The Mighty U.S. Consumer Is Struggling

https://www.bloomberg.com/opinion/articles/2019-05-08/the-mighty-u-s-consumer-is-struggling

by paulpauper • 7 years ago

101 98 7 years ago

munk-a8• 7 years ago

The outline, for reference: https://outline.com/3uNMyr

Don't take this the wrong way because I'm genuinely asking - how is this useful? All this does is cut out the sidebar/header content along with the graphs. I hate bad web design as much as the next guy especially on text and pictures websites, but I don't get what the site you linked is trying to accomplish.

tw04• 7 years ago

It bypasses the paywall.

fintler• 7 years ago

It removes the autoplay video ad, the floating banner ad header, and the paywall footer that make me read the article in 3 inches of vertical space.

SilasX• 7 years ago

It cuts out the sidebar/header content, along with all the usability-breaking stuff sites normally dump on us. Isn't that enough?

I hate that it's depriving them of views and revenue when they did legit journalism[1], but considering how webcancerous most news sites are, and how it probably wouldn't cost them much on net to revert to a sane design, I don't feel all that bad.

[1] other than worshipping the mantra of "the Economy depends on high consumer spending", of course.

munk-a8• 7 years ago

Mostly it's just to make articles (text content) readable as their text content.

I, personally, have little patience for being advertised to or being asked to check out "interesting related content"... someone linked an article they thought was worth reading so I wanted to read it, this makes reading the article as simple and direct as a plain text file.

I linked it here because I know other folks enjoy it and I thought it'd be considerate to minimize the number of times the article needed to be reparsed to strip out the weird bits.

mdorazio• 7 years ago

In addition to the no-surprise explanation of the "tax cut" not being an actual cut at all for most people and the uptick in household interest payments (likely driven by student loans and increased housing prices in many markets), the key takeaway quote for me is:

"two-thirds of April’s new jobs were generated in lower-wage services industries such as administration and support services, health and social services, leisure and hospitality, among others. The flip-side of this dynamic is that high-paying job growth has been nearly halved to 1.6 percent since peaking in 2015."

I've been trying to explain to people for years now that reduction in unemployment does not mean people are getting good jobs, it just means people are getting a job that employs them "full-time" with or without benefits, livable salary, etc. The data here supports that: "good" job growth is far outpaced by low-quality job growth.

iscrewyou• 7 years ago

I've been trying to explain to people for years now that reduction in unemployment does not mean people are getting good jobs, it just means people are getting a job that employs them "full-time" with or without benefits, livable salary, etc.

I’d like to amend that unemployment numbers that are widely reported are simply people employed (not full time). It includes part time, people who work in one industry but have expertise in a different industry(see retail).

All I’m saying is it’s good to keep that in mind when reading these unemployment numbers.

ProAm• 7 years ago

And it doesnt take into consideration people that gave up looking for work because they couldnt find it and no longer receive unemployment benefits.

pkaye• 7 years ago

There is also the U6 unemployment rate which adds is discouraged and part time workers who desire full time.

RickJWagner• 7 years ago

Wages have been rising too, for the first time in many years.

This is truly a time of economic prosperity (at least in the US). It won't last forever. Make whatever moves you have available to you at this time to prepare for the times ahead.

Like the boom years of Reagan and Clinton, we'll all look back at this time later and say "What an opportunity!" Sadly, there inevitably will be a fall like 2000 or 2008 at some point to bring us back to earth.

jdmichal• 7 years ago

I'd like to note that the article makes no claim regarding whether the tax cut saved households money. Rather, we now have the numbers that show a huge swing towards households owing taxes at the end of the year. That says nothing about the tax charged them, and everything about their withholding.

slg• 7 years ago

The tax bill was designed in a way to make people's previous withholdings inaccurate (although theoretically more accurate overall). That was politically motivated for two reasons. People were more likely to see a positive (or less likely to see a negative) impact on their paycheck from the tax bill passing. Republicans have also historically wanted to make the act of paying taxes more painful for the average American on the belief that it would generate political motivation for lowering taxes. Tweaking the withholding rules to result in larger payments (or lower refunds) when filing taxes is part of that plan. Both those points have nothing to do with whether the overall tax plan was beneficial for the average American or the country at large.

jvanderbot• 7 years ago

Which, by the way, was a suprise due to the mostly-unpublicized changes to the withholding rates.

Add in tax penalties and it's a very unwelcome suprise for all but the most vigilant / those that pay people to manage their money.

humblebee2• 7 years ago

I wish we also tracked the number of jobs people had. Having 600,000 new jobs is good, except if a high percentage of those are second jobs.

onlyrealcuzzo2• 7 years ago

We track unemployment (at several different levels). Isn't the relevant question how many people don't have a job? Or are under-employed?

zaroth4• 7 years ago

More lower income jobs is not the same as low quality job growth. It’s great to see job growth at the lower income spectrums, which ultimately leads to wage growth in that same area of the curve.

There is no reasonable interpretation of our current nearly decade long run of employment numbers that is anything less than gangbusters. The US economy is literally the envy of the entire world right now.

djrogers5• 7 years ago

In addition to the no-surprise explanation of the "tax cut" not being an actual cut at all for most people

Justify that statement please. Every single study of the 2017 tax cuts has shown that the vast majority of Americans did in fact get a tax cut. Every. Single. One. Even the New York Times admits as much. Either you haven't really looked in to this at all, or you've bought some policital rally baloney that is completey ungrounded in truth.

[1] https://www.nytimes.com/2019/04/14/business/economy/income-t...

empath75• 7 years ago

Most people did not save a meaningful amount of money while the wealthy got a massive benefit in comparison.

toomuchtodo2• 7 years ago

From your link:

The middle fifth of earners got about a $780 tax cut last year on average, according to the Tax Policy Center.
The top 20 percent of earners received more than 60 percent of the total tax savings, according to the Tax Policy Center; the top 1 percent received nearly 17 percent of the total benefit, and got an average tax cut of more than $30,000. And that’s not even factoring in the law’s huge cut to corporate taxes, which disproportionately benefit the wealthy households that own the most stock.

Hence (rightfully so) pitchforks. The average American taxpayer was bamboozled.

Frost1x2• 7 years ago

I know for an undeniable fact I paid more in federal taxes (if you account for inflation) but I'm one measly anecdotal data point.

I suspect most who don't believe it are like me or saw modest cuts. Perhaps if I saw the data and analyzed it myself I might believe it, otherwise, I suspect the majority got small tax cuts while the very few ultra wealthy enjoyed significant cuts.

derekp7• 7 years ago

The biggest problem with the new tax plan is that the withholding tables changed to be more accurate. This is because a large number of people's standard deduction went up enough to almost match, or exceed, their mortgage interest and SALT deductions.

And since payroll withholding doesn't account for the mortgage interest deduction, but does count the standard deduction, they ended up taking out less taxes (basically giving everyone a couple hundred dollar "raise") during the year, which made the year-end refund much smaller.

And too many people budget big items based on that year-end overpayment refund, instead of setting aside that extra pay every month. So lots of people feel like their taxes went up.

Now what would have been nice is if there was an information campaign that would have business encourage employees (via auto payroll deposit) to divide their paycheck into checking and savings accounts, having that "extra" money go into savings automatically.

munk-a8• 7 years ago

I didn't get a tax cut, my bill went up.

This is just anecdotal but I have no regrets about being anecdotal in response to bald hyperbole

Every. Single. One.

I also object that a number of arts programs that interest me have gotten budget cuts that seem (though the government is large and opaque) to outweigh the money saved by the tax cuts I've seen other people get.

I really don't care about what portion of my out-of-pocket expenses go to the government, I care about the size of my take home - so when taxes go slightly down and cost of living goes up I'm unhappy. And for me, everything went up (and my salary isn't stupid high either)

seanwilson• 7 years ago

I've been trying to explain to people for years now that reduction in unemployment does not mean people are getting good jobs

Is there a better metric for this? Something that combines the number of people with jobs with the amount they're making?

s_y_n_t_a_x2• 7 years ago

The article doesn't say the tax cut didn't help most people.

It makes the point that most people didn't notice it because they only pay attention to their tax refund. Their tax refund is going to be lower because they paid less taxes over the course of the year.

They are less likely to notice those incremental payments, but it's disingenuous to say they didn't receive a tax cut.

Ideally you want your tax refund to be $0 and invest the money instead of overpaying taxes.

Basically it boils down to who can manage your money better, do you need Uncle Sam to hold on to your money or not.

m0zg• 7 years ago

> two-thirds of April’s new jobs were generated in lower-wage services industries

Um, yeah, no shit. That's one of the segments this administration wants to help and create job market competition for: small businesses, low income people, folks who were SOL under previous administrations and voted for this one. Nearly every major economic initiative by this administration is targeted at tightening supply on the lower end of the job market: from stimulating manufacturing jobs, to China trade war, to NAFTA, to strengthening the border, and cutting off the flow of illegal low-wage labor.

Reduction in unemployment means less supply, less supply coupled with higher demand means labor can command higher prices. This is economics 101.

nevrthepfhor4• 7 years ago

Not a cut? Based on what data? Or is this a bait-and-switch where anything less than $2k is peanuts (so it's not really a cut)? I understand that people who own homes in high-tax states are missing out because of the SALT reform, but that's a far cry from 'most' people.

I'm glad that taxes went down for most people, but the cut made the tax code far more progressive than it already was, which I don't think is fair. But it's better than nothing.

MuffinFlavored• 7 years ago

how has automation not been a factor here? call centers, truck driving, etc.

coolaliasbro• 7 years ago

Exactly. Like using lines of code as a proxy for progress or success.

eledumb• 7 years ago

Real wages are dead flat for decades, everything else costs more so purchasing power is significantly reduced. The middle class is shrinking. For a lot of Americans it's a really bad time.

eanzenberg2• 7 years ago

The American middle class is shrinking because the majority are moving into the upper class, while the lower class remains constant. There's plenty of reports on this, check out intragenerational financial mobility.

defterGoose• 7 years ago

So many reports that you didn't bother linking to one? I'm sorry, but this seems heinously misinformed given that our debt/equity ratio keeps growing.

jorblumesea• 7 years ago

It's not just about numbers, but also about income disparity. Upper class incomes are increasing faster than the lower and middle class. The upper class is also the only one who see any real income growth from 2000 - 2016, hinting at the underlying issues that the middle class faces. Jobs existing, but they no longer provide real wage growth or advancement opportunities they once did.

In general, a wide gulf is forming between the upper and lower classes with the middle class being more aligned with the lower class as opposed to the upper class. If allowed to continue, this will essentially destroy the middle class in the long term, as they will eventually merge into either brackets.

https://www.pewresearch.org/fact-tank/2018/09/06/the-america...

Loughla2• 7 years ago

I hate to be that person, but I'm going to need some citations for that. After searching for 'intragenerational financial mobility' it seems that the US is awful at it.

So, citations for your claims?

adventured3• 7 years ago

Actualy the lower class has expanded by a few percentage points (it's not constant) due to the vast immigration of low skill workers from Latin America, while the middle class has (as you noted) been persistently moving up for decades (leading to the upper classes gaining a few percentage points).

You can see this represented over the last ~40 years based on the demographics of each bracket. All one has to do is look at the Fed's current household reports on race when it comes to wealth and income, which lays all of this out in a clear manner. White and Asian households have heavily moved up out of the middle class, while Hispanic and Black households now dominate the bottom 50% of households on income and wealth. As recently as 1980, the US was only 6% Hispanic demographically. By 2000 that had doubled to 12%, and was at 16% in the 2010 census.

Further to this point, the White demographic is now contracting. It's primarily the Hispanic demographic where population growth is occurring, and mostly via immigration.

The big middle class question for the next 20 or 30 years, is whether the huge influx of people from Latin America into the US will be able to move up over time through education and skill acquisition, and whether Black households will similarly gain.

munk-a8• 7 years ago

Citations please.

This is contrary to the figures I've seen surrounding an expanding portion of the populace below the poverty line and increased income inequality.

Frost1x2• 7 years ago

Yet people keep voting against their own interests and supporting behaviors that act against their own interests.

With proper organization, the majority of Americans could force changes within a few weeks (peacefully) by rejecting the current system as it stands, forcing their concerns to be addressed. The continued belief and support of our system that incentivizes moral and ethically questionable behavior and disproportionately rewards a select few who are increasingly contributing less to society at large is toxic and self-perpetuating. It will ultimately lead to non-peaceful action by society at large so it's best to fix things before we get to that point.

munk-a8• 7 years ago

Sorta, it's also a broken political system. Polls about whether we should increase the stringency of background checks prior to gun ownership are overwhelmingly in favor of increased checks but nothing happens. In this case it's not a populace being tricked into expressing an interest in policy that harms them - it's politicians just outright ignoring the populace.

I agree about the way this is going and, well, I've emigrated, I hope the rest of my family follows.

nostromo4• 7 years ago

Adjusted for inflation, personal income excluding government transfers peaked in December and has declined at a 3 percent annual rate over the past three months.

So, it declined 0.25% between December and March? Or like, $40 a month for the median US worker?

Oh wait, they adjusted this figure for three months of inflation, so it's more like... no change at all.

SketchySeaBeast2• 7 years ago

Generally, and especially given the tax cuts, one would expect a strong economy to have an increased personal income, wouldn't they? Especially when the GDP is supposed to be INCREASING at a 3% annual rate?

Also, the inflation rate so far for 2019 has been 1.9%, so that's not no change at all.

nostromo4• 7 years ago

The tax change has been in effect for a year now.

And, yes, that's my point regarding inflation. A 3% annualized change, adjusting for 2% inflation, is a 1% annualized change. While that may be interesting if sustained, over a few months it's not evidence of much of anything at all.

zaroth4• 7 years ago

I’m having trouble squaring the claims in this editorial with the following fact from the Personal Spending data;

Personal saving was $1.03 trillion in March, and the personal saving rate, personal saving as a percentage of disposable personal income, was 6.5 percent.

That seems incredibly robust considering negative personal savings rates of the past.

Increased personal spending is the best sign we have that consumers are not struggling. Up is down?

umeshunni• 7 years ago

Interesting observation.

I suspect it's question of definitions - "persons" are doing well, but "consumers" are struggling?

A consumer by definition is not a person who saves, but a person who consumes.

allmaypar• 7 years ago

I think the author is cherry-picking numbers to support her thesis. In any case, here are some opposing views:

U.S. consumer spending surged 0.9 percent in March, the biggest gain in nearly a decade, as inflation pressures remain non-existent.

The March gain in US consumer spending was the biggest monthly increase since August 2009, the Commerce Department reported April 29. while inflation rose just 0.2 percent and has risen only 1.5 percent over the past 12 months.

http://www.alaskajournal.com/2019-05-01/us-consumer-spending...

Average hourly earnings in April were 3.2 percent higher than a year earlier, the ninth straight month in which growth topped 3 percent, the Labor Department

https://www.nytimes.com/2019/05/02/business/economy/wage-gro...

zaroth4• 7 years ago

Here's an interesting observation on MarketWatch;

Income was subdued. The slight 0.1% gain in March follows a 0.2% gain in February and a 0.1% fall in January. Year over year, personal income is up 3.8%, moderate by historical standards. Disposable income was flat in March.
The weakness in income was concentrated in proprietors’ income. Wages and salaries rose 0.4% in March after a 0.3% gain in the prior month.

It makes sense that strong job growth at lower incomes, and low-income wage growth, would squeeze proprietors' profit margins, but if it were merely redistributing income, wouldn't the overall rate stay the same?

EDIT: I think if you look at Table 1 in the full report it gives better context. [1]

[1] https://www.bea.gov/system/files/2019-04/pi0319_0.pdf

nevrthepfhor4• 7 years ago

Savings rates in China are astronomical in comparison. RIP

throwayEngineer2• 7 years ago

Between these indicators and the constant discussion with multiple Fortune 500 companies about the China Tariffs, I'm bearish.

Expecting that debt will domino and cause worldwide Economic depression.

zaroth4• 7 years ago

Bearish you say? How is that working out for you?

The S&P is up nearly 15% YTD.

throwayEngineer2• 7 years ago

Yes, and I think those invested in the last year are going to lose big.

I believe in the 7% yearly number we were taught. But I also can see the economy is damaged.

beat• 7 years ago

I've learned to never be bearish in the big picture sense. It's a human instinct that doesn't very well reflect our modern world.

mjevans4• 7 years ago

This might seem counter intuitive, but think about things like this.

The cost of everything is going up; so many propose raising the minimum wage to compensate. This will provide some additional money to those beneath the minimum wage. However the price of literally everything will grow to consume that additional wage. In essence what raising that wage does is to devalue the dollar, meaning anyone not seeing a wage increase is actually being paid less relatively.

The only winners in raising such a wage are those that seek rent from others. The land owners, the business owners, the 1% and maybe even just the 1% within the 1%.

The actual solution, the way to increase the QUALITY of life, not the numbers on balance sheets, is to increase the size of the market. Remove arbitrary numeric limitations on workers entering a field (E.G. the monopoly on doctor training slots). Consolidate red tape and ensure that if predictable pre-conditions are met housing projects are approved. Also use actual civic planning, zoning, and land-value taxation to encourage high quality, higher density, and strong community development. Probably making more condos and making it easier to buy and sell housing.

SketchySeaBeast2• 7 years ago

Remove arbitrary numeric limitations on workers entering a field

Isn't that going to have a hard cap based upon market forces instead then?

Probably making more condos and making it easier to buy and sell housing.

So you're saying to let the land owners win more?

mjevans4• 7 years ago

I'm saying that the act of raising minimum wage DOES NOT EFFECT how much land owners win / loose. It DOES cause the price of everything to go up however, so it has the net effect of wrecking the middle class.

To actually increase //quality// of life, the good things must cost less to buy; that is achieved through taxing profits, increasing supply, and well designed market regulation in general.

vkou• 7 years ago

This is false.

Raising the minimum wage only affects a small % of employers. In industries that pay minimum wage (retail), labour is often a small % of overall expenses.

The impact of bringing a few people out of poverty is fairly minimal.

Also, many expenses are completely independent from minimum wages. Housing is a great example. It's price is determined by access to credit, and macroeconomic trends that have nothing to do with how much a Starbucks barista gets paid. Medical costs are another great one. Nobody in the healthcare industry gets paid minimum wage.

djrogers5• 7 years ago

It's even less than you'd think - the country's largest employer - WalMart - which is often stomped on as a 'minimum wage employer' only had 4,000 workers on minimum wage a few years ago, and has since raised their own minimum wage to $11/hr nationally.

Minimum wage jobs are in fact exceedingly rare beyond entry level 'starter' jobs...

mjevans4• 7 years ago

You do not understand the argument: this is NOT about the cost to employers.

This is about ECON101; If the 'take home' money is more for the lowest end of employees, the price that the market is able to pay for goods that have NOT increased in quantity rises to absorb all of the added take home pay.

Shivetya• 7 years ago

TL;DR at bottom

define small, so about twenty percent to labor is small? start inching up from there and many get scared quickly. plus it won't move many out of poverty what it will do is move many who are not employable out of a job. the people you hire at $15 are going to be held to a higher standard than those you would accept at $8, $9, or even $10. Plus you will get people come out of the wood work would never have considered "stooping" to such a job but for $15 an hour its fine then.

So Mr Tattoo who has a bit of an attitude problem but you take him because he is available for $8 isn't someone you will let cross the threshold at $15. Little Ms May who is always late or out sick will be on the other side of the counter. Why, because once you break a mental threshold in pay you get people who would not had considered working there. Now they won't all be seeing a career but they will see a job that is worth their time.

You want to help those in poverty. Then get government off their backs. From expensive government services and fees, to ordinance inspectors who troll poor neighborhoods, to the cops and legal system who prey on the very same. That $20 bucks you paid to update your license could be make or break it for some and that is just the tip of the ice burg. More low paying jobs are in regulated occupations which forces the poor to incur debt just trying to get licensed to work.

TL;DR $15 an hour won't change the attitude of those demanding it, they will feel even more entitled because they are not suited for employment. Won't matter because it will bring out those who are.

SubiculumCode• 7 years ago

This is why I support Andrew Yang's Freedom Dividend UBI proposal.

Edit: I want to explicate further, but am on my phone. Perhaps the Yang Gang can jump in?

strict92• 7 years ago

As for what’s pushing households to tap into their rainy-day funds, Deutsche Bank recently pointed to the 15 percent year-on-year increase in household interest payments. Levels of payments rising at a similar pace preceded the onsets of the last two recessions.

Maybe this isn't what the article is referring to, but assessments have skyrocketed in my city as they have in every other city. That means higher property taxes and a noticeably higher mortgage payment every month.

I can absorb it but wonder how much it can keep going up before something buckles and a lot of people can't keep absorbing the increases.

djrogers5• 7 years ago

Property tax assessments are not tied to your mortgage payment - if your mortgage payment changes monthly you've got a bad mortgage.

Also, before you assume a local factor is influencing national spending, keep in mind that the way property taxes are assessed isn't universal - for example in California, your property tax assessment can only go up by 2% /yr - so it's not possible for them to 'skyrocket'.

Junk_Collector• 7 years ago

He is probably referring to the fact that most people pay their property taxes out of escrow holdings along with their property insurance. Payment into the escrow account is part of your monthly bill and is rolled up into the "mortgage" payment even if it is not actually part of the mortgage. Most people won't even request these broken out by line. In those situations, you would expect your monthly payment to change year to year based on property tax assessment.

Since it seems that many people can't differentiate between total tax rates and tax refunds, it seems reasonable to assume that people would consider their property tax escrow part of their mortgage payment.

Loughla2• 7 years ago

The only thing I can come up with is the OP is implying escrow is making his payment change monthly?

strict92• 7 years ago

Property tax payment dispersals are handled by bank, which is the rule and not exception in Chicago.

And I promise you, assessments here have gone up orders of magnitude more than 2%. In some parts of the city it's gone up by 30%[1]

Point taken about an anecdotal experience affecting national spending.

https://www.chicagotribune.com/news/ct-met-cook-county-prope...

thrower1232• 7 years ago

I don't know. It seems to me that prices of most consumer goods have crashed so incredibly in my lifetime that it is almost unbelievable. I went into Wal-Mart today, and there is stuff on the shelves that I would have thought incredible luxuries twenty years ago selling for $15.

Combine with an aging population, that has amassed a considerable amount of "stuff" over their lifetimes, we may be getting close to peak household consumption.

nostromo4• 7 years ago

Deutsche Bank recently pointed to the 15 percent year-on-year increase in household interest payments. Levels of payments rising at a similar pace preceded the onsets of the last two recessions.

That's because the Federal Reserve caused the past two recessions. First by allowing an asset bubble to form, then by overreacting and driving the entire economy into recession.

It's strange how Bernanke is lauded as some hero that saved us from the Great Recession. I've heard quite a few smart people, people like James Grant, identify him both the savior from, and a cause of, the Great Recession. Curiously I only hear about their successes in the recovery and not their part in the crash.

adventured3• 7 years ago

"As for what’s pushing households to tap into their rainy-day funds, Deutsche Bank recently pointed to the 15 percent year-on-year increase in household interest payments. Levels of payments rising at a similar pace preceded the onsets of the last two recessions."

That's a pretty far fetched setup when you examine the actual facts of household debt interest payments.

Given the bearish angle of the article, households must be seeing soaring debt interest payment costs, right? They must, the article is pushing that very claim.

Fact: household debt service payments as a share of disposable income were at 40+ year lows, at 9.88% in 4Q2018. That's according to the Federal Reserve.

Since Nixon was President, US households have not struggled less when it comes to debt service costs.

Let's examine how today's figure compares to the past. It must be quite high and indicating a drowning consumer, surely.

During the roaring 1990s, the lowest that ever got was 11.4% in 1998. It was up to 12% by 4Q2000, far beyond where it's at now.

The best it ever got in the 1980s, was 10.2%, in 4Q1980.

Peak economy prior to the great recession, in 2005 and 2006, it was up at 12.5% +/-. Again, far higher than it is now.

In 1Q2013, it was at 10.2%. In 3Q2016, it was up at 10.07%.

Ok, but wait, households must be loading up on debt, right? They must be in terrible shape.

Nope. Total household debt as a percentage of disposable income, is sitting back at 2003 levels, prior to the insanity of the housing bubble. It has seen no large run-up increase yet (typical of what happens leading up to the time just before a recession). Here's what that looks like:

https://i.imgur.com/fWGzgYJ.png

The article is intentionally dropping context.

ficklepickle• 7 years ago

At some size, somewhere around 100-1000 employees perhaps, corporations lose their humanity, the sociopaths move to the top and the race to the botttom begins, IMHO.

Amongst lower-paying employers, SMEs (small- and medium- enterprises) generally provide better quality jobs. This is because they haven't lost their humanity yet and somebody there actually cares about their employees. They often have more opportunities for advancement and learning, possibly because roles are less well-defined and smaller orgs tend to need more generalists.

If we really want to help the average consumer, we should offer incentives to SME's rather than mega-corp's.

Obviously, this is just in my experience and I have 0 data to back this up.

cadence-• 7 years ago

SMEs don’t have enough money for effective lobbying. Most laws are constructed in a way that satisfies lobbyists, since they are the ones providing money to politicians. Those are overwhelmingly big rich corps. The most successful politicians are those who can implement what lobbyists want and frame it in a way that makes general populace consider it to be positive.

apo• 7 years ago

Mortgage lenders are reporting similar strains. According to Knight Black's latest Mortgage Monitor, a typical first quarter sees the national delinquency rate decline by 15 percent as borrowers use tax refund proceeds to catch up on their household finances. The first three months of 2019, however, marked the smallest drop in delinquency rates since 2009.

Zoom out:

https://fred.stlouisfed.org/series/DRSFRMT100S

There's a nearly unbroken downward trend back to 2010.

Also, it would be nice if the article reported the Q1 2019 drop. The Fed data doesn't appear to show an unusually high drop during any quarter.

VinLucero• 7 years ago

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People choose these loans because:

1) the simple dollar costs mask the actual APR due to relatively complex calculations. 2) the effective APR of multiple $40 overdrafts is actually higher cost than a 400% payday loan.

Long story short, these people are acting rationally in an irrational system.

Fortunately, I am a former Credit Karma employee and am working on a solution at:

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Please sign up and earn 5% on your checking account.

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Think of it like socially conscious lending and open source banking.

tmaly• 7 years ago

I have been noticing food prices in general going up.

Just tonight, I bought a 5 gallon water refill and it was $1 more

The Mighty U.S. Consumer Is Struggling

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