What’s
Wrong Today:
Here are two charts that describe the current state of consumer credit in the US.
Both come from Marketwatch.
The first chart shows the change quarter-to-quarter in loan delinquencies by type of loan. The left axis is $Billions. CC means credit card debt, HELOC means home equity lines of credit.
Wow and wow again. This one chart illustrates the magnitude of the Debt Crisis and
the Great Recession. Clearly, delinquencies were driven by the mortgage market.
To a great degree, this demonstrates the origins, and the culprits of the crisis. It was not profligate consumers, it is not feckless students; the students are pikers compared to the bankers. And it is not over.
Almost an entire generation’s worth of debt! By the time this graph reaches the
pre-crisis baseline, it looks like about 15-20 years of excess defaulted debt will have occurred! It is no surprise that many people are having to use CreditAssociates and similar companies to help them deal with their debt when you look at this. It is a frightening reality.
The chart below shows the % of loans that have entered delinquency. Most financial institutions declare loans that are past due by 90 days “delinquent”. The chart indicates that fewer Americans are getting into trouble with their debt, though the percentage of late loans is still higher than pre-recession levels. During the second quarter, every category of loan showed declining percentages of debt, although student loan delinquencies spiked much later than the other categories, and may decline more slowly.
So,
some parts of the economy suck less than they did last year.
This is what is
meant by the Soft Bigotry of Low Expectations.
This term was first used by George W. Bush in a speech to the NAACP in July, 2000.
He meant that we give extra consideration to individuals or groups that are considered lacking in some way. It was a bad idea then and it remains a bad idea today.
Bush was talking about educational standards, but the term as used here means that we have come to expect less from the economy than we have in the past, and that we now celebrate small
gains, like those shown in the charts above.
Think about jobs: Of the 161,000 reported private sector jobs gained in July, 157,000 or 97.5%, are in non-tradable domestic services. A non-tradable service is a job that produces services that cannot be offshored, such as waitresses, bartenders, hospital orderlies, retail clerks, warehousemen. Thus, no matter how large the new jobs number might be, it will not help reduce the US trade deficit.
Many of these jobs are part-time jobs without health or pension benefits. Many of these jobs do not produce sufficient income to drive a consumer economy.
Manufacturing
and tradable professional service jobs such as software engineering have been moved offshore to lower wage, lower-salary locations.Ā The savings in labor costs have enriched corporate executives, Wall Street, and shareholders.
Erica Groshen
is the Commissioner of Labor Statistics and head of the U.S. Bureau of Labor
Statistics (BLS), the department that produces the jobs report. The
commissioner’s statement
accompanying the jobs report, acknowledges that 8,200,000 or 6% of the currently employed are “involuntary part-time
workers” who cannot find full-time employment.
The July
2013 payroll employment level of 136,038,000 is 2,018,000 below the employment level in January 2008, which
was 5 years and 7 months ago.
If it
requires 130,000 new jobs each month to keep employment equal with population
growth, the US economy is behind by 10,728,000 jobs. These missing jobs show up
in the declining labor force participation rate, the part-time workers who can’t find full-time work, and the large number of
discouraged workers who are no longer counted as unemployed.
Obviously,
for job-seekers, there has been no economic recovery.
Soft Bigotry of Low Expectations indeed!!
