A look at the current state of the "Average Joe" and the affects the 2008 financial crisis had and continues to have on the economy.

The middle class is a main driver of the U.S. economy. They buy houses, cars, TV sets, furniture, appliances, clothing. Simply put: they spend money. The baby boomer generation started a renewed drive upwards just like their World War II parents did after the war. Who will drive the next move up?

One focus of our Economic Risk Report is on housing and autos. Going to our report one can see the hit housing took since 2008. In the Balance

1. The results on the "average joe " and how it affects his net worth.

2. The recovery (housing) hasn't shown a healthy back to level increase for job creation in this key industry.

3. The ripple effects off less income , less construction jobs and related jobs to housing and everything one buys for a house.

Consumer spending is what drives the economy.

One also has to understand that the nation has changed to a services production nation vs. a manufacturing one. While manufacturing is still important we feel services is a better indicator of the current economy. The the real makeup of the USA economy is the "Average Joe" or the "Middle Class".

Non-Durable goods are used by a consumer or which has an expected lifespan of three years or less. Examples of non-durable goods include food and clothing.

PCE is a little over 70% of GDP

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Income & Pay

Real Disposable Personal Income: Per capita: is a major component of the PCE ( "Average Joe") & a key driver of the U.S. economy. We are a consumer-driven economy. Disposable personal income is the portion of personal income that is left after personal taxes are subtracted, and thus is the amount of personal income available to people for consumption spending and saving. All else equal, a rise in consumer confidence will tend to increase the percentage of real per-capita income that is allocated to consumption, and decrease the percentage allocated to saving.

The US economy is mostly about consumption. Household/personal incomes extends beyond the individuals to the economy as a whole. If families have less money for consumption(see retail sales), businesses suffer, which in turn leads to layoff and further declines in personal incomes. The cycle continues in that the governments then receives less in tax revenues, etc....... a vicious cycle! Low Wage Article

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Purchasing power eroded by inflation is large. The inflation factor and how the FED computes it is important. We cover this in our Economic Risk Report. The middle class in the U.S. economy is actually earning less. Since 2000, the rate of change in real disposable income per capita in the U.S. economy (disposable income adjusted for inflation) has been declining.

The Working "Average Joe's" Balance Sheet

St. Louis Fed annual report states that it is important to learn more about the link between households' balance sheets--their savings, assets, debt and net worth, as distinct from wages and income--and the performance of the national economy. Average household wealth in real terms, contrary to recent headlines, has not fully recovered; indeed, it is only about halfway back to precession levels. Click here for video.

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Current Spending Habits

Jobs

The "Great Recession" had large and continuing affect on the Middle Class and the job outlook.

This chart (and last chart below ) shows we went backwards by 30+ years

Adding unto all of the problems is the aging boomer work force not retiring as early as one may think they should.

Employment to Population Ratio

A sustained contraction in the employment-population ratio. ^ chart

Economic normalization happens when spending rises relative to income, providing a boost to demand, output, and ultimately employment and income. The improvement in income then has positive second-round effects into spending. If we can't "up" the real income from increased jobs, better pay, more money per hour, how will the economy thrive? The American Dream has taken a big hit. Is it a knockout punch? I'm an Average Joe and I know I have only stayed even to slightly below since the 2008 crisis. Groceries, home, auto insurance & taxes all have had large increases in the last 5 years. What is your status? When or will The "Average Joe" start to thrive again?

One can see the problem of the economy & lack of jobs has had on the younger generations. Add the Generation X & Y debt have from college and the outlook gets pretty cloudy.

The next BIG problem?

This consumers liability and feds asset will be a large issue to deal with for all of us. read» charts» make sure to click on the maps to the right side

Federal Student loans make up around 39% of the feds assets add this with their other debt issues and.................

flow of funds»(quarterlyrelease)

Private student loans make up an even larger amount and problem. read»

Long-term, the "Private" economy (middle class) is what drives the nations economy. What needs to happen is more private sector jobs, better wages. Which means more spending, more new housing starts, etc........... Our outlook is guarded for the Average Joe's "American Dream". We believe structural change in housing & other related areas has affected the future economic outlook as compared to past recoveries. Combine the new debt by the younger generation and the inability of congress to act constructively. This all inhibits the private sector from prospering and adding new and/or higher paying jobs. You can see for yourself the concern we have for "The Return of the Average Joe." and the American Dream.

FED reads:

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• libertyStreet
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• What is the dollar worth calculator