Americans' Standard of living plummets

"jw3102 wrote:

Just because the numbers are said to be real and verifiable, doesn't make it true. Heck, according to the government figures, inflation over the last three years has been nearly zero. Of course if you had to purchase gas, food, health insurance, or any other type of insurance, you know that the government is lying about the real inflation rate.

As I stated earlier, everyone I know were making well over 200% more in 2007 then they were making in 1979. I am sure that a small percentage of individuals were earning a smaller percentage over this time period, but I think the vast majority of working Americans were well above the figures shown in this chart.

i know. part of what I do for a living is breaking through the gov't numbers to find out what's really going on. It depends on how they weigh things, but we cannot deny that the cost for housing has gone down during this period.

and actually, if you get away fro "income" and just look at real wages, there has been little gain over the past 30 years

as a fun exercise: the inflation calculator http://www.westegg.com/inflation/

if you plug your $12,000 for 1979 and find its equivalent for 2010, you get around $35K, which isn't far from what a typical worker makes in the earlier parts of their career these days.

you are an anomaly. if you weren't we wouldn't be having a SS and Medicare crisis or 30% of workers having less than $1,000 saved for retirement (or nearly half under $10,000). http://www.ebri.org/files/FS2_RCS11_Prepare_FINAL.pdf

"padre31 wrote:

http://www.cnbc.com/id/44962589

This is a really bad situation economically speaking, lowering incomes meets rising inflation, so less money that also buys less when you do have any money to spend.

Which is an economics conundrum, in theory inflation means "more money in people's pockets", reality is quite the opposite, less money buying less goods, which is not supposed to happen.

Which does create something of an interesting opportunity, it also means the more things people do for themselves, the more valuable that production becomes.

This to me, is the way forward for Americans, as a slightly embarrassing example:

I'm taking a mathematics of finance class right now, and we've reached the point of the future value of money in terms of single sums and annuities etc, so I thought I'd need a financial calcualtor which costs a little bit.

Happened to be messing around with my ancient PDA's calculator and noticed:

TVM/%

It has a "time value of money" function..that I'd never bothered to learn it had...

Average household debt has more than doubled from 60% to 133% over the last 30 years. Gross household debt has moved from 100% of GDP in 1980 to 173% of GDP. People have been having less and less money for discretionary because we've been spending more and more money we don't have. And not just households, but corporations and government have also been riding the debt train the last 30 years. Eventually, no matter what the actual spark, the debt driven ecoonomy bubble was going to burst.

http://www.economist.com/node/12957769?story_id=12957769&fsrc=rss

And as you've pointed out before padre, with housing sold as the "savings" investment, money that could have been in discretionary income savings has been "invested" in bigger homes to the all time highest debt-income ratios and risk. A gamble reminiscent of that preceding great depression when you could buy stocks on credit and of course never worry about because the debt driven market bubble won't ever burst.

What happens when the "middle class" disappears?

"jw3102 wrote:

I have no idea how these numbers were arrived at. They seem way out of line, as far as I am concerned. I know that is 1979, I earned a little over $13,000. In 2006, the year I retired, I earned $110,000. This income was certainly not in the top one percent of wage earners, but it exceeded the 281 % increase the top one percentage were said to have increased over this same time period. In fact everyone I know was earning at least two hundred percent more in 2007, compared to what they were earning in 1979.

How much was a gallon of gas then?

"Eshlemon wrote:

Average household debt has more than doubled from 60% to 133% over the last 30 years. Gross household debt has moved from 100% of GDP in 1980 to 173% of GDP. People have been having less and less money for discretionary because we've been spending more and more money we don't have. And not just households, but corporations and government have also been riding the debt train the last 30 years. Eventually, no matter what the actual spark, the debt driven ecoonomy bubble was going to burst.

http://www.economist.com/node/12957769?story_id=12957769&fsrc=rss

And as you've pointed out before padre, with housing sold as the "savings" investment, money that could have been in discretionary income savings has been "invested" in bigger homes to the all time highest debt-income ratios and risk. A gamble reminiscent of that preceding great depression when you could buy stocks on credit and of course never worry about because the debt driven market bubble won't ever burst.

If debt increases, while standard of living decreases, then the problem is business is fleecing America. There simply is no other conclusion to come to.

"Finascious D wrote:

How much was a gallon of gas then?

Sometime around 1978-79 gas had >doubled from 45 cents to nearly a dollar. Shortly afterwards, they were setting the oumps at 1/2 the price per gallon and then double the amount as the pumps would only go up to 99.9 cents.

"Finascious D wrote:

If debt increases, while standard of living decreases, then the problem is business is fleecing America. There simply is no other conclusion to come to.

As the flow of income is going in only one direction, if you know what I mean.

"DeDolfan wrote:

As the flow of income is going in only one direction, if you know what I mean.

I'm just so tired of this bull**** that is being spouted that people are just living beyond their means. They act like people were living in mansions and driving Bentleys. Its crap. Yes, people are living beyond their means but to attain a lower standard of living. Housing prices were too high. Gas is too high. Insurance is too high. That is the fault of industry and an industry run government.

"Finascious D wrote:

If debt increases, while standard of living decreases, then the problem is business is fleecing America. There simply is no other conclusion to come to.

Only the conclsusions you want to believe. Debt is decresing the standard of living.

"Finascious D wrote:

I'm just so tired of this bull**** that is being spouted that people are just living beyond their means. They act like people were living in mansions and driving Bentleys. Its crap. Yes, people are living beyond their means but to attain a lower standard of living. Housing prices were too high. Gas is too high. Insurance is too high. That is the fault of industry and an industry run government.

Not mansions, but close considering how the household populations have dropped. Housing prices are high not just because of demand but because over 30 years homes have grown from 1500 sq feet to its high of 2250 sq feet high in 2007. The 3-1 income-mortage ratio from 30 years ago usually meant 10% of income going to housing...compared to the expanding and eventual all time high of 4.5-1 in 2007 and 15% of income going to housing purchase in 2007. Thats a huge accrued decrease in monies for disposable income standard of living for individuals and the economy over the last 30 years and not just the last 3 years from the recession the article is discussing.

"Eshlemon wrote:

Only the conclsusions you want to believe. Debt is decresing the standard of living.

Not mansions, but close considering how the household populations have dropped. Housing prices are high not just because of demand but because over 30 years homes have grown from 1500 sq feet to its high of 2250 sq feet high in 2007. The 3-1 income-mortage ratio from 30 years ago usually meant 10% of income going to housing...compared to the expanding and eventual all time high of 4.5-1 in 2007 and 15% of income going to housing purchase in 2007. Thats a huge accrued decrease in monies for disposable income standard of living for individuals and the economy over the last 30 years and not just the last 3 years from the recession the article is discussing.

Debt isn't separate from the cost of living. You guys are still pretending that credit is & was only used for luxuries. People were buying groceries with credit cards. People were paying for gas with credit cards. A lot of people had to do this because they simply didn't make enough money.

If 3 bedroom homes of 2250 sg feet are all that's being built, then that's all people are going to buy. And FTR, the older homes that were smaller were going for the same amount of money. Either way, during all of this, square footage is not a sufficient example of the standard of living, especially when we're talking about the difference of 700 sq ft.

All this is, quite frankly, is a weak attempt to pretend that during the lowest taxes "job creators" have had, the economy is the worst its been while the non wealthy have less money. But yeah, 700 sq feet.

"Finascious D wrote:

Debt isn't separate from the cost of living. You guys are still pretending that credit is & was only used for luxuries. People were buying groceries with credit cards. People were paying for gas with credit cards. A lot of people had to do this because they simply didn't make enough money.

The all time high for per capita disposable income peaked in spring of 2008. Credit card use and revolving credit have declined as people "didn't simply didn't make enough money" during and after the recession as opposed to before.

http://www.usatoday.com/money/perfi/credit/2010-08-25-credit-card-balances_N.htm
U.S. credit card debt drops to lowest level in 8 years
http://www.usatoday.com/money/perfi/credit/2010-09-10-credit10_ST_N.htm
Credit card use plunges as hard times drag on, debit use rises

If 3 bedroom homes of 2250 sg feet are all that's being built, then that's all people are going to buy. And FTR, the older homes that were smaller were going for the same amount of money. Either way, during all of this, square footage is not a sufficient example of the standard of living, especially when we're talking about the difference of 700 sq ft.

All this is, quite frankly, is a weak attempt to pretend that during the lowest taxes "job creators" have had, the economy is the worst its been while the non wealthy have less money. But yeah, 700 sq feet.

Who's pretending now? Try to snarkily deflect this to the "yeah, 700 sq feet" all you want but doesn't change the fact the increasing amount of debt we have been taking on for the last 30 years is eroding away at standard of living. And not sure what lowest taxes is thrown in there too. You must have me confused with someone else as I've repeatedly stated we need to let all the Bush and Obama tax cuts expire.

"Eshlemon wrote:

The all time high for per capita disposable income peaked in spring of 2008. Credit card use and revolving credit have declined as people "didn't simply didn't make enough money" during and after the recession as opposed to before.

http://www.usatoday.com/money/perfi/credit/2010-08-25-credit-card-balances_N.htm
U.S. credit card debt drops to lowest level in 8 years
http://www.usatoday.com/money/perfi/credit/2010-09-10-credit10_ST_N.htm
Credit card use plunges as hard times drag on, debit use rises

Um, are you reading what you post?

The Federal Reserve Board reported this week that credit card borrowing fell at a 6.3% annual rate in July. The last time borrowing with credit cards increased was in August 2008.

Separately, a survey by Javelin Strategy & Research found that 56% of consumers used credit cards in 2009, down from 87% in 2007. Credit card usage could fall as low as 45% this year, the report said.

So credit was being used at a ridiculous clip and only slowed when credit was taken away after the burst.

"Eshlemon wrote:

Who's pretending now? Try to snarkily deflect this to the "yeah, 700 sq feet" all you want but doesn't change the fact the increasing amount of debt we have been taking on for the last 30 years is eroding away at standard of living. And not sure what lowest taxes is thrown in there too. You must have me confused with someone else as I've repeatedly stated we need to let all the Bush and Obama tax cuts expire.

Debt hasn't increased just because. Debt has increased because we can't afford a normal standard of living without it. You make the claim that 700sq feet is the difference between living past your means or not and that is ridiculous. People could not afford modest housing. People could not afford gas. They used credit to buy that stuff, and had less money to buy other stuff. That is why the economy sucks. Businesses have been waaaaaaaaay more irresponsible than the consumer.

That is a truism Fin D, debt fuled the growth, but it also kept people afloat.

A part of this is due to the skillset=wages+income mix

Led to declining incomes, a product of Globalism btw, to fill the gap credit was used, and now there is less credit being used a default's AS WELL AS caution have put a lid on using credit to the extent it had been used before.

The fundamental problem here is there is less of a creation of value happening in terms of exportable goods now, with fewer trade barriers, we become a huge net consumer and the ability to export allows for wage growth.

When the govt steps in with mandates, that merely creates paper income increases as expenses also rise for everything from gasoline to insurance, so we are in something of a vicious cycle atm.

For me, the answer is improve personal economies to free up cash, that will reduce the standard of livng (per se, a new washing machine does not add all that much to the SoL), and use that freed capital to upgrade skillsets or to start ones own enterprise.

So in a way, this generation is going to take the bullet for past generations policies.

"padre31 wrote:

That is a truism Fin D, debt fuled the growth, but it also kept people afloat.

A part of this is due to the skillset=wages+income mix

Led to declining incomes, a product of Globalism btw, to fill the gap credit was used, and now there is less credit being used a default's AS WELL AS caution have put a lid on using credit to the extent it had been used before.

The fundamental problem here is there is less of a creation of value happening in terms of exportable goods now, with fewer trade barriers, we become a huge net consumer and the ability to export allows for wage growth.

When the govt steps in with mandates, that merely creates paper income increases as expenses also rise for everything from gasoline to insurance, so we are in something of a vicious cycle atm.

For me, the answer is improve personal economies to free up cash, that will reduce the standard of livng (per se, a new washing machine does not add all that much to the SoL), and use that freed capital to upgrade skillsets or to start ones own enterprise.

So in a way, this generation is going to take the bullet for past generations policies.

Pretty much sums it about 30 years of policies to get out of 70's stagflation and keep things humming along no matter what the consequences...and we're coming around full circle.

Although on the manufacturing level where so many jobs have left overseas during globalism and free trade, hope for a trend to gain momentom come full cicle of manufacturing jobs 'returning' home such as the Toyotas in Kentucky, KIAs in Georgia, or HondaJet and Volvo Trucks here in Greensboro.

"Eshlemon wrote:

The all time high for per capita disposable income peaked in spring of 2008. Credit card use and revolving credit have declined as people "didn't simply didn't make enough money" during and after the recession as opposed to before.

http://www.usatoday.com/money/perfi/credit/2010-08-25-credit-card-balances_N.htm
U.S. credit card debt drops to lowest level in 8 years
http://www.usatoday.com/money/perfi/credit/2010-09-10-credit10_ST_N.htm
Credit card use plunges as hard times drag on, debit use rises

Who's pretending now? Try to snarkily deflect this to the "yeah, 700 sq feet" all you want but doesn't change the fact the increasing amount of debt we have been taking on for the last 30 years is eroding away at standard of living. And not sure what lowest taxes is thrown in there too. You must have me confused with someone else as I've repeatedly stated we need to let all the Bush and Obama tax cuts expire.

Debt has declined simply because ppl were maxed out and could not take on any more debt. That along with paying down debt somewhat to gain a new line is why it decreased. I don't necessarily see that as a big improvement in many ppl's situations. It's just not getting any worse for them at the moment.

"Finascious D wrote:

Um, are you reading what you post?

So credit was being used at a ridiculous clip and only slowed when credit was taken away after the burst.

Debt hasn't increased just because. Debt has increased because we can't afford a normal standard of living without it. You make the claim that 700sq feet is the difference between living past your means or not and that is ridiculous. People could not afford modest housing. People could not afford gas. They used credit to buy that stuff, and had less money to buy other stuff. That is why the economy sucks. Businesses have been waaaaaaaaay more irresponsible than the consumer.

Agree with all except perhaps the last line. The consumer is at fault equally as well. They used credit to over buy what was offered by biz. If they had said **** it instead, then builders may have built more modest homes, etc.

"DeDolfan wrote:

Agree with all except perhaps the last line. The consumer is at fault equally as well. They used credit to over buy what was offered by biz. If they had said **** it instead, then builders may have built more modest homes, etc.

I disagree.

Housing is necessary. Whenever you have a product or service that is necessary, the consumer loses their power.

Gas is a necessity, the consumer has no power.

While food is a necessity, there are so many options there's room for consumers to dictate the market. Not so with things like housing, medical care, energy, etc. Notice a=how all of these things have prices set based on principles outside the market place.

"Eshlemon wrote:

Pretty much sums it about 30 years of policies to get out of 70's stagflation and keep things humming along no matter what the consequences...and we're coming around full circle.

Exactly, what is worse, a politician who pointed this out, Ron Paul, is now labeled as a kook by the very people who created this situation in the first place!

It's madness, and I have a good grasp of Debt Financing and Fiat Currency, so it's not mere ideology speaking from my end.

Although on the manufacturing level where so many jobs have left overseas during globalism and free trade, hope for a trend to gain momentom come full cicle of manufacturing jobs 'returning' home such as the Toyotas in Kentucky, KIAs in Georgia, or HondaJet and Volvo Trucks here in Greensboro.

Wages and income growth outside of the top 1% will never be what it once was, American workers have no leverage.

We had a Volvo plant shut it's doors in Asheville, we've had several plants close their doors in recent yrs.

Which to me, means folks really should accept the situation and realize it basicaly is a war of Consumerism v Personal Economies, I'll grant the herd will always spend more then they make, the key is, don't be a member of the herd.

"Finascious D wrote:

I disagree.

Housing is necessary. Whenever you have a product or service that is necessary, the consumer loses their power.

Gas is a necessity, the consumer has no power.

While food is a necessity, there are so many options there's room for consumers to dictate the market. Not so with things like housing, medical care, energy, etc. Notice a=how all of these things have prices set based on principles outside the market place.

Housing is necessary. 2500 sq ft McMansions are not. Gas also is a necessity and, yes, we have no power over that. However, gas is a necessity only because transportation is. Bur porches and bentleys are not. One can greatly miitgate their fuel costs by their vehicle selection.
If ppl refuse to but McMansions and high end vehicles, the mkt will adjust downward to meet the demand, yes?

"DeDolfan wrote:

Housing is necessary. 2500 sq ft McMansions are not. Gas also is a necessity and, yes, we have no power over that. However, gas is a necessity only because transportation is. Bur porches and bentleys are not. One can greatly miitgate their fuel costs by their vehicle selection.
If ppl refuse to but McMansions and high end vehicles, the mkt will adjust downward to meet the demand, yes?

Where do you live? I live in Bellevue which is next to Microsoft and the entire city is not filled with McMansions and porches.

"DeDolfan wrote:

Housing is necessary. 2500 sq ft McMansions are not. Gas also is a necessity and, yes, we have no power over that. However, gas is a necessity only because transportation is. Bur porches and bentleys are not. One can greatly miitgate their fuel costs by their vehicle selection.
If ppl refuse to but McMansions and high end vehicles, the mkt will adjust downward to meet the demand, yes?

You're buying into the hype, that isn't real.

McMansions aren't the norm nor is 2500sq ft something to treat as huge. I live in a mobile home that is 2300 sq ft. Is my mobile a mansion? A modest 2 bedroom 1200 sqft home went for almost $300K in Orlando before the bubble. Orlando isn't a rich area. Neither was the home. That isn't a mansion.

"DeDolfan wrote:

Housing is necessary. 2500 sq ft McMansions are not. Gas also is a necessity and, yes, we have no power over that. However, gas is a necessity only because transportation is. Bur porches and bentleys are not. One can greatly miitgate their fuel costs by their vehicle selection.

Or by not driving at all, there are more costs with a vehicle then just gas, add in cars lose money, guaranteed, yet are Americans second largest capital investment behind mortgages, and that does not make much sense to pour money into the things...and yet...pour it in we do.

Why? Other then Americans have been trained to own the nicest, most expensive car, they can afford.

If ppl refuse to but McMansions and high end vehicles, the mkt will adjust downward to meet the demand, yes?

Would depend, is the mcmansion that much below market value as to make it a good value?

Which brings up the next point, say you do buy that home below market value, the City/County will then slap you with property taxes as if the house was worth as much as it was in the late 00's, and that can easily be 8k or more in property taxes.

"Dol-Fan Dupree wrote:

Where do you live? I live in Bellevue which is next to Microsoft and the entire city is not filled with McMansions and porches.

are you arguing that the average sized house of today is no different than 30 yrs ago? All I'm saying is that today's house are much larger.

"Finascious D wrote:

You're buying into the hype, that isn't real.

McMansions aren't the norm nor is 2500sq ft something to treat as huge. I live in a mobile home that is 2300 sq ft. Is my mobile a mansion? A modest 2 bedroom 1200 sqft home went for almost $300K in Orlando before the bubble. Orlando isn't a rich area. Neither was the home. That isn't a mansion.

Just what is it you're arguing? of course modest homes increased during the bubble but they still cost less.
Your 2300 sq ft mobile could be a mansion I suppose. It all depends on how you look at it. However, my point is that you likely don't need all that area tho, not to survive in at least. All I'm saying is that ppl need to be held accountable for their actions as well as the biz. They didn't, they're suffering for it. That is the hype.

"DeDolfan wrote:

are you arguing that the average sized house of today is no different than 30 yrs ago? All I'm saying is that today's house are much larger.

I guess I am arguing that you do not know what a McMansion is. I have seen McMansions. A little bigger home does not make a McMansion.

Plus a lot of people today buy condos and those are smaller or the same size as a house 30 years ago.