The State of the Economy Thread - “Falling inflation, rising growth give U.S. the world’s best recovery”

[China]

Income Inequality Is Killing Sports Cars

 

Why are attainable enthusiast cars disappearing? Because young working people can no longer afford to buy them.

 

Car fans are tired of being told we can’t have nice things. The ensuing refrain is that the enthusiast market is too small to be sustainable. Given the U.S. population alone has increased by 80 million people over the past 30 years, you’d imagine that potential buyers—of sports cars, of hot hatches, of stylish coupes or tossable roadsters or sneaky-quick sedans—would be more numerous than ever. So why is the market drying up?

 

To figure out what’s happening, we have to jump back in time. In 1990, the median wage for a young man aged 25 to 34 was $21,393 a year. The original Mazda Miata had just arrived the year before, with a base price of $14,000, and the median house price was just 3.7 times that wage, at $79,100.

 

Here’s the problem. In 2019, the median wage for the same young man was $42,212. A base 2019 Miata retailed for $26,500—proportionally stable at roughly 65 percent of the median annual wage. The real shocker is housing. In the ensuing years, the median home price has shot up to nearly $325,000 in the U.S. (per the St. Louis Fed, as of October 2020), a full 7.6 times the median annual wage of our young earner. And even if our hypothetical 25-to-34-year-old isn’t trying to buy a house, if he’s renting, he’s likely dealing with astronomical prices, especially if he’s living in a major city—not to mention the unprecedented student loan debt his generation has incurred.

 

The situation is even worse for young women. In 1990, the median wage for women aged 25 to 34 was $12,589, rising to $35,491 in 2019. And in every age and income bracket, women make less than their male counterparts, putting them at an even steeper disadvantage in terms of buying power.

 

Americans in this age group are in the prime of their youth, a time when a lack of responsibilities would historically pair with an influx of real adult income. It’s a precious window, a time when many would splurge on a brand-new sports car before children or other practical commitments got in the way. In decades past, one might have expected a new college graduate starting their first grown-up job to choose themselves a flashy new ride as a treat. But with a financial Sword of Damocles hanging above their heads, the young adults of today hesitate to make the same call.

 

In the last 40 years, wage growth in the U.S. has screeched to a halt.

 

Click on the link for the full article

 

Edited November 22, 2020 by China

[Cooked Crack]

 

 

 

 

[Larry]

At least according to my standby usgovernmentspending.com, we have official (as opposed to estimated) numbers for the federal deficit for FY 2020.  (Which ended Sept 1, I believe.)  

 

$2.731 T.  (Inflation adjusted to $2012).  

 

For comparison, the deficit for the worst year of the Great Recession was $1.487.  

 

I want people to remember that, six months from now.  When every Republican in Washington is insisting that they cannot possibly authorize the use of deficit spending to stimulate the economy (when a good economy will help the Dem Party.)  Because they're such deficit hawks.  Absolutely cannot be swayed.  

 

Edit:  

 

Also, on the topic of the Republican Party being such famous deficit hawks (just ask them):  

 

When Trump took office, and FY 2017 was half over, and was running Obama's last budget, the deficit was $617B

Two years later, after GOP control of the White House and both houses of Congress, and before Covid, the deficit was $876B

 

Note:  I am not complaining about the explosion of the deficit.  A good chunk of that explosion was due to the catastrophic economy.  And the stimulus spending absolutely should have been done.  Should have been more.  What I am pointing out is the incredible* chutzpah of them being completely willing to throw cash around like a firehose, when a good economy will help the GOP win elections.  But will be unanimously opposed to helping the economy when a Dem is in the White House.  

 

* OK, it's actually quite believable, after watching them for 30 years.  

 

 

Edited December 5, 2020 by Larry

[CousinsCowgirl84]

On 11/22/2020 at 12:56 AM, China said:

Income Inequality Is Killing Sports Cars

 

Why are attainable enthusiast cars disappearing? Because young working people can no longer afford to buy them.

 

Car fans are tired of being told we can’t have nice things. The ensuing refrain is that the enthusiast market is too small to be sustainable. Given the U.S. population alone has increased by 80 million people over the past 30 years, you’d imagine that potential buyers—of sports cars, of hot hatches, of stylish coupes or tossable roadsters or sneaky-quick sedans—would be more numerous than ever. So why is the market drying up?

 

To figure out what’s happening, we have to jump back in time. In 1990, the median wage for a young man aged 25 to 34 was $21,393 a year. The original Mazda Miata had just arrived the year before, with a base price of $14,000, and the median house price was just 3.7 times that wage, at $79,100.

 

Here’s the problem. In 2019, the median wage for the same young man was $42,212. A base 2019 Miata retailed for $26,500—proportionally stable at roughly 65 percent of the median annual wage. The real shocker is housing. In the ensuing years, the median home price has shot up to nearly $325,000 in the U.S. (per the St. Louis Fed, as of October 2020), a full 7.6 times the median annual wage of our young earner. And even if our hypothetical 25-to-34-year-old isn’t trying to buy a house, if he’s renting, he’s likely dealing with astronomical prices, especially if he’s living in a major city—not to mention the unprecedented student loan debt his generation has incurred.

 

The situation is even worse for young women. In 1990, the median wage for women aged 25 to 34 was $12,589, rising to $35,491 in 2019. And in every age and income bracket, women make less than their male counterparts, putting them at an even steeper disadvantage in terms of buying power.

 

Americans in this age group are in the prime of their youth, a time when a lack of responsibilities would historically pair with an influx of real adult income. It’s a precious window, a time when many would splurge on a brand-new sports car before children or other practical commitments got in the way. In decades past, one might have expected a new college graduate starting their first grown-up job to choose themselves a flashy new ride as a treat. But with a financial Sword of Damocles hanging above their heads, the young adults of today hesitate to make the same call.

 

In the last 40 years, wage growth in the U.S. has screeched to a halt.

 

Click on the link for the full article

 

wage growth. But not real wages.  If wages stayed the same they should still be able to buy what they did 20 years ago....
 

They should still be able to buy a sports car if they want it. People have a lot more they they did before. 
 

the real story in that article is housing prices, not wage growth....

Edited December 5, 2020 by CousinsCowgirl84

[China]

Nearly two-thirds of Americans are living paycheck to paycheck during COVID pandemic

 

Money is not something anyone wants to worry about during the holidays. In a year still ravaged by the coronavirus pandemic and its economic fallout however, it appears many will be struggling through the most festive part of 2020. A survey finds over 60 percent of Americans say they’re now living paycheck-to-paycheck as the year draws to a close.

 

The poll of over 2,000 Americans, commissioned by Highland Solutions, wanted to see how spending habits and personal finances in the U.S. are holding up during the pandemic. Their results find 63 percent of respondents have cut back on their spending due to COVID. Six in 10 say they’re doing it to be more cautious, but 49 percent add it’s because of losing income at work.

 

Click on the link for the full article

[TD_washingtonredskins]

How many Americans typically live paycheck-to-paycheck though? I was always under the impression it was about that many to begin with. 

[China]

Landlords are running out of money. 'We don't get unemployment'

 

Over the past 30 years, Maral Boyadjian has built up a family real estate business consisting of eight homes in Southern California that she and her husband rent out.

 

"Some people spend their money on a bigger home or better car or travel, but we live modestly," said Boyadjian. "Whatever money we can put together, we spend it on buying another single-family home to rent."

 

Typically, the rents from the homes enable the couple to cover all their expenses and earn income. But now tenants in three of their properties in the San Fernando Valley, haven't paid their rent for months. The couple can't remove those tenants because of a state eviction moratorium, which was extended until January 31.

Of the three tenants that are behind, one has arranged to pay 25% of rent now and the rest later. Boyadjian said she is happy to work with that tenant, because at least an effort is being made and she's getting something. Others, like those who have not paid any rent since August, leave her feeling like she's being taken advantage of.

"Owning a property and collecting rent on it is my way of making a living," she said. "There has been no government aid coming my way. Our income has been sliced. We don't get unemployment."

So far, she has been able to continue to meet her financial obligations. She makes property tax payments and pays the insurance. She not only pays for utilities like water, but also for gardeners and pool maintenance.

"We've been able to pay our mortgages, but we're really in danger of not being able to on two properties," Boyadjian said. "This is not sustainable."

 

As the coronavirus pandemic drags on -- with unemployment still high, government support dwindling and the status of future stimulus unknown -- landlords are suffering.

An estimated 9.2 million renters who have lost income during the pandemic are behind on rent, according to an analysis of Census data by the Center on Budget and Policy Priorities. And renter households with a job loss will owe an estimated average of $5,400 in back rent by this month, according to a report from the Federal Reserve Bank of Philadelphia.

 

A national ban on evictions, put in place by the Centers for Disease Control and Prevention to stop the spread of the virus, has meant many landlords must continue to pay to maintain and finance their properties with less rent coming in and no recourse to remove non-paying tenants.

"This is becoming a concern for landlords," said David Howard, executive director for the National Rental Home Council, which advocates on behalf of the single-family rental industry. "With the eviction moratorium, you don't know what the next step is. There is no certainty about when you're going to get paid."

If the CDC order is allowed to expire, as many as 5 million renters could face eviction across the country in January, with as many as 14 million renter households at risk of eviction, according to Stout, a global investment bank and advisory firm.

 

Click on the link for the full article

[China]

803,000 Americans file first-time jobless claims in week before Christmas

 

The U.S. Department of Labor reported 803,000 initial unemployment claims last week, a drop of 89,000 from the week prior.

 

Why it matters: The number of Americans on unemployment benefits remains high, though the figures released Wednesday were lower than the 888,000 that economists had expected.

 

Driving the news: The report comes a day after President Trump suggested he may not sign Congress' $900 billion coronavirus relief bill, potentially delaying desperately needed aid for millions of Americans.

 

The bottom line: Although the number of unemployment claims was less than expected, it is another sign that the country's job recovery still has a long way to go to recover to pre-pandemic levels.

 

According to the Labor Department, there were 287,243 initial claims for the same week last year.
 

Click on the link for the full article

[Cooked Crack]

 

Is this what socialism looks like?

[China]

 

[China]

50 years of tax cuts for the rich failed to trickle down, economics study says

 

Tax cuts for the wealthy have long drawn support from conservative lawmakers and economists who argue that such measures will "trickle down" and eventually boost jobs and incomes for everyone else. But a new study from the London School of Economics says 50 years of such tax cuts have only helped one group — the rich.

 

The new paper, by David Hope of the London School of Economics and Julian Limberg of King's College London, examines 18 developed countries — from Australia to the United States — over a 50-year period from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes. 

 

Per capita gross domestic product and unemployment rates were nearly identical after five years in countries that slashed taxes on the rich and in those that didn't, the study found. 

 

But the analysis discovered one major change: The incomes of the rich grew much faster in countries where tax rates were lowered. Instead of trickling down to the middle class, tax cuts for the rich may not accomplish much more than help the rich keep more of their riches and exacerbate income inequality, the research indicates.

 

Click on the link for the full article

[Captain Wiggles]

Trickle down economics is the business model for running a strip club not a country. 😐

[Larry]

One of the moments that's stuck in my head about trickle down economics was some comments Rush Limbaugh made, I think it was in the late Reagan years or early Bush 1.  

 

And he stated the economists were worried.  It seemed that after the miracle that was Reaganomics, unemployment was too low.  And the economists were worried that this might trigger inflation.  

 

And the thought occurred to me that when he said ti "might trigger inflation", what he meant was that it might cause wages to go up.  

 

In short, he was saying that we need to be careful, or else it might trickle down.  

[China]

The U.S. economy excels at one thing: producing massive inequality

 

To grasp the sheer magnitude of U.S. economic inequality in recent years, consider its two major stock market indices: the Standard and Poor (S&P) 500 and Nasdaq. Over the last 10 years, the values of shares listed on them grew spectacularly. The S&P 500 went from roughly 1,300 points to over 3,800 points, almost tripling. The Nasdaq index over the same period went from 2,800 points to 13,000 points, more than quadrupling. Times were good for the 10 percent of Americans who own 80 percent of stocks and bonds. In contrast, the real median weekly wage rose barely over 10 percent across the same 10-year period. The real federal minimum wage fell as inflation diminished its nominal $7.25 per hour, officially fixed and kept at that rate since 2009.

 

All the other relevant metrics likewise show that economic inequality in the United States kept worsening across the last half-century. This happened despite "concerns" about inequality expressed publicly across the years by many establishment politicians (including some in the new Biden administration), journalists, and academics. Inequality worsened through the capitalist downturns after 1970 and likewise through the three capitalist crashes of this century (2000, 2008, and 2020). Nor did the deadly pandemic provoke soul-searching or policies adequate to stop, let alone reverse, the ongoing redistribution of income and wealth upward.

 

No advanced economics is required to grasp that divisions, bitterness, resentment, and anger flow from such a persistently widening gap between haves and have-nots. Among millions who search for explanations, many become prey for those mobilizing against scapegoats. White supremacists blame Black and Brown people. Nativists (calling themselves "patriots" or "nationalists") point to immigrants and foreign trade partners. Fundamentalists blame those less zealous and especially the non-religious. Fascists try to combine those movements with economically threatened small-business owners, jobless workers, and alienated social outcasts to form a powerful political coalition. The fascists made good use of Trump to assist their efforts.

 

U.S. history adds a special sharpness to the search for explanations. The dominant argument for capitalism in the 20th century after the 1930s Great Depression was that it "produced a great middle class." Real U.S. wages had risen even during the Depression. They were generally higher than elsewhere across the globe, and especially in comparison with those in the USSR. High wages showed the superiority of U.S. capitalism according to the system's apologists in politics, journalism, and academia. Demolition of that middle class at the end of the 20th and into the new century pained especially those who had bought the apologies.

 

And indeed, the Great Depression and its aftermath had lessened inequality significantly, enabling such a defense of capitalism to have some semblance of validity.

 

The reduction of U.S. economic inequality accomplished then proved temporary. It was undone after 1945. Particularly after 1970, capitalism's normal trajectory of deepening economic inequality resumed through to the present moment. Simply put, capitalism's basic structure of production—how it organizes its enterprises—positioned capitalists to reverse the New Deal's reduction of economic inequality. Much of the temporary U.S. middle class is now gone; the rest is fading fast. 

 

Click on the link for the full article

[PleaseBlitz]

https://www.washingtonpost.com/business/2021/03/05/february-jobs-report-unemployment-2021/

 

Quote

The U.S. economy added 379,000 jobs in February, a level that surpassed analysts’ estimates but remains below the rate needed to regain the more than 9 million jobs lost since last year.

 

The unemployment rate dropped a tenth of a percentage point to 6.2 percent.

 

The gains were driven by large increases in the leisure and hospitality sector, which added 355,000 jobs, as coronavirus-related restrictions eased over the course of the month in many jurisdictions. Most of that was from gains of about 286,000 at restaurants, bars and other food service establishments. Employment in the sector is still down 3.5 million positions from where it was one year ago.

 

“The job gains should be seen as fairly modest,” said Julia Pollak, a labor economist at ZipRecruiter. “They do not yet signal a rapid rebound, but rather the slow reawakening of the labor market after the covid-19 winter.”

 

[PleaseBlitz]

 

 

[Larry]

On 4/2/2021 at 6:12 PM, PleaseBlitz said:

 

 

 

Number of jobs added, per month, in thousands.  (BLS data, seasonally adjusted, total nonfarm.)  

 

Biden:  692

Trump: -60

Trump, first 3 years:  184

Three years prior to Trump:  224

 

[CousinsCowgirl84]

https://www.cnn.com/2021/04/05/perspectives/trump-biden-economic-rebound/index.html
 

 

“Biden will benefit from the robust revival that began under Trump's watch. And we can't just attribute the revival to Operation Warp Speed, though the extraordinary ramp-up in vaccinations wouldn't be possible without Covid vaccines being developed and approved in record time. It's the economic cycle that deserves the lion's share of the credit for the strong recovery from the Covid recession.”

 

my emphasis.

[TradeTheBeal!]

Two maxims you can trust.

 

1) Civil war + raging epidemic = bad for business

2) Stable leadership + medical science = good for business

[Larry]

Right. Biden should thank Trump for the booming economic conditions he inherited. 

[CousinsCowgirl84]

57 minutes ago, Larry said:

Right. Biden should thank Trump for the booming economic conditions he inherited. 

that’s not what the article said.

[tshile]

General thought on trumpers pushing that narrative:

 

yeah you’re right, if trump didn’t **** it up so bad Biden wouldn’t have so many easy fixes to dunk on you with. 
 

Operation warp speed was a spectacular ****ing failure of great proportions that was only saved by the Biden administration tearing it down and rebuilding it, and our medical community jumping into the vaccine r&d immediately for their own reasons with some funding from the United States. 
 

otherwise he did everything else to make things worse so go on with your utter nonsense. 

Also, when you make your stance screwing up the response to a crisis, then the next guy def gets credit for fixing it

 

Economic cycle 😂 wake up

Edited April 6, 2021 by tshile

[Larry]

17 minutes ago, CousinsCowgirl84 said:

that’s not what the article said.

1). Oh, I don't think that's what the article was trying to say. 
 

2). But let's look at "the robust revival that began under Trump's watch". 
 

Same data and source as I used earlier. BLS data, seasonally adjusted, jobs added per month, in thousands:  

 

Biden. (two months):  692

The two months prior to Biden:  -36. 

[Sacks 'n' Stuff]

I read the article this morning and am just popping into this thread now. It's not a pro Trump article.

[CousinsCowgirl84]

7 hours ago, tshile said:

General thought on trumpers pushing that narrative:

 

yeah you’re right, if trump didn’t **** it up so bad Biden wouldn’t have so many easy fixes to dunk on you with. 
 

Operation warp speed was a spectacular ****ing failure of great proportions that was only saved by the Biden administration tearing it down and rebuilding it, and our medical community jumping into the vaccine r&d immediately for their own reasons with some funding from the United States. 
 

otherwise he did everything else to make things worse so go on with your utter nonsense. 

Also, when you make your stance screwing up the response to a crisis, then the next guy def gets credit for fixing it

 

Economic cycle 😂 wake up

3-4 years from now when the economy show signs of weakening due to inflation and higher interest rates (they are 100 percent coming) remember this post.....

 

 

wage inflation

https://www.wavy.com/news/business/where-are-the-workers-as-economy-recovers-from-pandemic-many-jobs-remain-unfilled/

 

Higher interest rates:

 

low housing inventory/record housing prices:

 

https://www.google.com/amp/s/www.cnbc.com/amp/2021/04/05/competitive-housing-market-squeezing-real-estate-brokers.html
 

 

inflation:

 

https://www.bloomberg.com/news/articles/2020-12-07/get-ready-for-the-great-u-s-inflation-mirage-of-2021

 

note that article believes inflation isn’t going to happen in 2021 necessarily, but presents several cases of why inflation might occur.

 

 

The next think you’re  thinking is, what was presented is indicative of a strong economy. Not a week one. And you are correct. We are in a bubble. Question is when does it pop which is irrelevant to who is president.

 

 

 

 

 

 

Edited April 6, 2021 by CousinsCowgirl84