Consumer confidence took a significant dip in October, with the Conference Board’s consumer sentiment index registering a low of 39.8—its lowest since March 2009. For context, a healthy economy typically sees consumer confidence readings above 90.
Consumer spending constitutes around 70 percent of the U.S. economy, making consumer confidence an essential gauge of economic health. When individuals feel uncertain about the economic landscape or their financial stability, they are less inclined to make purchases.
Clearly, there isn’t much for consumers to feel optimistic about. Over the past 12 years, stock markets have stagnated, many homeowners find themselves in negative equity, and median pay for the middle class has dipped by 7 percent in the last decade. Recent findings from the Conference Board indicate that twice as many respondents anticipate a pay cut in the next six months compared to those who expect a raise. Moreover, recent graduates are struggling to secure employment.
For instance, the Bureau of Labor Statistics reports that the unemployment rate for college graduates under 25 is nearly 14 percent. Compounding this issue, members of the Class of 2009 began their professional lives with an average student debt of $24,000, leaving many at high risk of defaulting on their loans. Continue reading
The November issue of National Geographic outlines the recent unearthing of the Staffordshire Hoard—a collection of gold, silver, and garnet military artifacts from the early Anglo-Saxon period, buried in the English countryside for 1,300 years.
The article reveals that after Roman colonizers left Britannia around A.D. 410, the Britons sought protection from Germanic troops against incursions from Scotti and Pict tribes. However, situations rarely turn out as anticipated.
Before long, Germanic warriors flooded into Britain. The Scotti and Pict tribes were soon overshadowed by this new influx, as the newcomers rapidly outnumbered the indigenous population. Once established, these Germanic groups turned upon their former allies to forge their own kingdoms.
The sixth-century monk Gildas vividly depicted the ensuing bloodshed in his work, “On the Ruin of Britain.” He wrote of a vengeance that spread “from sea to sea,” resulting in widespread destruction across the island. Many surviving Britons were either forced to flee or were enslaved. Continue reading
The U.S. Bureau of Labor Statistics reported on Wednesday that inflation, as gauged by the Consumer Price Index, rose by 0.3 percent in September. This increase was largely driven by rising energy and food costs. Annually, prices in September surged by 3.6 percent, quite consistent with the 3.9 percent CPI increase observed over the past year.
With an inflation rate of 3.9 percent, one might assume the economy is thriving. Unfortunately, the reality tells a different story; recent GDP data indicates the economy is expanding at an annual rate of just 1.3 percent. When adjusted for inflation, this shows a contraction of 2.6 percent, signaling that the economy is actually declining.
Anyone receiving a paycheck can attest to this grim reality. Even those who have managed to secure a minor wage increase have seen their earnings eroded by inflation. Others have experienced job losses. Furthermore, individuals on fixed incomes face the dual challenges of low treasury yields alongside rising prices.
This Wednesday, it was announced that Social Security payments will rise by 3.6 percent next year. Yet, even with this increase, the payouts will still afford 0.3 percent less in inflation-adjusted value than they did the previous year. Continue reading
The 2011 fiscal year closed on September 30th, marking the conclusion of the tally of U.S. government revenue and expenditures. Total revenue reached $2.3 trillion, while total spending amounted to $3.6 trillion. This created a $1.3 trillion deficit that was financed through borrowing, elevating the national debt to $14.8 trillion—over 100 percent of GDP.
Just five years prior, a $1 trillion annual budget deficit would have been deemed outrageous and inconceivable. Back then, before the upheaval of the 2008 financial crisis, a deficit of $500 billion was already seen as alarming. However, in today’s economic climate, the federal government has consistently exceeded tax revenues by $1 trillion each year for the past three years.
However, actions have consequences. Interest payments on the national debt are now the fastest growing segment of the federal budget. In 2011, net interest payments surged by 15.7 percent, totaling $227 billion.
The U.S. government is undeniably in a precarious financial situation. Each month, it requires over $108 billion in new debt simply to maintain operations. To date, the government has relied on the goodwill of creditors willing to purchase treasuries at historically low interest rates. Continue reading
