10 Economic Facts To Know Before You Watch The Debate

The political super bowl is only hours away and the issues that will be discussing could not be more vital. The debate features two of the most dynamic candidates in modern history, Donald Trump and Hillary Clinton.  The candidates could not be more different in technique, world view or policy.  Undoubtedly, facts and figures will fly faster than coffee at a Starbucks on Monday morning.  

To get you through it all, here are the top ten economic factors you should know in order to make sense of the rhetoric. Talk is cheap, but these facts can help shine light on debate zingers.

1. Income Inequality is on the way up. It has grown by every major measuring scale and by some indicators it is at an all time high. According to inequality.org, “Wages in the United States, after taking inflation into account, have been stagnating for more than three decades. Typical American workers and the nation’s lowest-wage workers have seen little or no growth in their real weekly wages.”


The report goes on to note that, “Productivity has increased at a relatively consistent rate since 1948. But the wages of American workers have not, since the 1970s, kept up with this rising productivity. Worker hourly compensation has flat-lined since the mid-1970s, increasing just 15.5 percent from 1979 to 2013, while worker productivity has increased 132.8 percent over the same time period.”

While this issue was once an area exclusively covered in developed states and more prominently by those on the left, it has now taken a new stage from outside forces including the International Monetary Fund and the OECD.

2. Employment Rate is flat and failing.  The latest Bureau of Labor and Statistics report that was released to the public at the beginning of September. It showed that the unemployment rate average (4.9%) and part-time work figures in the U.S as of August have both remained unchanged over the past year.

This indicates that not only are jobs stagnant, but that our data reports that fluctuate from month-to-month are not actually yielding considerable employment improvements overall. The BLS measurements certainly have their flaws and negate multiple factors that go into real employment, even by their standards – the U.S is at a major economic jam.

3. Home ownership in America is dropping. According to the most recent U.S Census Bureau report, figures show that in the second quarter of 2016, home ownership has dropped to 62.9%.  That figure is the lowest in over half a century.  The American dream appears to be changing.  Where it had once been an obtainable and shared objective to become a homeowner, this no longer appears to be an aspirational option.

4. Savings are in dire straights. A recent survey put out to the public noted that nearly 7 out of every 10 Americans have $1,000 or less in their personal savings accounts.  The survey, which was completed by GoBanking, had a poll of 7,000 people throughout the U.S.  Just as unnerving from the same survey, the organization found that nearly 34% of those surveyed had nothing set aside in savings. If social security is a taboo topic, just wait until personal savings are discussed. 

5. Student debt is at catastrophic levels. Its massive and at an all time high. As of March 2015, student debt was measured by the Federal Reserve to be at $1.27 trillion.  That figure makes the total debt pool for student loans exceed credit card and even auto loan debts. The report noted that only 37% of borrowers are actively paying down this debt that has undoubtedly risen over the past 12 months. That total debt figure has tripled over the past decade with increase in university pricing and demand. Want to see more? MarketWatch has a national student debt clock seen here.

6. Big banks have gotten even bigger. The big banks have not only been bailed out, but they have gotten even bigger in the aftermath. Before the 2008 crisis, the five largest banks held 35 percent of all bank assets.  As of now, that figure has jumped in size to 44 percent. An all time high. If the candidates were to delve into banking discussion (though highly unlikely) this would be an indicator for how serious they are about financial risk reform. In the off chance that “too big to fail” is mentioned, this must be taken into account.

7. The labor force is now a millennial one.  According to one research survey, “Millennials are now the largest generation in the labor force. More than a third of American workers today are Millennials (adults ages 18 to 34 in 2015), and last year they surpassed Generation X (ages 35 to 50 in 2015) to become the single largest generational group in the U.S. workforce.” This is important for the presidential debate because it shows who the primary workforce population in the U.S is and who they must truly speak to for the future, not just for votes. 

8. Service sector jobs make up America. The majority of working Americans are part of the service sector. According to a July report put out by the Bureau of Labor Statistics 102.6 million people (over 70% of non-farming workers on payroll) are in the private “service-providing” sector.  The Institute for Supply Management on reported that its non-manufacturing index measurement dropped down to 51.4 in August from 55.5 in July of 2016.  This is the measurements lowest reading since February 2010. While candidates might speak on “made in America” these jobs are what make up the life blood of the economy in the eyes of voters.

9. The middle class continues to shrink. It has become the political commonplace to highlight a hurting middle class. But, the story really does continue to unfold for those that once attributed a massive amount of influence within the “American dream” mentality. According to Pew Research, “nationally, the share of adults in the middle class has fallen since 2000 and the shares in lower- and upper-income tiers have increased.” American adults in middle-income households decreased from 55% in 2000 to 51% in 2014.

10. Direction of the U.S economy. Where is the economy headed? According to CNBC’s Bryan Borzykowski, since the early 1900’s, the S&P 500 has typically fallen by 1.25 in year 8 of a presidential term, with the market rising only 44% of the time. The worst fall in recent history was following George W. Bush’s final term in office (2008), where the market took a near 41% dive. The outlook for 2017 rides directly through the markets.  That story can only go one of two ways.

This debate will be a spectacle of epic political proportions.  Both candidates will likely throw out tax ideas, stimulus incentives and other promises on the periphery.  As the U.S faces an election on a scale that has never been seen before, it is pivotal to keep in mind the economic and financial realities.  

These economic factors will impact the private sector just as much as the public sphere and will give a clear indicator for what to expect.  

Stay tuned.


Craig Wilson, @craig_wilson7
for the Daily Reckoning

Ed. Note: Sign up for a FREE subscription to The Daily Reckoning, and you’ll receive regular insights for specific profit opportunities. By taking advantage now, you’re ensuring that you’ll be set up for updates and issues in the future. It’s FREE.