THIRD WORLD U$A

A boomer couple lives on Social Security and receives $23 a month from SNAP for food: 'How are we to survive?'

Allie Kelly
Sun, Jun 2, 2024

• Mary Dacus, 69, struggles to afford basic necessities with only Social Security income.

• Inflation and limited income have forced Dacus and her husband to drain their savings.

• Older adults like Dacus face financial vulnerability, with many lacking sufficient retirement savings.

Mary Dacus, 69, doesn't have a savings account anymore.

She lives with her husband Stephen, 67, and their two dogs in Robinson, Illinois. They find it difficult to make ends meet, and Dacus often worries about paying for groceries and healthcare.

A few years ago, Dacus said she could afford "wants," like an item at the thrift store, and she and Stephen could travel on the weekends. They even had some savings for retirement.

But, with inflation and an increasingly limited income, she said they now struggle to afford basic necessities.

Social Security is the couple's only source of income. Dacus receives $854 a month, and her husband receives $1,286 a month, according to documents reviewed by Business Insider. Additionally, her household qualifies for $23 a month in SNAP benefits to buy food.

"If we worked a 40-hour week from Monday through Friday with my income, it would come out to like $2 an hour," she said, comparing her Social Security income to a full-time work salary. "They're paying $12 an hour or something over at McDonald's."

Dacus is one of the millions of Americans who are living paycheck to paycheck. Her income places her above the federal poverty line, but her household income still isn't enough to make ends meet. Like ALICEs — people who are asset-limited, income-constrained, and employed — Dacus doesn't qualify for most forms of government assistance.

Older adults are especially financially vulnerable, and many boomers worry they won't have enough money to cover living expenses in retirement.

Fifty-two percent of boomers have $250,000 or less in retirement assets, per an April report from the Retirement Income Institute, the retirement-focused research arm of the Alliance for Lifetime Income. What's more, the Census Bureau's Current Population Survey found that more than half of Americans over 65 have an annual income of $30,000 or less.

And, if lawmakers don't intervene, the US Social Security fund is expected to dry out by the late 2030s.

"It scares us to death because we'll still be here, God-willing," Dacus said. "How are we to survive?"

With no savings and credit card debt, Dacus struggles to make ends meet

Last fall, the couple moved to Robinson from Blytheville, Arkansas. They wanted to be closer to Dacus' brother and were able to buy a house for less than $50,000 using settlement money from a lawsuit. She isn't sure they would be able to afford stable housing if they had to pay rent.

Dacus said she never has "any extra money" anymore. The couple has nearly $10,000 in credit card debt and had to drain their savings account to afford housing, groceries, and healthcare.

Sometimes, Dacus has to request an advance on her Social Security check to buy food because her SNAP benefits aren't enough.

To make sure she and Stephen have enough to eat, Dacus depends on food banks. She has been turned away before for having the wrong ZIP code — food banks typically manage demand by only serving households with specific addresses — but Dacus said the nearest food bank to her is across town.

Dacus is anxious about affording her car, utility, and cellphone bills. Unless they have a required vaccination, she can't take her dogs to the vet. She and her husband rarely celebrate Christmas and anniversaries because they can't afford gifts.

"It's a struggle," she said. "Even our change container only has about $1.50."

Most of the couple's prescriptions and basic medical bills are covered by Medicare, but they don't have Medicaid, meaning their insurance doesn't cover long-term care or other non-emergency medical expenses. And, a few weeks ago, Stephen received a cancer diagnosis. They aren't sure yet what kind of treatment he will need, but Dacus said if insurance won't cover it, it could be financially "catastrophic."

She wishes there were more resources for older adults. Dacus has tried to apply for government assistance besides SNAP, but her options are limited. She said it's especially difficult to get help when you don't have children or if you live in a rural area.

"A lot of people think that, with Social Security, you get this big check, and you can move to Florida, and you could buy a boat and go fishing," said said. "That's not what it is."

U.S. Money Supply Is Doing Something So Scarce That It Hasn't Happened Since the Great Depression -- and a Big Move in Stocks May Be Forthcoming

Sean Williams
Sun, Jun 2, 2024, 


Over long stretches, Wall Street has demonstrated that it's a wealth-creating powerhouse. Compared to other asset classes, including gold, oil, housing, and Treasury bonds, stocks have handily outperformed on an annualized return basis over the last century.

But when the lens is narrowed to just a few months or a couple of years, the performance of the broad-market indexes becomes much tougher to forecast. In fact, the ageless Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and growth stock-powered Nasdaq Composite (NASDAQINDEX: ^IXIC) traded off bear and bull markets in successive years for the first four years of this decade.


When the stock market is volatile, it's only natural for investors to seek out clues that might signal which direction stocks will head next. While there's no such thing as a predictive indicator or metric that can, with concrete accuracy, forecast where the major stock indexes are headed, it doesn't stop investors from trying to gain an advantage.

Image source: Getty Images.

However, there are a small number of indicators that have strongly correlated with historic moves higher or lower in the Dow, S&P 500, and Nasdaq Composite.

One such predictive tool, which hasn't signaled the warning we're seeing now since the Great Depression, appears to portend trouble for the U.S. economy and a big move to come for stocks.
This is a first for the U.S. money supply in more than 90 years

The forecasting metric I've alluded to above is the U.S. money supply. Though the U.S. money supply has five different measures, the two with the most merit tend to be M1 and M2.

M1 money supply takes into account cash and coins in circulation, as well as demand deposits in a checking account. Think of it as money that's very accessible and can be spent at the drop of a hat. Meanwhile, M2 factors in everything in M1 and adds in savings accounts, money market accounts, and certificates of deposit (CDs) under $100,000. It's still money that's accessible, but it takes a bit more work to get to and spend. It's this category, M2 money supply, which is cause for concern.

Normally, little attention is paid to M2 money supply. That's because it's been rising with virtually no interruption for the last nine decades. With the U.S. economy growing over time, it's not surprising that more capital has been needed to facilitate transactions.

What's abnormal is a decline in the U.S. money supply -- which is exactly what we're witnessing right now with M2.

In April 2022, the Board of Governors of the Federal Reserve reported that M2 peaked at an all-time high of $21.722 trillion. For some context, that's up from $286.6 billion in January 1959 and represents a compound annual growth rate of approximately 7%. But as of April 2024, M2 came in at $20.867 trillion, representing a decline of nearly $855 billion -- 3.94% on a percentage basis -- in two years. It's the first time M2 money supply has backed off more than 2% from its all-time high since the Great Depression.

The stipulation to this decline that shouldn't be overlooked is that M2 exploded higher by 26% on a year-over-year basis during the height of the COVID-19 pandemic. Multiple rounds of fiscal stimulus from the federal government, coupled with low interest rates, flooded the U.S. economy with capital that rapidly expanded the money supply. An argument can be made that the nearly 4% retracement in M2 over the last two years is nothing more than a normalization after a historic expansion.

I'll also point out that M2 has actually risen on a year-over-year basis. Despite being down 3.94% from its all-time high in April 2022, M2 is higher by a very modest 0.14% from where things stood one year ago.

Nevertheless, history has been quite clear about what happens anytime the M2 money supply retraces by at least 2% from its high — and it's not good news for Wall Street or the U.S. economy.

As you can see in the post above from Reventure Consulting CEO Nick Gerli on social media platform X (formerly Twitter), year-over-year drops of at least 2% in M2 are quite scarce. Using data from the Federal Reserve and U.S. Census Bureau, Gerli was able to back-test these percentage changes in U.S. money supply since 1870. Over this span, just five instances were noted where M2 declined by at least 2% on a year-over-year basis: 1878, 1893, 1921, 1931-1933, and 2023.

All four previous instances of M2 dropping by at least 2% correlated with depressions and double-digit unemployment rates for the U.S. economy.

The good news is that the Federal Reserve and federal government are far more knowledgeable now about how to tackle economic turbulence than they were a century ago. The Fed didn't exist during the depressions of 1878 and 1893, and it was still getting its proverbial feet wet in 1921 and during the Great Depression. In short, there's a very low probability of a steep downturn in the U.S. economy in modern times.

But what this decline in U.S. M2 money supply does suggest is a good likelihood of the U.S. economy weakening in the not-too-distant future. If there's less capital in circulation, the expectation would be for consumers to pare back their discretionary spending. That's often a recipe for a recession.

Historically speaking, the bulk of the S&P 500's downturns have occurred after, not prior to, a U.S. recession taking shape.

Image source: Getty Images.
Statistically speaking, time is an undefeated ally for investors

With the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all roaring to record-closing highs in 2024, the last thing you probably want is someone raining on your parade with a prognostication that calls for potentially meaningful downside to come in stocks. Thankfully, this is a forecast with little bearing on investors with a long-term mindset.

One of the most glaring examples of time being a powerful ally can be seen in the economic cycle.

As much as you might dislike the idea of economic contractions and recessions, they're a normal and unavoidable part of the boom-and-bust nature of the economic cycle. But what's important to recognize is that booms and busts aren't linear (i.e., they aren't mirror images of one another).

Whereas only three out of 12 U.S. recessions have reached the 12-month mark since World War II ended in September 1945, almost every economic expansion has endured multiple years. Two periods of growth actually hit the 10-year mark. While recessions can cause unemployment to rise and wage growth to slow, these effects tend to be short-lived.

You can see this same non-linear variance between bear and bull markets on Wall Street, too.

Nearly one year ago, the analysts at Bespoke Investment Group published a data set on X that examined the length of bear and bull markets for the S&P 500 dating back to the start of the Great Depression. What Bespoke found was that the average S&P 500 bull market lasted roughly 3.5 times longer than the typical bear market over a 94-year stretch: 1,011 calendar days (bull market) versus 286 calendar days (bear market).

Furthermore, there have been 13 separate S&P 500 bull markets that endured longer than the lengthiest S&P 500 bear market since the Great Depression began.

Want more proof that time is an undefeated ally for patient investors?

Earlier this year, Crestmont Research refreshed its data set from a report that analyzed the rolling 20-year total returns, including dividends paid, of the S&P 500 dating back to 1900. Even though the S&P didn't officially come into existence until 1923, its components (and their total returns) could be found in other major indexes prior to 1923 — thus, the ability to trace rolling 20-year total returns back to 1900.

The analysts at Crestmont Research found that all 105 rolling 20-year periods they examined (1919-2023) produced a positive annualized average return. In simple terms, if you, hypothetically, purchased an S&P 500 tracking index at any point since 1900 and held that position for 20 years, including dividends, you'd have made money every single time.

No matter what Wall Street has in store for investors over the coming months, patient investors have the luxury of time as an undefeated ally in their corner.

CRIMINAL CAPITALI$M

Toyota apologizes for cheating on vehicle testing and halts production of three models


Toyota Chairman Akio Toyoda speaks during a news conference in Tokyo, Monday, June 3, 2024. Toyoda apologized Monday for massive cheating on certification tests for seven models as the automaker suspended production of three of them. 

(Kazushi Kurihara/Kyodo News via AP)·Associated Press Finance·

YURI KAGEYAMA

Updated Mon, Jun 3, 2024


TOKYO (AP) — Toyota Chairman Akio Toyoda apologized Monday for massive cheating on certification tests for seven vehicle models as the automaker suspended production of three of them.

The wide-ranging fraudulent testing at Japan’s top automaker involved the use of inadequate or outdated data in collision tests, and incorrect testing of airbag inflation and rear-seat damage in crashes. Engine power tests were also found to have been falsified.


Toyota Motor Corp., based in Toyota city, central Japan, suspended production in the country of the Corolla Fielder, Corolla Axio and Yaris Cross. The deceptive tests were also found on discontinued models.

The company said the wrongdoing does not affect the safety of the vehicles already on roads, which include the Corolla subcompact and Lexus luxury vehicles.

“We sincerely apologize,” Toyoda told reporters, bowing deeply and holding the position for several seconds, as is customary in Japan at news conferences where companies apologize for misbehavior.

A Japanese government investigation into Toyota began in January. The issue does not affect Toyota’s overseas production.

Also Monday, Toyota's Japanese rival Mazda Motor Corp. reported similar irregular certification testing, and halted production of two models, the Roadster and Mazda 2. It said incorrect engine control software was used in the tests.

Mazda, based in the southwestern city of Hiroshima, also acknowledged violations on crash tests on three discontinued models. None of the violations affect the vehicles’ safety.

Tokyo-based Honda Motor Co. also apologized Monday for improper tests, such as those on noise levels and torque, on a range of models. Honda said affected older models — the Accord, Odyssey and Fit — are no longer in production. The safety of the vehicles is not affected, it said.

Certification problems starting surfacing two years ago at Toyota group companies, truck maker Hino Motors and Daihatsu Motor Co. — specializing in small models — and Toyota Industries Corp., which makes machinery and auto parts.

Shinji Miyamoto, a Toyota executive overseeing customer satisfaction, said Toyota began looking into its own tests following the problems at the group companies.

The apparent unraveling of the testing systems at Toyota and its group companies is an embarrassment for an automaker that’s prided itself for decades on production finesse and a corporate culture based on empowering workers to make “ever-better cars.”

Toyoda, the grandson of the company’s founder, suggested some certification rules might be overly stringent, noting such tests differed around the world. But he repeatedly said he wasn't condoning the violations.

“We are not a perfect company. But if we see anything wrong, we will take a step back and keep trying to correct it,” said Toyoda.

He said the company may have been too eager to get the tests done and abbreviated them at a time when model varieties were burgeoning.

Toyota sells more than 10 million vehicles around the world.

___

Yuri Kageyama is on X: https://twitter.com/yurikageyama

Japan auto safety scandal widens, Toyota halts some shipments


News conference over rigging safety tests by its TMC affiliate Daihatsu, in Bangkok·Reuters

Updated Mon, Jun 3, 2024

By Daniel Leussink

TOKYO (Reuters) -A safety test scandal at Japanese automakers widened on Monday, with Toyota Motor and Mazda both halting shipments of some vehicles after Japan's transport ministry found irregularities in applications to certify certain models.

The irregularities were also found in applications from Honda, Suzuki and Yamaha Motor, the ministry said. The automakers were found to have submitted incorrect or manipulated safety test data when they applied for certification of the vehicles.


The ministry ordered Toyota, Mazda and Yamaha to suspend shipments of some vehicles. It said it will conduct an on-site inspection at Toyota's central Aichi prefecture headquarters on Tuesday.

The latest revelations came after the ministry requested automakers in late January to investigate certification applications following a safety test scandal at Toyota's Daihatsu compact car unit that emerged last year.

Monday's developments are also likely to heighten focus on Toyota's annual general meeting later this month. Influential proxy advisory firms Institutional Shareholder Services and Glass Lewis have recommended shareholders vote against re-electing Akio Toyoda as chairman at the meeting.

In a report to shareholders, ISS singled out the "spate of certification irregularities" at the Toyota Group.

"As the person in charge of the Toyota Group, I would like to sincerely apologise to our customers, to car fans, and all stakeholders for this," Toyoda, the grandson of the automaker's founder and its former chief executive, told a press conference.

He said the cars did not go through the correct certification process before being sold. The world's biggest automaker by volume said it temporarily halted shipments and sales of three car models made in Japan.

The scandals at the automakers are proving to be a sore point for the government, which has otherwise earned praise from investors and executives for its corporate reforms. Yoshimasa Hayashi, Japan's top government spokesperson, called the misconduct "regrettable".

SHARES FALL

Toyota said its wrongdoing occurred during six different tests conducted in 2014, 2015, and 2020. Affected vehicles were three production models - the Corolla Fielder, Corolla Axio and Yaris Cross - and discontinued versions of four popular models, including one sold under the Lexus luxury brand.

In one example, it had measured collision damage on one side of a model's bonnet while it was required to do so on both sides.

In other instances, it said it conducted certain tests through development testing under more strict conditions than those set out by the ministry that did not meet the government's requirements.

Toyota said it is still investigating issues related to vehicle fuel efficiency and emissions, and aimed to complete that inquiry by the end of June.

It added there were no performance issues that violated regulations and customers did not need to stop using their cars.

Toyota shares closed down 1.8%, underperforming a 0.9% gain in the broad Topix index.

Mazda suspended shipments of its Roadster RF sports car and the Mazda2 hatchback from Thursday last week after finding workers had modified engine control software test results, it said in a statement.

It also found crash tests of the Atenza and Axela models, which are no longer in production, had been tampered with by using a timer to set off airbags during some frontal collision tests, instead of relying on an on-board sensor to detect a hit.

Mazda shares fell 3.3%.

Yamaha said it had halted shipments of a sports motorcycle.

Honda said it had found wrongdoing in noise and output tests over a period of more than eight years to October 2017 on some two dozen models that are no longer being produced.

(Reporting by Daniel Leussink and Rocky Swift; Additional reporting by Kaori Kaneko and Satoshi Sugiyama; Editing by Edwina Gibbs, David Dolan and Muralikumar Anantharaman)