Our off the books economy

Rosslyn Smith

I have suspected this for some time now, that one sector thriving under Obama is the Off-the-Books Economy. This week the subject came up on CNBC when Jim Cramer discussed record 631 days the average loan in foreclosure has now been delinquent. 

Cramer: When you're 600 days [past] foreclosure, you should be thinking squatters, and those are people who are not paying their mortgage so they're shopping. And I know that sounds odd, but listen, we've got a squatter economy and we have got an off-the-books economy and those are the ones generating the better numbers.

Other CNBC anchor: By off-the-books, you mean people working jobs- 

Cramer: Look, you know what, the employer wants to avoid all the Obama regulations, okay, or the previous ones, and the employee wants cash. Look, we're developing an economy that is an underground economy, it's never been the way America has done [this]. It's the way business is reacting, it's the way people who need jobs are reacting.

It's obviously hard to get a handle on the size of this movement but here are some numbers to think about. At the start of the great recession the amount of cash in circulation grew by over 13% while the unbanked and underbanked population, those who rely on check cashing and money transmitting services, increased to 18% of all households.  Then the IRS reported that that the income reported on 2009 individual income tax returns fell by 7.7%. This is significantly lower than the 2.5% decline in GDP in 2009.

Here is a comment from one of the stories cited in the first paragraph. 

It's funny that Kramer says this... I'm a freelance designer and since I've been leery of banks since the crash, I started giving a 20% discount to clients who pay in cash. I hold all the cash until the end of the month, when I deposit what I need to cover things that have to go through the bank. I'm not doing this to avoid the IRS or anything, I file as an S-Corp, and to be honest things are so tough right now, there's never much cash on hand at all. I'm not making enough money to hide anything. But what I have noticed is that over the past two years, more and more of my clients not only go for the cash-only option, they understand and appreciate it... to the point now, where I haven't received a check in 6 months. John Galt at work.

 

I have suspected this for some time now, that one sector thriving under Obama is the Off-the-Books Economy. This week the subject came up on CNBC when Jim Cramer discussed record 631 days the average loan in foreclosure has now been delinquent. 

Cramer: When you're 600 days [past] foreclosure, you should be thinking squatters, and those are people who are not paying their mortgage so they're shopping. And I know that sounds odd, but listen, we've got a squatter economy and we have got an off-the-books economy and those are the ones generating the better numbers.

Other CNBC anchor: By off-the-books, you mean people working jobs- 

Cramer: Look, you know what, the employer wants to avoid all the Obama regulations, okay, or the previous ones, and the employee wants cash. Look, we're developing an economy that is an underground economy, it's never been the way America has done [this]. It's the way business is reacting, it's the way people who need jobs are reacting.

It's obviously hard to get a handle on the size of this movement but here are some numbers to think about. At the start of the great recession the amount of cash in circulation grew by over 13% while the unbanked and underbanked population, those who rely on check cashing and money transmitting services, increased to 18% of all households.  Then the IRS reported that that the income reported on 2009 individual income tax returns fell by 7.7%. This is significantly lower than the 2.5% decline in GDP in 2009.

Here is a comment from one of the stories cited in the first paragraph. 

It's funny that Kramer says this... I'm a freelance designer and since I've been leery of banks since the crash, I started giving a 20% discount to clients who pay in cash. I hold all the cash until the end of the month, when I deposit what I need to cover things that have to go through the bank. I'm not doing this to avoid the IRS or anything, I file as an S-Corp, and to be honest things are so tough right now, there's never much cash on hand at all. I'm not making enough money to hide anything. But what I have noticed is that over the past two years, more and more of my clients not only go for the cash-only option, they understand and appreciate it... to the point now, where I haven't received a check in 6 months. John Galt at work.