Bottom 40% Have Negative Net Income

[Peter1469]

Not really. What you all are talking about is not nominal but real wages. Real wages are adjusted for inflation. Nominal wages are steady if not rising, but because of inflation real wages are in decline. Number one cause of inflation, the goddamned government.

Deficit spending.

[Dr. Who]

Deficit spending.

Is deficit spending responsible for more and more jobs being contract positions?

[Captdon]

Yeah, it figures that the natural reaction here would be for a bunch of rich people to lecture poorer people for being poorer than they are.



Did you even bother to click on the link? I have to ask because the main point contained therein is that the poorer 40% of the population is losing money on balance after you account for increases in the cost of living.



So I guess then no one should get a college education, right? Or no one should ever take out a loan to pay bills or pay for necessities with a credit card when they have no other means, right? Who needs heating in freezing temperatures when you can have a more balanced budget, right?

Simplistic, condescending suggestions like the above are unhelpful because they are much easier said than done and often cannot be done in my experience.



In response to the last recession, they did! It was called personal savings, which peaked back in 2012. The problem here is that, since that time, the cost of living has risen so much that working people writ large have been forced to exhaust most of that buffer.

No, people should live within their means. I never heard of student loans when I left HS. I couldn't afford college but I didn't go over my head. I worked the best I could and spnet the best I could. I am now retired very comfortably. What I did isn't special. It's just not being stupid.

I am not rich. I'm not close to being rich. I am not poor. I made sure of that by doing my best. I didn't make a half-assed attempt and give up. I hustled to make money so my family could live well and they did. I educated two children. I retired comfortably. i did it by my own means.

No, 150 thousand is not middle class. Wherever you got that, I hope you kept the receipt.

[Captdon]

You don't know how lucky you are.

How was it luck?

[Captdon]

There is such a thing as good debt. If you can borrow at say 6% and earn 9% , bingo. In addition if you have a use for your capital on say an appreciable asset for 50k that is a better use than paying cash for a 50k toy etc than borrow the money and put the original money to work. When I was in financial planning I do not recall a single instance where there was not pockets of underutilized capital. In the world of finance yoy do all you can " OPM". If you dont you are basically a financial fool. Sure it feels good to Pa Kettle to tighten his overalls and say " dad nabbit pay cash fir everything. Shoot ma some of these things are only depreciating at a rate of 20% annum. Others are well you know , worthless. But by shakees you fat old woman I dont owe a dime.
" you mean you lack the ability to understand the numbers , utilization of capital etc so that's the path you chose as opposed to working something simple as the Rule of 72 ? Further proof some people are too stupid to have money anyway.

You still can't borrow what you can't pay back. I bought a duplex once and I borrowed a lot of it. No matter what I could have sold it and come out even. I would never have put myself in a position to lose my money.

[Collateral Damage]

A remarkable new study published by Ashlyn Still and Jonathan Spicer for Reuters reveals that fully 40% of Americans currently have a negative net income, which means that their living expenses exceed their annual incomes. In act, according to this study, even the middle quintile of the population -- the average American -- is only barely above water financially, and the margin has collapsed.
A few other factoids are also telling: the rate of personal savings has fallen from a high of 11% in December of 2012 to just 3.1% in March of this year, which amounts to a drop-off of more than three-quarters over the last five years or so, including a drop of half within just the last three. The authors also call attention to how, historically, U.S. consumption growth is dominated by the top 40% of earners, while, by contrast, in the past few years, the bottom 60% of earners has accounted for the majority of consumption. Consumption makes up for over 70% of all economic activity in the United States and plays a critical role in economic growth. Meanwhile, serious credit card delinquencies and defaults have surged in recent years.

Put all these facts together and the picture you get is that, while the average middle class American is slightly above water financially, the economic significance of this fact is outweighed by the sheer volume of debt that the working class is accumulating. The poorer 40% of the population (to which I belong, incidentally) is exhausting its savings to pay debts and living expenses; a formula for survival that is obviously not sustainable. Eventually, the working class, which is now fueling the main driver of the economy -- consumption -- will not be able to sustain its consumption levels and have to scale back, which will have ripple effects across the economy, and especially for the barely-above-water middle class population. As the authors point out, what it all means is that "the nearly decade-long economic expansion may be more vulnerable to a further spike in gasoline prices or an escalation of trade conflicts" at present. In an unsustainable situation like this, little shocks can trigger a recession.

While the findings of this study explains a lot, really the telltale signs that (contrary to what you hear from the White House) all is not well with working America have been there already. In recent years, the United States has been wracked by growing epidemics of alcohol and opioid addiction, increasing rates of depression, anxiety, and suicide, and declining life expectancy. But now we can clearly see a big part of why.

That lovely little graph fails to define 'expenses, which pretty much invalidates it's entire premise.

[Tahuyaman]

Yes, without fractional reserve banking most people would be called renters.

We would basically be living in a cash society.

[Chris]

Is deficit spending responsible for more and more jobs being contract positions?

We were talking about inflation and how it affects real wages.

[Captdon]

You've been Cottonized. Very few get that honor.

He gives coupons to the lucky few.

[Captdon]

Is deficit spending responsible for more and more jobs being contract positions?

It has nothing to do with contracting. Spending is spending.