The Reality Of U.S. Economic Slowdown: The Longer This Shutdown Has Continued, The More Evidence We Have Seen That The Government Employees Are Facing Severe Hardships

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Average Americans Struggling Says Economic Growth May Not Be Real

At the time of this writing, the U.S. government is in a partial shutdown, and it has been going on for several weeks. The shutdown has revealed something significant about the U.S. economy: there isn’t much economic growth.

You see, economic growth occurs when the general standard of living improves—when average Americans have savings, better-paying jobs, optimism about the future, and so on and so forth.

This, however, is not the case these days.

The partial U.S. government shutdown means that close to a million government employees have been furloughed.

What happens to furloughed workers? They are not working and are not getting paid. However, they are still promised back pay.

The longer this shutdown has continued, the more evidence we have seen that the government employees are facing severe hardships.

The Brookings Institutes states, “Furloughed workers have already started taking steps all too common to families living paycheck to paycheck: curtailing spending, increasing credit card debt, delaying paying bills, and seeking short-term, small dollar credit.” (Source: “Furloughed workers are facing an all-too-common problem for many Americans—living paycheck to paycheck,” Brookings Institute, January 17, 2019.)

What does this say? Americans are strapped for cash.

Mind you, federal government workers get paid relatively higher wages compared to workers doing similar jobs in the private sector. So, imagine what would happen if Americans in the private sector were told that they would not be getting their paychecks for a few weeks. Would they be able to sustain themselves for long?

55% of Americans Face Volatility in Their Paychecks

Don’t think it’s only the furloughed government workers who are facing hardships in the U.S. economy. It’s important that you also look at the overall conditions of workers’ paychecks.

According to a study by the JPMorgan & Chase Co. Institute, 55% of American workers experienced volatility in their paychecks of 30% on a month-to-month basis. (Source: “Paychecks, Paydays, and the Online Platform Economy,” JPMorgan & Chase Co. Institute, last accessed January 21, 2019.)

Where’s the U.S. Economy Headed Next?

Dear reader, looking at all this, I am just going to ask one question: If this is what economic growth looks like, how dire will the economic slowdown be?

I believe that things in the past few years have been taken out of context. Everyone looked at the stock market as an indicator of economic growth in the U.S. economy. The thinking has been, “if the stock market is rising, the average American is doing alright.”

This, however, is not true.

Stock markets were boosted due to low interest rates and all the easy money that was around. Average Americans weren’t buying a lot of stocks, though.

Mind you, in every economic growth period in the U.S. economy, there was one factor that played a major role: average Americans spending money.

In the coming quarters, I will continue to watch the U.S. economic data closely. This data is making a strong case that an economic slowdown is ahead.

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