US Economy, part 2

[lawdog77]

The expression "Damning someone with faint praise" comes to mind.

Reminds me of Shecky Greene talking about Shelley Berman. After ranting for several minutes about what a dick Berman was, the interviewer asked Shecky if there was anything positive he could say about him. He thought for a long moment and said "Yes. His brother was worse."

[MU82]

From Yahoo Finance:

The state of the consumer has remained a hot-button issue for the past year.

‌Recent warnings from companies like McDonald's and Starbucks about price-conscious consumers have added to the growing case some have made about a potential slowdown in consumer spending. A revision lower in personal consumption within first quarter GDP data and weaker-than-expected April retail sales have also added to the case.

But the broader question remains whether consumers still have enough left in the tank to keep spending throughout 2024.

‌A deep dive on the consumer led by Barclays senior US economist Jonathan Millar argues there's more spending coming down the pike even if there is a shift to "value-focused spending."

Millar notes that while some studies have claimed pandemic-driven excess savings are gone, that might not fully be the case. Millar estimates consumers still have $850 billion in excess savings.

And even with Americans spending about $50 billion per month from their excess savings, it would take another 17 months for the entire excess savings nest egg to expire.

"Households are still comfortable dipping into savings to support income," Millar said. "In our view, there is plenty of scope for this to continue."

[jesmu84]

So, "about 50% of Americans can't afford a $500 emergency or 70% of Americans living paycheck to paycheck", but there's plenty of savings for Starbucks and McDonald's?

[JWags85]

So, "about 50% of Americans can't afford a $500 emergency or 70% of Americans living paycheck to paycheck", but there's plenty of savings for Starbucks and McDonald's?

Because you're leaning far too heavily on qualitative survey responses and polling and automatically absolving any personal decision making with the paycheck to paycheck figures.  I knew single people making $80Kish in their late 20s/early 30s in the late 2010s and people making $200K now living paycheck to paycheck (and very open about complaining they are).  Its not from some sort of nefarious capitalistic toxicity, its due to reckless spending and lifestyle creep.

I'm not blaming poor people for being poor or for cash strapped families at/near/just above the poverty line to be castigated as stupid for their financial decisions.  I am blaming plenty of people with sufficient financial means being happily used as a fodder for complaining about any number of financial factors in the US.

Key factor from that article is people not stopping spending or changing lifestyle when money is tight, its just spending money on value things.  Notice, this is data from actual spending and consumption data, and not people responding to a survey.  Someone could have $3K a month in car payments and a $8K mortgage and be living "paycheck to paycheck" as far as a survey is concerned.

And FWIW, there are plenty of middle class Europeans taxed out the a** for "wealth redistribution" living in countries with ample social safety nets who are still paycheck to paycheck.  People spending beyond their means is not a uniquely American concept.

[The Sultan]

So, "about 50% of Americans can't afford a $500 emergency or 70% of Americans living paycheck to paycheck", but there's plenty of savings for Starbucks and McDonald's?

I mean...yeah.

Their "living paycheck to paycheck" includes stopping at Starbucks a couple times a week.

[Skatastrophy]

Scoopers in a recent survey are all over 6ft with a minimum of a 24" vertical

Marquette dentists all believe that the economy is in ruins despite data to the contrary.

[MUBurrow]

And FWIW, there are plenty of middle class Europeans taxed out the a** for "wealth redistribution" living in countries with ample social safety nets who are still paycheck to paycheck.  People spending beyond their means is not a uniquely American concept.

I'm sure this is true, but FWIW, if you live in a country that pays for its ample social safety net with your taxes, the calculation on what is irresponsible spending shifts.  E.g., if the US had a UK-style NHS, old folks would need to hold far less in reserve.

[Pakuni]

I mean...yeah.

Their "living paycheck to paycheck" includes stopping at Starbucks a couple times a week.

I don't think those couple Starbucks visit a week - what's that, $15? - is the difference between living paycheck to paycheck vs a more stable financial existence.
And yet the trope gets tossed out there by the Dave Ramseys of the world as an example of frivolity that's keeping people living paycheck to paycheck.

[cheebs09]

I don't think those couple Starbucks visit a week - what's that, $15? - is the difference between living paycheck to paycheck vs a more stable financial existence.
And yet the trope gets tossed out there by the Dave Ramseys of the world as an example of frivolity that's keeping people living paycheck to paycheck.

I like to listen to Money Guys and they push back on the Starbucks and Avocado trope. They argue it's more about bigger purchases like too much house, car payments, etc.

[Pakuni]

I like to listen to Money Guys and they push back on the Starbucks and Avocado trope. They argue it's more about bigger purchases like too much house, car payments, etc.

Yep, agreed.
Though "too much house" is a tough one, given the lack of affordable stock out there (and the high prices being sought for what not long ago would have been viewed as affordable/starter housing).

[The Sultan]

I don't think those couple Starbucks visit a week - what's that, $15? - is the difference between living paycheck to paycheck vs a more stable financial existence.
And yet the trope gets tossed out there by the Dave Ramseys of the world as an example of frivolity that's keeping people living paycheck to paycheck.

Right. That's my point. People can still be living paycheck to paycheck and go to Starbucks.

[jesmu84]

If you live paycheck to paycheck, by definition you have no savings.

Therefore you'd have no "excess savings" to spend on anything, Starbucks or otherwise.

[jesmu84]

I'm sure this is true, but FWIW, if you live in a country that pays for its ample social safety net with your taxes, the calculation on what is irresponsible spending shifts.  E.g., if the US had a UK-style NHS, old folks would need to hold far less in reserve.

Right.

If there were ample social safety nets here like EU, when an emergency strikes there isn't complete life/financial ruin.

[jesmu84]

I mean...yeah.

Their "living paycheck to paycheck" includes stopping at Starbucks a couple times a week.

I took 82's article to be saying there's a ton of people out there with significant excess savings available for spend.

If 70% of people live paycheck to paycheck, they have no savings at all, let alone "excess"

And I'm sure the majority of those with "excess savings" - likely 1%ers or better, aren't picking up a big Mac on the way home.

[jesmu84]

Because you're leaning far too heavily on qualitative survey responses and polling and automatically absolving any personal decision making with the paycheck to paycheck figures.  I knew single people making $80Kish in their late 20s/early 30s in the late 2010s and people making $200K now living paycheck to paycheck (and very open about complaining they are).  Its not from some sort of nefarious capitalistic toxicity, its due to reckless spending and lifestyle creep.

I'm not blaming poor people for being poor or for cash strapped families at/near/just above the poverty line to be castigated as stupid for their financial decisions.  I am blaming plenty of people with sufficient financial means being happily used as a fodder for complaining about any number of financial factors in the US.

Key factor from that article is people not stopping spending or changing lifestyle when money is tight, its just spending money on value things.  Notice, this is data from actual spending and consumption data, and not people responding to a survey.  Someone could have $3K a month in car payments and a $8K mortgage and be living "paycheck to paycheck" as far as a survey is concerned.

Agree people live/spend beyond their means. You're correct.

But if the premise that 70% of Americans live paycheck to paycheck, they don't have savings.

See my response to sultan.

[The Sultan]

If you live paycheck to paycheck, by definition you have no savings.

Therefore you'd have no "excess savings" to spend on anything, Starbucks or otherwise.

That's not exactly what it means. It doesn't necessarily mean you have no savings. And it doesn't mean that you don't buy items like Starbucks occasionally.

I would interpret paycheck to paycheck meaning that you don't have enough savings to pay expenses should you, for whatever reason, have to skip a paycheck.

[TAMU, Knower of Ball]

If you live paycheck to paycheck, by definition you have no savings.

Are you certain about that?

My understanding is that your 70% number came from people self-describing themselves as living paycheck to paycheck. There was a time in my life where if you asked me, I would have told you I was living paycheck to paycheck. But I also had a sizeable 401A account. To me, that money was untouchable because accessing it now would carry severe penalties, but it was there if I ever had an emergency. I suspect that others who consider themselves "paycheck to paycheck" also don't factor in retirement savings because to them it is a necessary expense.

[JWags85]

Agree people live/spend beyond their means. You're correct.

But if the premise that 70% of Americans live paycheck to paycheck, they don't have savings.

See my response to sultan.

Why are you taking a unscientific survey as bible?  Versus actual tracked and recorded spending?

Ive heard "paycheck to paycheck" meaning their biweekly paycheck is used up...a paycheck that also has 401K and savings account deposits taken out of it.  I know some people who complain they have no day to day money but having assorted savings/retirement funds they wont touch.

Ive heard people say they are paycheck to paycheck cause they spend a huge chunk of it paying off big credit card purchases (that are not healthcare costs).

Again, this is not to disparage the truly economically disadvantaged in this country (which believe is a decent chunk of that 70%), but self reported data about financial situations is a terrible way to assess a general population/country's economic well being.  It fits your narrative so you're placing a lot of weight on it.

Right.

If there were ample social safety nets here like EU, when an emergency strikes there isn't complete life/financial ruin.

If you're bad with money and spend beyond your means so that you're tight on cash, how is that social net going to help with an expensive car repair or blow water heater?  Not having $500 for an emergency doesn't automatically mean healthcare costs.

And its a bit presumptuous to assume if people had more things paid for by the government, they are suddenly gonna sock all that extra cash.


Financial wellness, literacy, budgeting, etc... should be mandatory school curriculum if we're talking about actual tangible steps toward solutions

[jesmu84]

I suppose there's some semantics at play.

IMO, paycheck to paycheck meant no savings.

That's an assumption I guess I made.

[The Sultan]

I suppose there's some semantics at play.

IMO, paycheck to paycheck meant no savings.

That's an assumption I guess I made.

Nearly 70% of adult Americans have a savings account. The problem is that half of these people have less than $500.

This doesn't include retirement savings, which isn't considered "transactional."  My guess is that the half who cannot afford a $500 emergency aren't including the possibility of an early withdrawl or loan off their retirement account.

[jesmu84]

Nearly 70% of adult Americans have a savings account. The problem is that half of these people have less than $500.

This doesn't include retirement savings, which isn't considered "transactional."  My guess is that the half who cannot afford a $500 emergency aren't including the possibility of an early withdrawl or loan off their retirement account.

Thanks.

In my head "paycheck to paycheck" meant spending every last cent on required monthly expenses. Which would leave no money for savings.

And my discussion was in the context of 82's article that seemed to imply there were tons of people out there with significant money to burn.

If 35%+ of adult Americans have less than $500 then it would be a fair assumption that another block have not much more than that.

That would lead me to believe the $850 billion in excess savings is amongst a relatively small % of the population.

If that's true, those folks are more likely to be hoarding their savings than spending it.

[Skatastrophy]

Hoarding wealth and investing it in corporations is the established meta in a capitalist society. If you're not doing that, then you're a pleb.

[BM1090]

https://www.realestatenews.com/2023/09/06/mortgage-payments-jump-60-in-just-two-years

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.


In 2000 the median household income was 42,189 and 32,032 after taxes. The average mortgage payment was $769 per month or $9,228 per year. That's 28% of salary towards mortgage.

Obviously there are other factors. But add in other cost of living increases and I'm honestly really surprised people are arguing that it isn't much harder to accumulate wealth today. People didn't largely and suddenly get worse at making financial decisions.

People have less money than ever, fewer realistic choices than ever. And fewer realistic choices leads to increased exploitation.

[Jay Bee]

Hey bros how much u make a year?

[The Sultan]

https://www.realestatenews.com/2023/09/06/mortgage-payments-jump-60-in-just-two-years

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.


In 2000 the median household income was 42,189 and 32,032 after taxes. The average mortgage payment was $769 per month or $9,228 per year. That's 28% of salary towards mortgage.

Obviously there are other factors. But add in other cost of living increases and I'm honestly really surprised people are arguing that it isn't much harder to accumulate wealth today. People didn't largely and suddenly get worse at making financial decisions.

People have less money than ever, fewer realistic choices than ever. And fewer realistic choices leads to increased exploitation.

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