{"id":7904,"date":"2024-11-14T21:35:09","date_gmt":"2024-11-14T21:35:09","guid":{"rendered":"https:\/\/finderica.com\/will-the-u-s-finally-admit-that-personal-economics-is-a-big-problem\/"},"modified":"2024-11-14T21:35:09","modified_gmt":"2024-11-14T21:35:09","slug":"will-the-u-s-finally-admit-that-personal-economics-is-a-big-problem","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=7904","title":{"rendered":"Will The U.S. Finally Admit That Personal Economics Is A Big Problem?"},"content":{"rendered":"\n
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FILE – In this May 14, 2020, file photo, a campaign sign urging people to vote “Yes” on Measure … [+]<\/span> 26-210, which would approve taxes on personal income and business profits to raise $2.5 billion over a decade to fight homelessness, is displayed near an upscale home in Portland, Ore. A measure to tax the incomes of the wealthiest residents and the profits of the biggest businesses to raise $2.5 billion over a decade to address the homeless crisis sailed to victory in the Portland, Oregon metropolitan region even as the state faces crippling revenue losses and record-high unemployment. Nearly 60% of voters in the three counties that make up the greater Portland region approved the tax amid a greatest economic turmoil in years, a sign of just how intractable the homeless problem has become in the liberal Pacific Northwest city. (AP Photo\/Gillian Flaccus, File)<\/span><\/p>\n

<\/fbs-accordion>Copyright 2020 The Associated Press. All rights reserved.<\/small><\/figcaption><\/figure>\n

A problem exists when people experience it. The problem is sometimes personal when those feeling the impact are few and far between. You have a cold and others around you don\u2019t. So long as you stay isolated, they\u2019re fine even if you aren\u2019t. Your bank account is overdrawn because you made an error tracking your accounts. That is painful, but you will likely resolve it, and others don\u2019t realize.<\/p>\n

When millions of people experience the problem, it is likely no longer personal but systematic and maybe systemic, inherent in how the country operates and lives. However, a fix goes beyond those experiencing it as forces greater than themselves have helped establish and maintain it.<\/p>\n

One of the ongoing issues before and after the election has been an imbalance in economics. Many had been saying that they couldn\u2019t make ends meet, food prices had grown too high, housing prices were ridiculous. That they could never catch up.<\/p>\n

Versions of a graph of household income over time have made the rounds in social media when people talk of economic pain. These representations seem to wipe away the argument because, well, just look at how household income has grown. The graph below comes from the FRED site of the Federal Reserve Bank of St. Louis.<\/p>\n

<\/fbs-ad><\/p>\n

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Median household growth in current (not adjusted for inflation) dollars<\/p>\n

<\/fbs-accordion>Federal Reserve Bank of St. Louis<\/small><\/figcaption><\/figure>\n

This, however, is distorted \u2014 even more so when shown on some social media platforms and the width is squashed, making the growth look more dramatic. The graph is one of income in current dollars<\/a>, also known as nominal income that doesn\u2019t extract the negative influence of inflation. It starts at $22,240 in 1984 and ends at $80,610 in October 2024. That\u2019s an increase of 3.6 times, or an additional 260% (because 1.0 times would be identical).<\/p>\n

Instead, look at this other graph from the FRED site, this time income in constant dollars<\/a>, meaning adjusted for inflation. The starting point is now $58,930, expressed in today\u2019s dollars. It still ends at $80,610. The increase is now 1.4 times, or only a 40% increase.<\/p>\n

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Median household growth in constant (adjusted for inflation) dollars<\/p>\n

<\/fbs-accordion>Federal Reserve Bank of St. Louis<\/small><\/figcaption><\/figure>\n

According to the inflation calculator at the Bureau of Labor Statistics<\/a>, $1 in 1984 had the same buying power as $3 in October 2024. A family would need an additional 200% over the roughly 40 years to stay even with how much their money could buy.<\/p>\n

For many years, starting in early 1987, inflation in the form of the Consumer Price Index, pegged to a reference point of 1984, has raced away from household income, also indexed to 1984 \u2014 ironically, given George Orwell\u2019s book, the beginning of a long habit of gaslighting about finance. Below is a graph demonstrating the growing gap.<\/p>\n

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Median household income in constant dollars versus CPI inflation growth<\/p>\n

<\/fbs-accordion>Federal Reserve Bank of St. Louis<\/small><\/figcaption><\/figure>\n

If you wonder why healthcare costs have run away, higher education is unaffordable for many, and maybe most families, housing has become increasingly out of reach of young families \u2014 this is why. Income hasn\u2019t kept up with rising prices.<\/p>\n

It also hasn\u2019t kept up with corporate profits. One more graph from FRED, comparing total corporate profit growth indexed to 1982 and disposable personal income (income after taxes but nominal because the corporate profits seem to be nominal as well).<\/p>\n

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National corporate profits growth versus disposable personal income (after taxes), indexed to 1982<\/p>\n

<\/fbs-accordion>Federal Reserve Bank of St. Louis<\/small><\/figcaption><\/figure>\n

Corporations get wealthier and demand more concessions in lower taxes. People try to keep on keeping on but usually can\u2019t. Cutting taxes isn\u2019t enough because the big problem is not enough income at the start. If a person or family is so far behind, a bit more in tax money isn\u2019t transformative.<\/p>\n

Waving aside the problem as one that hasn\u2019t caused collapse in 40 years is little comfort. The disassembly and hollowing out of a country takes a long time. That doesn\u2019t mean it never happens.<\/p>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

FILE – In this May 14, 2020, file photo, a campaign sign urging people to vote “Yes” on Measure … [+] 26-210, which would approve taxes on personal income and business profits to raise $2.5 billion over a decade to fight homelessness, is displayed near an upscale home in Portland, Ore. A measure to tax<\/p>\n","protected":false},"author":1,"featured_media":7905,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[2538,242,2539,1814,239,1441,272],"class_list":{"0":"post-7904","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-admit","9":"tag-big","10":"tag-economics","11":"tag-finally","12":"tag-personal","13":"tag-problem","14":"tag-u-s"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/7904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7904"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/7904\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/7905"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7904"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}