American Workers: Hanging on by the Skin of Their Teeth

Sure, you do, Dave. Here's more from Bloomberg:

"US. chains are already bracing for a tough holiday season, when sales are projected to rise 2.4 percent, the smallest gain since 2009, according to ShopperTrak, a Chicago-based firm. Wal-Mart cut its annual profit forecast after same-store sales fell 0.3 percent in the second quarter. ...

"Wal-Mart's order pullback is affecting suppliers in various categories, including general merchandise and apparel, said the supplier, who has worked with Wal-Mart for almost two decades and asked not to be named to protect his relationship with the company. He said he couldn't recall the retailer ever planning ordering reductions two quarters in advance." ("Wal-Mart Cutting Orders as Unsold Merchandise Piles Up," Bloomberg)

So we're back to 2009?

Looks like it. When the nation's biggest retailer starts trimming its sails, it ripples through the whole industry. It means softer demand, shorter hours, and more layoffs. Get ready for a lean Christmas.

The Wal-mart story just shows that people are at the end of their rope. For the most part, these are the working poor, the people the Democratic Party threw overboard a couple decades ago when they decided to hop in bed with Wall Street. Now their hardscrabble existence is becoming unbearable; they can't even scrape together enough cash to shop the discount stores. That means we're about one step from becoming a nation of dumpster divers. Don't believe it? Then check out this clip from CNN Money:

"Roughly three-quarters of Americans are living paycheck-to-paycheck, with little to no emergency savings, according to a survey released by Bankrate.com Monday.  Fewer than one in four Americans have enough money in their savings account to cover at least six months of expenses, enough to help cushion the blow of a job loss, medical emergency or some other unexpected event, according to the survey of 1,000 adults. Meanwhile, 50% of those surveyed have less than a three-month cushion and 27% had no savings at all..

"Last week, online lender CashNetUSA said 22% of the 1,000 people it recently surveyed had less than $100 in savings to cover an emergency, while 46% had less than $800. After paying debts and taking care of housing, car and child care-related expenses, the respondents said there just isn't enough money left over for saving more." ("76% of Americans are living paycheck-to-paycheck," CNN Money)

Savings? What's that? Do you really think people can save money on $30,000 or $40,000 a year feeding a family of four?

Dream on. Even an unexpected trip to the vet with pet Fido is enough to push the family budget into the red for months to come. Savings? Don't make me laugh.

The truth is, most people are hanging on by the skin of their teeth. They can't make ends meet on their crappy wages and they're too broke to quit. There's no way out. It's obvious in all the data. And it's hurting the economy, too, because spending drives growth, but you can't spend when you're busted. Economist Stephen Roach made a good point in a recent article at Project Syndicate. He said, "In the 22 quarters since early 2008, real personal-consumption expenditure, which accounts for about 70% of US GDP, has grown at an average annual rate of just 1.1%, easily the weakest period of consumer demand in the post-World War II era." (It's also a) "massive slowdown from the pre-crisis pace of 3.6% annual real consumption growth from 1996 to 2007." ("Occupy QE," Stephen S. Roach, Project Syndicate)

So the economy is getting hammered because consumption is down. And working people are getting hammered because jobs are scarce and wages are flat. But we live in the richest country in the world, right?

Right. So what's wrong with this picture?