Quote

I warned last week that a recession and higher unemployment were about to hit the U.S. economy. On Tuesday, the Bureau of Economic Analysis cut their estimate of growth in the third quarter ending September from 2.5% to 2%. Then on Wednesday, the Federal Reserve rocked financial markets by forcing America’s 31 largest U.S. banks to “stress test” balance sheets to determine their capability to withstand an 8% drop in the economy; which would cause home prices to plunge by 21%, and unemployment rate to jump to 13%.
Source: http://biggovernment.com/cstreet/2011/11/26/fed-warns-unemployment-may-double-great-depression/

Historical norms going back to at least the 1920s on spending which state that at age 46 through age 55 the average spending plateaus and then falls sharply after age 55. This is in part due to home purchases, feeding and clothing children, etc which are done in younger years and flat line as the kids get older and ultimately drop once the kids are on their own. Homes are the largest single driver of the economy and as more people do not retire at age 65 there are fewer jobs for the younger folks, the ones who spend more, are unable to get jobs and be able to afford homes.

From this population chart it becomes clear that the bulk of the population is either too young to be working (or have meaningful employment) or at the spending plateau or beyond. This would suggest that for some number of years into the future spending will be lower than it has in recent past years.

As government spending is increasing the economy is slowing creating a lens effect on the problem. Starting in 2010 social security is spending more than it collects[1] and that means cashing in the treasury bills they have as IOUs from congress, a program that was mandated decades ago to allow for spending of any surpluses. As these are cashed in there is an inflationary increase since the already spent principle is paid out plus interest. Add to that 7,000-10,000 new people are added as beneficiaries every day starting 2011, the first year the baby boomers start collecting.[2] This will continue for the next 19 years. For the past 40 or so years social security surpluses were used to help pay the budget deficit, a trend that can no longer continue and will result in a larger deficit, less services, more taxes or more likely a combination of these things.

In light of this I personally would not be surprised if the numbers the government gave regarding unemployment were low, that the problem will be worse than previously reported. 82% of the US population resides in cities and suburbs as of 2010 (the worldwide urban rate is 50.5%)[3] You already have police forces in many areas saying that due to budget concerns they will not respond to many calls including home burglaries.[4][5][6][7]

Food and energy are excluded from inflation figures although counted in growth figures, this is to "normalize" the numbers. The US is reporting growth but claiming there is no inflation indicating that food and energy costs are driving the growth. Food in the United States travels an estimated 1500 miles farm to dinner table on average. Farmers on average across the nation spend 60% of their operating budget on energy related costs. As the dollar devalues energy prices from imported sources will necessarily rise forcing food costs to similarly rise. Wyoming cannot be immune to this as it only has a peak refining capacity for less than 6 gallons per person per day excluding all industrial consumption, further as demand exists elsewhere it will force localized prices to similarly rise as the owners of the refineries will sell at market rates as opposed to artificially depressing prices and selling only locally.

I think this makes an excellent argument for moving to a rural area, particularly one where farming and ranching are suitable, if nothing else to mitigate food based inflationary costs. If you can similarly generate enough of your own energy needs you should be able to dramatically shield against inflationary increases.

[1] http://www.nytimes.com/2010/03/25/business/economy/25social.html
[2] http://www.foxbusiness.com/personal-finance/2011/01/28/ready-baby-boomers-turn-year/
[3] https://www.cia.gov/library/publications/the-world-factbook/fields/2212.html
[4] http://www.tulsaworld.com/news/article.aspx?subjectid=11&articleid=20100205_11_A1_Tulsap768160
[5] http://detroit.cbslocal.com/2011/08/16/detroit-police-to-cut-back-on-alarm-response/
[6] http://www.usatoday.com/news/nation/2010-08-25-1Anresponsecops25_ST_N.htm
[7] http://www.nbcbayarea.com/news/local/Suffer-These-Crimes-in-Oakland-Dont-Call-the-Cops-98266509.html