{"id":10185,"date":"2014-08-23T13:50:03","date_gmt":"2014-08-23T17:50:03","guid":{"rendered":"http:\/\/www.pgm-blog.com\/?p=10185"},"modified":"2014-08-23T13:50:03","modified_gmt":"2014-08-23T17:50:03","slug":"25-of-us-families-are-living-in-poverty","status":"publish","type":"post","link":"https:\/\/www.pgmcapital.com\/nl\/25-of-us-families-are-living-in-poverty\/","title":{"rendered":"25% of US families are living in poverty"},"content":{"rendered":"

\"Inflation\"<\/a>\"Poverty\"<\/a><\/p>\n

Dear\u00a0PGM Capital\u00a0<\/strong>Blog readers,<\/p>\n

In this weekend blog edition we want to discuss with you the decrease of wealth and the increasing number of Americans living in poverty.<\/p>\n

A\u00a0new study\u00a0published by the Russell Sage foundation<\/a> helps explain why many American families feel like they\u2019re falling behind: they actually are! The study, which measures the average wealth of U.S. households by income level, reveals a startling decline in wealth in the USA.<\/p>\n

The median household in the USA in 2013 had a net worth of just US$ 56,335.00, which is 43 percent lower than the median wealth level right before the beginning of the Great Recession in 2007, and 36% lower than a decade ago.<\/p>\n

Wealth generally comes from two types of assets: financial holdings and real estate. Financial assets have more than recovered ground lost during the recession, thanks largely to a stock-market rally now in its sixth year.<\/p>\n

Since the Great Recession<\/a>, the FED policy of pushing long-term interest rates to unusually low levels, has provided tail wind which increased the demand for housing\u00a0too.\u00a0But a housing recovery is taking much longer to play out than the reflation of financial assets.<\/p>\n

Since wealthier households tend to hold more financial assets, they\u2019ve benefited the most form the stock-market recovery, as a consequence of which\u00a0<\/span>households with a lower income, have lost a larger portion of their wealth than those with higher incomes as can be seen from below chart.<\/p>\n

\"Change<\/a>

Source: Russell Sage Foundation<\/p><\/div>\n

SAVINGS RATE:<\/strong><\/span>
\nAs can be seen from below chart, the bottom 90% of earners \u2014 most Americans \u2014 currently save only about 3% of their income.<\/p>\n

\"2d88c3c0-f004-11e3-8047-3da8c231da47_Wealth1\"<\/p>\n

This chart also shows that for a decade prior to the Great Recession of 2007, the savings rate for this group was negative, meaning most Americans borrowed on an ongoing basis to supplement their income.<\/p>\n

That debt binge created a financial hole that many families are still digging themselves out of \u2014 one reason many people feel like they\u2019re falling behind.<\/p>\n

Above chart shows also that currently by, contrast, wealthy Americans save about 12% of their income, while the richest 1% save 38% of their income. The huge and growing gap in the ability to save among different income groups explains why the rich get richer and the rest don\u2019t.<\/p>\n

INFLATION:<\/strong><\/span>
\nAnalyses and research done by Walter J. “John” Williams\u00a0and published on his site\u00a0“Shadow Government Statistics<\/a>“, exposes\u00a0flaws in current U.S. government economic data and reporting.<\/p>\n

Below chart from this web site shows respectively the current rate of inflation (CPI) in the USA, \u00a0using the methodologies <\/span>as if it were calculated in respectively 1990 and 1980.<\/p>\n

<\/div>\n
\"alt-cpi-home2\"<\/a><\/div>\n
\"sgs-cpi\"<\/a><\/div>\n

In general terms, methodological shifts in USA government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.<\/p>\n

PGM CAPITAL COMMENTS:<\/strong><\/span>
\nThe first ever U.S. Census Bureau\u00a0report\u00a0on the near-poor,<\/a> released on May 1st of this year, shows that 14.7 million people, or 4.3 percent, of USA family incomes live between 100 percent and 125 percent of the poverty level, down from 6.3 percent in 1966, as can be seen from below chart.<\/p>\n

\"poverty<\/a><\/div>\n

This decrease of people living near poverty in the USA is actually a consequence of the surge in the number of people who have slipped below poverty levels since the Great Recession of 2007-2009.<\/p>\n

As a consequence of this, the poverty rate in the USA shot up from about 12 percent before the recession to 15 percent, extending lines at food banks.<\/p>\n

For those living in or near poverty, educational attainment matters. Those with a high school diploma or less had higher poverty rates than those with some college education.<\/p>\n

About 10 percent of those with less than a high school diploma live just above poverty level, compared with 1.6 percent of college graduates.<\/p>\n

\n

But in a tough economic climate, and as more people go to college, even degrees may not help.<\/p>\n

As can be seen from below chart, those 12 percent of people living near poverty have at least a college degree.<\/p>\n

\"poverty<\/a><\/p>\n

Racial divides are clear with the near-poor.<\/p>\n