Reply With Quote
Sure, that period includes a rather nasty bear market. Median income is up, which is probably the better measure to use unless you are worried about the upper crust.
Yahoo NewsWASHINGTON - The average income of American families, after adjusting for inflation, declined by 2.3 percent in 2004 compared to 2001 while their net worth rose but at a slower pace.
The Federal Reserve reported Thursday that the drop in inflation-adjusted incomes left the average family income at $70,700 in 2004. The median, or point where half the families earned more and half less, did rise slightly in 2004 after adjusting for inflation to $43,200, up 1.6 percent from the 2001 level.
The median, or midpoint for net worth rose by 1.5 percent to $93,100 from 2001 to 2004. That growth was far below the 10.3 percent gain in median net worth from 1998 to 2001, a period when the stock market reached record highs before starting to decline in early 2000.
The Fed's results were published in the 2004 Survey of Consumer Finances, a do ent which provides a comprehensive view of how Americans are faring on such pocketbook issues as incomes and net worth.
The figures don't lie. Heavy debt and no, or slow growth in real wages are eatting up any rise in net worth.
Sure, that period includes a rather nasty bear market. Median income is up, which is probably the better measure to use unless you are worried about the upper crust.
Median income is up slightly, but median wages which make up the largest part of family income is down 6.2%
CNN MONEYA decline in wages also helped account for the slow growth in net worth.
While the median income rose 1.6 percent, to $43,200, after adjusting for inflation, median wages fell 6.2 percent. Wages make up the largest part of family income.
Despite lower interest rates between 2001 and 2004, families spent more of their incomes paying off their debt.
The growth in income was the slowest since the Fed's 1992 survey, when median income actually fell.6.7 percent, to $35,100, between 1989 and 1992.
Median income is skewed by the rich getting richer effect, not an increase in real wages by working Americans.
Yeah, but the rich got richer..........
And the old got older.Yeah, but the rich got richer..........
^^The alternative isn't so great, is it?
You consider families that make $70K rich?
Otherwise, mathematically, your premise is impossible.
Also, these are gross income figures. Because of the accross the board tax cuts, ANY person who paid income taxes in '04 saw a rise in their net income.
The median is up while the average is down. That doesn't indicate that the "rich" are doing better relatively, rather the reverse.
You mean tax deferments, right? Let's come correct.
Or the income gap has widened.
Not when the median is up. You'd need that to have declined more than the mean for your assertion.
I like to put it this way, the income gap has widened, but were all swimming in the same ecomomic cess-pool. The Poor have more debt, the rich have more debt.
The median has increased. That means half the population are below a higher threshold. That's not a bad thing. The average has declined in real terms but the average is above the median.
You will get yours after you earn it. Like anyone who has worked, earned
reaganomics, right!
and saved. It takes time for most folks.
And Dan, not all poor and rich are deeper in debt, just some. You get the
facts straight....okay
Really? There are many who would argue that. Me for one. But it
would serve no purpose. Being rich is not a crime. (unless you made it
in crime...LOL). I am far from rich, but I don't have to worry too much
about money, not because I have that much, it just that I don't really
need that much. I am satisfied with my life, material wise. I drive a
86 pickup, runs great, no bruises or scrapes and gets me where I want
to go. Have a roof over my head and eat well. Have enough toddies to
keep me happy. Heck, no one with loads of money has more. Just a little
prettier settings.
Anyhow, you are young, full of piss and vinegar and just getting started.
I would love to be around in about 50 years, not possible, and talk to you then
about wealth. Believe me you will change you tune. You will do well,
I promise, you have a good education, provided you really did attend
college to learn and not kill time and you are going to one of the top
notch universities in the US of A. Enjoy life, believe me when people
tell you time slips by, it does.
Is this a suicide note?
Who is responsible for all of these people having more debt?
Oh, and mine went considerably up. Because of the house I bought.
Last edited by SpursWoman; 02-24-2006 at 07:33 PM.
^^not really. But I do know that anyone in this country who want to succeed, can
and will. I don't by that mean become rich. I actually admire young people who do go
to college. I don't like it when you say some of the things that you have about being
in debt and blaming the government. But luckily you can say things like that.
I was lucky in many ways. I am a native Texan. I had a good family on both sides,
Mother and Father and both my grandparents had small farms. I loved my childhood in many
ways. I had things that most of those on this board will never have and it really
is a shame. I remember Sunday afternoons when we would go to my Granddads
and cut watermelon and cantaloupes and eat to our hearts content. I remember
sitting and listening to the men talk (and smoke) and tell stories, a lost art. I learned
a lot from those times. I learned that money was not the only thing in life. I can
remember the times when my Grandfather didn't have two cents to rub together
but he wasn't poor. I thought patches on men's pants were a normal thing and
nothing to be ashamed of. But we never went hungry, my Father always had a
job and my Mother always kept a great house and was a great cook. We didn't have
air conditioning, but had a sleeping porch or slept outside, with no fear. Dogs
ran loose, cats roamed and everyone knew everyone's else business and no one
really cared. You left the house open and windows up in the summer, if a thunder-
storm came up you neighbor came over and shut the place up. If someone dropped
by at mealtime, they were welcome to come in a eat with you. Blacks and whites
were good friends (that might surprise some). People respected others and their
word was good as gold. People read and were literate, does that surprise anyone.
And yes, people were very moral and most church going folks. Many deals were
sealed with a handshake. Hogs were killed at first frost and it was a family thing
along with neighbors all helping out. Yeah, I know it all sounds so corny to some
now. They say air conditioning was what made Texas great. BS, wished they
had never invented it. The people of Texas is what made Texas great. They were
hard working, stuck in the mud types who just loved family and their country. Yep,
and they did their share of griping.
Once again you missed the a vital point
Let me restate it in case you missed it.
after adjusting for inflation, median wages fell 6.2 percent.
just in case you weren't wearing your reading glasses.
The real bottom line is that living standards are falling for more than half the population.
What is going to happen to that median income when we have to raise taxes to pay for the interest on all the new debt the US govt was/is issuing to pay for those massive budget shortfalls?
Heh, your liabilities went up, but so did your asset column. House purchases generally have a mostly neutral effect on net worth (slightly negative at first due to the closing costs, but rising into positive area as equity is built up after the first few years)Who is responsible for all of these people having more debt?
Oh, and mine went considerably up. Because of the house I bought.
But to the point of your question:
People themselves. Americans have forgotten how to save money, it seems. I really wish we would stop living beyond our means.
I would bet that home appreciation makes up much of people 'asset gains' on their individual balance sheets. Now let's say that the cyclical home market start depreciating, as has happened throughout history. Now people are stuck with high debt, and a home that is worth much less than they can get if they sold it. This is the real danger to the economy.Heh, your liabilities went up, but so did your asset column. House purchases generally have a mostly neutral effect on net worth (slightly negative at first due to the closing costs, but rising into positive area as equity is built up after the first few years)
All it would take is a rapid rise in interest rates of less than 5% and all these adjustable rate mortages, home loans at 125% of value, and floating interest rate revolving credit would sink millions of Americans. This, more than any other reason is why the WH cannot let Iran undermine the strength of the dollar with it's new oil boarse.
^^Dan, some people buy a home for just that purpose: their home. One thing
most forget, look at housing today (size wise) versus homes from just the
50-60's. What a difference. People say homes have gone up, and they have,
but one thing they don't realize so has the size and quality. One of the most
expensive items a person purchases and gets ripped off with is a car. Quality
may have gone up a bit, but size wise, they are tin cans. Which you put on
not get into. The point I am trying to make about housing is that some people
more than you would imagine buy a home never intending to move from that
location. It is their home where they want to raise their family.
THOUGHT OF THE DAY:
You own a home in a distant suburb of any major with few nearby jobs.
Gas gets increasingly expensive over the course of say 10 years, tripling in price (12% rise per annum).
Your transit costs to get to your far away job in the city center have increased dramatically, creating a large incentive to live closer to your job.
The same holds for everybody else.
Question #1:
What happens to the aggregate (overall) demand for those suburban homes?
Question #2:
Based on your answer to #1, would this lead to an increase or decrease in the price of those suburban home, all other things held equal?
Question #3:
Since interest rates are intrinsically tied to inflation rates, if the cost of energy is rising at roughly 12% as in question #1, does that imply that interest rates will be rising as well?
Question #4:
If the demand for houses is inversely related to interest rates, do higher interest rates imply a greater or lesser demand for homes?
Answers in next post, in case you really need them.
Q #1 Answer:
Overall demand for those home will decrease, all other things held equal.
__________________________
Q #2 Answer:
All other things held equal, the price point for homes would fall.
__________________________
Q #3 Answer
Given the premises, yes interest rates will be rising.
__________________________
Q #4 Answer
Again, given the premises of the question, overall demand for housing will fall.
A simple conclusion for this is that this combination of (very plausible) factors will "prick" the current housing bubble.
As Nbadan mentioned above, this will lead to a lot of unpleasant things for the large numbers of people who have maxxed out the equity loans on their houses.
I sincerely hope that those of you who read this and own houses will take heed to get your loans on a fixed interest rate basis if they are not, and to not take out more debt in the coming year or two based on equity that may not be there much longer.
I have no doubt that some of you will read this as "he hates Bush and is trying to say the economy is awful to make Bush look bad" and will ignore it simply based on that. This is the WRONG conclusion to draw.
You might not agree with me politically, but if I were to tell you not to drink Drano, I would hope you would have the good sense to believe that. The intention of this is similar.
I AM NOT trying to convince anybody with this that because the economy is not ducky Bush is bad.
I AM trying to convince y'all to be cautious when it comes to buying/financing a house and to pay down your debt over the next few years.
There are currently 1 users browsing this thread. (0 members and 1 guests)
Posting Permissions
