Charting Poverty In Ferguson: Then And Now Submitted by Tyler Durden on 08/17/2014 17:05 -0400 Ben Bernanke Ben Bernanke None Reality Unemployment in Share 1 While there have been many socio-economic 'explanations and justifications' for the recent events in Ferguson, many of which have exceeded the realm of the factual and have brazenly encroached on feelings, emotions, heartstrings, and various other of the media's favorite manipulative mechanisms to achieve a desired outcome, the unpleasant reality is that much of what has transpired not only in the small 21,000-person St. Louis suburban community, but what is taking place across all of America has to do with a far simpler phenomenon: the rise of poverty and the destruction of America's middle class. Here are some facts : Ferguson has been home to dramatic economic changes in recent years. The city’s unemployment rate rose from less than 5 percent in 2000 to over 13 percent in 2010-12. For those residents who were employed, inflation-adjusted average earnings fell by one-third. The number of households using federal Housing Choice Vouchers climbed from roughly 300 in 2000 to more than 800 by the end of the decade. Amid these changes, poverty skyrocketed. Between 2000 and 2010-2012, Ferguson’s poor population doubled. By the end of that period, roughly one in four residents lived below the federal poverty line ($23,492 for a family of four in 2012), and 44 percent fell below twice that level. These changes affected neighborhoods throughout Ferguson. At the start of the 2000s, the five census tracts that fall within Ferguson’s border registered poverty rates ranging between 4 and 16 percent. However, by 2008-2012 almost all of Ferguson’s neighborhoods had poverty rates at or above the 20 percent threshold at which the negative effects of concentrated poverty begin to emerge. (One Ferguson tract had a poverty rate of 13.1 percent in 2008-2012, while the remaining tracts fell between 19.8 and 33.3 percent.) Below are charts of Ferguson poverty in 2000 and 2012: Then : Census Tract-Level Poverty Rates in St. Louis County, 2000 and Now : Census Tract-Level Poverty Rates in St. Louis County, 2008-2012 The biggest concern, however, is that Ferguson is merely the canary in the coalmine. According to Brookings, within the nation’s 100 largest metro areas , the number of suburban neighborhoods where more than 20 percent of residents live below the federal poverty line more than doubled between 2000 and 2008-2012. Almost every major metro area saw suburban poverty not only grow during the 2000s but also become more concentrated in high-poverty neighborhoods. By 2008-2012, 38 percent of poor residents in the suburbs lived in neighborhoods with poverty rates of 20 percent or higher. For poor black residents in those communities, the figure was 53 percent. Like Ferguson, many of these changing suburban communities are home to out-of-step power structures, where the leadership class, including the police force , does not reflect the rapid demographic changes that have reshaped these places. Suburban areas with growing poverty are also frequently characterized by many small, fragmented municipalities; Ferguson is just one of 91 jurisdictions in St. Louis County. This often translates into inadequate resources and capacity to respond to growing needs and can complicate efforts to connect residents with economic opportunities that offer a path out of poverty. And as concentrated poverty climbs in communities like Ferguson, they find themselves especially ill-equipped to deal with impacts such as poorer education and health outcomes, and higher crime rates . In an article for Salon , Brittney Cooper writes about the outpouring of anger from the community, “Violence is the effect, not the cause of the concentrated poverty that locks that many poor people up together with no conceivable way out and no productive way to channel their rage at having an existence that is adjacent to the American dream.” We have warned all along that the Fed's disastrous policies are splitting the nation in two, creating a tiny superclass of uber-wealthy oligrachs, and a vast majority of disgruntled, disenfranchised poor. It is the latter, whose life of squalor and poverty, has left them with little if anything to lose. Unless dramatic and rapid changes take place within the executive levels of the US corporato-banking oligrachy and its D.C. puppets, very soon "Ferguson-type" occurences, where participatnts could care less if the SP 500 closed at a fresh all time record high, will become a daily, and very deadly, occurence. All thanks to the Fed's dual mandate of "maximum employment and stable inflation." * * * And as a tangent, we must say that we find the fact that none other than former Fed chairman Ben Bernanke is now a Distinguished Fellow in Residence with the Economic Studies Program at the Brookings Institution , the source of most of the above data, to be ironic beyond words. Average: 3.857145
Personal Income And Spending Weigh On Economic Recovery Hopes Submitted by Tyler Durden on 12/02/2012 11:28 -0500 Core CPI CPI Debt Ceiling Global Warming Gross Domestic Product Guest Post Personal Consumption Personal Income Rate of Change Recession recovery Savings Rate Via Lance Roberts of Street Talk Live , The personal income and spending report Friday morning left a lot to be desired for those expecting a stronger economic environment soon. However, the report fell well in line with what I have been expecting over the past several months (see here , here and here ) as the drag on real wages and incomes have weighed on the consumer. As we discussed in yesterday's report on GDP - personal consumption makes up more the 70% of the economy therefore changes to employment, incomes or credit has an immediate and significant impact to growth. First, let me argue the claim that the impact to personal incomes was due to Hurricane Sandy. While the storm is going to be the excuse for everything from economic reports to global warming the impact from Sandy on personal incomes was most likely very limited. The storm did not occur until the last two days of the month. Even if we assume that everyone in the Northeast was hourly pay, all quit their job five days before the hurricane, and then left town, the overall impact to the entire month of personal incomes for the entire country would still be fairly limited. Secondly, the Hurricane excuse doesn't account for the negative revisions to the personal income data going back to April of this year. The chart below shows the level of personal incomes both pre- and post revisions in October. These revisions also resolve some the imbalances that we have noted between reported personal income data and other economic reports pre-election. We have suggested that many of these anomalies would be revised away in the months ahead which we are now seeing come to fruition. However, for the sake of argument let's assume that the BEA is correct in their statement that 24 states were affected by Sandy for a total of about $18 billion at an annual rate . This still doesn't explain the complete lack of income growth nationwide. The chart below shows the contributions to personal incomes over the last months. More curious was the very large jump in interest income for the month of October after two previous months of decline. Absent that bump in interest income overall personal incomes would have been negative for the month. However, in the next month or two we should see the estimates used to account for the impact of the storm revised with actual data. This could show a minor increase to the October data. Moving on to personal spending it is not surprising that the previous estimates to spending were likewise revised down in October to reflect weaker income growth . The chart below shows the revision to the major categories of spending for the months of July, August and September. These negative revisions show that spending in the previous months was far less robust than previously estimated which is likely to lead to a downward revision of Q3 GDP next month. The continuing problem that faces the economy remains the impact of rising cost of living which is offsetting increases in compensation. We stated in our last report that: "...it is important to note that wage and salary disbursements have risen since the beginning of the year which has contributed to the increase in personal incomes. However, the recent rise in wages has been very nascent and has come very late in the current economic expansion. Secondly, the rise in wages has been more than offset by a large surge in food and energy costs in recent months as shown in the chart below. While the annualized rate of change in wage and salary disbursements rose again September continuing a steady trend since the beginning of this year, food and energy as a percentage of wages and salaries surged substantially more . The problem with this is that it grossly impacts the consumer. In the most recent report - personal incomes rose by 0.4% while consumer spending surged by 0.8%. Unfortunately, when spending outstrips income the difference has to come either from savings or credit. The chart below shows food and energy as a percentage of disposable personal incomes (DPI) versus the personal savings rate as a percentage of DPI. See the problem here? While core CPI remains very mild - rising food and energy costs at the headline have an immediate impact on the consumer's ability to make ends meet ." This is still the case this month. In October that annualized rate of change in wages showed an increase of 3.04% which was enough of an increase to keep food and energy at 22% of wages. Are We There Yet? When it comes to the economy, and particularly the ongoing recession watch that has nearly become a sporting event, it is real (inflation adjusted) incomes that matter. In the most recent report we see that real personal incomes declined for the month from $11,546 to $11,532 billion for the month reflecting a -.12 change. Doug Short always does an excellent job of tracking the four primary indicators used in distinguishing periods of economic expansion from contraction: "At this point, with all indicators for October on the books, the average of the Big Four (the gray line in the chart above) shows us that economic expansion since the last recession has been hovering around a flat line for the past seven months . Are we tipping into a recession? ECRI has reinforced its claim that we are in a recession and puts the cycle peak in July (more here ). On the other hand, a post-Sandy rebound, good holiday sales and favorably received outcome to Fiscal Cliff negotiations could easily put the economy into indisputable expansion mode. As for the recent data, of course they are subject to revision, so we must view these numbers accordingly." He is correct in his assessment that we are not currently in a recession. However, I am not optimistic the post-Sandy rebound will be enough to stem the tide of contracting wage growth. I am also less than convinced that Washington will come to a resolution for the fiscal cliff and the debt ceiling before it impacts the economy further. The next couple of months will be very telling about the strength of the underlying economy. The manufacturing data continues to point to further economic weakness, hiring plans have deteriorated and the main drivers of economic growth have all stagnated. With the recession in Europe continuing to erode exports, and impact corporate profitability, this leaves investors exposed to a sharp valuation adjustment in the months ahead. While we can hope to get lucky that things will work out for the best - "hope" rarely works out as an investment strategy. Average: 4 Your rating: None Average: 4 ( 2 votes) Tweet Login or register to post comments 2960 reads Printer-friendly version Send to friend Similar Articles You Might Enjoy: Guest Post: CFNAI: Not Seeing The Growth Economists' Predict Overnight Sentiment: Cloudy, If Not Quite Frankenstormy Guest Post: GDP And Durable Goods - Heading To Recession? Europe's Recessionary Collapse Beating Even Most Optimistic Expectations Guest Post: New Home Sales - Not As Strong As Headlines Suggest
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