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How Will The Economy Improve In 2014 If Almost Everyone Has Less Money To Spend?
 

How Will The Economy Improve In 2014 If Almost Everyone Has Less Money To Spend?

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Is the U.S. consumer tapped out? If so, how in the world will the U.S. economy possibly improve in ...

Is the U.S. consumer tapped out? If so, how in the world will the U.S. economy possibly improve in
2014? Most Americans know that the U.S. economy is heavily dependent on consumer spending. If
average Americans are not out there spending money, the economy tends not to do very well.

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    How Will The Economy Improve In 2014 If Almost Everyone Has Less Money To Spend? How Will The Economy Improve In 2014 If Almost Everyone Has Less Money To Spend? Document Transcript

    • How Will The Economy Improve In 2014 If Almost Everyone Has Less Money To Spend? Michael Snyder Economic Collapse Blog January 1, 2014 Is the U.S. consumer tapped out? If so, how in the world will the U.S. economy possibly improve in 2014? Most Americans know that the U.S. economy is heavily dependent on consumer spending. If average Americans are not out there spending money, the economy tends not to do very well. Unfortunately, retail sales during the holiday season appear to be quite disappointing and the middle class continues to deeply struggle. And for a whole bunch of reasons things are likely going to be even tougher in 2014. Families are going to have less money in their pockets to spend thanks to much higher health insurance premiums under Obamacare, a wide variety of tax increases, higher interest rates on debt, and cuts in government welfare programs. The short-lived bubble of false prosperity that we have been enjoying for the last couple of years is rapidly coming to an end, and 2014 certainly promises to be a very “interesting year”. Obamacare Rate Shock Most middle class families are just scraping by from month to month these days. Unfortunately for them, millions of those families are now being hit with massive health insurance rate increases. In a previous article, I discussed how one study found that health insurance premiums for men are going to go up by an average of 99 percent under Obamacare and health insurance premiums for women are going to go up by an average of 62 percent under Obamacare. Most middle class families simply cannot afford that. Earlier today, I got an email from a reader that was paying $478 a month for health insurance for his family but has now received a letter informing him that his rate is going up to $1,150 a month.
    • Millions of families are receiving letters just like that. And to say that these rate increases are a “surprise” to most people would be a massive understatement. Even people that work in the financial industryare shocked at how high these premiums are turning out to be… “The real big surprise was how much out-of-pocket would be required for our family,” said David Winebrenner, 46, a financial adviser in Lebanon, Ky., whose deductible topped $12,000 for a family of six for a silver plan he was considering. The monthly premium: $1,400. Since Americans are going to have to pay much more for health insurance, that is going to remove a huge amount of discretionary spending from the economy, and that will not be good news for retailers. Get Ready For Higher Taxes When you raise taxes, you reduce the amount of money that people have in their pockets to spend. Sadly, that is exactly what is happening. Congress is allowing a whopping 55 tax breaks to expire at the end of this year, and when you add that to the 13 major tax increases that hit American families in 2013, it isn’t a pretty picture. This tax season, millions of families are going to find out that they have much higher tax bills than they had anticipated. And all of this comes at a time when incomes in America have beensteadily declining. In fact, real median household income has declined by a total of 8 percent since 2008. If you are a worker, you might want to check out the chart that I have posted below to see where you stack up. In America today, most workers are low income workers. These numbers come from a recentHuffington Post article… -If you make more than $10,000, you earn more than 24.2% of Americans, or 37 million people. -If you make more than $15,000 (roughly the annual salary of a minimum-wage employee working 40 hours per week), you earn more than 32.2% of Americans. -If you make more than $30,000, you earn more than 53.2% of Americans. -If you make more than $50,000, you earn more than 73.4% of Americans. -If you make more than $100,000, you earn more than 92.6% of Americans. -You are officially in the top 1% of American wage earners if you earn more than $250,000. -The 894 people that earn more than $20 millionmake more than 99.99989% of Americans, and are compensated a cumulative $37,009,979,568 per year. It is important to keep in mind that those numbers are for the employment income of individuals not households. Most households have more than one member working, so overall household incomes are significantly higher than these numbers. Higher Interest Rates Mean Larger Debt Payments On Tuesday, the yield on 10 year U.S. Treasuries rose to 3.03 percent. I warned that this would happen once the taper started, and this is just the beginning. Interest rates are likely to steadily rise throughout 2014. The reason why the yield on 10 year U.S. Treasuries is such a critical number is because mortgage rates and thousands of other interest rates throughout our economy are heavily influenced by that number. So big changes are on the way. As a recent CNBC article declared, the era of low mortgage rates is officially over…
    • The days of the 3.5% 30-year fixed are over. Rates are already up well over a full percentage point from a year ago, and as the Federal Reserve begins its much anticipated exit from the bond-buying business, I believe rates will inevitably go higher. Needless to say, this is going to deeply affect the real estate market. AsMac Slavo recently noted, numbers are already starting to drop precipitously… The National Association of Realtors reported that the month of September saw its single largest drop in signed home sales in 40 months. And that wasn’t just a one-off event. This month mortgage applications collapsed a shocking 66%, hitting a13-year low. And U.S. consumers can expect interest rates on all kinds of loans to start rising. That is going to mean higher debt payments, and therefore less money for consumers to spend into the economy. Government Benefit Cuts Well, if the middle class is going to have less money to spend, perhaps other Americans can pick up the slack. Or maybe not. You certainly can’t expect the poor to stimulate the economy. As I mentioned yesterday, it is being projected that up to 5 million unemployed Americans could lose their unemployment benefits by the end of 2014, and 47 million Americans recently had their food stamp benefits reduced. So the poor will also have less money to spend in 2014. The Wealthy Save The Day? Perhaps the stock market will continue to soar in 2014 and the wealthy will spend so much that it will make up for all the rest of us. You can believe that if you want, but the truth is that there are a whole host of signs that the days of this irrational stock market bubble are numbered. The following is an excerpt from one of my recent articles entitled “The Stock Market Has Officially Entered Crazytown Territory“… The median price-to-earnings ratio on the S&P 500 has reached an all-time record high, and margin debt at the New York Stock Exchange has reached a level that we have never seen before. In other words, stocks are massively overpriced and people have been borrowing huge amounts of money to buy stocks. These are behaviors that we also saw just before the last two stock market bubbles burst. If the stock market bubble does burst, the wealthy will also have less money to spend into the economy in 2014. For the moment, the stock market has been rallying. This is typical for the month of December. You see, the truth is that investors generally don’t want to sell stocks in December because they want to put off paying taxes on the profits. If stocks are sold before the end of the year, the profits go on the 2013 tax return. If stocks are sold a few days from now, the profits go on the 2014 tax return. It is only human nature to want to delay pain for as long as possible. Expect to see some selling in January. Many investors are very eager to start taking profits, but they wanted to wait until the holidays were over to do so.
    • How To Address Growing Poverty? More Confiscation By Government Kurt Nimmo Infowars.com January 1, 2014 CNN, home to the Army’s Fourth Psychological Operations Group, admits the “war on poverty,” launched half a century ago this month, is a dismal failure and more Americans than ever are mired in poverty. How to reverse this long-running trend? Well, since the problem is all about “income inequality,” the natural solution is to tax the rich, although CNN does not directly say this. Instead, it cites nonpartisan congressional analysts who blame “less redistributive” government for the yawning chasm between rich and poor. In other words, more confiscation will be required. Not from the 1% that offshores its cash and devises other ways to avoid taxation, but from helpless victims in the millionaire class and the middle class directly below it. How to accomplish this? Get out the vote… again. “Statistics do show lower-income people are less likely to vote. According to CNN exit polls, those who made less than $15,000 per year comprised 6% of voters in 2008. More than 13 percent of the overall population fell below the poverty line that year,” CNN reports.
    • Liberals hope 2016 will be different as they push people like Massachusetts Sen. Elizabeth Warren to run for president. A neophyte politician, Warren is a champion of liberal economic policies. And progressives believe the election of Democrat Bill De Blasio as Mayor of New York, the world’s financial capital, is a promising sign the nation may be more ready to discuss issues pertaining to poor people. A populist, De Blasio has stressed a tale of “two cities” theme that illustrated a division of rich and poor. CNN says establishment Republicans are also looking to court poor people. “Democrats tend to support policies that involve more government and equitable wealth distribution while Republicans tend to back a ‘trickle-down’ approach in which stronger upper and middle class economies benefit the poor,” CNN explains. “Trickle down” is a buzzword that drives liberals bats. They prefer direct confiscation and never seem to notice that this does nothing to ameliorate the lot of the poor. “Government’s power and money doesn’t trickle down,” writes Jeffrey Tucker. “It takes money and pours it into ever more bureaucracy and gives it to the elites. Its power grows and grows at the expense of society.” It looks like a new war on poverty is about to be launched by the establishment. Like the last one, this new boondoggle will not reduce the number of poor people, but it will grow government and create a new class of bureaucrats. Of course, so long as the economy is the play thing of banksters and their coterie at the Federal Reserve, nothing significant will change, except maybe the rhetoric and a march to the polls where rigged voting machines wait.
    • $1T Spending Bill Nears Unveiling Erik Wasson The Hill January 1, 2014 Congress is set to unveil a giant spending bill next week that staff for appropriators have been preparing on a near daily basis throughout the holiday break. Aides say progress on the $1 trillion, 12-part omnibus legislation has been better than expected at the subcommittee level, and that their goal remains to pass the bill through both chambers by Jan. 16 to prevent a government shutdown. The secretive process has members anticipating rushed votes when they return next week, as congressional leaders race the clock. It’s unclear whether top leaders of the House and Senate spending panels will return to Washington to negotiate final details of the deal before Monday. Aides say that decision depends on how much progress staff can make. One House aide said that some obstacles remain on both funding levels for specific projects, and one some of the dozens of policy riders that have been proposed during the course of 2013. Still, the aide struck an optimistic note, saying talks are “going better at this point than many predicted.” The bill is being developed according to the $1.012 trillion top-line spending cap in the budget agreement forged by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) and signed into law by President Obama last week. Sixty-two House Republicans voted against the budget largely because it exceeded the $967 billion spending cap already on the books for fiscal 2014.
    • Republican Study Committee Chairman Steve Scalise (R-La.), one of the no votes, told The Hill this week that he could be open to voting for the omnibus if some key policy provisions are included, such as limits on ObamaCare’s implementation. But he acknowledged that his impression from appropriators is they will not risk a new showdown over ObamaCare, which triggered a 16-day government shutdown in October. To get his vote, Scalise argued that at the very least, Appropriations Chairman Hal Rogers (R-Ky.) must score wins on energy, defense and homeland security spending provisions. The House approved Energy and Water, Defense and Homeland Security appropriations bills this summer with numerous amendments, while the full Senate did not vote on companion bills. “We passed a few appropriations bills and we put some policy riders that reflect conservative principles,” Scalise said. He said a final bill at a minimum should reflect GOP policy riders that scale back funding for wasteful green energy programs favored by the Obama administration. Examples of floor amendments include ending funding for green energy advertising and limiting fe deral agency procurement of alternative fuels. Energy riders could have a good shot given Rogers' keen interest in helping the coal industry. Scalise said conservatives will push leaders to allow floor amendments on the omnibus, something that could make completing the bill in just over a week problematic. Rep. Mick Mulvaney (R-S.C.), who has made fiscal matters his signature issue, said he expected conservatives to offer an amendment to bring the top-line number down to $967 billion. Another amendment, he said, would trim spending by 1 percent across the board. He said he would push for a House rule that would cover votes on those issues. Mulvaney was less optimistic about getting policy riders on the omnibus. He said GOP leaders appear ready to rely on Democrats to pass the omnibus, and as a result won’t feel the need to push policy riders. “We were told in no uncertain terms that they would not be coming to us for votes,” he said. “Part of the deal with Democrats also included their support on appropriations.” He said that “personally it would be difficult to support” any omnibus at a spending level higher than $967 billion, regardless of policy riders.
    • The Hidden Costs Of Obamacare Jacqueline Leo theweek.com January 1, 2014 Higher premiums could really kneecap the economic recovery ObamaCare has delivered another sucker punch to the middle class. This time it's sticker shock. Now that most people can get past the tech problems of HealthCare.gov and actually see the real cost of insurance plans available, they are finding that Affordable Care is a big hit to the family budget. And when the family budget gets hit in the solar plexus, guess what happens to consumer spending and the economy? In California, policies for about 900,000 Californians are being canceled because of ObamaCare's mandates, and about two-thirds of these do not qualify for subsidies, according to The Chicago Tribune. The result: These folks will be paying higher premiums. In Alabama, premiums have doubled for some middle-class families, like that of Courtney Long, a stay-at-home mother of four. She told WHNT News, "It's devastating. I started crying." "I mean, we have worked so hard to get out of credit card debt, get ahead on the car loan, transfer our mortgage to a 15- from a 30-year mortgage… and for what?” In Tennessee, GOP Sen. Lamar Alexander issued an analysis of a White House report and found the following: • Today, a 27-year-old man in Memphis can buy a plan for as low as $41 a month. On the exchange, the lowest state average is $119 a month — a 190 percent increase.
    • • Today, a 27-year-old woman in Nashville can also buy a plan for as low as $58 a month. On the exchange, the lowest-priced plan in Nashville is $114 a month — a 97 percent increase. Even with a tax subsidy, that plan is $104 a month, almost twice what she could pay today. • Today, women in Nashville can choose from 30 insurance plans that cost less than the administration says insurance plans on the exchange will cost, even with the new tax subsidy. • In Nashville, 105 insurance plans offered today will not be available in the exchange. In Washington state, ObamaCare will increase the underlying cost of individually purchased health insurance by 34 to 80 percent on average, according to Forbes. The list goes on and on and includes Texas, Florida, New York, Illinois, Georgia, and North Carolina. But premiums are just the beginning. The deductibles are outrageous, too. A recent article in The New York Times tells the story of Doug and Ginger Chapman, ages 55 and 54, a middle-class couple "sitting on the health care cliff." Their annual income of around $100,000 a year makes them ineligible for a subsidy in New Hampshire (if they earned under $94,000, it would cut their costs by half). They have to replace their family insurance which includes the two of them and their two sons. The premium cost alone, not including any deductible, is $1,000 a month, or 12 percent of their income. The Times' analysis found the following: The cost of premiums for people who just miss qualifying for subsidies rises rapidly for people in their 50s and 60s. In some places, prices can quickly approach 20 percent of a person's income. Experts consider health insurance unaffordable once it exceeds 10 percent of annual income. By that measure, a 50-year-old making $50,000 a year, or just above the qualifying limit for assistance, would find the cheapest available plan to be unaffordable in more than 170 counties around the country, ranging from Anchorage to Jackson, Miss. [The New York Times] The other group that gets disproportionately hit is the young, according to Forbes. For a 40-year-old, the 2013 average deductible was $4,045, and the monthly cost increased 29 percent to $309. For a 64year-old man, the monthly cost of a plan with a $3,494 deductible increased 64 percent to $806. If even a fraction of the middle class and upper middle income earners divert some of their discretionary dollars to pay for health care, it will have a significant impact on consumer spending. What will that mean for the economy? Consumer spending accounts for about 70 percent of the nation's GDP, although experts say that number is likely to decline. The top 20 percent of income earners account for about 40 percent of all spending in the U.S. When you increase the costs of health care and the new taxes associated with ObamaCare, you can hear the wallets closing. INFOWARS.COM BECAUSE THERE'S A WAR ON FOR YOUR MIND