Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Silver Short-Term Trend Analysis - 26th June 19
Iran and the Dying Days Of the US Empire - 26th June 19
Why a Saturated Online Gaming Market Spells Good News for Gamblers - 26th June 19
Natural Gas Sets Up Bottom Pattern - 26th June 19
Has Gold Price Broken Out Or Not? Technicals And Fundamentals - 26th June 19
Stocks and XAU Gold Miners Next Bull and Bear Markets are Now Set Up - 26th June 19
Gold Price Trend Forcast to End September 2019 - Video - 25th June 19
Today’s Pets.com and NINJA Loan Economy - 25th June 19
Testing the Fed’s Narrative with the Fed’s Data: QT Edition - 25th June 19
What "Pro Traders" use to Find Profitable Trades - eBook - 25th June 19
GDX Gold Stocks ETF - 25th June 19
What Does Facebook’s LIBRA New Crytocurrency Really Offer? - 25th June 19
Why Bond Investors MUST Be Paying Attention to Puerto Rico - 25th June 19
The Next Great Depression in the Making - 25th June 19
The Bad News About Record-Low Unemployment - 24th June 19
Stock Market New High, but…! - 24th June 19
Formula for when the Great Stock Market Rally Ends - 24th June 19
How To Time Market Tops and Bottoms - 24th June 19
5 basic tips to help mitigate the vulnerability inherent in email communications - 24th June 19
Will Google AI Kill Us? Man vs Machine Intelligence - 24th June 19
Why are Central Banks Buying Gold and Dumping Dollars? - 23rd June 19
Financial Sector Paints A Clear Picture For Stock Market Trading Profits - 23rd June 19
What You Should Look While Choosing Online Casino - 23rd June 19
INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - 22nd June 19
Here’s Why You Should Drive a Piece of Crap Car - 22nd June 19
How Do Stock Prices React to Fed Interest Rate Cuts? - 22nd June 19
Gold Bull Market Breaking Out! - 21st June 19
Post-FOMC Commentary: Delusions of Grandeur - 21st June 19
Gold Scores Gains as Draghi and Powel Grow Concerned - 21st June 19
Potential Upside Targets for Gold Stocks - 21st June 19
Gold Price Trend Forcast to End September 2019 - 21st June 19
The Gold (and Silver) Volcano Is Ready to Erupt - 21st June 19
Fed Leaves Rates Unchanged – Gold & Stocks Rally/Dollar Falls - 21st June 19
Silver Medium-Term Trend Analysis - 20th June 19
Gold Mining Stocks Waiting on This Chart - 20th June 19
A Key Gold Bull Market Signal - 20th June 19
Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - 20th June 19
Investing in APPLE (AAPL) to Profit From AI Machine Learning Stocks - 20th June 19
Small Cap Stocks May Lead A Market Rally - 20th June 19 -
Interest Rates Square Minus Zero - 20th June 19
Advice for Financing a Luxury Vehicle - 20th June 19
Stock Market Final Blow Off Top Just Hit… Next Week Comes the FIREWORKS - 20th June 19
US Dollar Rallies Off Support But Is This A Top Or Bottom? - 19th June 19
Most Income Investors Are Picking Up Nickels in Front of a Steamroller - 19th June 19
Is the Stock Market’s Volatility About to Spike? - 19th June 19
Facebook's Libra Crypto currency vs Bitcoin: Five Key Differences - 19th June 19
Fed May Trigger Wild Swing In Stock Index and Precious Metals - 19th June 19
How Long Do Land Rover Discovery Sport Brake Pads Last? - 19th June 19
Gold Golden 'Moment of Truth' Is Upon Us: $1,400-Plus or Not? - 18th June 19
Exceptional Times for Gold Warrant Special Attention - 18th June 19
The Stock Market Has Gone Nowhere and Volume is Low. What’s Next - 18th June 19
Silver Long-Term Trend Analysis - 18th June 19
IBM - Watson Deep Learning - AI Stocks Investing - Video - 18th June 19
Investors are Confident, Bullish and Buying Stocks, but… - 18th June 19
Gold and Silver Reversals – Impossible Not to Notice - 18th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

10 Things That Affect Your Purchasing Power

Economics / Inflation Sep 24, 2014 - 06:32 PM GMT

By: Harry_Dent

Economics

Rodney Johnson writes: This might be considered “wonkish,” but it tells the story of how middle-class purchasing power has suffered since 2007.

Recently, the Federal Reserve released the 2013 Survey of Consumer Finances (SCF). This tri-annual survey is a treasure trove of information that provides a snapshot into the financial life of the median American in inflation-adjusted 2013 dollars. Notice that I said “median” and not “average”… that’s important.


The average can be skewed by a few people at the top or bottom of any measurement. The median gives us the point at which half the people are above and half the people are below and is a much better indicator of what’s going on. Because the SCF has been conducted for decades, we can see how people have progressed, or regressed, over time.

The changes over the last six years are consistently horrible, particularly for those in the middle income brackets.

10 Factors That Affect Your Purchasing Power

  • Age of Head of Household
  • Percentile of Income
  • Family Structure
  • Education of Head of Household
  • Race of Head of Household
  • Current Work Status of Respondent
  • Region
  • Urbanicity
  • Housing Status
  • Percentile of Net Worth

Since 2007, median net worth has tanked, almost any way you cut it. The one group that escaped a decline was the Current Work Status of “other,” whose median net worth in 2007 was $6,000, and in 2013 was $9,000. Yes, I know… fat cats on Wall Street and corporate executives are raking in ridiculous sums of money, so there must be small pockets of people that have seen their fortunes rise over the past six years. These groups are so small that they exist at the edges of society.

For the median person, the one in the exact middle in all of these categories except the one, it’s nothing but losses. Looking at just one classification — net worth by percentile of income — the change in median net worth from 2007 to 2013 is breathtaking.

When we flip over to the change in median income itself, the results are still miserable, though not as dramatic. Almost every group in every category suffered a decline in income over the past six years. The exceptions were households led by those over 65 years old, households of retirees, and those with net worth in the 90% to 100% range. Again, breaking it out by percentile of income, there were losses in every group.

While the median at the bottom and the top of the food chain experienced little change in inflation-adjusted earnings over the past six years, those in the middle income and just below were hit hard.

Now, think of these two statistics together. For those who earn between the 40th and 59.9th percentile of earnings, meaning those smack in the middle of wages in the U.S., purchasing power has fallen by 12% while their net worth has plummeted by 38%… and that’s over SIX YEARS!

This isn’t a one-year aberration, or some fluke in the data. This is six years.

Where is the recovery? Where is the improving economy that is supposed to carry the U.S. through the second half of the 2010s? How are people supposed to not only grow their purchasing power, but also put money away for their future?

Keep in mind that the inflation numbers used to adjust the data are the official Consumer Price Index (CPI) figures. If we used more realistic numbers over those same six years, showing higher spending on medical expenses, education and food, the reports would be even worse.

Whenever you read about the recovery gaining speed, or about consumers gearing up for higher spending, think about these numbers. Think about the millions of Americans who can’t even tread water financially, and have watched their situation deteriorate for more than five years. These are not high school dropouts, or even just high school graduates (only 35% of Americans have a college degree, so by definition 50% of earners must include many college grads).

Think about them when someone at the Fed, in Congress, in the Administration or at the New York Times crows about how they “saved” us.

The line between the “haves” and the “have-nots” is being drawn more boldly with each passing year. At some point, the angry “have-nots” might choose to stand up and start saving themselves. This should make the small group at the top very nervous.

Rodney

http://economyandmarkets.com

Follow me on Twitter @RJHSDent

Rodney Johnson

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules