Fox News
Expand
Browse All Video
Watch Live

You're watching...

Americans taking advantage of 'underground economy'

Details

  • Description

    Spending surprisingly strong because more people are working off-the-books?

  • Duration 3:14
  • Date

Clips

Also in this playlist...

Editor's Picks

Auto-advance: ON

Auto-advance
View All

Transcript

This transcript is automatically generated

Meantime something about our economy does not add up we all know that the latest government numbers show consumer spending grew at a very strong pace last month.

That's a great thing because consumer spending accounts for about 7% of the total economic activity.

But here's the weird part.

We're not seeing the expected what we expected -- comparable rise in our paychecks.

Mean we're spending more but we're not making more.

And we're not spending more on credit cards.

In fact the experts say the payroll tax hike that kicked in in January 1 would slow spending it did not slow spending.

So what is this.

Analyst Rick humans suggest more Americans are taking advantage of the so called underground economy.

Earning -- spending cash off the books to avoid taxes or other regulations.

-- -- -- now he's the chief business correspondent for US news and world report.

It is that it is the worst kept secret in the nation that there is an enormous underground economy.

Where people get paid cash and they don't get benefits are many times it's a cash world on many level.

-- some of that to constantly we know all about landscape workers in -- and illicit.

Operators like drug dealers and cookies -- work in the underground -- the dark economy if you will.

But the speculation among economists now is that.

This sector has grown in its made -- largely because people let's say who got laid off.

Are now doing jobs -- they get paid in cash or they're doing what work around the neighborhood this could even be professional types of -- -- -- think about.

Somebody who might use maybe used to work in the IT department got laid off and now it's fixing computers around the neighborhood whereas.

Clients maybe he -- of their -- and who else sort of know people like this.

That could be freelancers consultants other people like this.

Not all of those jobs require you to get paid with a W two form and a tax form because of the government so the speculation is.

-- -- you know we the underground economy could be as the largest 10% of total GDP are bigger.

And those people don't report him money they -- but they spend it so it shows have been spending but not an income so if it's a -- what he's saying one dollar out of ten that would be.

Is a dollar that -- -- and layer of taxation that's right -- and misses and those people are missing benefits.

Still missing benefits but it actually is a surpasses probably more than one layer of taxation because they're not paying state taxes on -- local taxes or federal taxes California says.

They miss it's -- six point five billion dollars a year in tax revenue because the underground economy.

You multiply that out that's a lot of money -- that adds up to more than the sequester we've been talking about a large part of that.

Is the failed drug war but but the drug war the reason it exists now frankly is that there's such an enormous economy around the failed drug war.

I think all the people who work in this failed industry if you were to close the failed drug war industry that you have hundreds of thousands of people without jobs.

I suppose or -- could be opposite which is make marijuana legalized a couple of states have done and maybe try to -- -- which -- -- regulated by -- but I get out of jail I think that illegal activities a constant and what's new and kind of interesting in this regard is what's the good work it's actually legal.

It's just -- it just not it just off the books so they incomes not being report.

Changing world and is Rick Newman good stuff thank -- ship.

Load More