How bad are things actually going in the United States?

Are things really that bad in the United States? At the end of October 2011, an article was published on the website of ‘The Motly Fool’ about the fortunes of the American economy from the post-war United States up to the last quarter of 2011. It contains extremely remarkable and astonishing facts about the US up to 2011.

How bad things are actually going in the United States

Constantly falling stock markets and then some revivals… Terrifying stories about the ceiling of the US government’s debt… Unemployment figures that make people shudder, impoverishment in the United States, bad mortgages that can never be repaid. How bad is the economic situation in the United States of America?

According to the Motley Fool:

the United States of America is still by far the largest economy in the world, almost 3x larger than the Chinese or Japanese economy and almost 5x the size of the German economy.
does the US have the best schools,
the deepest financial system,
the most advanced innovations
and the best entrepreneurs.

Unemployment and pensions in the United States

The overall unemployment rate in the US is 9.1 percent in September 2011. The private sector is creating jobs faster than ever, but this is offset by the large amounts of state jobs lost in the past year (accounting for 1 percent of the unemployment rate). Old unemployment benefits have now been converted into ‘welfare’ in 2011, which means that unemployed families have very little to spend in 2011.

From 1948 to 2007, people were unemployed for an average of 13.5 weeks. In 2011, people in the US were unemployed for an average of 40.5 weeks.
Each year, 17,000 U.S.-educated graduates leave the U.S. to seek employment elsewhere.
In 1948, 87 percent of men participated in the U.S. workforce. That dropped to 71 percent in 2011.
5.5 million Americans are unemployed without receiving unemployment benefits in 2011. In 2010 that was only 1.4 million Americans.
Between 2007 and 2009, the employer-to-resident ratio was reduced by 0.5 percent for those who completed their Bachelor’s studies. For those who did not obtain such a degree, the reduction was 2.0 percent.
The deficit with regard to pensions paid by the state or local government amounts to 4.4 trillion Usdlr in 2011.
Private sector jobs grew faster in 2011 than between 2001-2003. In contrast, layoffs in the public sector were dramatic.
The White House expects that unemployment rates will not rise above pre-recession levels until 2016.

Houses and Mortgages

Houses in the US are worth 35 percent less in 2011 than in 2006. This means that they are back to the same level as in 2002. Yet it is assumed that the houses at the bottom of the market (the cheaper houses) will soon have a will show a recovery in the market. The recovery of the more expensive houses is expected to take even longer.

In 1982, the interest rate on a mortgage was 17.6 percent. In 2011, the interest on a mortgage is 4.1 percent. This means that for a loan of 250,000 Usdlr, people paid 3,686 Usdlr monthly in 1982 compared to 1,210 Usdlr in 2011.
Across the US, house prices have fallen by 8.5 percent since 1979. (After inflation adjustment.)
60 percent of American homeowners say the main reason they bought a home was because they thought they had a good investment for their retirement.
Only 23 percent of Americans benefit from the mortgage deduction through tax deductions. As many as 93 percent of Americans are in favor of this deduction. So 77 percent of Americans would not benefit from such a deduction.
For every 1000 Usdlr depreciation of his house, the American saves 20-70 Usdlr per year.
If Americans had not spent the overvaluation on their homes, the US economy would have gone into recession between 2001-2006.
Calculated across the US, housing costs have amounted to approximately US$7 trillion since 2006. worth less.

Health insurance and health in the United States

Barak Obama’s new health insurance system has still not gone into effect due to opposition from the House of Representatives, which contains more Republicans than Democrats (Obama is a Democrat). Nearly 20 percent of the U.S. population has no health insurance.

In 2000, 69 percent of employers contributed to health insurance for their employees. In 2009, this percentage had fallen from 69 to 60 percent.
Only 1 in 7 workers in the United States are of normal weight and have no chronic health problems.
Health care costs for an average family in the US cost almost USD 20,000 per year in 2011. In 2002 that was half.
The US State pays health benefits for a minority of its citizens (old and poor people) that are higher than any state in the world pays on average for their entire country’s coverage.
The percentage of Americans covered by health insurance decreased from 86.9 percent in 2000 to 83.7 percent in 2010.
General Motors (NYSE: GM) has 96,000 employees but provides health insurance for 1 million people.

Taxes

Taxes on the wealthy remain a hot topic in the US. Recently, an increase in taxes for the wealthy was approved in the House of Representatives. Tax avoidance, legal or illegal, remains high in the US.

In 1952, the amount of corporate and business taxes was 6.1 percent of the Gross National Product, while employees accounted for 1.8 percent of this.
In 2009, the situation was reversed: employees paid 6.3 percent of GNP and employers 1 percent.
Tax evasions have so far cost the US State USD 3 trillion over the last 10 years.
Calculated as a percentage of US GDP, 2010 federal taxes were the lowest since 1950

Government: bonds, debts and funds

Rating agencies have stripped the American State of its rating of AAA (Triple A) because of the poor solutions or the considered insufficient solution that US politicians have proposed regarding the immense US national debt. The question remains whether the US downgrade will have any impact on the US economy.

The day after Standard & Poor’s downgraded government bonds (from AAA to AA) was the second best trading day for government bonds in modern history
The state of California will receive 5.7 billion Usdlr this year (2011). spend on its main universities, compared to USD 9.6 billion on its prisons.
In 2000, interest on the national debt cost USD 222 billion. In 2009, the debt had more than doubled, but interest rates only amounted to a total of USD 186 billion. Lower interest rates have saved American taxpayers trillions.
Although gold reached a record price on the stock exchanges in the summer of 2011, inflation in the US was lower than ever.

Savings, Debt, Spending, and Student Loans in the US

Consumer Price Index (CPI) in the US has reached 0.5%, more than double the predicted 0.2% in August 2011. This means that the likelihood of new monetary expansion measures from the Federal Reserve – quantitative easing – is has become much smaller. US citizen spending is extremely important to the US. Until now, the American has kept his hand on the purse strings. The American borrowed less than ever in 2011 and quickly paid off his debts. Unfortunately, this does not apply to students and their student loans.

The increase in student debt is mainly due to the fact that college costs, etc., are 4 times higher than inflation.
In August 2011, 4.5 percent of personal income was saved. From 1959 to 2010, the average was 7 percent. To return to the 7 percent level, USD 200 billion per year must be removed from consumer spending.
The share of debt for each household (of income) is at the lowest level since 1994.
Despite record high Federal deficits (debt), total private and public sector debt has been declining since 2008. Households are currently paying their debts faster than the US government can make them.
This does not apply to student debt: total student debt will reach USD 1 trillion this year. amounts.
The average student now leaves ‘College’ with a debt of 23,000 Usdlr. 10 years ago that was half.
Just 1 percent of households benefited 52 percent of the income progress between 1993-2006.
Inflation on basic necessities was the least high, as evidenced by the fact that the richest 10 percent of Americans had 6 percent higher inflation costs on their purchases than those who bought virtually only basic necessities.
In 1908, an average person had to work 4,700 hours to afford a Model T. 100 years later, someone would only have to work 1,000 hours to afford the purchase of a mid-range car.
The first Apple computer (Macintosh) cost 5,440 Usdlr. The current iPad only costs 500 Usdlr in 2011 and performs much, much better than the Mac.
Only 2.7 percent of what Americans spend comes from China.
88.5 percent of U.S. spending is on goods produced in the U.S.
Americans immediately mention food prices when it comes to inflation. That is incorrect: food prices in the US have actually devalued in the last 50 years.

Conclusion

The United States of America has fallen into deep recession due to sky-high government debts and problems with the housing market due to bad mortgages granted and the resulting drastic declines in the housing market.
It is also clear that the public sector will have to undergo major cuts to reduce the US debt burden. That is also the reason for the large resulting unemployment, which would be 1 percent less without all the layoffs in the public sector, the resulting (state) pension gap and the state benefits that have to be paid because a large part of the unemployed are no longer eligible comes for unemployment benefits. Households save less, but on the other hand they quickly pay off their debts: personal debts, credit card debts, etc. Contrary to popular belief, the largest part of American consumer spending is a product of American soil. The downgrade of S&P etc. also only concerns the government bond market. The US is going through difficult times, but its citizens are far from bankrupt.

Another comment from the Motley Fool: the American economy may be 5 times the size of Germany, but if one looks at the size of the US compared to the size of Germany, one may doubt its value.

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