US Economy, part 2

[JWags85]

People don't "have less money than ever." That is an absolutely inaccurate statement.

I was gonna say.  It may feel like it do to some inflation factors and a recent spike in housing, but by no means do they have less money than ever.

People didn't largely and suddenly get worse at making financial decisions.

No, but similar to the previous posts, this is also an exercise in showing how TERRIBLE most people are at benchmarking themselves and their financial situation.  There is the old ancedote how no rich person every thinks they are rich, often because their scale their gradually and so do their expenses as well as the company they keep (often wealthier than them).  Well conversely, I think many many middle class people don't realize how much more financially sound they are than others. 

I remember thinking how underpaid and struggling I was compared to many of my friends when I was making around $65K in my late 20s.  In reality, I was making well over the average household income, as a single person, and was in a position to be just fine, even though it didn't feel like it.

Similarly, paycheck to paycheck is commonly considered the idea that your housing, food, utilities, and essentials, etc... take up all your income until the next paycheck.  But for people with a mindset mentioned above, they just think that not being able to have money left over or plugged into savings after buying what they wanted or living their life means they are actually paycheck to paycheck.  So the definition and perception gets blurred.  Cause in reality, financially those groups are quite different.

Ancedotes are often terrible when adding contrasting color to hard data.  But when addressing qualitative surveys or perceptions like "people have less money now", its relevant cause the responses and sentiments are usually just based on vibes.

[Skatastrophy]

Hey bros how much u make a year?

You guys have jobs? I thought Scoop was for men of leisure

[BM1090]

People don't "have less money than ever." That is an absolutely inaccurate statement.

To be clear, my intent wasn't to say "less money" but it was bad phrasing on my part. People absolutely have a lower % of their income left after only necessary expenses than they did 10, 20, or 30 years ago, which makes it harder to accumulate wealth.

The costs of nearly every necessary living expense have risen at a much quicker rate than income. The average debt to income ratio is higher as well.

Given that, how can you say it's not more difficult to accumulate wealth than it has been in the past? That's all I'm arguing.

[lawdog77]

Nothing says Scoop more than wealthy white guys telling poor people that they are poor   because they are bad with money

[BM1090]

I was gonna say.  It may feel like it do to some inflation factors and a recent spike in housing, but by no means do they have less money than ever.

No, but similar to the previous posts, this is also an exercise in showing how TERRIBLE most people are at benchmarking themselves and their financial situation.  There is the old ancedote how no rich person every thinks they are rich, often because their scale their gradually and so do their expenses as well as the company they keep (often wealthier than them).  Well conversely, I think many many middle class people don't realize how much more financially sound they are than others. 

I remember thinking how underpaid and struggling I was compared to many of my friends when I was making around $65K in my late 20s.  In reality, I was making well over the average household income, as a single person, and was in a position to be just fine, even though it didn't feel like it.

Similarly, paycheck to paycheck is commonly considered the idea that your housing, food, utilities, and essentials, etc... take up all your income until the next paycheck.  But for people with a mindset mentioned above, they just think that not being able to have money left over or plugged into savings after buying what they wanted or living their life means they are actually paycheck to paycheck.  So the definition and perception gets blurred.  Cause in reality, financially those groups are quite different.

Ancedotes are often terrible when adding contrasting color to hard data.  But when addressing qualitative surveys or perceptions like "people have less money now", its relevant cause the responses and sentiments are usually just based on vibes.

You're not refuting anything I'm saying though. And I got my data from studies and the census, not surveys.

In case I'm talking in circles, which I tend to do, I'm saying that younger generations today have a far lower percentage of their income leftover after necessary expenses. And that makes it harder to accumulate wealth. And there's nothing that I've seen in the data to show it will reverse in the future.

[Pakuni]

Nothing says Scoop more than wealthy white guys telling poor people that they are poor   because they are bad with money

[Hards Alumni]

To be clear, my intent wasn't to say "less money" but it was bad phrasing on my part. People absolutely have a lower % of their income left after only necessary expenses than they did 10, 20, or 30 years ago, which makes it harder to accumulate wealth.

The costs of nearly every necessary living expense have risen at a much quicker rate than income. The average debt to income ratio is higher as well.

Given that, how can you say it's not more difficult to accumulate wealth than it has been in the past? That's all I'm arguing.

YEP

[The Sultan]

YEP

Still waiting for you to dunk on the article I posted last week.

[The Sultan]

You're not refuting anything I'm saying though. And I got my data from studies and the census, not surveys.

In case I'm talking in circles, which I tend to do, I'm saying that younger generations today have a far lower percentage of their income leftover after necessary expenses. And that makes it harder to accumulate wealth. And there's nothing that I've seen in the data to show it will reverse in the future.

Again, that's just not accurate.

https://www.americanprogress.org/article/wealth-of-younger-americans-is-historically-high/

[4everwarriors]

Wider and broader social programs - paid family leave, paid time off, universal childcare, etc.

Significantly more wealth redistribution through tax structure

Regulatory enforcement particularly of financial sector and anti-trust

Probably other things I can't think of off the top of my head

Oh, so you actually have a head? Thought it was just a hollow coconut, hey?

[BM1090]

Again, that's just not accurate.

https://www.americanprogress.org/article/wealth-of-younger-americans-is-historically-high/

Thanks for the link. Need to think about this more, but I'll reply once I have more time to read more closely.

I'll look for data for 30 and under too, as that's more the age range I was referring to.

[Hards Alumni]

Still waiting for you to dunk on the article I posted last week.

Sorry, I just moved on with my life, and so did you until now.  I didn't think you'd actually want that.

[The Sultan]

OK, and I get under-30. Between students loans, housing and Covid, it's been a struggle. But I would suggest that under 30 aren't really your prime wealth accumulating years. They can make up for lost time.

[MU82]

From Seeking Alpha:

U.S. nonfarm payrolls climbed by 272K in May, outpacing the 182K expected and 165K in April, which was revised down from +175K, the U.S. Department of Labor said on Friday.

The May figure, while rising from April, declined from +310K in March 2023 and +303K in May 2023. The three-month average stands at +249K.

Unemployment rate: 4.0% vs. 3.9% expected and 3.9% prior.

U.S. equity futures dipped after the strong print on jobs added may put a Fed rate cut even farther into the future. Nasdaq futures slipped 0.2%, S&P futures -0.4%, and Dow futures -0.4%. The 10-year US Treasury yield jumped 13 basis points to 4.424%.

Average hourly earnings rose 0.4% in May, accelerating from 0.2% in April and topping the 0.3% consensus. Y/Y, average hourly earnings increased 4.1%, compared with the +3.9% consensus and +4.0% in the prior month (revised from +3.9%).

Traders have reduced their bets that the Federal Open Market Committee will cut its policy rate by 25 basis points in September. The probability of a 25-bp rate cut fell to 50.0% from 55.4% on Thursday. The probability that the rate will stay at 5.25%-5.50% increased to 45.6% from 31.13%, according to the CME FedWatch tool.

Quickie Take: The economy is creating too many jobs, and wages are rising higher than expected. That seemingly good news is seen as bad news by Mr. Market, who is concerned that the Fed won't cut rates this year.

[rocky_warrior]

Average mortgage payment is $2306 per month before property taxes. Up 80% in two years. $27,672 per year. Average household income is $63,500, $48,589 after taxes. So a median household trying to buy a median house would have to put 57% of their income towards mortgage alone. That's unsustainable.

A nit I suppose, but that's not how housing as a percentage of income is calculated.  And not all "households" have mortgages, many have rents.

[MU82]

Also, a surprisingly high percentage of houses are fully paid for - almost 40% are mortgage-free according to the most recent data available.

The share of mortgage-free U.S. homes has jumped from 34.3% to 39.3% in the past decade, per the census data.

https://www.axios.com/2023/12/12/mortgage-free-homes

[Pakuni]

Also, a surprisingly high percentage of houses are fully paid for - almost 40% are mortgage-free according to the most recent data available.

The share of mortgage-free U.S. homes has jumped from 34.3% to 39.3% in the past decade, per the census data.

https://www.axios.com/2023/12/12/mortgage-free-homes

Sure, but the large majority of those homes are owned by retirees.

[MU82]

In the not-so-good economic news department ...

From AP: More than 7,000 debt-laden companies are just stumbling by on the brink of survival

They're called zombies, companies so laden with debt that they are stumbling by, barely able to pay even the interest on their loans and just a hit away from dying off for good. An Associated Press analysis found their ranks in raw numbers have jumped over the past decade by a third or more globally – whiplashed by years of piling up cheap debt followed by stubborn inflation that has pushed borrowing costs to decade highs.

Many of these companies could soon be facing their day of reckoning, with due dates looming on hundreds of billions of dollars of loans they may not be able to pay back. "They're going to get crushed," Valens Securities Managing Director Robert Spivey said of the weakest zombies.

As the number of zombies has grown, so too has the potential damage if they are forced to file for bankruptcy or close their doors permanently. Companies in AP's analysis employ at least 130 million people in a dozen countries. Already, the number of U.S. companies going bankrupt has hit a 14-year high, a surge expected in a recession, not an expansion.

A real concern among investors is that too many zombies could collapse at the same time because central banks kept them on life support with low interest rates for years instead of allowing failures to sprinkle out over time.

[jesmu84]

Sure, but the large majority of those homes are owned by retirees.

Or how many are owned by large investor groups that paid cash?

[Skatastrophy]

In the not-so-good economic news department ...

From AP: More than 7,000 debt-laden companies are just stumbling by on the brink of survival

They're called zombies, companies so laden with debt that they are stumbling by, barely able to pay even the interest on their loans and just a hit away from dying off for good. An Associated Press analysis found their ranks in raw numbers have jumped over the past decade by a third or more globally – whiplashed by years of piling up cheap debt followed by stubborn inflation that has pushed borrowing costs to decade highs.

Many of these companies could soon be facing their day of reckoning, with due dates looming on hundreds of billions of dollars of loans they may not be able to pay back. "They're going to get crushed," Valens Securities Managing Director Robert Spivey said of the weakest zombies.

As the number of zombies has grown, so too has the potential damage if they are forced to file for bankruptcy or close their doors permanently. Companies in AP's analysis employ at least 130 million people in a dozen countries. Already, the number of U.S. companies going bankrupt has hit a 14-year high, a surge expected in a recession, not an expansion.

A real concern among investors is that too many zombies could collapse at the same time because central banks kept them on life support with low interest rates for years instead of allowing failures to sprinkle out over time.

This only matters if their market cap is big. Otherwise, let them die. If you're only surviving because of cheap debt, or if you can't pay your employees a living wage, then it's a mercy killing. Another company will take your market share.

[jesmu84]

This only matters if their market cap is big. Otherwise, let them die. If you're only surviving because of cheap debt, or if you can't pay your employees a living wage, then it's a mercy killing. Another company will take your market share.

What's the definition of "living wage"? How many companies actually pay that?

[The Sultan]

What's the definition of "living wage"? How many companies actually pay that?

I mean...a lot.

[MU82]

Sure, but the large majority of those homes are owned by retirees.

True, but I'm not sure why that matters in the scope of what was being discussed.

I was surprised by the 40%, regardless of who owns the houses.

[JWags85]

What's the definition of "living wage"? How many companies actually pay that?

You and I agree on very little financially/politically, but I find you to be earnest and sincere, so I say this respectfully, but you really need to supplement your online browsings with real world evidence, and probably get outside the online bubble in general when it comes to this kind of stuff.  And this is from someone who can often fall into the trap of grounding far too much of reality in online musings.

Online personalities would have you believe that millions of corporations and small businesses are paying near minimum wage (not remotely true) and a true living wage is $80K+ per year.  Hell, my wife just saw in a Mom group she is in on Facebook (I know, lol) that posted an article with a study that said the living wage in Florida was $93K. 

Meanwhile MIT's Living Wage calculator places it much closer to the mid 50Ks in most of the country for a family of 3.  By that metric, the vast majority of corporations are paying that rate for many many jobs.  You can argue nuance or actual wage levels by another $10K or whatever, but the idea that all these companies don't pay living wage is just silly and based in nothing but feels.

[jficke13]

You and I agree on very little financially/politically, but I find you to be earnest and sincere, so I say this respectfully, but you really need to supplement your online browsings with real world evidence, and probably get outside the online bubble in general when it comes to this kind of stuff.  And this is from someone who can often fall into the trap of grounding far too much of reality in online musings.

Online personalities would have you believe that millions of corporations and small businesses are paying near minimum wage (not remotely true) and a true living wage is $80K+ per year.  Hell, my wife just saw in a Mom group she is in on Facebook (I know, lol) that posted an article with a study that said the living wage in Florida was $93K. 

Meanwhile MIT's Living Wage calculator places it much closer to the mid 50Ks in most of the country for a family of 3.  By that metric, the vast majority of corporations are paying that rate for many many jobs.  You can argue nuance or actual wage levels by another $10K or whatever, but the idea that all these companies don't pay living wage is just silly and based in nothing but feels.

Ah yes, the vibe-cession.

It is interesting to see how by almost any objective measure, the US economy is very strong and yet everywhere you look on the internet people are convinced the economy is terrible. Or my random group of politically-aggrieved friends on a text thread who are convinced that the economy has never been worse. It's all vibes man. All vibes.

But to throw a bone in the direction of the "who is paying a living wage" folks, there are certainly companies that have elected not to pay their workforce adequately. Wal-Mart comes to mind as one employer that famously paid their employees so little they qualified for social safety net programs. Whether that remains true in today's tight labor market or not, I can't say. There is also a reasonable logical conclusion that in many high cost of living areas that a larger swath of potentially "living wage" type employment no longer is. Even back when I was a kid and visited NYC, I wondered where the people who worked in McDonalds for minimum wage lived. $25/hr (aprx $50k/yr) might be a living wage in Milwaukee, but is it in San Francisco?