I don’t need to remind you how devastating the economic collapse of 2008 and 2009 was. No retiree or investor will soon forget that.
But, since that time, the standard media “truth” has been that the economy is slowly recovering. They point to falling unemployment as a key indicator. Investors and retirees become more comfortable in their belief that the economy will soon return to full strength and it will be smooth sailing from there.
But what if that’s not actually the case? As a recent Heritage.org report explains, there is reason to believe that the economy is much worse than “experts” are letting on:
The American economy is experiencing the slowest recovery in 70 years. In addition to persistently high unemployment, labor force participation has fallen sharply since the recession began in December 2007. Today, 6.9 million fewer Americans are working or looking for work. This drop accounts for virtually the entire reduction of the unemployment rate since 2009 because those not looking for work do not count as unemployed.
Demographic changes explain less than one-quarter of the drop in labor force participation. The Council of Economic Advisers (CEA) estimate that demographics explain half of the drop in labor force participation, but the estimate ignores the effect of rising education rates. The baby boomers are aging and thus more likely to retire, dropping out of the labor force, while the population has become more educated and thus more likely to work. These demographic changes together explain less than one-quarter of the drop in labor force participation.
The remaining drop in participation primarily comes from millions more people collecting Social Security Disability Insurance (SSDI) or attending school. While those enrolled in school will probably return to the labor force, those going on the disability rolls will not. They will remain permanently outside the labor force.
What if the economy is still struggling on the brink of collapse? What would another financial crisis do for YOUR retirement prospects?
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