Buried in the New York Fed's August Consumer Expectations Survey is evidence that American consumers are in trouble and believe things will get worse before they get better.
Of course, the headline “Consumer inflation and labor market expectations remain broadly stable” hides the reality facing a growing number of consumers.
Inflation expectations are rising, not falling. The costs of gasoline, rent, health care, food, and college education are expected to rise 3.5 to 5.9 percent over the next 12 months. Consumers expect the unemployment rate to continue rising next year. One in eight currently employed people expect to lose their job within the next year. The chances of finding a new job are now one in two. The chances that consumers cannot even make the minimum payment on their credit card debt are now 13.6 percent. Most consumers report to the Federal Reserve that they are worse off financially than they were a year ago. And expectations for the future are “somewhat worse, with an increasing percentage of respondents expecting it to get worse.”
Almost stable?
According to the U.S. Census Bureau's Household Pulse Survey, nearly four in 10 adults belong to a household that feels it is “somewhat” or “very” difficult to pay for common expenses like food, gas, rent, insurance and medical bills.
In “rich” states like Florida, 42 percent of people surveyed by the Census Bureau said they struggle to pay basic living expenses; in New York and Texas, the figure is 40 percent; and in California, the figure is 37.5 percent. And in poorer states like Mississippi, Alabama, and West Virginia, the percentage struggling to pay bills is closer to 50 percent.
Consumers are at home
One way to cut costs is to eat dinner at home instead of going out, but the restaurant industry is suffering as a result: Restaurant chain bankruptcies have doubled in the past 12 months, with 17 filing for Chapter 11 bankruptcy so far this year, up from nine last year.
The damage goes beyond restaurants: LL Flooring (formerly Lumber Liquidators), for example, announced it was in trouble earlier this year, closing hundreds of locations and only avoiding bankruptcy through a last-minute deal.
According to the Administrative Office of the Courts, personal bankruptcy filings increased by more than 15 percent last year, while small business bankruptcies increased by more than 40 percent.
The technology industry is no exception.
Tech companies including Intel, Cisco, IBM and Apple laid off 27,000 employees in August alone, according to the Economic Times. More than 136,000 employees have been laid off at 422 tech companies so far this year, the Times reported.
For example, Intel has laid off more than 15% of its workforce, Cisco has laid off 1 in 14 employees, and IBM, Infineon, GoPro, Apple and Dell have all cut jobs in response to the economic downturn.
What's causing the problem? The Fed.
No matter how hard the New York Fed tries to hide the weakening economy, consumers themselves report suffering the depreciation of their national currency, a natural, predictable, and inevitable consequence of inflating the currency to pay the government bills.
The New York Fed, which is part of the system that creates new money out of thin air to help pay the Treasury's bills, made no mention of it in its press release.
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