Most Americans don't earn enough to afford basic costs of living, analysis finds
The gap between what Americans earn and how much they need to bring in to achieve a basic standard of living is growing, according to a new report.
The analysis, from the Ludwig Institute for Shared Economic Prosperity (LISEP), looks beyond whether people can afford daily necessities like food and shelter to consider whether they have the means to pay for things like the technology tools necessary for work, higher education, and health and child care costs.
In tracking costs associated with what the group calls a "basket of American dream essentials," LISEP says its Minimal Quality of Life index provides a truer picture of how Americans are faring than standard economic data, such as the nation's gross domestic product and jobless rate. The index captures the annual change in the typical costs facing low- and moderate-income households who are looking to maintain a basic quality of life.
"We analyze these components not just in terms of financial figures but as crucial elements that shape a family's capability to achieve a desirable standard of living," the group explains in a paper describing its approach.
The findings? For the bottom 60% of U.S. households, a "minimal quality of life" is out of reach, according to the group, a research organization focused on improving lower earners' economic well-being.
"The middle class has been declining — we just haven't recognized it fully," LISEP Chairman Gene Ludwig told CBS MoneyWatch. "It's really dangerous because it's the kind of thing that leads to social unrest, and it's not fair. The American dream is not that it's given to you — it's that if you work hard, you have a chance to get ahead and achieve the things in life that you want to achieve. It's not living in a tent, not having to steal."
The Ludwig Institute also says that the nation's official unemployment rate of 4.2% greatly understates the level of economic distress around the U.S. Factoring in workers who are stuck in poverty-wage jobs and people who are unable to find full-time employment, the U.S. jobless rate now tops 24%, according to LISEP, which defines these groups as "functionally unemployed."
Click on the link for the full article
US economy (Feb. 2025: Unemployment ticks up to 4.1)
The big, bad bond market could derail Trump’s big, beautiful bill
To pass a law in the United States, you need to jump through a lot of hurdles.
A bill has to first clear a committee in the House or Senate. (In the case of Republicans’ tax legislation this year, its components had to clear 11 different committees.) The House Rules Committee has to agree for it to come to the floor for a vote. It has to pass that vote. In the Senate, it has to get 60 votes to beat a potential filibuster, or else obey a set of byzantine rules allowing it to pass with a simple majority.
But another entity gets a vote, an entity not mentioned in the Constitution or in congressional rules or even physically located in Washington, DC. That entity is the bond market, and right now, it is very pissed.
Currently, the US makes up for any budget deficits it incurs by issuing bonds of various durations to cover the difference. It auctions those bonds — essentially IOUs issued by the Treasury Department — on the open market, where investors (banks, hedge funds, foreign central banks, pension funds, etc.) can bid on them.
To get them to bid, the US has to pay interest on the bond. And when the US borrows a lot, and especially if its fiscal policy indicates that the country may reach a point where it can’t pay back what it owes, investors will demand to receive more interest to compensate for the risk of default. That means the US has to pay more every year to service its past debt, and those payments in turn become future debt. If the interest they demand is high enough, the result can be an economic downturn, an upward debt spiral, or both.
While politicians pay attention to all kinds of economic indicators, from the unemployment rate to the stock market, the bond market is a different and more powerful animal. The most famous quote about the bond market’s power comes from former Bill Clinton adviser James Carville: “I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”
History is littered with cases of governments that were forced to abandon policies — or that even fell from power — because the bond market revolted. Just a few years ago in the UK, a mass sell-off by currency and bond traders forced the Tory government to abandon its plans for a massive deficit-ballooning tax cut and axe Chancellor of the Exchequer Kwasi Kwarteng, before then-Prime Minister Liz Truss herself was forced to resign after just 45 days in office. Banks like Citigroup were openly declaring that unless the UK got a different prime minister, the markets would continue to punish it. That is power.
Now, Congress is weighing a reconciliation bill that would increase the deficit by at least $3 trillion over 10 years, and possibly closer to $5 trillion if some of its temporary components become permanent, as seems likely. This is a big increase in America’s already substantial debt burden and markets are responding accordingly. Interest rates are heading higher, especially once you adjust for inflation. Countries once infamous for fiscal mismanagement — Greece, Spain, even Italy — can now borrow more cheaply than the United States can.
The US is not the UK; the bond market cannot depose a president the way it can a prime minister, simply because prime ministers are far easier to swap out. But that doesn’t mean that the bond market is powerless over US policy. It has the ability to make this tax bill much, much more costly for the US government and economy, and that ability could be decisive in shaping where the legislation goes from here.
The US issues a lot of different kinds of debt, but the kind you should pay closest attention to are 10-year bonds. These reflect the market’s views on the medium- to long-run trajectory of the government and economy, whereas 30-day or six-month bonds are much shorter-run indicators. The interest rate that’s most informative about government policy and long-run prospects is the “real” rate, adjusted for inflation. If inflation is 4 percent, investors will probably add about 4 percentage points to the real interest rate to make sure their investment doesn’t erode in value. The real rate thus reflects how much they expect to earn for essentially lending money to the US government in addition to just keeping up with overall prices.
Here’s the 10-year, adjusting for inflation, since the start of President Donald Trump’s first term:

In the aftermath of Covid, rates actually went negative after taking inflation into account. This is what’s sometimes called the “flight to safety”: In times of crisis, investors often move away from risky assets like stocks and toward reliable, predictable ones, like US government bonds. That drives interest rates down, sometimes even below inflation.
But since 2023 or so, rates have been much higher.
When Fed economists analyzed the spike that occurred in 2023, they concluded the spike in rates was indeed due to investors reacting to changing economic conditions: The US was issuing more debt, the Federal Reserve was tightening to try to control inflation, and future economic growth in the US was looking sluggish.
Other observers in the bond market have been sounding alarms, mostly citing excessive US borrowing. In 2023, Fitch, one of the three big credit rating agencies that issues risk evaluations of bonds, downgraded US debt, which previously had a perfect AAA rating. On May 16 of this year, Moody’s, another of the three, followed suit, amid tax cut negotiations in Congress. Standard & Poor’s, the third rater, had already downgraded the US after the 2011 debt ceiling fight, meaning there now isn’t a single rating agency giving US debt top marks.
As the 2023 downgrade indicates, this change isn’t entirely due to Trump. Covid did a number on the US debt picture, with trillions of dollars in relief measures passed and implemented, and many months of lower revenues due to the 2020 recession. But in January, as Trump prepared to return to the White House, bond analysts were already forecasting higher rates, noting his penchant for tax cuts and lack of seriousness about deficits. On May 20, amid the tax fight in Congress, a batch of 20-year government bonds had trouble selling at auction, sending rates flying higher still. The bond market, it is fair to say, is not pleased with the direction this administration is going.
Click on the link for the full article
To pass a law in the United States, you need to jump through a lot of hurdles.
A bill has to first clear a committee in the House or Senate. (In the case of Republicans’ tax legislation this year, its components had to clear 11 different committees.) The House Rules Committee has to agree for it to come to the floor for a vote. It has to pass that vote. In the Senate, it has to get 60 votes to beat a potential filibuster, or else obey a set of byzantine rules allowing it to pass with a simple majority.
But another entity gets a vote, an entity not mentioned in the Constitution or in congressional rules or even physically located in Washington, DC. That entity is the bond market, and right now, it is very pissed.
Currently, the US makes up for any budget deficits it incurs by issuing bonds of various durations to cover the difference. It auctions those bonds — essentially IOUs issued by the Treasury Department — on the open market, where investors (banks, hedge funds, foreign central banks, pension funds, etc.) can bid on them.
To get them to bid, the US has to pay interest on the bond. And when the US borrows a lot, and especially if its fiscal policy indicates that the country may reach a point where it can’t pay back what it owes, investors will demand to receive more interest to compensate for the risk of default. That means the US has to pay more every year to service its past debt, and those payments in turn become future debt. If the interest they demand is high enough, the result can be an economic downturn, an upward debt spiral, or both.
While politicians pay attention to all kinds of economic indicators, from the unemployment rate to the stock market, the bond market is a different and more powerful animal. The most famous quote about the bond market’s power comes from former Bill Clinton adviser James Carville: “I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”
History is littered with cases of governments that were forced to abandon policies — or that even fell from power — because the bond market revolted. Just a few years ago in the UK, a mass sell-off by currency and bond traders forced the Tory government to abandon its plans for a massive deficit-ballooning tax cut and axe Chancellor of the Exchequer Kwasi Kwarteng, before then-Prime Minister Liz Truss herself was forced to resign after just 45 days in office. Banks like Citigroup were openly declaring that unless the UK got a different prime minister, the markets would continue to punish it. That is power.
Now, Congress is weighing a reconciliation bill that would increase the deficit by at least $3 trillion over 10 years, and possibly closer to $5 trillion if some of its temporary components become permanent, as seems likely. This is a big increase in America’s already substantial debt burden and markets are responding accordingly. Interest rates are heading higher, especially once you adjust for inflation. Countries once infamous for fiscal mismanagement — Greece, Spain, even Italy — can now borrow more cheaply than the United States can.
The US is not the UK; the bond market cannot depose a president the way it can a prime minister, simply because prime ministers are far easier to swap out. But that doesn’t mean that the bond market is powerless over US policy. It has the ability to make this tax bill much, much more costly for the US government and economy, and that ability could be decisive in shaping where the legislation goes from here.
The US issues a lot of different kinds of debt, but the kind you should pay closest attention to are 10-year bonds. These reflect the market’s views on the medium- to long-run trajectory of the government and economy, whereas 30-day or six-month bonds are much shorter-run indicators. The interest rate that’s most informative about government policy and long-run prospects is the “real” rate, adjusted for inflation. If inflation is 4 percent, investors will probably add about 4 percentage points to the real interest rate to make sure their investment doesn’t erode in value. The real rate thus reflects how much they expect to earn for essentially lending money to the US government in addition to just keeping up with overall prices.
Here’s the 10-year, adjusting for inflation, since the start of President Donald Trump’s first term:

In the aftermath of Covid, rates actually went negative after taking inflation into account. This is what’s sometimes called the “flight to safety”: In times of crisis, investors often move away from risky assets like stocks and toward reliable, predictable ones, like US government bonds. That drives interest rates down, sometimes even below inflation.
But since 2023 or so, rates have been much higher.
When Fed economists analyzed the spike that occurred in 2023, they concluded the spike in rates was indeed due to investors reacting to changing economic conditions: The US was issuing more debt, the Federal Reserve was tightening to try to control inflation, and future economic growth in the US was looking sluggish.
Other observers in the bond market have been sounding alarms, mostly citing excessive US borrowing. In 2023, Fitch, one of the three big credit rating agencies that issues risk evaluations of bonds, downgraded US debt, which previously had a perfect AAA rating. On May 16 of this year, Moody’s, another of the three, followed suit, amid tax cut negotiations in Congress. Standard & Poor’s, the third rater, had already downgraded the US after the 2011 debt ceiling fight, meaning there now isn’t a single rating agency giving US debt top marks.
As the 2023 downgrade indicates, this change isn’t entirely due to Trump. Covid did a number on the US debt picture, with trillions of dollars in relief measures passed and implemented, and many months of lower revenues due to the 2020 recession. But in January, as Trump prepared to return to the White House, bond analysts were already forecasting higher rates, noting his penchant for tax cuts and lack of seriousness about deficits. On May 20, amid the tax fight in Congress, a batch of 20-year government bonds had trouble selling at auction, sending rates flying higher still. The bond market, it is fair to say, is not pleased with the direction this administration is going.
Click on the link for the full article
