past nine years.

This is no way to run a government; it is terribly inefficient. Agencies have no certainty about how much money they’ll have.

Congress seems to enjoy this game of brinksmanship, but there are enormous expenses associated with their foolishness. Another shutdown could cost tens of billions of dollars and tens of thousands of jobs.

Congress proved that it never cared about these things in the past and it’s unlikely that they care about them now.

Congress only cares about the rich donors who put them, and keep them, in office.

Simplifying the Tax Code is Long Overdue, but the GOP Tax Plan is a Travesty

The GOP — allegedly the party of fiscal responsibility — has proposed a tax cut that they claim will cost $1.5 trillion. However, a preliminary debt calculation by the non-partisan Congressional Budget Office concludes that the plan would add $1.7 trillion to the national debt over the next decade.

That $200 billion difference is critical since it exceeds the limit Republicans agreed to for their reconciliation bill. They must restrain the cost of the bill to $1.5 trillion in order to retain the special “reconciliation” status of their tax proposal in the Senate, which would allow them to pass it with only 51 votes instead of 60. That means they could pass the massive deficit increase without a single Democrat’s vote.

This has set the stage for all manner of machinations, manipulation and massaging to get the bill below that threshold. You could call it smoke and mirrors or sleight of hand. In other words, don’t believe the $1.5 trillion figure for a minute.

The Republicans have railed against the deficit and the debt for decades but, as customary, when a fellow Republican occupies the White House, they have selective amnesia.

The GOP claims to loathe deficit spending — though the GOP-controlled Congress approves deficit spending each year, right along with the Dems — yet they have no issue with deficit-inducing tax cuts. Ultimately, they have the same result; spending takes money from the Treasury at the back end, while tax cuts take money at the front end.

We’ve got plenty of recent experience with the onerous cost of tax cuts and just how much they weigh on the deficit and debt.

The non-partisan Congressional Research Service estimated the 10-year revenue loss from extending the 2001 and 2003 Bush tax cuts beyond 2010 at $2.9 trillion, with an additional $606 billion in debt service costs (interest), for a combined total of $3.5 trillion.

A commensurate $3.5 trillion in deficit spending would result in a lot of howling by the GOP, but the same impact to the deficit from tax cuts is met with cheering and applause. It’s dubious, if not delusional.

This enthusiasm for exploding the deficit comes at a time when the national debt stands at $20.5 trillion and rising. The fiscal 2017 budget deficit was $666 billion and the fiscal 2018 deficit is $440 billion (that’s before the tax cut), meaning that our “leadership” in Washington has added more than $1 trillion to the debt in just the past two years.

Meanwhile, bipartisan pressure for additional money for defense, infrastructure and other domestic demands could add nearly $100 billion in additional spending next year alone.

The Congressional Budget Office forecasts that deficits will total $10.1 trillion over the next decade.

No less a conservative authority than Forbes has called the Republican party a “deficit fraud.”

To that point, there are other estimates that the GOP tax cut plan will cost a whole lot more than advertised.

The plan outlined by the White House and Republican leaders in the House and Senate could cost more than $2 trillion over the next decade, according to a preliminary estimate by the Committee for a Responsible Federal Budget, a nonpartisan advocacy group.

During his presidential campaign, Donald Trump insisted that he could eliminate the national debt in eight years. That would be laughable if the danger of our ever-expanding wasn’t so frightening.

This whole tax cut plan is being sold on the premise that it will spur economic growth. We’ve heard those rosy projections many times in the past and they haven’t panned put. This time will be no different.

George W. Bush and his fellow Republicans pledged that tax cuts would spur economic growth and ultimately pay for themselves. It’s an old canard that goes back to at least the Reagan Administration. So, what happened in the aftermath of the 2001 and 2003 Bush tax cuts?

Let’s take a look at economic growth by year, since 2001 (source: World Bank):

2001: 1.0%
2002: 1.8%
2003: 2.8%
2004: 3.8%
2005: 3.3%
2006: 2.7%
2007: 1.8%
2008: -0.3%
2009: -2.8%
2010: 2.5%
2011: 1.6%
2012: 2.2%
2013: 1.7%
2014: 2.4%
2015: 2.6%
2016: 1.6%

If only we could cut taxes and release the animal spirits of the economy! Just take the shackles off!

The above GDP numbers should be viewed through the following lens: Historically, from 1947 through 2016, the annual GDP growth rate in the US averaged 3.23 percent. Yet there have been just two years since 2001 in which economic growth reached even 3 percent. Furthermore, over the past 16 years, economic growth has averaged a paltry 1.79 percent.

Are you feeling conned yet? The whole notion that tax cuts spur economic growth — much less “tremendous” economic growth, as Trump would say — is pure snake oil.

Voters seem to have caught on to this ruse. Overall, the GOP tax plan is not popular with Americans. Even Republican voters worry about what this tax cut will do to the deficit, according to recent polling.

An NBC News/Wall Street Journal poll released this month found that just 25 percent of Americans think President Trump’s tax plan is a good idea.

A subsequent Quinnipiac University survey had the same result: just 25 percent of voters approve of the Republican tax plan.

We all dislike paying taxes and we’d all like to pay less. But this tax plan will only accelerate our insolvency — the moment of reckoning where we have to accept that the government can’t pay for the promises it has made. Then we will have to suffer the dual pain and indignity of less government services and much higher taxes.

For nearly five decades, our government has consistently spent more than it has taken in. Since 1970, the Federal Government has run deficits in all but four years (1998–2001). Without a doubt, Washington has a spending problem.

That’s why creating an even deeper revenue problem amounts to madness.

The idea of simplifying the tax code and eliminating the dizzying array of deductions, exemptions and credits would be a great start and one that is long overdue. There are a whole host of special interests that have inserted their pet deductions or exemptions into the code and they will fight like hell to maintain the status quo.

Businesses aside, no individual taxpayer should have to spend numerous hours and hundreds to thousands of dollars just to pay Uncle Sam — it amounts to rubbing salt in a wound.

Additionally, the tax code should not be used to reward or punish tax payers or to incentivize or dis-incentivize certain behaviors/activities. If you have kids or buy a house, for example, the rest of society that doesn’t have either of them shouldn’t be subsidizing your decisions. The government shouldn’t be favoring certain groups or activities above others, nor should it be penalizing childless people or apartment dwellers.

The one thing that Republicans pushing tax reform have right is that all deductions, exemptions and credits should be permanently eliminated — all of them. Poor people should helped out by paying a lower rate. That’s why the tax code has been progressive, with multiple tiers, for many decades and it’s why it needs to remain so.

A flat tax would be punitive to the poor. Here’s why: According to the Social Security Administration, 50 percent of wage earners make less than $30,000 annually, and a lot of them come from single-income households.

Taking 20 percent, for example, from someone who makes just $30,000 a year is much more painful than taking that same percentage from someone who makes $1 million, or even $500,000 annually. Though the dollar amount is higher for latter group, their lifestyle isn’t altered by a 20 percent income tax.

Whether the tax code should have three, four or five brackets is up for debate, but I won’t argue for one of them here. Suffice to say that the progressive tax code must remain… without ANY exemptions, deductions or credits.

Once Congress does that, it will simultaneously wipe out most lobbying and lobbyists.

Wouldn’t that be nice?

Some Perspective on the Rise in Median Household Income

The Census Bureau reported this week that median household income rose to $59,039 in 2016, a 3.2 percent increase from the previous year and the second consecutive year of healthy gains.

To be clear, household income is the amount of income earned by an entire household, whether it’s a single occupant, a couple, or roommates.

Let's explore the term 'median', which denotes the midpoint. The median is the "middle" value in a list of numbers.

When it comes to median income, this means that half of earners have incomes above that amount, and half have incomes below that amount.

The fact that median household income rose last year is obviously good news, but before we pop the champagne, let’s have a little perspective.

Middle-class households are only now seeing their income eclipse 1999 levels. The Census Bureau reports that in 1999, median household income, adjusted for inflation, was $58,655.

Yes, it took us 17 years just to get back to where we started. Are we really supposed to celebrate that?

According to the Social Security Administration, 50 percent of wage earners make less than $30,000 annually, 61.5 percent make less than $40,000 and 70.5 percent make less than $50,000.

Again, 50 percent of all wage earners make less than $30,000 per year, and a lot of them come from single-income households.

The proportion of Americans who live alone rose to 27 percent in 2013, according to the latest Current Population Survey from the Census Bureau; that’s more than one-in-four people. Obviously, these are single-income households and a lot of them are surely earning less than the median.

As of 2012, 60 percent of married couples with kids had dual income households. Among the households with just one income earner; the father was the sole earner in 31 percent and the mother was the sole earner in 6 percent.

The average American household consisted of 2.53 people in 2016.

So, the median household income is generally a byproduct of two earners. That suddenly makes $59,000 seem a lot less impressive.

The incomes of the richest households are much further apart from those at the median than those at the median are from the bottom households. In other words, the difference between the households at the top and those in the middle is much more vast than the difference from those in the middle to those at the bottom.

Consider how different the earnings are among those above and below the median income.

According to the Internal Revenue Service (IRS), the top 1 percent had an adjusted gross income of $465,626 or higher for the 2014 tax year.

Clearly, the top 1 percent are not all billionaires.

Remember, a significant majority of earners take home less than $40,000 per year. Thirty-seven percent of earners take home less than $20,000. However, the lifestyles of those two groups aren’t as radically different from each other as they are from those who make at least $465,000 a year.

Roughly 534,000 Americans made more than a million dollars in 2013, according to the latest IRS data available.

The mega wealthy — a fraction the top 1 percent — now earn an average of $1.3 million a year. That’s more than three times as much as the 1980s, when the super rich "only" made $428,000, on average, according to economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman.

The top fifth of earners are taking home more than half of all overall income, a record.

The top 1 percent take home more than 20 percent of all income.

However, the bottom 50 percent collect about 12 percent percent of national income.

This is why the savings rate was just 3.5 percent in July. People simply don’t have enough left-over income to save. Most Americans are spending everything they make just to get by and are using credit cards to make up the difference, even for basics like groceries and gas.

Credit-card debt in the U.S. recently surpassed the peak set just before the 2008 financial crisis. Outstanding revolving credit, which includes credit-card debt, rose to $1.02 trillion in June, according to a monthly report from the Federal Reserve.

Low incomes and slow income growth are having some rather glaring effects, especially on younger Americans.

Last year, the Pew Research Center reported that 32.1 percent of 18- to 34-year-olds lived at their parents’ homes in 2014, exceeding the 31.6 percent of young adults who were married or living with a partner in their own household.

Yes, one third of young adults — people up to the age of 34 — are still living with their parents. Yet, the findings were even worse the following year.

Almost 40% of young Americans were living with their parents, siblings or other relatives in 2015, the largest percentage since 1940, according to an analysis of census data by real estate tracker Trulia.

It should be noted that 1940 was the end of the Great Depression, so the current state of affairs is quite troubling.

This huge percentage of adult children living with their parents has added at least one additional working adult to millions of households. Assuming the adult child lives with both parents and is working, it results in at least three income earners in millions of households.

Once again, that $59,000 median doesn’t seem so impressive.

Yes, it’s nice that median household income went up last year, but we’re still only back to 1999 levels and it’s clear that the masses are still struggling.

Remember, the bottom 50 percent collect just 12 percent percent of national income.

That’s important to consider, if you’re celebrating the rise in median household income.

Labor Day: a Reminder of How Far We've Come and How Far We Still Have to Go

Labor Day, the first Monday in September, is a celebration of the American worker. As you might expect, this day of tribute was created by the labor movement. Since labor has always had less capital than management, its strength is always in its numbers.

The day is an acknowledgement of the American workers who built this nation, and continue to do so, while advancing it economically and socially.

Though municipal ordinances were passed in 1885 and 1886, the first state to officially recognize Labor Day by law was Oregon, on February 21, 1887. Colorado, Massachusetts, New Jersey, and New York all followed suit later that year, and by 1894 a total of 28 states had adopted the holiday in honor of workers.

Finally, on June 28 of that year, Congress passed an act making the first Monday in September of each year a legal holiday in the U.S.

Labor unions, such as the American Federation of Labor, the Brotherhood of Carpenters, the American Railway Union and the International Association of Machinists were instrumental in fighting for betters working standards, as well as promoting a holiday to celebrate the working man (and later, working women).

Fighting for better labor standards, such as the eight-hour work day, the five-day work week and the minimum wage, etcetera, have raised the living standards of all workers and led to higher economic and political principles for all.

While Labor Day also symbolizes the unofficial end of summer and is celebrated with beach parties, backyard barbecues and retail-sales events, no American worker should ever lose sight of the true meaning of Labor Day, or the sacrifices that the labor movement made over the past century to improve work and living standards.

In the late 1800s, the average American worked 12-hour days and seven-day weeks to simply get by. Children as young as five or six worked in mills, factories and mines across the country, earning a fraction of their adult counterparts’ wages. Conditions for all workers were poor and often terribly unsafe. Many employees lacked access to clean air, toilet/wash facilities and work breaks.

There were examples of workers living in company-owned buildings, in company-owned towns, where the workers’ only option was to spend their hard-earned money in company-owned stores.

These circumstances drove workers to organize and strike for better conditions, hours and pay. At times, these strikes turned violent and dozens of workers died in protest. Chicago was the scene of the infamous Haymarket Riot of 1886 and the bloody Pullman strike in 1894, the latter of which resulted in federal troops being deployed to crush the rioting workers.

These violent, brutal events led President Grover Cleveland to sign the Labor Day holiday into law just days later.

The incidents also led to common labor statutes that are now accepted as standard, such as child labor laws, mandatory breaks, paid overtime, vacation time and even paid holidays.

The unfair, unsafe, often inhumane labor practices of the 19th Century ultimately resulted in United States labor law, whose basic aim is to remedy the "inequality of bargaining power" between employees and employers.

The Fair Labor Standards Act of 1938 requires a federal minimum wage and discourages unhealthy working weeks over 40 hours through time-and-a-half overtime pay. The Occupational Safety and Health Act of 1970 requires that employees have a safe system of work.

The Clayton Act of 1914 guarantees all people the right to organize and the National Labor Relations Act of 1935 gave the right for most employees to organize over unfair labor practices without punishment.

None of these things would have resulted if not for the struggles and organization of American workers. We owe better pay, better hours, paid overtime and safe workplaces to the workers who fought for these things.

There is still a long way to go in order for most workers to be fairly compensated for their labors.

The federal minimum wage has remained at $7.25 an hour since 2009. Adjusted for inflation, it peaked in 1968 at $8.68 (in 2016 dollars), according to the Pew Research Center.

Contrary to popular belief, minimum wage workers are not all, or even mostly, teens. Less than half (45 percent) of the 2.6 million hourly workers who were at or below the federal minimum in 2015 were ages 16 to 24.

If a minimum wage worker puts in 40 hours per week and works 52 weeks a year (no vacation time), his/her annual earnings would be $15,080. The federal poverty guideline in 2017 for a family of two (one working parent, with one child) is $16,240. In other words, that minimum wage worker is below the federal poverty line.

This isn’t theoretical; it's real life for millions of Americans. According to U.S. Census Bureau, there were 23 million single-parent families in 2016 and the vast majority were headed by single mothers. Today, 1 in 4 children under the age of 18 are being raised without a father and almost half (40 percent) live below the poverty line.

It’s not just minimum wage workers who are a struggling. A reasoned argument can be made that most American workers are underpaid, which is a major factor in our troubling income inequality problem.

Sadly, America ranks among the worst in the world in this category. Of the 35 developed countries in the Organization for Economic Development (OECD), only three have worse income inequality than the US (Turkey, Mexico and Costa Rica).

Today the top 1 percent take home more than 20 percent of all U.S. income. Meanwhile, the bottom 50 percent earn barely 12 percent of income.

According to the Social Security Administration, in 2015:

- 50 percent of wage earners made less than $30,000
- 61.5 percent of wage earners made less than $40,000
- 70.5 percent of wage earners made less than $50,000

Unionized workers are rarely minimum wage workers. Many are skilled laborers who rightfully earn more. The problem is that there are relatively few union workers left in America today.

The share of American workers who actually belong to a labor union has been falling for decades and is at its lowest level since the Great Depression, according to the Pew Research Center.

As of 2013, only 11.3 percent of wage and salary workers belonged to unions, down from 20.1 percent in 1983, according to the Bureau of Labor Statistics.

At their peak in 1954, 34.8 percent of all U.S. wage and salary workers belonged to unions, according to the Congressional Research Service.

In many ways, American workers have come a long way over the past century, but they clearly have much further to go.

However, the labor movement's past achievements are worth remembering and celebrating on this, and every, Labor Day.

Humanity Vastly Overdrawing Its Ecological Bank Account

August 2nd was a rather auspicious day this year. That’s because what is known as Earth Overshoot Day (EOD) fell on the second day of August — the earliest it has ever arrived.

What is Earth Overshoot Day, you may be asking?

It is the date on which humanity’s resource consumption for the year exceeds earth’s capacity to regenerate those resources that year. The problem with EOD arriving on August 2nd is that there are still five months left in the year. From this point forward, humanity is stealing from its own future.

In a normal, healthy world, humanity would not use up all its available resources until Dec. 31. In fact, until the past few decades, humanity didn’t even come close to depleting all of the earth’s renewable resources on an annual basis. In 1963, humanity used just 78 percent of the earth's biocapacity.

Yet, Earth Overshoot Day has been arriving earlier than the previous year on a rather steady basis since the early 1970s. Look at where it fell at the start of recent decades:

1971 - December 21
1980 - November 4
1990 - December 7
2000 - November 1
2010 - August 21

Notice the trend? The arrival of EOD has really accelerated over the past two decades. As recently as 1975, EOD fell in December. The last time it fell in November was 1985. At the current pace, it will arrive in July in 2019.

Aside from representing the day when the human population overshoots its environment, economically speaking, EOD also represents the day on which humanity begins its ecological deficit spending.

This earth contains finite resources, some of which are renewable if given adequate time to replenish. Therein lies the problem; humanity is using these resources far faster than they can be restored annually.

Obviously, this has limits, which are recognizable in the form of shrinking forests, topsoil erosion, species loss, fisheries collapse, diminishing fresh-water supplies and higher commodity prices.

Earth Overshoot Day is calculated by Global Footprint Network, which calls itself, “An international think tank that coordinates research, develops methodological standards and provides decision-makers with a menu of tools to help the human economy operate within Earth’s ecological limits."

According to Global Footprint Network’s calculations, our demand for renewable ecological resources and the services they provide is now equivalent to that of more than 1.5 earths. The data shows us on track to require the resources of two planets well before mid-2000-century.

As you may know, there are no additional earths from which to extract precious resources. That poses some rather obvious problems, the kind that don’t have easy answers.

The obvious solution is to change our behavior, but humanity has never been very good at that. However, reality doesn’t negotiate. It’s terms are firm and irreconcilable.

Environmental groups, such as Global Footprint Network and the World Wildlife Foundation, recommend some fairly simple remedies, such as eating more vegetarian meals and cutting food waste. Yet, those are tough sells in America, where people believe in “American exceptionalism” and don't like being told what to do.

Big problems usually don’t have easy solutions. The above suggestions are fairly straight forward and achievable. However, getting big industries to stop deforestation and overfishing, for example, will be much more challenging.

The earth needs more trees, not less. Without a massive tree-planting campaign, the forces of climate change will evolve more quickly and be more devastating.

Every single minute, an area of forest the size of fifty soccer fields is cut down. Some 129 million hectares of forest — an area almost equivalent in size to South Africa — have been lost since 1990, according to the United Nations' Food and Agriculture Organization (FAO).

Overfishing has left vulnerable the millions upon millions of people around the world who are dependent on the sea for food and income. Nearly 90 percent of global fish stocks are either fully fished or overfished, based on an analysis from the UN’s FAO.

Ocean species are not the only animals vanishing from the earth at a dangerously rapid pace.

A report from World Wildlife Fund found that more than half the globe's vertebrates — mammals, birds, reptiles, amphibians and fish — were wiped out in a mere four-decade span. Specifically, these populations declined by 58 percent between 1970 and 2012.

The world’s topsoil, which is vital to growing crops, is in a perilous state; about a third of it is already degraded and the decline is projected to continue. Generating three centimeters of top soil takes 1,000 years, and if current rates of degradation continue all of the world’s top soil could be gone within 60 years, according to a senior UN official.

The global population is presently 7.5 billion. The United Nations predicts it will increase to 10 billion by 2050.

This means, by that time, the world’s farmers, ranchers, and fishers must find a way to produce more food than they have in all of human history. That will prove daunting since farmland is decreasing instead of increasing.

In 1960, there were 1.1 acres of arable farmland per capita globally, according to data from the UN. By 2000 that had fallen to 0.6 acre. Clearly, productive farm land and the human population are moving in the opposite directions.

Fresh water scarcity afflicts much of the world. Only about half of the world’s population has a connection to a piped-water supply in the home, whereas 30 percent rely on wells or local village pipes, and about 20 percent have no access at all to clean water.

Though 71 percent of the earth’s surface is covered by water, only 3% of all the water is freshwater, meaning it is safe for drinking. However, most of this is unavailable for human use. Roughly three-quarters of all freshwater is part of the frozen, and largely uninhabited, ice caps and glaciers. What remains for our use is about 1 percent of the total.

While a concerted, global effort is needed to stop and ultimately reverse the exhaustion of the earth’s resources, much of the developed world remains woefully unaware of the crises that are currently unfolding.

People who live in places where massive deforestation has occurred and continues, such as the Amazon, are well aware the emergency. People in fishing communities around the world come face to face with empty nets on a daily basis. The half of the global population without a piped water supply in their homes likely views clean, drinking water as the vital, precious resource that it is, while the other half likely takes it for granted.

Governments around the world need to act unilaterally, and quickly, to solve these problems or the entire planet will be facing multiple, crushing resource shortages all at once, just a few decades from now.

For much of the world, these issues are already at full-blown crisis levels right at this very moment.