Americans have lost an incredible 39% of their net worth since the economic crisis. According to new data from the Fed Americans are now at the same level of net worth as in 1992, a full 20 years back. Much of it has been blamed on the housing bust as most middle class Americans get the bulk of their net worth from their house. The only group to do better than they were was the wealthy, which saw a modest increase to their net worth. No matter what your political persuasion its not hard figuring out that these numbers do not help Obama at all.
President Obama has had a double dose of bad news. Yesterday the nation learned that 1st quarter gdp initial estimates had been revised down from the original 2.2% to 1.9%. Today we found out that the unemployment number has gone up from 8.1% to 8.2%. New hires dropped to just 69,ooo for this month while the previous 2 months job numbers were also corrected down by about 49,000 jobs. With the economy slowing in the middle of the 2012 presidential election while the two candidates are in a statistical dead heat it has to lead many to wonder if Obama can get reelected. It seems to me with not only the US economy slowing down but just about every major economy in the world also cooling off that Obama’s only real hope is the Fed. Though it should be pointed out that it is questionable how much an impact the Fed could have between now and the election. Perhaps the best Obama could hope for would be the Fed keeping the economy from getting any worse. Link to story below.
Here is a good quote that seems to go along with our other article on diminished future economic prospects The New Normal. The quote is by Jeremy Warner who was writing a story for the Daily Telegraph criticising economist and writer for the New York Times Paul Krugman for calling for more deficit spending. What makes the quote relevant for us is that he echoes many of the things we have already touched on here.
“As Raghuram Rajan, a former IMF chief economist, has argued, today’s troubles are not simply the result of inadequate demand, but of major changes in the world economy brought about by globalisation. The old monopoly of knowledge and expertise once enjoyed by advanced economies has been swept away. For decades, we compensated for the jobs and income lost to technology and cheaper foreign competition with unaffordable government spending and easy credit. Much of the growth enjoyed in these pre-crisis years was simply unsustainable”.
We can all only hope that both this blog, the author quoted, and many others are wrong because if not we are in for a much poorer existence. Here is the link to the story below.