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The biannual report card from the National Assessment of Education Progress (NAEP) has been released. The results indicate a lost decade for academic progress in America’s public schools, with little progress measured in eighth-grade reading and zero improvements for reading in fourth-grade or for mathematics in eighth-grade.

Despite the hundreds of billions of taxpayer dollars pumped into the education programs at state and federal levels per annum, the return on developing America’s intelligent, future leaders of tomorrow is failing.

“This has been education’s lost decade,” Michael Petrilli, president of the reform-oriented Thomas B. Fordham Institute, told The 74 Million.

NAEP was administered in 1Q2017 to a nationally representative sample of 149,400 fourth-graders and 144,900 eighth-graders. Fourth-grade scores in 2017 were unchanged in math and declined in reading, though the decline was not determined to be significant. On the other hand, eighth-graders made marginal progress in both subjects, though reading was much stronger than math.

The 74 Million said in the modern era of academic standards and school accountability over the last two decades, the flat trajectory in education progress for public school youth have left education reformers baffled.

“In some ways, the flat trajectory provides relief for educators after the especially bitter NAEP news in 2015, when scores dropped for three out of four age/subject groupings. The development came as states were still rolling out testing regimes aligned with the Common Core, and the new standards were widely (and controversially) blamed for bringing down student performance.

 

Although scores for American students have gone through periods of sizable and consistent growth — most recently at the dawn of the modern era of academic standards and school accountability in the late 1990s and early 2000s — results over the past 10 years have left education reformers at a loss.”

Petrilli said, “the one-point [increase] in eighth-grade reading? I’m not going to start a party for that one. We’ve been basically flat since the late 2000s. There was a time when we were making some big progress nationally, and we’re not seeing that now. The results are disappointing.”

The National Center for Education Statistics (NCES) noticed a troubling trend in test scores — spotted about two years ago. While the national average in test scores stagnated over the past decade, “scores for the highest-performing eighth-graders (those scoring at the 75th and 90th percentiles) nosed higher, while those for the lowest-performing students (those at the 10th and 25th percentiles) declined in fourth-grade math, eighth-grade math, and fourth-grade reading,” detailed The 74 Million.

“Some of the hypotheses [for growing score gaps] would include that we’re seeing some of the lingering effects of the Great Recession,” Petrilli said.

“And that can impact both kids, individually — what’s going on in their homes, if they’re experiencing greater challenges than before — and … schools, in terms of funding. If that’s a factor, you’d expect to see it most strikingly for the lowest-performing kids.”

University of Southern California education professor Morgan Polikoff said that the growing performance gap could be caused by wealth inequalities developed after the Great Recession.

“I think it’s certainly conceivable that that’s a real phenomenon — that there’s a widening of the gaps, and you sort of imagine that that might have something to do with widening socioeconomic gaps or increases in the degree of poverty among relatively poor people in the U.S.,” he explained to The 74. “That seems plausible.”

“The story seems to be no story,” he added.

“On average, it looks like not too much has changed from 2015. I think there was a good deal of progress for most grades and subjects from 1990 up to maybe 2005, 2007, 2009, somewhere in that window. And there definitely seems to have been some sort of leveling off since then.”

Among the 27 large cities across the United States for which the Department of Education published the 2017 NAEP test scores, Detroit and Fresno school districts had the lowest scores in math for eighth-graders; meanwhile, eighth-graders in Charlotte and Austin had some of the brightest students in the country.

Per CNSNews:

• Only 5 percent of Detroit public-school eighth-graders were proficient or better in math. Only 7 percent were proficient or better in reading.

• In the Cleveland public schools, only 11 percent of eighth-graders were proficient or better in math and only 10 percent were proficient or better in reading.

• In the Baltimore public schools, only 11 percent were proficient or better in math and only 13 percent were proficient or better in reading.

• In the Fresno public schools, only 11 percent were proficient or better in math and only 14 percent were proficient or better in reading.

Urban Districts Ranked By Percentage of 8th Graders Proficient in Math 2017 NAEP Test :

Urban Districts Ranked By Percentage of 8th Graders Proficient in Reading 2017 NAEP Test:

States Ranked By Percentage of 8th Graders Proficient in Math 2017 NAEP Test:

States Ranked By Percentage of 8th Graders Proficient in Reading 2017 NAEP Test:

If American exceptionalism begins with education, then why is the public school system falling apart?

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Via TruthInMedia.com,

As the U.S. moves closer toward all out war in Syria, a lot of what our government seems to base its intelligence on, especially claims of chemical weapon use by they Syrian government, is from an impartial humanitarian group called the White Helmets.

You’ve no doubt, heard of the White Helmets. They have been praised in the media as heroes and have reportedly saved more than 100,000 lives as of April 2018.

But who are the White Helmets really? Are they a legitimate organization or pawns, funded for the purpose of regime change?

Despite a recent U.S. funding freeze for humanitarian aid for Syria, the U.S. continues to fund the controversial group, known as White Helmets.

The White Helmets claim to be a neutral entity in Syria. They say they are just helping people caught in the middle of a civil war. But are they?

Follow the money and you will find numerous ties to government funding from not only the U.S., but the U.K., the Netherlands, Denmark, and Germany.

Untangling these ties to the White Helmets is complicated, so stay with me.

According to their website, the Syria Civil Defense, nicknamed the White Helmets, formed in “late 2012- early 2013” as self-organized groups.

Realizing they needed training, 20 Syrians went to Turkey back in March 2013 to learn from a former British army officer named James Le Mesurier.

Le Mesurier has ties to the failed NATO intervention in Kosovo. He developed a training program for Syrians that included trauma care, command and control and crisis management courses.

He is credited for helping form the White Helmets’ structure and operations.

Le Mesurier was able to fund this training program through Mayday Rescue, his Netherlands-based non-profit funded by grants from the Dutch, British, Danish and German governments.

Now, this brings us to December 2013, when the U.K.-based PR machine backing the White Helmets was established.

It’s called the Voices Project, set up as a private limited company for public relations and communications activities.

Part of the Voices Project’s articles of incorporation state that the organization seeks to “influence public opinion” and “influence governmental and other bodies and institutions regarding reform … legislation and regulation.”

Who set up the Voices Project? The first listed director on the articles of incorporation is Jeremy Heimans, the co-founder and CEO of the global PR platform “Purpose” and a co-founder of controversial online activist network “Avaaz”.

Though Heimans stepped down from his position with the Voices Project in 2015, his connection to the project is worth noting. Here’s why.

In February 2014, New York-based “Purpose” listed a job posting for interns to “help launch a new movement for Syria.”

By March 2014, the Voices Project set up The Syria Campaign NGO, which they describe as “a human rights organisation that supports Syria’s heroes in their struggle for freedom and democracy.”

This, coinciding with the graduates of the Mayday Rescue training establishing new teams in Syria.

Six months later, in October 2014, a conference of these teams came together to establish the Syrian Civil Defense as an official, national organization. They then became known as the White Helmets, thanks to The Syria Campaign.

According to their website, the White Helmets have been directly funded by Mayday Rescue, and a company called Chemonics, since 2014.

Yet there’s evidence that both of those organizations started supporting the White Helmets back in early 2013, right around the time the White Helmets claim to have formed as self-organized groups.

Mayday Rescue, as we said, is funded by the Dutch, British, Danish and German governments. And Chemonics?

They are a Washington, D.C. based contractor that was awarded $128.5 million in January 2013 to support “a peaceful transition to a democratic and stable Syria” as part of USAID’s Syria regional program. At least $32 million has been given directly to the White Helmets as of February 2018.

The firm has been funded by USAID for years, and carries a record of failures in supporting so-called humanitarian interventions, including in Libya.

What you need to know is that first, this was only part one of our look at the White Helmets.

There are even more dots to connect here, including the relationship between USAID, Chemonics, Jeremy Heimans and Azaaz. We will make those connections in another episode of Reality Check.

But for today, let’s make this clear: there are very real questions about the authenticity of the voice of the White Helmets as representative of the Syrian people.

It is also clear that the White Helmets have ties to organizations that are being funded by governments that have been seeking, and right now continue to, seek to overthrow the Assad government and to establish a new regime in Syria.

And yet our media and government act as if the information coming from the White Helmets is coming from an impartial observer. When in fact, it appears to actually be coming from an organization that is being funded with an agenda to see the Syrian government overthrown.

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After March’s dismally disappointing 102k payrolls print, expectations are for a swift rebound in hiring in the April jobs report to 192k – that will confirm that the March results were a fluke, and not a signal of an emerging economic soft patch… despite the collapse of economic data this month and a majority of labor market indicators deteriorating…

However, Goldman Sachs warns investors not to expect too much – Most labor market indicators decelerated somewhat, and we don’t expect a meaningful weather rebound (relative to trend).

Reasons to expect a softer report include the following:

1. Softer services business surveys. Service-sector employment surveys were softer on net in April. Our non-manufacturing employment tracker declined 1.7pt to 55.2. This deterioration was also broad-based, with decreases in five of the six business survey measures we track in the sector. In particular, the ISM non-manufacturing employment component declined 3.0pt to 53.6. Additionally, the Conference Board labor market differential – the difference between the percent of respondents saying jobs are plentiful and those saying jobs are hard to get – edged 0.9pt lower to +22.9, but still remains at a high level. Service-sector employment growth slowed to 87k in March, well below the 151k average over the last six months.

2. Softer manufacturing business surveys. The manufacturing employment surveys were also weaker on net in April. Our manufacturing employment tracker edged down 1.1pt to 58.4, still a relatively elevated level consistent with a solid pace of factory job gains. Manufacturing employment rose 22k in April, roughly in line with the 27k average over the past six months.

3. Tighter labor supply constraints. We see the labor market as at or a bit beyond full employment and diminished slack should exert some downward pressure on job growth. Labor supply constraints are likely to weigh the most on hiring in the hiring season months of April and May.

4. A drop in help-wanted ads. The Conference Board’s Help Wanted Online (HWOL) report showed decreases in both new (-1.0%) and total (-1.4%) online ads in April. We currently put only limited weight on this indicator in light of recent research by Fed economists showing that the HWOL ad count has been influenced by price increases for online job ads.

Neutral factors include:

1. No meaningful weather rebound. Weather very likely reduced March payroll growth as payrolls in weather-sensitive sectors (construction, retail trade, leisure and hospitality) fell 14k and job growth slowed significantly in the affected Northeast and Southeast regions. However, Exhibit 1 shows that the March regional weakness likely represents payback following above-trend growth in January and February. We therefore don’t expect a significant April bounce-back in job growth in the affected areas.

March Weakness in East Was Likely Payback from Earlier Weather Strength

2. Jobless Claims. Initial claims rebounded 6k between the survey weeks to 233k in the April survey week. In contrast, continuing claims have kept declining in April.

3. ADP. Private sector payrolls in the ADP report rose by 204k in April, slightly above consensus expectations. We don’t make much of this small beat because ADP’s predictive content for the BLS numbers has been very limited recently.

Goldman offers no factors that suggest a stronger report.

We expect the unemployment rate to decline to 4.0% in April after stabilizing at 4.1% for six consecutive months. The unrounded unemployment rate edged lower to 4.07% in March. The bar for the unemployment rate to decline on a rounded basis is therefore low, with trend job growth still likely roughly double the breakeven pace.

We estimate average hourly earnings for all private workers rose 0.2% in April, lowering the year-over-year rate to 2.6%. While last week’s cycle-high growth pace in the Q1 Employment Cost Index and the pick-up in our wage tracker suggest that underlying wage pressures are rising, our below-consensus forecast for the year-over-year rate reflects somewhat unfavorable calendar effects (as the pay period ends on the 14th) and a potential mean reversion following the firm March print.

Bloomberg notes that consensus has tended to undershoot the April payroll gain by five- and 10-year averages of 15k and 30k, respectively, in recent years. Similarly, April-hiring gains have shown a tendency to exceed the six-month trailing average by about 15k-40k. Both of these factors suggest an increase exceeding 200k. The ADP private employment survey results (204k) also point to a stronger outcome, as this series has shown a bias to underestimate by about 40k. The seasonal adjustment factor applied to April payrolls is typically somewhat larger than February and March; it has averaged near 865k over the past five years.

CONSENSUS  EXPECTATIONS

• Nonfarm Payrolls: Exp. 198k, Prev. 103k

• Unemployment Rate: Exp. 4.0%, Prev. 4.1%

• Average Hourly Earnings Y/Y: Exp. 2.7%, Prev. 2.7%

• Average Hourly Earnings M/M: Exp. 0.2%,  Prev. 0.3%

• Average Work Week Hours: Exp. 34.5hrs, Prev. 34.5hrs

• U6 Unemployment Rate: Prev. 8.0%

• Labor Force Participation: Prev. 62.9%

Unemployment rate expected to drop to lowest

since 2000

*  *  *

Finally, as Bloomberg notes, a substantial disappointment in payrolls would magnify concerns that trade-war anxieties are yielding tangible economic fallout.

Otherwise, the market focus will more likely be on the unemployment rate and pace of wage increases. The former is overdue to reach a new low, while consensus expects the latter to trend sideways.

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Authored by Philip Giraldi via The Strategic Culture Foundation,

There have been a number of developments in the endless inquiry into possible collusion between the Russian government and Donald Trump to manipulate perceptions and voting relating to the two presidential candidates in the November 2016 election. In particular, it has been alleged that the Russians were, with the connivance of some in the Trump team, able to obtain information damaging to Hillary Clinton while also misusing social media to send a message critical of the Democratic Party candidate.

“Russiagate” was born out of a desire to explain how Trump was able to defeat the Establishment candidate Clinton and it quickly focused on emails in possession of Wikileaks and meetings of Trump associates with Russians as a plausible explanation for the electoral result. The media opined that “It had to be the Russians,” who also had motive in their recognizing that Clinton was the stronger candidate whose harsh and steely glare was focused on the various crimes and misdemeanors alleged to be committed by Kremlin President Vladimir Putin in places like Ukraine and Georgia, not to mention Syria. Clinton’s campaign message was that she was prepared to do something about Putin while Trump was instead arguing that a good relationship with Moscow was a sine qua non for American foreign policy.

There are currently three investigations proceeding simultaneously looking into the Russian-Trump collusion, though one of them has finally come to an end. The House of Representatives’ Intelligence Committee investigation has concluded that there was no evidence that there had been “collusion, conspiracy, or coordination between the Trump campaign and the Russians” to influence or subvert the outcome of the election. The committee did, however, accept that there had been Russian “active measures” interference, apparently based largely on assumptions about WikiLeaks and the alleged activities of employees of Putin confidant Yevgeny Prigozhin’s Internet Research Agency on social media sites.

However, no evidence was produced by the committee to support the claim of Kremlin interference, described as an influence campaign having “strategic objectives for disrupting the US election,” and it is to be presumed that the judgement is based on suspicions regarding Russian behavior as well as assessments produced by administrators of the social sites themselves which revealed sketchy and often contradictory evidence based on presumed political ads purchased by the various Russian entities. Even the US media admits that the Facebook ads had little or no real impact on the election while claims that Democratic Party emails were either hacked or stolen by Russian agents or proxies have never been demonstrated.

Nor is there any actual evidence in the Congressional report that anyone in the Kremlin was trying to help Donald J. Trump get elected and it is interesting to note that many of the allegations about insinuations of foreign involvement in the election can be traced back for former senior intelligence figures who were themselves active in the Clinton campaign.

The House judgment was immediately attacked by the media and also by the outnumbered Democrats on the committee, claiming that the “premature” decision to end the investigation was political, to bail out an under-pressure president, but no one has produced any evidence suggesting that the contacts between Russians and Americans, “ill-advised” as some of them were, led to any deliberate or incidental electoral malfeasance. The Democrats and their allies in the media merely assert that more digging and additional otherwise unidentified witnesses would have produced the desired result.

Meanwhile, the investigation continues at the offices of the Robert Mueller Special Counsel and also at the Senate Intelligence Committee, which has proportionately more Democrats on board than does the corresponding committee at the House of Representatives. Senator Mark Warner has already warned that the work of his committee will continue, presumably until their either find something or have to finally admit that there is nothing to find.

Concerning Mueller there are daily newspaper reports explaining how his noose is tightening around President Trump, though no one quite explains credibly how that is so. What is clear so far is that Donald Trump is a highly immoral man by most standards and that a lot of his friends, if not criminals, were engaged in activity that might easily be described as sleazy. But sleazy does not exactly equate to a deliberate attempt to fix a national election and subvert the Constitution of the United States of America.

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Judging solely by the top-line numbers, the US labor market appears to be at its tightest level in decades. But if you look below the surface, of course, that narrative swiftly unravels, and the notion that the labor numbers have been at least partially goalseeked (possibly for political purposes) is almost unavoidable.

Last month, we pointed out how last month’s abysmal labor-market report was in reality even softer than many analysts initially believed. Case in point: A quick peek beneath the surface revealed sizable revisions in full-time job creation and also the discouraging fact that part-time jobs created only just offset the full time jobs lost during the period.

And as if this problem wasn’t already acute enough, the plight of the part-time worker could soon be even more widely shared, as a General Motors plant in Lordstown, Ohio is considering a radical plan that would see it become almost entirely reliant on part-time workers to power one of its shifts, the Tribune Chronicle reported. The plant almost exclusively manufactures the Chevy Cruze and has already gone through a round of layoffs in 2017, when the plant eliminated its third shift and cut 1,200 workers. It announced the elimination of its second shift – which also eliminated 1,500 jobs – last month.

The cuts come as Chevy Cruze sales have dwindled, as Wolf Richter over at Wolf Street shows us in the chart below:

Last month, GM announced that the second shift would be eliminated. But this week, the leader of the local United Auto Workers Local 1112 said the union and management might’ve found a way to save some of the 1,500 jobs cut from the factory’s second shift.

n a rare move, the General Motors complex in Lordstown may be considering using part-time workers to fulfill the plant’s needs after it was announced last month the second shift was being eliminated, costing approximately 1,500 workers their jobs.

United Auto Workers Local 1112 president Glenn Johnson said the union’s bargaining unit was working through “details.” Johnson was tight-lipped about the negotiations, saying only that there was an ongoing conversation between the parties involved. He did not reveal which parties.

Johnson added that he did not want to undermine the progress that has been made. When pressed for details, Johnson said, “you don’t know what you have until after the negotiation.”

A spokesman for the plant said the company does not talk about personnel situations.

“Plans are still being discussed for what will happen when we shift from two shifts to one,” the spokesman said.

He added that any employment matters “are pursued under the GM-UAW agreement.”

It appears that after Congressman Timothy Ryan – a “progressive” who challenged Nancy Pelosi for party leader following Trump’s victory over Hillary Clinton – urged GM to consider a “layoff aversion program,” the company has decided that employing an army of part-time workers who still depend partly on government benefits might just be the way to go.

But to the workers affected – don’t think of your jobs as part time work, think of it as shared work.

On April 24, U.S. Rep. Timothy J. Ryan, D-Howland, urged GM chairwoman and CEO Mary T. Barra to consider a layoff aversion program called SharedWork Ohio. The program would allow GM to reduce the laid-off workers’ hours in a uniform way. Affected employees would work a reduced set of hours each week and would be eligible for unemployment benefits in proportion to their reduced hours.

Ryan spokesman Michael Zetts said Tuesday he is not aware of whether GM would implement the program.

At least this way, every worker at the plant will be adversely affected by the layoffs, helping to ensure that none of them are earning enough to survive. Luckily for them, President Trump has established himself as a champion of wellfare programs like, say, food stamps…

…If “SharedWork Ohio” is branded a “success”, we wonder: Will other US automakers scramble to mimic it? And what would happen if they did?

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Authored by Daisy Luther via The Organic Prepper blog,

If you’ve noticed that it takes a lot more money to live the middle-class American Dream than it used to, you aren’t alone. Buying a house, saving for retirement, and putting your kids through college while living comfortably is a whole lot harder than it once was. Being part of the middle class sure isn’t what it used to be.

Despite the rosy outlook on employment numbers, things have become incredibly difficult for many families. They’re deeply in debt, living paycheck to paycheck, and without an emergency fund. Let’s take a look at what the media is saying about the middle class.

First of all, what IS “middle class”?

There are many different definitions of middle class, and a lot of it depends on where you live. “Easy,” you may be thinking. “Just live somewhere with a lower cost of living.” Unfortunately, it isn’t that easy, because when you move to an area with a lower cost of living, you’re likely to get paid less for your occupation.

Once upon a time, the middle class was the largest group of Americans. Now, according to the Pew Research Group, it is closely matched by people in the low-income class and the high-income class. The image below shows the stats for 2014.

Photo Credit: Pew Research Group

According to Quentin Fottrell, the personal finance editor for MarketWatch, “middle class” is tough to define:

There is no universal definition of the middle class. The Pew Research Center often uses the middle wealth quintile, the middle 20% of Americans’ income and wealth. Other economists have said it’s defined as making 50% above or below the median annual income. Most Americans regard a college education as a critical component to becoming middle class. Some 71% of people with a college degree consider themselves middle class versus just 58% of people with a high school diploma or less, according to a 2012 survey by Gallup. And yet college graduates in 2017 are shouldering $1.3 trillion in student debt.

Previous studies suggest those who identify as middle class as higher than 50%, but also indicates that the middle class is shrinking. Those who identify as middle class has fallen to 59% in 2010 from 62% in 1991, according to a separate report by the Pew Research Center, a nonprofit think tank in Washington, D.C.  (source)

Other sources cite variables like savings, net worth, debt, and spending to determine whether a family is “middle class.”

These two calculators will help you compare your income to others in your area:

• The Pew Research Group Income Calculator
• The CNN Money Middle-Class Calculator

For the purposes of this article, we’re going to go with Pew’s definition of the middle wealth quintile.

The middle class is shrinking

The middle class is getting smaller. According to an article on Quartz:

Pew defines middle earners as anyone who earns between two-thirds and twice the median household income in a given year. In 2014, this included a three-person household earning between $42,000 to $126,000 per year. In 1971, 61% of households were middle earners by this standard. By 2015, only 50% were. (source)

The Pew Group said:

After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number by those in the economic tiers above and below it. In early 2015, 120.8 million adults were in middle-income households, compared with 121.3 million in lower- and upper-income households combined, a demographic shift that could signal a tipping point, according to a new Pew Research Center analysis of government data. (source)

Both of the above articles state that more people are getting pushed into the higher income class than are sliding into the lower income class, which sounds great, initially. But when you look at it more closely, those in the middle class are far less wealthy than they used to be:

…middle-income Americans have fallen further behind financially in the new century. In 2014, the median income of these households was 4% less than in 2000. Moreover, because of the housing market crisis and the Great Recession of 2007-09, their median wealth (assets minus debts) fell by 28% from 2001 to 2013…

…The gaps in income and wealth between middle- and upper-income households widened substantially in the past three to four decades. As noted, one result is that the share of U.S. aggregate household income held by upper-income households climbed sharply, from 29% in 1970 to 49% in 2014. More recently, upper-income families, which had three times as much wealth as middle-income families in 1983, more than doubled the wealth gap; by 2013, they had seven times as much wealth as middle-income families. (source)

It’s getting harder and harder to thrive on a middle-class income

The middle class isn’t what it used to be. Once the “American Dream,”middle-class families are struggling for several reasons. Despite their incomes, they owe more and have saved less than ever before.  If you can dig through the politically charged introduction and get to the statistics in this NY Mag article, you’ll find the following:

The percentage of families with more debt than savings is higher now than at any point since 1962, while the median American family’s net worth is lower than it’s been in nearly a quarter-century…

…So, this is what a “good” economy now looks like in the United States: shrinking household wealth; soaring middle-class debt; wage growth that can’t keep pace with the rising costs of housing, healthcare, and higher education; job growth concentrated in part-time positions; widespread retirement insecurity; and more wealth-less households than America has seen for 56 years. (source)

Having more debt than savings is called “negative wealth.” One-fifth of American households fall into this category. Of course, $1 trillion in credit-card debt and $1.4 trillion in student loan debt has to take a toll eventually, right?

Then there’s the ridiculous cost of healthcare in our country. (I recently had my own bad experience with healthcare costs.) Those who are on the upper end of the middle class are hit with premiums well into the thousands of dollars per month for far less coverage than they had previously.

“Health-care spending is growing at an unsustainable rate. Insurance and medical costs are draining the incomes of the middle class—tens of millions of people who earn too much to qualify for government-subsidized coverage, but not so much that they don’t feel the bite of medical bills…Health premiums and out-of-pocket costs wiped out most of the real income gains for a median family from 1999 to 2011, according to an analysis published on the blog of the journal Health Affairs in 2013.” (source)

Finally, Americans don’t have much in the way of an emergency fund. A recent study found that a whopping 47% of us would be unable to cover an unexpected bill of only $400. The middle class – and often even the upper middle class – are living paycheck to paycheck, and not always through poor handling of money.

Where the great jobs are, folks want to make $300,000-400,000 to live a middle-class lifestyle.

Lots of young people go deeply into debt for an education that will (hopefully) land them a job in Silicon Valley, New York City, or some other metropolitan area. After all, that’s where the jobs that start you off at $80,000 a year are, right?

Unfortunately, these are also the places in which the cost of living is completely out of reach for those with middle-class incomes, making it so that to be “middle class,” people feel as though they need to earn anywhere from $300,000-400,000 per year. This article pinpoints the actual amount of money you’d need to make in 25 different metropolitan areas to live a middle-class lifestyle.

While there’s a big difference between these amounts and the amounts that statistics show are needed, the stats aren’t showing everything. Sam Dogen wrote an article about why you need to earn more:

Let me tell you a sad story: In order to comfortably raise a family in an expensive coastal city like San Francisco or New York, you’ve got to make at least $300,000 a year. You can certainly raise a family earning less as many do, but it won’t be easy if your goal is to save for retirement, save for your child’s education, own your own home instead of rent and actually retire by a reasonable age. (source)

Here’s the budget he put together. If you read the article and look at his review of the expenses, they aren’t as out of whack as they might sound to those of us who live outside of the major metro areas.

While I can’t actually imagine making that kind of money every year, neither can I imagine facing those kinds of expenses. When your base costs are that high, even hardcore frugality can’t save you.

What’s a middle-class family to do?

It’s essential to watch the trends and be ready if things come tumbling down. Here are the things on which you should focus:

• Building an emergency fund – you don’t want to be one of those people who can’t handle a $400 emergency, right?

• Reducing your fixed expenses – this will help you through the rough times

• Building a stockpile – this will cut your costs to the bare minimum during bad times

• Paying off debt – this will help you live within your means

It’s essential to pay attention to what is going on in the economy. Jose, our writer from Venezuela, wrote of numerous warning signs that should have told him that a financial crisis was drawing near. If you want to keep up to date with what is happening, subscribe to my newsletter here.

Finally, maybe it’s time to take a look at the lifestyle for which you yearn. Maybe you need to focus on simplicity. Maybe you don’t need to keep up with the Joneses. Maybe, after some adjustment, you’ll find that you are happier without the stress of competing for that middle-class lifestyle.

Figure out your priorities. Would you rather have a big house or travel the world? Would you prefer to put your kids through school debt-free or have a new car every other year? Most of us can’t do both.

The only way to be different from those families who are struggling to pay their $24,650 in monthly expenses is to live differently than they do. Being part of the middle class isn’t what it used to be. It doesn’t take a financial expert to see that the US economy, despite the optimism from the White House, is going to continue to hit most of us hard. Now is the time to make the changes before they’re forced on you.

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Just when you thought Elon Musk has had enough headaches for one day, here comes Vertical Group’s Gordon Johnson with some more bad news for the flamethrower man.

Are TSLA’s Claims That Its Autopilot Feature Reduce Crash Rates By As Much As 40% Exaggerated?

Quick Take: In short, we note this recent blog post from TSLA (link) dated March 30, 2018, where the company stated:

“Over a year ago, our first iteration of Autopilot was found by the U.S. government to reduce crash rates by as much as 40%. Internal data confirms that recent updates to Autopilot have improved system reliability.”

In our view, this statement has been used by TSLA many times in the past, and has been a key underpinning of its “software advantage”. Furthermore, institutional analysts have used it as a means to justify TSLA’s current valuation (link).

However, we note this article from Reuters, published last week, which has gotten very little fanfare – link. More specifically, the article states:

“In 2017, NHTSA closed a probe into a May 2016 fatal crash involving a driver using the system and cited data from the automaker that crash rates fell by 40 percent after installation of Autopilot’s Autosteer function. Tesla has repeatedly cited the statistic in defending the system. NHTSA said Wednesday that its crash rate comparison “did not evaluate whether Autosteer was engaged.” The agency added that it “performed this cursory comparison of the rates before and after installation of the feature to determine whether models equipped with Autosteer were associated with higher crash rates, which could have indicated that further investigation was necessary.”

CONCLUSION: While this topic was not covered on TSLA’s 1Q18 conference call last night (our analysis on this call will be published shortly), given Autopilot is among the main key drivers of TSLA’s current valuation, and the “Autopilot was found by the U.S. government to reduce crash rates by as much as 40%” line has been used by TSLA time-and-time again, we feel this development could prove more important than the company’s earnings conference call yesterday.

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Authored by James Dorsey via Mid East Soccer blog,

Subtle shifts in Chinese energy imports suggest that China may be able to exert influence in the Middle East in alternative and subtle ways that do not involve military or overt economic pressure.

The shifts involve greater dependency of the Gulf states on oil and gas exports to China, the world’s largest importer, at a time that the People’s Republic has been diversifying imports at the expense of Gulf producers.

The shifts first emerged in 2015 when Chinese oil imports from Saudi Arabia rose a mere two percent while purchase of Russian oil jumped almost 30 percent. Russia rather than Saudi Arabia has been for much of the period since China’s biggest crude oil supplier.

The shifts were reinforced by the US shale boom, a resulting drop in US imports from the Gulf, and President Donald J. Trump’s tougher trade policies.

“With the Trump administration, the pressure on China to balance accounts with the U.S. is huge… Buying U.S. oil clearly helps toward that goal to reduce the disbalance,” said Marco Dunand, chief executive and co-founder of commodity trading house Mercuria.

At the same time, China became in 2016 the largest investor in the Arab world with investments worth $29.5 billion, much of which targeted infrastructure, including the construction of industrial parks, pipelines, ports, and roads.

Compounding the impact of shifts in Chinese energy imports is the fact that despite support for Russian policy in the Middle East, Beijing increasingly fears that Moscow’s approach risks escalating conflicts and has complicated China’s ability to safeguard its mushrooming interests in the region.

Viewed from Beijing, the Middle East has deteriorated into a part of the world in which regional cohesion has been shattered, countries are fragmenting, domestic institutions are losing their grip, and political violence threatens to effect security and stability in northwest China.

China’s concern is likely to increase if and when the guns fall silent in Syria and the country begins to focus on reconstruction. Already China worries that Uyghur foreign fighters in Syria and Iraq are heading to areas closer to Xinjiang in Pakistan and Afghanistan.

An end to the war in Syria, moreover, opens up economic opportunity but is also likely to sharpen rivalry between Russia and China as that will play to China’s strength and highlight Russian weaknesses.

China’s interest in Syrian reconstruction goes beyond dollars and cents. “Syria can be a key logistics hub for China. Its history is the key to bringing stability in the Levant, meaning it has to be incorporated into China’s plan in the region. From a security perspective, if Syria is not secure, neither will (be) China’s investment in neighbouring countries,” said Kamal Alam, a Syrian military analyst.

All of this raises the question of how China can best stand up for its interests against the backdrop of a perception among Chinese scholars that China’s unsuccessful efforts to mediate in multiple conflicts in the Middle East, including Israel-Palestine, Syria and the Gulf crisis that pits a United Arab Emirates-Saudi-led alliance against Qatar, have failed to position the People’s Republic as a credible alternative to the United States and Russia.

Pouring fuel on the fire, is the fact that Chinese support for Russian policies in the United Nations Security Council and elsewhere has effectively identified Beijing with Moscow rather than allowed it to differentiate itself.

The Middle East has already forced China to move away from long-standing principles that underwrote its foreign and defense policies for decades like non-interference in the domestic affairs of others and a refusal to establish foreign military bases even if officially they remain valid.

China has in part been able to maintain the dichotomy between theory and practice by evading public discussion on issues such as whether and under what circumstances China should use military force or apply economic pressure as it did for example when it expressed in 2016 discontent with a South Korean decision to deploy a US THAAD (Terminal High Altitude Area Defence) anti-missile system.

Beyond the establishment of China’s first foreign military base in Djibouti, Chinese special forces have been advising Syrian president Bashar al-Assad’s regime in its operations against jihadists that include Uyghurs in their ranks and have operated on the Afghan side of the Central Asian nation’s border with the People’s Republic.

China scholar Andrea Ghiselli noted that Chinese diplomats, scholars and journalists seldom focus on security in public, pointing instead to “the positive elements” of China’s relationships in the Middle East.

Nevertheless, Mr. Ghiselli observed that few Middle Eastern leaders attended last year’s Belt and Road Forum in Beijing that was intended to showcase China’s Eurasian-focused infrastructure investment initiative as “a more open and efficient international cooperation platform; a closer, stronger partnership network; and to push for a more just, reasonable and balanced international governance system.”

The Gulf crisis has rendered the six-nation Gulf Cooperation Council that groups Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain impotent and complicated negotiations for a free trade agreement with China.

Similarly, a potential withdrawal this month of the United States from the 2015 international agreement that curbed Iran’s nuclear program would likely put China at odds with Middle Eastern proponents of a tougher attitude towards the Islamic republic like Saudi Arabia, the UAE and Israel.

The hardening of Middle Eastern fault lines is likely to make it increasingly difficult for China to remain aloof and emphasize economic and trade relationships without getting sucked into the region’s multiple conflicts.

Saudi Arabia has so far refrained from making economics a fixture of its relationships in its effort to counter rising Iranian influence in the Middle East, and together with the UAE, has not attempted to force third countries to abide by its boycott of Qatar.

The question is whether the Gulf states will maintain their caution. Omar Ghobash, the UAE’s ambassador to Russia, suggested last summer that the anti-Qatar alliance could “impose conditions on our own trading partners and say you want to work with us then you have got to make a commercial choice.”

The alliance has so far not acted on Mr. Ghobash’ suggestion, in part because the international community, including China, have called for a negotiated end to the crisis and refused to back the Saudi-UAE position.

The shifts in China’s energy imports coupled with China’s need to protect its interests means that the People’s Republic may be in a position to leverage its power in alternative ways.

“This…gives China significant leverage to impose its preference in oil contracts and improve its own energy security. It also means that China has the capability to greatly determine the economic future of countries currently engaged in all the regional hotspots, a costly endeavour that cannot be sustained without matching capital inflows,” Mr. Ghiselli said.

“Thus far,” he added, “China has bought oil and gas from both Sunni and Shia countries without showing evident preferences. However, were China to do otherwise, its actions might bring produce deep changes in the region in ways not different from those of a military intervention in favour of one of competing parties.”

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One out of every six American retirees is a millionaire, according to a new report by investment manager United Income, which notes that the average retiree’s wealth has risen over 100% since 1989, to $752,000  – while the share of millionaires has doubled.

“Retirees are healthier and wealthier than any previous generation,” reads the report. 

While income inequality has remained about the same since 1989, a rising stock market has resulted in a 42% rise in wealth inequality among American retirees. 

“People have held incomes and spending constant over time,” said Matt Fellowes, United Income’s founder and chief executive officer. “The wealthiest retirees are wealthier but are not spending more, relative to previous generations.”

The gap between the wealthy and the ultra-wealthy has also widened. The wealth of the median millionaire rose by about 12 percent from 1989 to 2016, while the median millionaire’s equity position was swelling from 27 percent of financial accounts to 55 percent. The wealth of the top 1 percent of millionaires, meanwhile, more than doubled, from $14.9 million to $31.3 million, in 2016 dollars, as their equity positions jumped from 30 percent to 69 percent, according to the report. –Bloomberg

“It’s clear that the dividends from being an investor are paying off for retirees fortunate enough to have savings and investments,” said Fellowes. “What’s discouraging is that those who are not saving or investing are just getting left progressively farther and farther behind as each successive generation enters retirement.” In other words, if you want to retire wealthy, you better be rich to begin with.

The analysis uses data from various sources including the Federal Reserve Board, the US Bureau of Labor Statistics, the Census Bureau, the Internal Revenue Service, and the Centers for Disease Control, for their in-depth analysis of the changing lives of retirees in the US.

“Credit card use has also grown broadly, but more as a cash management tool than a lifestyle-enhancing product. In particular, since 1989, the share of retirees with credit card debt grew from 18 percent to 33 percent. But the average balance among all retirees is just $1,504, or four percent of the average income among retirees. That number may be lower than what is optimal, if retirees are instead withdrawing money from investment accounts to fund spending volatility due to unexpected expenses, which grow in frequency as households age.” (United Income)

The study also reveals that 62% of retirees enjoy their sunset years without physical or cognitive problems – up from just 49% in 1963 when such data was first taken.

Perhaps that has something to do with the reduced financial stress retirees are under compared to three decades ago. While around the same number of people are dependent on Social Security for 50%+ of their income, nearly half of retirees are living on minimum wage or less, and those living below the poverty line has decreased from 14% to 12%. 

“As retirees have become increasingly healthier and wealthier, they are staying put, choosing instead to live in urbanized communities close to amenities they have known as workers. In fact, there is no relationship between where retirees live and the state’s tax rate, crime rate, or weather. In addition, even though the cost of living is more expensive for growing shares of retirees who remain in high-cost areas of the country, the propensity of serious consumer finance challenges among retirees has also declined.”

And here’s some additional trivia: retired Americans love their TV!

“The largest change in activity is a near doubling of the amount of time retirees watch TV over the past 40 years,” the report notes.

The average retired 60-year-old now watches television almost three hours every day. The increases were largest in high-income, highly educated households, which experienced a 78 percent rise in couch time since 1975, versus 43 percent for lower-income households. –Bloomberg

In fact “for every 10 minutes of time added onto the life of a retiring 60-year-old, the share of time spent awake and in front of a TV every day among retirees increased by about one minute, compared to about a 20-second increase in the amount of time spent on exercise, outdoor activities, or sports,” reads the report.

That said, for all the TV retirees are watching, they may not be learning much from their viewing habits, suggests the report. Pew Research Center reveals that over 55% of households over the age of 65 watch cable new programs, while “one multi-country study found that public broadcast news (such as PBS) increased political knowledge, while cable news actually reduced knowledge that people have about actual events.”

And while American retirees may be a bunch of rich, TV watching, financially sound folks – they’re also living longer thanks to advances in diet and medicine, with the average 60-year-old living nearly 10 years longer than their TV-less ancestors in 1900. 

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