armstrongeconomics.com / By Martin Armstrong /
There is a backdrop to the whole deflationary mode that is not really being discussed. Household income has declined by almost 5% from the high in 2007. With the rise in payroll taxes and Obamacare, this should decline at least another 5% in 2013. Meanwhile, banks and insurance companies continue to downsize shifting back office jobs overseas. In discussion I personally had with a major insurance company, their take on this has been rather stark. For every $50,000 they pay an employee in the USA, I was told their actual costs are $125,000. This has led many to shift jobs to the Philippines (reason for its upgrade), India, and believe it or not – POLAND!
Consequently, staff in the USA are being replace with low level people far less educated and this is reflected in many areas. This is contributing to the STAGFLATION that is underway. The Fed is conflicted by this data contrasted against the rising Dow. They are confused to say the least. This is a major contributing factor to the rise in corporate profits, yet the lower unemployment is not reflecting the decline in income.