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The answer to the problem is largely due to none other than "you can!" With so many of these things in reach that weren't in the old days due to 2 incomes, easier loans, easier credit, etc... the average Joe can go further, which naturally drives equilibrium prices higher. A house cost less when the down was larger and term was shorter - and a family only had one income to pay it off. There's no way that the spending power can go further on credit without the overall prices increasing.
This is interesting because I have been trying to show others similar stats. I am convinced that people today are a lot less sensible than their predecessors and have been willing to go into debt to make ends meet. Since 1971 inflation has been underrreported and people have been too distracted to notice.
The availability of easy and cheap credit has brought on the increases. Economics haven't changed, if there wasn't demand the prices would not keep increasing. But wait, we can borrow and pay later, right ?
Average car loans was less than 36 months in 70's too. Now it's 60 months.
Housing has been a major increase with the availability of easy credit -that worked well now didn't it ?
The vast majority of our economic growth (they like to call it consumer society) has been built on credit. The government as well has gone deeper and deeper in debt.
This "consumer society " doesn't work. No great economy has ever existed without producing goods.
This isn't really anything new, we have lived beyond our means for 30 years now and the chickens are coming home to roost.
Think about how Asia is advancing. They have savings rates as high as 40% in countries like China. This is all money that can be invested in infrastructure. Our money get's invested in paying off debt.
The country has been void of leadership for many years. Congress is an embarrassment. They do their best work when on recess.
The availability of easy and cheap credit has brought on the increases. Economics haven't changed, if there wasn't demand the prices would not keep increasing. But wait, we can borrow and pay later, right ?
Average car loans was less than 36 months in 70's too. Now it's 60 months.
Housing has been a major increase with the availability of easy credit -that worked well now didn't it ?
The vast majority of our economic growth (they like to call it consumer society) has been built on credit. The government as well has gone deeper and deeper in debt.
This "consumer society " doesn't work. No great economy has ever existed without producing goods.
This isn't really anything new, we have lived beyond our means for 30 years now and the chickens are coming home to roost.
Think about how Asia is advancing. They have savings rates as high as 40% in countries like China. This is all money that can be invested in infrastructure. Our money get's invested in paying off debt.
The country has been void of leadership for many years. Congress is an embarrassment. They do their best work when on recess.
jimmyp i could only give you one point but this post deserves a thousand
The availability of easy and cheap credit has brought on the increases. Economics haven't changed, if there wasn't demand the prices would not keep increasing. But wait, we can borrow and pay later, right ?
Average car loans was less than 36 months in 70's too. Now it's 60 months.
Housing has been a major increase with the availability of easy credit -that worked well now didn't it ?
The vast majority of our economic growth (they like to call it consumer society) has been built on credit. The government as well has gone deeper and deeper in debt.
This "consumer society " doesn't work. No great economy has ever existed without producing goods.
This isn't really anything new, we have lived beyond our means for 30 years now and the chickens are coming home to roost.
Think about how Asia is advancing. They have savings rates as high as 40% in countries like China. This is all money that can be invested in infrastructure. Our money get's invested in paying off debt.
The country has been void of leadership for many years. Congress is an embarrassment. They do their best work when on recess.
We also have had a cancer growing, which has been eating our economy away from the inside-out, called outsourcing.
Until outsourcing of jobs and manufacturing stops, we will never recover.
It goes like this: Joe used to earn $75,000 as a software developer for "big bank". Big bank finds that it can bolster its bottom line by employing overseas software developers at 1/3 the cost, as well as not having to pay taxes on them, offer retirement or health care for them either. Joe has to train his overseas replacement or he gets no severance.
Then Joe is dumped onto the streets to collect unemployment lest he find a lesser paying job because now other banks are doing the same. Joe decides to look at other industries but find that most others have gotten into the outsourcing game and if he does want to work in his city, he will have to take a large pay cut. So he either gets a job with another bank at 45,000 or he tries to start his own software company but also learns he's got to compete with $30,000 outsourced software developers overseas.
So Joe gets a job at Walmart and abandons software development.
Do the simple math. Joe isnt alone. Tens, maybe hundreds of thousands are in his shoes. Not just software developers either. They can be customer service call centers, radiologists who read x-rays, HR departments - you name it. If it can be outsourced, its been outsourced.
All of these people used to earn X but are now earning a fraction of X. And that is IF they have found work. These people used to pay tax revenues of Y but since they have only been able to find lower paying work - if at all, they contribute a fraction of Y into local, state and national tax revenues.
Meanwhile, our Einstein government keeps increasing spending as if they have the money coming in to pay it. This includes their own salaries, benefits and retirement. They live in a bubble and have zero clue as to how it feels out here.
And to top it off, the newly appointed Immelt, from GE - one of the largest offenders out there when it comes to outsourcing jobs and manufacturing, is supposed to try to figure out why we're in such a bad Recession? Does he ever look in the mirror? GE has saved itself billions of dollars by opening up manufacturing facilities in China while closing down US manufacturing.
Forget it. The only way to fix our problems is to MAKE stuff here in the USA again and to EMPLOY people here in the USA to sell and service that stuff. Otherwise, there is only so much time remaining before we, as a "service economy" will become just like Greece.
Many of the 70s stats reflected primarily single income. Take 5.6 housing figure and divide by 2 and you get 2.8 which about the same as the 2.7 the OP referenced.
We just got sold into a two income lifestyle. The two incomes bidded up the prices and makes it understandable how a single-headed household, especially without a spouse, find themselves at the low end of living standards at or near poverty. It also makes it extremely difficult for single elderly citizens who were from modest means.
As a portion of the average household budget, the USA has the cheapest food prices in the world.
Consider the Potato. Agricultural land worth thousands of dollars an acre is prepared, irrigated, fertilized, cultivated and harvested with modern machinery that doesn't grow on trees. The harvested potatoes are gathered, transported to processing facilities, sorted, culled, washed, and loaded for shipment by workers who are paid wages and benefits, and FDA-inspected every step of the way, then transported a couple of thousand miles in $100K trucks burning expensive gasoline on high-cost modern highways, by drivers making $150 a day. They go to a warehouse, then to a wholesaler, then to a retailer, each paying wages and insurance and shrinkage losses, and taking a profit along the way, and someone weighs and bags them. The retailer pays a staff to set them out in a modern, attractive store a few blocks from your house, where a wage-paid cashier rings them up at less than 40c a pound.
Compared to the cost of 44c in delivery alone for you to send a single piece of paper back to the Idaho farmer to tell him "Hey, nice potato".
The low-cost of marketing food in the USA is nothing short of miraculous.
Yes, food cost has increased. But if you read labels and look at the weight, you'll also notice manufacturers are giving you less. Sargento cheese, for example, you get 12 slices for such and such a price, but if you look at how paper thin the slices are, it takes two slices just to equal what used to be one slice. Technically you're really only getting the equivalent of 6 slices for that price. I can go on and on but..... you get the picture.
The reason is complicated. Most people in this country can't do math so that doesn't help. Then you have the fact that people love to complain about banks, corporations etc and yet will be first in line to buy the new $800 phone on a payment plan. Same with the furniture, appliances etc and then on top of that 2 brand new pimped out cars, boat or RV, bigger house etc All on credit. They've borrowed from future self for stuff today.
Now add to that:
Wages have been stagnant. So even if they weren't pigs they'd still be worse off. The fact that many are pigs makes it even worse.
Thus credit spending is much higher. Can't have all these things without credit.
So reality is not only are people worse off today because things like rents, food and transportation have greatly exceeded inflation while wages have been stagnant we've also doubled down on stupid and leveraged the average household so far up the ying yang that they can barely see the sun from under all that debt.
The government has been no better either. Military spending and Tax cuts can account for a huge portion of the debt and we continue to **** away money on things we don't need all because a significant portion of the folks in this nation might as well tattoo their party rhetoric on the foreheads.
Welcome to the peak and decline of our nation. We have lived during the best of times and squandered so much of it that we knocked ourselves off our own perch. Plenty of blame to go around and it spans many generations.
I'd say corporate greed and enough lobbying to get government to put corporate interests over that of the citizens........
I have money in the stock market, money invested through retirement and pension plans. Millions of others do also. I would say we citizens own the corporations.
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