The Census Bureau released some interesting data in October. One of the pieces of data that we knew was coming was the continuing decline of household income. This decline is in line with the growing income disparity that is occurring in the US. Another piece of data made this trend abundantly clear. The comprehensive data showed for the 2011 year that more Americans received means-tested government benefits than actually were employed. As usual, we can only examine data after the fact and the Census is releasing this data in October of this year. Yet it gives us a better perspective on what kind of recovery this is. This information only confirms other trends like the 1 out of 6 Americans on food stamps. Hard to believe? Only if you keep your eyes closed to the real status of the economy.

Means-tested benefits surpasses Americans employed

This is not a threshold that you want to cross. According to the Census Bureau 108,592,000 Americans in the fourth quarter of 2011 were recipients of one or more means-tested benefit programs:

Source: US Census Bureau

At the same time, there were 101,716,000 Americans working full-time. Does this really seem like a robust recovery? What this seems like is a situation where the stock market is rallying higher and higher thanks to financial maneuvering but the actual American worker is taking it on the chin. This is obviously unsustainable. You have 1 full-time worker supporting 1.07 people on means-tested programs. It is a simple math problem. Of course, this also ties in on why the government so desperately needed to borrow money or was facing a shutdown.

I think many large metro areas are simply not paying attention to what is happening across the US. Many areas might be sheltered in some sort of bubble. The growing economic disparity in the United States is troubling. This trend did not just happen overnight. Yet we are seeing a dramatic usage of means-tested government programs. Think of what this means. Beyond the politics of this issue is the grim reality that many Americans have such little income that they are qualifying for these programs. These figures signify a deeper issue with the economy.

Some Americans look at overseas economic disasters yet fail to see the failing behemoths in our own backyard. Take a look at Detroit for example:

The fact that the reporter in the video can golf across a large stretch of the city is mind boggling. We have cities in the US that are flat out crumbling. Coming back to the Census figures, these areas are largely areas where these benefits as a proportion of the population are being used dramatically. This takes a toll on the entire nation. You simply cannot ignore this. The policy so far has been to load up various areas with benefits and continue to run up our debt tap. Bailout the banks and put it on the credit card. Keep squeezing the working and middle class. This is how you can have the dichotomy of peak food stamps and a peak in the stock market. The stock market is largely a charade for most since the majority of Americans don’t even own stocks.

Why are Americans not investing heavily in the stock market? Well apparently, a large swath of our population is relying on government support to get by. A small segment is able to leverage nice financial benefits from the Federal Reserve into more sophisticated financial engineering. And the middle continues to be squeezed here. The true shutdown battle is the one hitting the middle class. Unfortunately this fight is largely being ignored by the mainstream press that seems to sidestep this topic. Keep on spending and keep on going into debt. That worked out well for us with the first housing bubble right? That is working out well with student debt as well, right? More people on means-tested benefits than actually working full-time. You don’t need to be an economist to know this is not a good sign.

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