Disposable personal income; i.e., take-home pay, hasn’t really increased much in the last few years. Neither has personal spending nor savings. That’s because there’s no real, sustainable growth in the economy anymore. Okay, maybe there’s hope for the future, but right now – things don’t look good with unemployment unchanged at 7.6%.
If you’re living in South Dakota, Iowa, Missouri, Ohio, Kentucky, Tennessee, Virginia, or Alaska, your income might be a little better than if you’re in California, Montana, Wyoming, Oklahoma, Arkansas, or New York; but, not by much. The rest of the states are also in an economic funk by varying degrees.
If you have a job in the private sector, like Durable Goods Manufacturing, Construction, Real Estate, Finance or Insurance, you probably stand a chance for a pay increase in 2013. Those industries were leading contributors to the small growth in the nation’s economy in 2012 and first half 2013.
However, with respect to the Agricultural sector, its contribution to GDP declined for a third consecutive year. Consequently, chances for an increase in farm paychecks are slim to nothing. Part of the problem is an ever increasing volume of imports of food stuffs, feeds and beverages that keep prices too low for domestic workers to make more money.
A variety of agricultural imports are rising steadily from China, Canada, Mexico, and the rest of the Americas. This competition, coupled with federal policies and regulations on domestic farming are having a bad economic effect on farm management and productivity.
Another economic condition hurting your pocket book is the country’s persistent trade deficit. For example, current imports of goods are approximately $2.3 trillion and exports $1.6 trillion. That translates into a net deficit of around $700 billion annually. These import deficits are contributing to your pocket book pinch in ways that go beyond the scope of this paper to fully explain.
Briefly, however, trade creates jobs for exporting industries, but destroys jobs when imports replace the output of domestics firms. Because trade deficits have increased annually for more than a decade, more jobs and wages in the United States have been lost by imports than created by exports.
Beside all of the above, another cause for your pocket book pinch is growing inflation. The depreciating value of our money results in getting less for more dollars spent; and this bum trend is barely under control by the Federal Reserve. However, according to the U.S. Bureau of Labor Statistics, there are noticeable increases in Consumer Price Indexes for consumer essentials; such as food, which increased 1.4%. Also, housing costs that increased 2.2%; additionally, fuels and utilities prices went up 3.9%, and public transportation bumped to 3.2%. Medical Care services, as though they weren’t high enough already, increased 3.9%.
Some political analysts believe the rise in inflation is economically manageable and within the “consumer’s comfort zone of 2.5%.” However, others believe the inflation rate that determines Federal Reserve monetary policy (the core rate) understates real inflation because it ignores soaring food and energy prices. Consequently, use of the core rate makes the economy look healthier than it really is. Therefore, the Fed’s policies in trying to stabilize inflation are criticized as not working, nor will they work in the future due to the use of flawed data.
Certainly, the above list of economic conditions offered as contributing to a pocket book pinch does not exhaust all of the possible reasons for this painful condition. There are more things you might want to add. However, knowing all the possible reasons for a lousy economy doesn’t necessarily lead to a worthy conclusion or solution. What matters is determining when and if an actual recovery is in our future.
In this regard, there are economic indicators that give clues to the likelihood of an economic recovery and opportunity to refill empty pocket books. Of course, they are not perfectly accurate. In fact, they are often wrong because false data inadvertently enters into their construction and analysis which can lead to wrong interpretations.
Nevertheless, the widely used Conference Board Employment Trends Index (ETI) was selected to provide some economic insight as to whether incomes might improve this year and next. A look at the data shows an encouraging sign that things may get better.
The currently available June ETI index shows a 3.8% increase versus a year ago. That’s pretty good. And, the increase reflects positive contributions from Industrial Production, Unemployment Insurance Claims, Number of Temporary Employees, Real Manufacturing and Trade Sales indexes. So, based on this admittedly scant, but plausible evidence, there’s hope of relief for the pocket book pain.
Thanks for reading
 Bureau of Economic Analysis, June, 2013. Disposable income declined an average of 1.2% for all states.
 USDA Economic Research Service
 Farm and non farm income taxes, social security, self employment taxes and environmental laws (endangered species, dust prevention are some of the specific laws).
 Economic Policy Institute policy research studies 2003 and 2008.
 Current 12 months CPI increased 1.8%. The CPI for all items, less food and energy, increased 1.6%
 See BloombergBusinessweek article The Great Inflation Debate, June 13, 2013.
 During the depression of the 1930s, Congress demanded higher inflation to help pay for government public relief and works programs. Freedom from Fear, D.M. Kennedy, 1999
 A full discussion on data errors is in Oskar Morgenstern book, Accuracy of Economic Observation.
 The index aggregates eight labor-market indicators into one composite index to show an underlying economic trend.