43 Percent of American Families Worse off Now than 4 Years Ago

That is according to an NBC / Wall Street Journal poll taken earlier this week.  Summary results of the poll show:

• 43% say that they and their families are worse off
• 34% say they’re better off
• 21% say that their status is the same

If you’re anything like me, you are probably not surprised at these results; in fact if you are at all surprised it is probably because the “worse off” percentage isn’t HIGHER.

Admittedly, while employment figures are falling in manufacturing, construction and retail trades, the national unemployment rate is holding steady at 4.8% (~7.4 million jobless) according to the Bureau of Labor Statistics.  We are even seeing some job growth in health care and in food service with average hourly earnings rising.  Albeit, earnings are rising slowly (0.3%) according to February 2008 statistics.  

What scares me is the perfect storm that has been brewing for almost 20 years thanks to the economic policies of (former Chairman) Alan Greenspan and our Federal Reserve.  Sure, the last decade brought with it lots of perceived prosperity for many Americans.  As time went on, however, some of us saw what was happening…

Credit was depersonalized and easier than ever to obtain.  At the same time, people with little or no formal instruction in how to manage personal finances or the long term implications of borrowing money at high interest rates began stacking up credit cards, personal loans, loans against home equity, small business loans and expensive car loans.  Meanwhile, their income was increasing at only modest rates and before they knew it, they all had big screen TVs with HD and surround sound, cell phones, lots of expensive clothes, little or no money down McMansions with ARM mortgages and two $30,000 gas guzzling SUVs parked in the garage.

And everything was in balance, until interest rates began to rise and the war in Iraq began to drag on.  Now here we are, 4 years later.  Over 900,000 borrowers are losing their homes, up 71% from last year and a record number of home owners are behind on payments.

I really don’t see a near term end in sight either.  What I do see is fuel prices that continue rising and the price we pay for daily necessities rising at an accelerated rate as the remainder of this decade passes us by.  While I believe that Americans hope that our next President will bail us all out of this mess with renewed economic policy, I don’t see it happening.  What I do see is a lot more foreclosures and bankruptcies as well as a continued dramatic slowdown in spending that will unfortunately result in a large number of small and medium sized business shut downs.