Posts Tagged ‘Household Income’

Wealth and income inequality in the USA

September 2, 2016

wealth-share

These two charts, courtesy of Prof. David F. Ruccio, show the changing distribution of wealth and income in the USA.  Please keep in mind that while the chart below refers to the top 1 percent of income earners, the chart above refers to the top 1/100th of 1 percent of wealth holders.

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Another reason I’m glad I’m not a Millennial

July 5, 2016

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Sharp increases in rents along with stagnant incomes over the past five years have helped create a dire situation for many of the country’s renters.  A new report shows how those trends have actually been playing out for more than five decades.

Inflation-adjusted rents have risen by 64% since 1960, but real household incomes only increased by 18% during that same time period, according to an analysis of U.S. Census data released by Apartment List, a rental listing website.

Renters fared the worst during the decade between 2000 and 2010, when inflation-adjusted household incomes fell by 9%, while rents rose by 18%, according to Apartment List.  That is likely because there were two recessions during that time and a housing bust in 2008 that drove millions of homeowners into renting.

The takeaway: The United States has grown much less affordable for renters for half a century and, barring a major change, is likely to continue doing so.

Source: Wall Street Journal.

These figures are national averages.   I shudder to think what it would be like to try to rent in places like San Francisco.

Qualitative easing and the Obama recovery

March 25, 2016

SPX-10-yr-yield-and-fed-intervention

The Federal Reserve Board’s policy of qualitative easing has helped the stock market recover.  But Americans who work in the real economy are still struggling.

Qualitative easing is the Federal Reserve Board’s policy of creating new money to buy Treasury bonds in order to keep interest rates low.  The greater the demand for bonds, the lower the interest rates, and the interest rate on Treasury bonds is generally the benchmark on all Treasury bonds.

The Fed’s Operation Twist was a sale  of medium-term Treasury bonds and purchase of 10-year bonds.  The Federal Funds rate is the interest rate for overnight loans among banks so they can meet the Federal Reserve’s requirement for reserves.

The chart above shows how QE correlated with the ups and downs of the stock market.  But, as I indicated in a previous post, American corporations did not advantage of low interest rates to invest in their businesses.  Instead they have transferred the gains to stockholders in the form of stock buybacks.

An economic recovery has taken place.  Most Americans are better off than they were at the depths of the crash.  But as economic recoveries go, this one has been weak.

2.household-income-monthly-median-growth-since-2000

The chart shows how important is it to always adjust for inflation.  A dollar in the year 2000 is not the same thing as a dollar in the year 2016.

Although corporate executives did not take advantage of Qualitative Easing to invest in America, there was nothing besides politics holding back the federal government from investing in public works.  There is a lot of urgent work that needs to be done in maintaining and upgrading American’s physical infrastructure, such as upgrading public water systems to get the lead out.

With a lot of public work that needs to be done, a lot of people who need work and financing costs at historic lows, why not put the unemployed and under-employed to work doing what needs to be done?  Fiddling with interest rates and the money supply is not enough.

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An ebbing tide lowers most boats

September 23, 2014

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Most Americans today are poorer than their counterparts 15 years ago, no matter what their race, marital status, educational credentials or region of residence.

LINK

The American Middle Class Hasn’t Gotten a Raise in 15 Years by Ben Casselman for FiveThirtyEight