So This is Life Out of a Recession?


A new Associated Press report has just changed the game in all things financial related. The most shocking statistic this report uncovers is the surreal truth about what we, as Americans, see for the future based on where we are today. It reported was that four out of five American adults are dealing with a myriad of sociological and economic realities.

These four out five American adults report they are struggling in a near-poverty status, they’re deeply concerned about their jobs (or lack of) and are now either receiving welfare benefits or strongly considering the option.

For white Americans, the challenges are especially amplified. More than two-thirds say the economy is both poor and worsening. The report also reveals that the gap between affluent and poor continues to grow and the number of traditionally good paying manufacturing jobs are decreasing. One woman quoted in the survey said,

If you do try to go apply for a job, they’re not hiring people, and they’re not paying that much to even go to work. Children have nothing better to do than to get on drugs.

She said that most month, after paying her own bills, she might have $10 left over to get her through the month. She receives disability.

For the purposes of the report, the AP defined “economic insecurity” as at least twelve months of joblessness, growing reliances on federal and state assistance programs and incomes that fall below 150 percent of the poverty line.

Poor Americans on the Rise

On a national level, 46.2 million of Americans are considered poor. That equates to 15 percent of the national population. The reasons are many, but the biggest (and most obvious) reason is a still – high unemployment rate. Hispanics and blacks are three times more likely to live in poverty, but at this point, and from a numbers perspective, whites are poorest. There are more than 19 million whites who fall below the poverty line. For a family of four the poverty line is $23,021. This equates to more than 41 percent of the nation’s poorest. If you factor in the income spent on expenses like medical costs, child care and mortgage payments, the number of Americans whose remaining income falls below the poverty line is closer to 50 million, or roughly 16% of the population.

Another interesting trend the report uncovered is that marriage rates are also down, but the number of single parent homes where the mother is head of household is now at the same rate as blacks. That hasn’t happened since the mid-1970s. Out of wedlock babies are being born at faster rates for white women, too.

Economic Class Position

One Harvard professor says the answers are in the economic class position,

There is the real possibility that white alienation will increase if steps are not taken to highlight and address inequality on a broad front.

He also pointed out that even in the difficult economic environment, minorities have more optimism about the future after Obama’s re-election. On the other hand, struggling whites have less optimism.

Invisible Poor

The demographics tell the tale: for whites living in poverty, they are more likely to live in small rural towns and in most, the number of poor whites is at 60 percent on average. In some areas, the numbers are even higher. Even those who are employed on a full time basis are living in poverty. Children who are raised in poverty are more likely to not go to college, become pregnant before graduating high school and have another out of wedlock baby before the age of 20. It’s little wonder, then, that only 45 percent of Americans say they can improve their economic outlook based on today’s outlook.

There are new worries on credit card debt, mortgages and emergency savings. While there’s not yet been a trend detected in credit card defaults, we know that student loan debt is on the rise and the housing market continues to wobble, despite assurances that it’s on the mend.

Bleak Future

By 2030, it’s believed 80 percent of Americans will have had at least one instance of financial insecurity. This isn’t good for banks, card networks or the government.

While the numbers leave no room for confusion, there are deeper realities that, until addressed, will keep the concerns high. With fewer Americans across every demographic who support the current administration and have faith in the economy as a whole, consumers could begin reining in their spending. Indeed, there are some signs that point to this already being the case. The number of Americans living in poverty has been on the rise since the Great Recession, as many households have seen their incomes drop and their debts mount in the past few years.

There are areas that are especially struggling. In fact, dozens of counties in the U.S. report a 50 percent or higher poverty rate. These counties also have higher rates of bankruptcies and foreclosures. According to census numbers, Wilcox County, Ala is just one of the many southern counties that made the list. A full 52.5 percent of the county’s children live in poverty and the median household income is just $21,600.

Wilcox County also has a lower graduation rate for high school students. In Owsley County, Kentucky, 55 percent of its children under the age of 18 live in poverty. What’s interesting is it’s also one of the counties in the state with higher home ownership rates. Finally, 57.1 percent of children who call Washington County, Miss home are also living in poverty. In a single year, it jumped an astonishing 10 percent.

If consumers are concerned about the basics of survival; keeping a job and a roof over their family’s head, there’s reasons for the banks and credit card companies to worry. Not only will they not consider credit card payments a top priority, but it will also mean fewer who qualify for loans. This means with fewer new accounts, lenders will have to find other ways of keeping profits high.

What are your thoughts on these numbers? Are we headed for another financial meltdown in the United States? Will you be reining in your spending?

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