Employment, Income & Portfolios Are Up – But So Is Debt
In 1967, 8.1% of households earned more than $100,000 inflation adjusted, 53.2% (the middle class) earned between $35,000 and $100,000, and 38.7% earned less than $35,000. Today, 27.7% of the population earns greater than $100,000 (three times the percentage back in 1967), 42.1% earn between $35,000 and $100,000, and 30.2% earn less than $35,000. The middle class is shrinking, but it’s because more American households are earning more than ever.
February’s job report was stellar! 313,000 net new jobs, the best increase since 7/16, and upward revisions to December and January totaled 54,000. Moreover, the labor force participation rate rose from 62.7% to 63%, a rate not bettered since 3/14. That led to the labor force rising by 800,000, the largest increase since 1983, which kept monthly wage growth to a noninflationary 0.15%, and the unemployment rate unchanged at 4.1%.
While US household debt is slowly rising, as a percentage of GDP it’s 20 percentage points below its housing bubble peak of 100%. Nations with fast rising and high household debt-to-GDP ratios include Switzerland at 130%, Australia at 120%, Canada and Norway at 100%, New Zealand at 95%, South Korea at 92%, and Sweden at 87%. Luckily, these are all small nations that won’t cause noticeable global damage if they implode.
January housing starts came in at a seasonally-adjusted annualized rate of 1.326 million, their second highest level since 8/07. Single-family starts are also at their second-best level since 2007, 10/07 to be precise. Overall, starts are up 7.3% compared to 1/17 and 18.1% compared to 1/16; good growth! While multifamily starts are up 6.7% Y-o-Y, multifamily activity peaked in 6/15 at 507,000, and has generally been declining since.
In 17Q4, US household wealth rose by slightly more than $2 trillion to a record $98.75 trillion, or 6.8 times disposable income, surpassing the previous record of 6.52, in 06Q1. The increase in wealth attributable to the soaring stock market was $1.35 trillion, while wealth from real estate holdings, which includes more than residential houses, grew by $511 billion, with other items accounting for the remaining $220 billion.
With 325 million people, the US is the world’s third largest nation behind China with 1.4 billion and India with 1.3 billion. By 2100, India will be the biggest at 1.5 billion, followed by China at 1 billion, Nigeria at 800 million, and the US at 450 million. Earth’s population is currently 7.5 billion. The planet’s population in 2100; 11 billion. These numbers account for already declining global fertility rates.
Source: Elliot Eisenberg, PhD., Chief Economist for GraphsandLaughs, LLC, an economic consulting firm serving a variety of clients across the United States. All rights reserved.