Americans are the richest they have ever been (debt, status, mortgage)

[EDS_]

Originally Posted by beachmouse

The Economist's 'Big Mac Index' is actually surprisingly good despite being a single variable brute force way of estimating that on a country level.

It's OK for that but terrible as a relative cost measure over time per area.

[Huckleberry3911948]

Darned
I used to be so poor it made flop houses look like a 5 star hotel when I got here - homeless too for a bit -
Now that I got cash everybody tells me I am privileged
What about the 30 year climb out of the poverty pit?
Most envy what I got- none what I had to do to get it

[sholomar]

I work at a plant where people make $25-30/hour in a state with no income tax, and people are taking 401K loans, cash poor, but this is largely their own fault. It takes money to make money, and if they are going to spend every cent they ever make, they will never get ahead.

I don't know if we should be blaming the rich and the central bankers for this for blowing up asset bubbles and large corporations for not having wages keep up with the real inflation rate, or people for choosing to take jobs that don't pay well, and choosing to go out to eat 3 times a week and spend every cent they have and live paycheck to paycheck. In my case where we make good money, people simply spend up to their income level, seeing their monthly revenues and expenses and seeing if they can afford that monthly payment. They particularly love big $60K trucks out here.

It takes self discipline to actually accumulate net worth unless you happen to buy a house in a hot market and have it go up.

Gauging the 1000 people at my plant, probably 800 live paycheck to paycheck, saying they can't afford to have their Sunday taken away. They are cash poor. Only people with assets in the stock market have really made any progress this year. I'm the only one in my department who doesn't check their monthly statements or worry about cash balances. There used to be another but he just retired last week. Kept his COL low and invested in the market. Plus many of us still have or qualify for pensions here and he had a pension, social security, and good stock returns.... 57 years old, not too shabby. The cash poor ones still plan to be here at 65. Most of them are at least putting money into 401k but the number taking loans of $25,000+ just because the government is letting them is astonishing.

These days people want a middle class lifestyle without having to work... that's why you have all this talk about universal incomes. Pay people to just exist.. maybe in 50 years if we have free energy and robots that can do all the work. Won't do me much good at that point.

[sheena12]

Originally Posted by ddeemo

Your stats are way off - you are being fed misinformation - probably from the left. According to Northwest Mutual survey, 68% consider themselves as middle class. According to the data from pew research, the middle class by measure is about 52% of the country where as the poor comprise about 29% - so over half the country is middle class and 80% more are middle class than lower class. The middle class has shrunk some but more have moved to the upper class than to being poor.

Wall street has a lot to do with how many retirees live though since that is their income source.

I included no "stats"with my comment. Are you dreaming?

What people consider themselves in terms of class, has little to do with reality - or wealth. People assign themselves a class that may have little basis in reality.

That 29% of our country is poor, is a disgrace.

As far as my being "fed information" - far from it. I seek out information from many sources. I avoid Fox. It's commentary, not news.

I read, watch and listen to many news sources. Do you?

[1ondoner]

So you are saying the economic disparity in the US is much less than defined by the Gini index?

Originally Posted by EDS_

We should mostly forget internal disparity numbers and focus on relative after tax buying power (after tax nominal incomes vs. COL) across maybe the 50/75 most important first world cities and the same for countries.

Similar to per capita purchasing power parity analysis........take a like marketbasket of goods per area, smooth the numbers for FX differences and local incomes at the poverty line and the median. Doing all this by differences in income per race is a serious eye-popper.

[1ondoner]

There's nothing like good debt when a person is struggling to pay it off or has no chance of paying it off. And if mortgage were good debt, there would never have been the GFC/housing crash. For many, especially in this forum, a mortgage is never meant to be paid off.

Originally Posted by ddeemo

Mounting debt is a personal choice, wanting to create the impression of wealth before they earned it. Debt related to things like housing is "good debt", debt related to a credit card is "bad debt" - both because of the interest charged and the wealth created or lost. Buying a house can increase wealth, buying a coffee at Starbucks does not.

"Good" debt is normally defined as money owed for things that can help build wealth or increase income over time, such as student loans, mortgages or a business loan. "Bad" debt refers to things like credit cards or other consumer debt that do little to improve your financial outcome. "Good" debt has increased faster than "bad" debt.

The age group with the highest credit card debt is the 25-34 year group. Much of the debt of those in their 20s is student loans but that results in higher wages if the degree is relevant to their job. But debt is not mounting, household debt peaked in 2007-8 in both actual value and debt-to-income ratio - now 11% less in total and about 25% lower debt ratio according to Fed Reserve data https://www.marketwatch.com/story/su...ebt-2018-01-09

We just went through a dotcom and housing bubble, where on this flat earth have you been since 1929?

Originally Posted by ddeemo

There is no debt bubble but if there was that would be a big drag on the market - more income going to debt maintenance than purchasing is a drag and debt that is written off because of inability to pay is a bigger drag. BTW - Much of the 1929 crash was because of personal debt proliferation and bank loans that could not be liquidated.

[Zephyr2]

You provided nothing but unsupported statements that are not relevant to the articles subject

Reading comprehension is obviously not one of your strong suits. I provided links to factual articles explaining that wealth increases have been hugely unequal in recent times. Ignore the facts if you wish, but the truth doesn't care.

[ukrkoz]

Yes, American household debt to income ratio surely hit the record high of 160%.
Be proud.

[ddeemo]

Originally Posted by beachmouse

The Economist's 'Big Mac Index' is actually surprisingly good despite being a single variable brute force way of estimating that on a country level.

Actually, there are a lot of ways the "Big Mac" index makes a poor estimate - part of the issue is the estimate used for the Big Mac cost in each country. Another issue is thinking that the price of Big Mac equates to a relatively inexpensive meal everyplace, in some countries, McDonalds is

According to the economist, the current big mac cost for the US is $5.71. The US average according to https://www.fastfoodprice.com/menu/mcdonalds-prices/ is $4.69 in September 2020, over a $1 less, or a little over 20% lower, that throws everything off by 20%.

And in case think that the price is inflated in other places, the index has the cost of Big Mac in UK at £3.39 in the economist which exactly matches £3.39 ($4.30) according to business insider. And if use $4.69 vs $4.30 you get a difference of just a few %. So the difference is 8% vs the over 25% the index shows. From raw index at https://www.economist.com/news/2020/...-big-mac-index

A Big Mac costs £3.39 in Britain and US$5.71 in the United States. The implied exchange rate is 0.59. The difference between this and the actual exchange rate, 0.79, suggests the British pound is 25.1% undervalued

If use 3.39 vs 4.69 you get an implied exchange rate of 0.72 vs actual of 0.79, suggesting that the pound is undervalued by a little over 8% not 25%. From GDP adjusted index at same site you get that the pound is really slightly overvalued using $4.69, instead of 10.8% undervalued at $5.71. That means that the the exchange rate is about where it should be.

BTW - I have never seen a Big Mac anywhere close to $5.71 except as a value meal which is not what is supposed to be used. According to https://www.fastfoodmenuprices.com/mcdonalds-prices/ , no state has Big Macs anywhere near as high as $5.71 - not even DC, HI or NY - looks like someone is adjusting the prices to fit an agenda.

[ddeemo]

Originally Posted by Zephyr2

Reading comprehension is obviously not one of your strong suits. I provided links to factual articles explaining that wealth increases have been hugely unequal in recent times. Ignore the facts if you wish, but the truth doesn't care.

Reading comprehension is not your strong suit, you provided no stats to counter that wealth has not increased. You also tried to argue that average was irrelevant, hard to understand when the discussion is on averages. The original article was about increased average wealth and yet say it was misleading because didn't discuss income inequality - that was not the subject. You provided some discussion about income inequality and then mixed that to say wealth, not the same thing, you can not directly tie income to wealth, many wealthy have little income and many with high incomes have no wealth.

Your link is also behind a firewall so I can not see the actual article but based on what I can see it is about income inequality - wrong argument.