For the past few years, there have been plenty of signals from Washington supported by an assortment of economic experts, that the economic recovery within the U.S. is moving along. But completely detached from the optimistic headlines the media keeps feeding us, the story on the street is totally different.
On the surface, the contradiction seems puzzling. Several recent reports seem to give us a lot to feel optimistic about. The unemployment rate is now below 7%, its lowest level in five years. The housing sector seemed to be rebounding. Home sales and prices in December 2013 were their highest since 2006. Auto sales are up, gas prices have gone down, and Wall Street is roaring with stocks up more than 26%.
But, there are several, pretty poignant signs that our recovery is not all it’s cracked up to be:
1. Many people just don’t feel it. According to a recent CNN poll, only 24% of respondents believe economic conditions are improving, while almost 40% believe that the economy is actually getting worse. Meanwhile, the Consumer Confidence Index has been on the decline.
2. The number of people on food stamps is on the rise. As of March of this year, 47.7 million Americans are now on some form of food stamps. From the year 2000 till 2012, this number has increased more than 171%.
3. The housing market is starting to crumble. While the media is already drawing attention to a recent slow down in the housing sector, many industry experts point out that home prices are actually being driven upward by institutional investors. Big financial institutions like The Blackstone Group have become major home buyers. So far, Blackstone has spent more than $4.0 billion for 24,000 homes in the U.S. that it plans to rent out. But, the same rising home prices that seem to have created a rebound last year, are now accounting for a decline among individual buyers who can no longer afford to buy.
4. The rich are getting richer, the poor are getting poorer. According to a recent report by the Pew Research Center, the bottom 93% of households in the U.S. economy saw their net worth drop by 4% between 2009 and 2011, the richest 7% of U.S. saw their wealth increase by 28% in that time.
5. The recovery is a whole lot of hot air. Many people point to the fact that the rosy numbers Washington keeps promoting are nothing more than smoke and mirrors once you consider things like: how much money the U.S. government borrowed versus produced, the Fed’s obsession with printing money, as well as how key indicators, such as the unemployment rate, are calculated.
In short, though the economy does show some signs of rejuvenation, much of it is due to a thick layer of makeup. Wash it all away, and the picture we are left with ain’t so pretty.