10 Charts Which Show We Are Much Worse Off Than Just Before The Last Economic Crisis

By Michael Snyder, Economic Collapse Blog.

10 Charts Economic CrisisIf you believe that ignorance is bliss, you might not want to read this article.  I am going to dispel the notion that there has been any sort of “economic recovery”, and I am going to show that we are much worse off than we were just prior to the last economic crisis.  If you go back to 2007, people were feeling really good about things.  Houses were being flipped like crazy, the stock market was booming and unemployment was relatively low.  But then the financial crisis of 2008 struck, and for a while it felt like the world was coming to an end.  Of course it didn’t come to an end – it was just the first wave of our problems.  The waves that come next are going to be the ones that really wipe us out.  Unfortunately, because we have experienced a few years of relative stability, many Americans have become convinced that Barack Obama, Janet Yellen and the rest of the folks in Washington D.C. have fixed whatever problems caused the last crisis.  Even though all of the numbers are screaming otherwise, there are millions upon millions of people out there that truly believe that everything is going to be okay somehow.  We never seem to learn from the past, and when this next economic downturn strikes it is going to do an astonishing amount of damage because we are already in a significantly weakened state from the last one.

For each of the charts that I am about to share with you, I want you to focus on the last shaded gray bar on each chart which represents the last recession.  As you will see, our economic problems are significantly worse than they were just before the financial crisis of 2008.  That means that we are far less equipped to handle a major economic crisis than we were the last time.

#1 The National Debt

Just prior to the last recession, the U.S. national debt was a bit above 9 trillion dollars.  Since that time, it has nearly doubled.  So does that make us better off or worse off?  The answer, of course, is obvious.  And even though Barack Obama promises that “deficits are under control”, more than a trillion dollars was added to the national debt in fiscal year 2014.  What we are doing to future generations by burdening them with so much debt is beyond criminal.  And so what does Barack Obama want to do now?  He wants to ramp up government spending and increase the debt even faster.  This is something that I covered in my previous article entitled “Barack Obama Says That What America Really Needs Is Lots More Debt“.

Presentation National Debt

#2 Total Debt

Over the past 40 years, the total amount of debt in the United States has skyrocketed to astronomical heights.  We have become a “buy now, pay later” society with devastating consequences.  Back in 1975, our total debt level was sitting at about 2.5 trillion dollars.  Just prior to the last recession, it was sitting at about 50 trillion dollars, and today we are rapidly closing in on 60 trillion dollars.

Presentation Credit Market Instruments

#3 The Velocity Of Money

When an economy is healthy, money tends to change hands and circulate through the system quite rapidly.  So it makes sense that the velocity of money fell dramatically during the last recession.  But why has it kept going down since then?

Presentation Velocity Of M2

#4 The Homeownership Rate

Were you aware that the rate of homeownership in the United States has fallen to a 20 year low?  Traditionally, owning a home has been a sign that you belong to the middle class.  And the last recession was really rough on the middle class, so it makes sense that the rate of homeownership declined during that time frame.  But why has it continued to steadily decline ever since?

Presentation Homeownership Rate

#5 The Employment Rate

Barack Obama loves to tell us how the unemployment rate is “going down”.  But as I will explain later in this article, this decline is primarily based on accounting tricks.  Posted below is a chart of the civilian employment-population ratio.  Just prior to the last recession, approximately 63 percent of the working age population of the United States was employed.  During the recession, this ratio fell to below 59 percent and it stayed there for several years.  Just recently it has peeked back above 59 percent, but we are still very, very far from where we used to be, and now the next economic downturn is rapidly approaching.

Presentation Employment Population Ratio

#6 The Labor Force Participation Rate

So how can Obama get away with saying that the unemployment rate has gone down dramatically?  Well, each month the government takes thousands upon thousands of long-term unemployed workers and decides that they have been unemployed for so long that they no longer qualify as “part of the labor force”.  As a result, the “labor force participation rate” has fallen substantially since the end of the last recession…

Presentation Labor Force Participation Rate

#7 The Inactivity Rate For Men In Their Prime Working Years

If things are “getting better”, then why are so many men in their prime working years doing nothing at all?  Just prior to the last recession, the inactivity rate for men in their prime working years was about 9 percent.  Today it is just about 12 percent.

Presentation Inactivity Rate

#8 Real Median Household Income

Not only is a smaller percentage of Americans employed today than compared to just prior to the last recession, the quality of our jobs has gone down as well.  This is one of the factors which has resulted in a stunning decline of real median household income.

Presentation Real Median Household Income

I have shared these next numbers before, but they bear repeating.  In America today, most Americans do not make enough to support a middle class lifestyle on a single salary.  The following figures come directly from the Social Security Administration

-39 percent of American workers make less than $20,000 a year.

-52 percent of American workers make less than $30,000 a year.

-63 percent of American workers make less than $40,000 a year.

-72 percent of American workers make less than $50,000 a year.

We all know people that are working part-time jobs because that is all that they can find in this economy.  As the quality of our jobs continues to deteriorate, the numbers above are going to become even more dismal.

#9 Inflation

Even as our incomes have stagnated, the cost of living just continues to rise steadily.  For example, the cost of food and beverages has gone up nearly 50 percent just since the year 2000.

Presentation Food Inflation

#10 Government Dependence

As the middle class shrinks and the number of Americans that cannot independently take care of themselves soars, dependence on the government is reaching unprecedented heights.  For instance, the federal government is now spending about twice as much on food stamps as it was just prior to the last recession.  How in the world can anyone dare to call this an “economic recovery”?

Presentation Government Spending On Food Stamps

So you tell me – are things “getting better” or are they getting worse?

To me, it is crystal clear that we are in much worse condition than we were just prior to the last economic crisis.

And now things are setting up in textbook fashion for the next great economic crisis.  Unfortunately, most Americans are totally clueless about what is going on and the vast majority are completely and totally unprepared for what is coming.

Or could it be possible that I am wrong?  Whether you agree or disagree with me, please feel free to add to the discussion by posting a comment below…

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  • Dr Smileyface

    Yep, that pretty much buries fake claims of a ‘recovery’, David.

    However, if as George Carlin says, “The game’s rigged … it’s a club – and you ain’t in it!”, then shouldn’t we be wary of accepting concepts like; ‘the economy’, ‘economic crisis’, ‘national debt’ and ‘recovery’ at face value? We could add many more to this list.

    These terms are important components of a psyop-system that’s main aims are convincing everybody that; hierarchies are natural and essential, everything can be commodified, and worth as a human is synonymous with wealth.

    All the financial-economic-monetary news, commentary and opinions tend to convince people that it’s common sense to look at human affairs in this way – but it’s the biggest modern con, perpetuated by elites to rob and dominate the majority.

    Mystics and holy books have long warned that evil results from ‘the love of money’.

    So let’s talk about it less…

  • Me Who

    It looks like most people don’t have the money to handle the better part of next week, so why should they, or how practical is it for them to, care? It also looks like the people who have the wealth to care are, coincidentally, the ones responsible for the debt and benefiting from that debt to begin with. Ofcourse, many of the profiteers are elusive and stateless as business entities, just like their tax responsibility.

  • Guest

    Truth Is Our Country Paul Craig Roberts Club De Periodistas De Mexico, March 12, 2015

    In the United States journalists receive awards for lying for the government and for the corporations. Anyone who tells the truth, whether journalist or whistleblower, is fired or prosecuted or has to hide out in the Ecuadoran Embassy in London, like Julian Assange, or in Moscow, like Edward Snowden, or is tortured and imprisoned, like Bradley Manning.

    http://vocesdelperiodista.mx/nacional/discurso-completo-del-doctor-paul-craig-roberts-ingles-y-espanol/

  • One Day After Retiring As Dallas Fed President, Dick Fisher Elected To Pepsi Board Of Directors Submitted by Tyler Durden on 03/23/2015

    Former Dallas Fed president Dick “Feral Hogs” Fisher may be worried about a major correction in a market that is “hyper overpriced”, and he may be confused and unable to grasp that the only reason “traders are lazy” is because the Fed’s Chief Risk Officer has made risk, and selling, illegal but when it comes to finding sources of funding there are no conerns or confusion at all. Because promptly after he officially resigned from the Dallas Fed, on Thursday March 19, the very next day the board of Pepsi announced that “On March 20, 2015, the Board of Directors (the “Board”) of PepsiCo, Inc. (“PepsiCo”) elected Richard W. Fisher as an independent member of the Board, effective March 23, 2015. Mr. Fisher will serve on the Audit Committee of the Board, effective March 23, 2015.”

    http://www.zerohedge.com/news/2015-03-23/one-day-after-retiring-dallas-fed-president-dick-fisher-elected-pepsi-board-director

  • x1plus1x

    This article is beyond belief.

    #1 The National Debt. Look closely at the chart. It goes up sharply from the mid 80s to the early 90s (republican presidents). It starts to level off in the 90s (democratic president). It takes another sharp upturn in the early 2000’s (republican president). It starts to level off again around 2008 (democratic president).. This is so obvious, the author is either a total bafoon, or can’t see thru their partisan lens.

    #2 Total Debt. Graph shows a sharp increase in the mid 80’s and early 00’s (Rs). A point that a lot of people don’t realize. Money IS Debt. The current monetary system requires exponentially more money in order to keep functioning. With a system like this, the total debt will necessarily have to increase to keep the thing going. 95% of new money (debt) comes from banks, not the federal gov.

    #3 The Velocity of Money. There was an out of the ordinary increase in the early 90s, and it has been on a downward trend ever since.

    #4 The Home Ownership Rate. The article says that the home ownership rate has be declining since the recession, but that is not true. It has been declining since 2005.

    #5 The Employment Rate. We lost a lot of jobs during the recession, and the employment rate has been slowly increasing every since.

    #6 The Labor Force Participation Rate. The comment in the article regarding this makes no sense at all. “The gov lies about how many people are unemployed to make themselves look better, as a result the numbers are going down”. The author is so interested in bashing Obama that they didn’t even care if what they said makes any sense.

    #7 The Inactivity Rate For Men In Their Prime Working Years. Perhaps this has something to do with #8. If relative wages continue to go down as they have been since the early 80s, and you can get adequate assistance, why would you go to a job you don’t like for low wages?

    #8 Real Median Household Income. This trend has been happening for 30+ years.

    #9 Inflation. This is the dirty little secret of the modern monetary system.

    #10 Government Dependence. This is another chart that makes a lot more sense when you think about who was president. During the 80s (R), dependence goes up. During the 90s (D) dependence goes down. During the 00s (R) dependence goes way up. During the mid 10s (D) dependence trend changes dramatically.

    Is the economy screwed up? Yes. Is Obama to blame? No.

    The economy itself is an unsustainable system that is showing signs of nearing it’s breaking point. This system has been in practice for a looong time. To say that the breakdown of this greedy and unsustainable system is somehow Obama’s fault is dishonest.

    • Doug Zembiec

      Under Obama Public debt increased by 9 Trillion Dollars . Excluding the time value of money , thats how much debt increased in the previous 38 years before him…..

      • twothbeave

        Seriously! What kind of blinders are you wearing? How steep does a graph have to get before you can read it! Especially the national debt. When the debt the Country has accumulated in 232 years doubles in 7 and you can’t see an obvious trend then you are hopeless! Every other trend you described is inaccurate! You have so much Obama Kool Aid in your blood you are drunk beyond comprehension. Shaking my head so hard it hurts.

        • Doug Zembiec

          R-E-A-D my posting again ………

  • Bolz

    regarding no. 8, Real Median Household incomes. This is a very important chart for “are we worse off?” questions. Far far more than most of the others. But the presentation of the data is extremely distorting. Please, just because FRED doesn’t use good chart hygiene doesn’t mean you can’t. Start the x axis at 0 (for crying out loud) and the y axis at, say, 1980 (come on, you aren’t afraid of the data are you?).

    If these things are done a quite different picture emerges. Not saying there isn’t a problem. Yes we are worse off than before the crisis, yes there is very worrisome stagnation, yes the most vulnerable are hurt the worst, etc.

    Still, the real median household income today (2016) is higher than it was under Reagan (even at the end of his last term, 1989) — though of course not as good as it was under Clinton!! I’m not talking about causality here (and the article title’s rhetorical question is descriptive not causal), I’m just trying to put this in perspective. And that requires 0 at the y origin and a longer timeline for the y.

    For a more balanced picture of median household income changes look at: http://fragilefinances.org/2015/06/28/household-income-stagnation/

    • twothbeave

      No not distorted at all when Obama tries to say we are better off than we were 7 years ago. The answer to that question only requires a graph this wide. Because the answer for the vast majority is no. And he is supposed to be the champion for the poor and middle class. Well guess who is pulling down the average? It certainly isn’t the rich. In fact if you take away the top quartile the real median will drop below that 1990 benchmark you put out there. The divides under this President have gotten larger in everything. That makes for an abysmal failure. You think that dumbass Trump would be in the lead in polling if the majority of people in this Country were happy with him? All that in spite of getting roasted daily for absolutely all of his bombastic behavior and all the support the pathological pantsuit wearer is getting. People are getting shelled financially and they are sick of it!

  • Bahman

    What bullshit! Who writes this garbage?