We all know the US economy is in trouble, but some figures I recently read in the Australian Financial Review surprised me.
I’ve read before that the unemployment rate in the US is 9.1%, but clearly there are a number of other alarm bells.
The poverty rate hit 15.1% recently, the highest since 1993 and almost 1 percentage point higher than a year ago.
In 2010 just over 46 million people fell below the poverty line as defined by an annual income of $US22,314 for a family of four and $US 11.139 for an individual.
Also the number of children living in poverty is at the highest level since 1993, up the fourth consecutive year to 22%.
The latest numbers also show the median household income of Americans fell by 2.3% in 2010 from the previous year, due to the long term unemployment rate, which kept wages low and left thousands without an income.
Interestingly median wages in he US hit their highs in 1999, at the height of the dotcom boom, and are still 7% below that level.
What about US property?
Sure properties in some parts of the US are very cheap, but that doesn’t make them a good investment…at any price.
Currently one in five Americans with a mortgage owes more than their home is worth, and $7 trillion of homeowners’ equity has been lost in the bust. Homeowners’ equity as a share of home values has fallen to 38.6% from 59.7% in 2005.
The housing bust has chilled consumer spending—the largest single driver of the U.S. economy—with eroding home equity contributing to the so-called reverse wealth effect that prompts people to spend cautiously because they feel poorer.
We definitely live in the lucky country here in Australia.
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