25 years old and deep in debt

[Admiral Yi]

Some interesting observations, but dude seems to have forgotten about the lessons of the Great Depression, which everyone agrees was prolonged (and deepened?) by contractionary monetary policy.

[citizen k]

21 Shocking Facts About The Explosive Growth Of Poverty In America

Submitted by Michael Snyder via The Economic Collapse blog,


What you are about to see is more evidence that the growth of poverty in the United States is wildly out of control.  It turns out that there is a tremendous amount of suffering in "the wealthiest nation on the planet", and it is getting worse with each passing year.  During this election season, politicians of all stripes are running around telling all of us how great we are, but is that really true?

As you will see below, poverty is reaching unprecedented levels in this country, and the middle class is steadily dying.  There aren't enough good jobs to go around, dependence on the government has never been greater, and it is our children that are being hit the hardest.  If we have this many people living on the edge of despair now, while times are "good", what are things going to look like when our economy really starts falling apart?  The following are 21 facts about the explosive growth of poverty in America that will blow your mind...

    #1 The U.S. Census Bureau says that nearly 47 million Americans are living in poverty right now.
   

    #2 Other numbers from the U.S. Census Bureau are also very disturbing.  For example, in 2007 about one out of every eight children in America was on food stamps.  Today, that number is one out of every five.

   
    #3 According to Kathryn J. Edin and H. Luke Shaefer, the authors of a new book entitled "$2.00 a Day: Living on Almost Nothing in America", there are 1.5 million "ultrapoor" households in the United States that live on less than two dollars a day.  That number has doubled since 1996.

   
    #4 46 million Americans use food banks each year, and lines start forming at some U.S. food banks as early as 6:30 in the morning because people want to get something before the food supplies run out.

     
    #5 The number of homeless children in the U.S. has increased by 60 percent over the past six years.
 

    #6 According to Poverty USA, 1.6 million American children slept in a homeless shelter or some other form of emergency housing last year.
   

    #7 Police in New York City have identified 80 separate homeless encampments in the city, and the homeless crisis there has gotten so bad that it is being described as an "epidemic".

    #8 If you can believe it, more than half of all students in our public schools are poor enough to qualify for school lunch subsidies.

     
    #9 According to a Census Bureau report that was released a while back, 65 percent of all children in the U.S. are living in a home that receives some form of aid from the federal government.
   

    #10 According to a report that was published by UNICEF, almost one-third of all children in this country "live in households with an income below 60 percent of the national median income".


    #11 When it comes to child poverty, the United States ranks 36th out of the 41 "wealthy nations" that UNICEF looked at.

     

    #12 The number of Americans that are living in concentrated areas of high poverty has doubled since the year 2000.

     

    #13 An astounding 45 percent of all African-American children in the United States live in areas of "concentrated poverty".
   

    #14 40.9 percent of all children in the United States that are being raised by a single parent are living in poverty.
   

    #15 An astounding 48.8 percent of all 25-year-old Americans still live at home with their parents.


    #16 There are simply not enough good jobs to go around anymore.  It may be hard to believe, but 51 percent of all American workers make less than $30,000 a year.

   
    #17 There are 7.9 million working age Americans that are "officially unemployed" right now and another 94.7 million working age Americans that are considered to be "not in the labor force".  When you add those two numbers together, you get a grand total of 102.6 million working age Americans that do not have a job right now.
   

    #18 Owning a home has traditionally been a signal that you belong to the middle class.  That is why it is so alarming that the rate of homeownership in the United States has been falling for eight years in a row.

     
    #19 According to a recent Pew survey, approximately 70 percent of all Americans believe that "debt is a necessity in their lives".


    #20 At this point, 25 percent of all Americans have a negative net worth.  That means that the value of what they owe is greater than the value of everything that they own.
   

    #21 The top 0.1 percent of all American families have about as much wealth as the bottom 90 percent of all American families combined.


It would be one thing if economic conditions were getting better and poverty was in decline.  At least then we could be talking about the improvement we were making.  But despite the fact that we are stealing more than a hundred million dollars from future generations of Americans every single hour of every single day, poverty just continues to grow like an aggressive form of cancer.

[Admiral Yi]

I wish articles like this one would mention that the requirements for obtaining food stamps have been lowered.

[citizen k]

Why Are Half Of All 25-Year-Olds Living With Their Parents? The Federal Reserve Answers


Back in 1999, a quarter of all 25-year-olds lived with their parents. By 2013 this number has doubled, and currently half of young adults live in their parents home.

While the troubling implications for the economy from this startling increase are self-evident, and have been extensively discussed both here and elsewhere (and are among the key factors pushing both the US and global economy into secular stagnation), a just as important question is why are increasingly more young adults still living at home.

While we admit there is something morbidly grotesque in none other than the Fed taking an active interest in this most devastating development (for the simple reason that it has been the Fed's own policies that have unleashed not only the $1.3 trillion wave of student debt but an army of Millennials in their parents' basement), it is the Fed itself that has been the latest to attempt an answer.

Here is the Fed's response to "Why Are More Young Adults Still Living at Home?"

Economist Maria Canon and Regional Economist Charles Gascon noted that many factors have been suggested for why young adults return to or continue living at home, including significant student debt, weak job prospects and an uncertain housing market. The table below breaks down the percentage of 25-year-olds who were living at home for the period 2012-2013 in each state in the Federal Reserve's Eighth District as well as in the country as a whole.

Labor Market and Higher Education

One potential reason for the increase in young adults living with their parents is the labor market. The authors highlighted research showing that individuals at the beginning of their careers often need more time to transition into the labor market. This is reflected in the unemployment rates of those between 21 and 27, which are often higher than for other age groups.

Earning a college degree can help with labor market outcomes, as young adults with a college degree are more likely to live independently. However, additional research has shown that the underemployment rate for recent graduates was about 40 percent during the Great Recession. Canon and Gascon noted: "An implication is that a significant portion of recent graduates were earning lower wages than what they should have been, given their education."

Also affecting many young adults is that they started their post-education careers during a recession. Canon and Gascon discussed a study noting that those entering the job market during a recession pay a price for about a decade. They wrote: "That's because they start work for lower-paying employers and slowly work their way up toward better-paying jobs."

Housing Market

The nation's recovery may also play a role in young adults remaining at home. As the economy has grown, so have house prices. Canon and Gascon pointed out that national house prices have increased 21 percent since 2012, and rental prices have grown even faster in many areas. They wrote: "Because most youth would be first-time homebuyers, they have no housing equity to regain from the rebound in house prices after the housing crash."

In the Eighth District, housing generally remains more affordable. The authors noted that the median house costs 3.3 times the median household income nationally, but less than 3 times the median household income in most District states.

Student Debt

According to a 2014 survey, more than half of first-time homebuyers said student loan debt was delaying saving for a down payment for a house. A 2015 report from the Federal Reserve Bank of New York found that a $10,000 increase in a student's average debt increases the probability of living with parents or other family members by the age of 25 by about 2 percentage points.


To all the 25-year olds out there reading this from their parents' basement, all we can add is that these are actually all correct. There is just one thing left to add: for all of the above you can thank, who else, the Fed for blowing the biggest debt-funded asset bubble in history.

[Barrister]

I see citizen K is again posting a bunch of slightly-tinfoily articles without actually linking to show where they are coming from...

[citizen k]

I see citizen K is again posting a bunch of slightly-tinfoily articles without actually linking to show where they are coming from...

Zerohedge is my goto place for doom & gloom.

[Valmy]

This just means the multi-generation home is coming back

[MadImmortalMan]

I see citizen K is again posting a bunch of slightly-tinfoily articles without actually linking to show where they are coming from...

Zerohedge is my goto place for doom & gloom.

Yeah I'm kinda surprised it wasn't obvious. You don't really have to link ZH, since it's instantly recognizable. 

[The Minsky Moment]

Just as a PSA - use of the term "mal-investment" is a tip-off that the writer adheres to the Austrian school (Ludwig von Mises etch).

[Admiral Yi]

Just as a PSA - use of the term "mal-investment" is a tip-off that the writer adheres to the Austrian school (Ludwig von Mises etch).

Eh, that term pops up constantly in Economist articles on the Chinese economy.

[Barrister]

Just as a PSA - use of the term "mal-investment" is a tip-off that the writer adheres to the Austrian school (Ludwig von Mises etch).

Eh, that term pops up constantly in Economist articles on the Chinese economy.

I'm not an adherent to the Austrian school myself, but it has some interesting insights.  Malinvestment (which is a term I hadn't heard of before) sounds like one of them.

[MadImmortalMan]

Not an Austrian, but you have to a bit of an ideologue to hold that paying people to dig holes and then fill them back in is not malinvestment.

It's skirting the edge of silliness to use that as a litmus test of anything. That doesn't mean zero hedge writers aren't mostly kooks. They are. They also sometimes break important financial news.

[The Minsky Moment]

Austrian theory is that state intervention in the economy causes distortions and mixed signals and results in "mal-investment."  How does one recognize mal-investment?  It is investment that should not be made but is made because the market is subject to distortions due to state intervention.

It's a classic question-begging exercise.

Most bodies of economic theory suffer from either (1) being incoherent as a matter of theory or (2) inconsistent with the empirical data.  For example, old-fashioned Cowles Commission Keynesianism focused on generating elaborate models to fit the empirical data but was attacked for its lack of firm theoretical foundation.  Real business cycle is elegant and rigorous as theory but can't explain the data.

Austrian theory is notable for suffering from both flaws at once.

[Admiral Yi]

Austrian theory is that state intervention in the economy causes distortions and mixed signals and results in "mal-investment."  How does one recognize mal-investment?  It is investment that should not be made but is made because the market is subject to distortions due to state intervention.

It's a classic question-begging exercise.

Well no.  Bridges to nowhere and trillion dollar airports with no passengers are not poor investments because of circular logic.

[MadImmortalMan]

I see no reason that malinvestment should refer only to the state. I think it's pretty clear it happens even more in the private sector.