It’s official. The Federal Reserve has ended its third quantitative easing program, QE3. The Fed claims that the economy is continuing to improve, yet they’re still going to keep interest rates at near-zero for a “considerable time.”

So the Fed claims the economy is getting better, particularly stressing how good the labor market is today. However, if you dig into the numbers, the labor market is actually terrible. There are 54% more involuntary part-time workers now than in 2007. On top of this, 1.4 million full-time jobs have been lost since 2008. Given this, it should come as no surprise that when you account for inflation, the 2013 median household income was 8% lower than 2007!

Things look even worse when you consider that the cost of living is getting higher and higher for everyday Americans. For instance, in New York City, the cost of basic groceries are surging. Take a look at these NYC figures from US Labor Department data as reported by the New York Post. In the past year, grocery prices have risen a lot:

  • Butter is up 23.7%
  • Meat rose 13%
  • Beef alone is up 17.8% (the biggest rise since 2004)
  • Whole milk rose 8.7%
  • Fruit rose 9.5% (excluding apples, bananas, and oranges)

New York City is already an expensive place to live, and it looks like it’s just getting worse. New Yorkers aren’t the only Americans suffering, though. USA Today reports that middle class Americans across the country cannot afford all sorts of things that were once associated with a comfortable average American lifestyle. Here are a few:

  • Only 25% of households have 6 months of emergency savings.
  • About 20% of people near 65 years of age have no retirement savings.
  • 66% of households can afford either food or medical care – not both.
  • About 25% of adults between 20 and 64 have untreated dental problems.

So how do these middle-class Americans afford groceries and basic medical expenses? More debt. From that same article:

Not only do we have large amounts of credit card debt, we also have student loans, mortgages, cars, and medical debts. Our debt is growing faster than our income, and many middle class workers have trouble staying afloat. Money-Zine evaluated debt growth and income growth over the past few decades and found that ‘back in 1980, the consumer credit per person was $1,540, which was 7.3% of the average household income of $21,100. In 2013, consumer debt was $9,800 per person, which was 13.4% of the average household income of $72,600. This means debt increased 70% faster than income from 1980 through 2013.’”

Don’t listen to the hype – QE has completely failed to repair the economy, no matter what the central bank officials tell you. Check out this article from the Economic Collapse Blog for a frightening summary of the real state of the US economy.

 

Peter Schiff is an American investment broker, author and financial commentator. He is CEO and chief global strategist of Euro Pacific Capital Inc., a broker-dealer based in Westport, Connecticut.