World Economic Outlook Has Turned Downward

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Musburger1 said:
What I consider free trade is much different than how it actually works.

For example, industry in country A makes and produces goods which they sell to country B and vice versa. Comparative advantage and all that. Maybe Ford makes cars in Detroit and sells them in Australia. Australia mines a mineral and sells it to the US.

But now, these so called free trade arrangements are just a cover for what they really are which is free capital arrangements. In this example, Ford would close its Detroit shop and move to the outback and employ Aborigines at a lower wage and provide no health or other benefits. This is called higher productivity because Ford lowers costs which allows them to achieve the same number of units with lower expenditures. They then sell the cars back to America. Not only are the Ford US employees laid off, but competitors who remain in the US are forced to either lower wages and benefits or off shore to stay competitive. The corporation and stock holders benefit as do pension funds (the upper 1-5% of the population) as the majority of the population see income fall. In order to keep consumption levels high as incomes decline, interest rates are lowered so that the population can still purchase goods on credit. The economy becomes more and more financialized.

Similarly, an agreement like NAFTA enables a company such as Del Monte to move into Mexico and monopolize portions of the agriculture sector. Tens of thousands of small farmers become wiped out and flee across the border and then we complain about the influx. GDP isn't harmed, and may actually rise, but the benefits accrue at the top. This "free trade" charade which is nothing more than a free card to relocate capital out of the country has led to the US becoming the country with the greatest wealth disparity in the developed world. This is why Trump has so much support.
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Bad news Musberger. The actual income facts I found don't support your theory. It seems as though incomes have improved for every income level measured in real terms since 1959, and income disparities between different strata of income earners has remained the same or close to the same. Even better news is that income mobility is good; in other words an individual does not remain in poverty even though they may have been in poverty at one point in time. In fact, the level of those that remain in chronic poverty is less than 1% of the population. Sorry to burst your bubble.
 
iatrogenic said:
Even better news is that income mobility is good; in other words an individual does not remain in poverty even though they may have been in poverty at one point in time. In fact, the level of those that remain in chronic poverty is less than 1% of the population.
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Your 1 percent statistic basically means that 1 percent of the population will be born into poverty and die in poverty without ever leaving poverty.

A better statistic is 70 percent. That's the percent of people who never achieve the median U.S. income level after having been in poverty for 1+ years of their lives. So a child born into poverty has less than a 30 percent chance of ever being "average."

As for income mobility, it's more likely to happen in pretty much every other country graced by western civilization except the UK. Brookings and Pew did a couple of studies last year. I could only find the Cliffs Notes version of the Brookings one here: The Link

Again, this probably goes back to definitional debate. If you're saying that "income mobility is good," as in "it is entirely possible," then sure. I guess it is possible, although not likely, for a poor person in the U.S. to get a better condition in some way/form. It's more likely that a woman in the 50th percentile will marry into the 75th percentile than it is for other segments of society to change classes. But the mobility potential by my definition is still poor in the US, particularly for the bottom 25 percent and compared to other nations.
 
Horns11 said:
Your 1 percent statistic basically means that 1 percent of the population will be born into poverty and die in poverty without ever leaving poverty.

A better statistic is 70 percent. That's the percent of people who never achieve the median U.S. income level after having been in poverty for 1+ years of their lives. So a child born into poverty has less than a 30 percent chance of ever being "average."

As for income mobility, it's more likely to happen in pretty much every other country graced by western civilization except the UK. Brookings and Pew did a couple of studies last year. I could only find the Cliffs Notes version of the Brookings one here: The Link

Again, this probably goes back to definitional debate. If you're saying that "income mobility is good," as in "it is entirely possible," then sure. I guess it is possible, although not likely, for a poor person in the U.S. to get a better condition in some way/form. It's more likely that a woman in the 50th percentile will marry into the 75th percentile than it is for other segments of society to change classes. But the mobility potential by my definition is still poor in the US, particularly for the bottom 25 percent and compared to other nations.
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Yes, 1% stay in poverty.

70% in poverty is fallacy. Not sure where you get that number. Not having average income does not mean you are in poverty if that is your contention.

The study you refer to states that mobility in the U.S. Is average with the world, and the study was purposely stacked against the U.S.

The footnotes state that the U.S. individual income mobility of sons was measured against the prior generation's FAMILY INCOME, which is a dumb relative measurement. The study then compares the mobility in the U.S. to mobility of the relative incomes of Sons v. FATHERS (not family) income in other countries, which is also misleading. It would certainly be more difficult for one person to earn as much as two or more people, so the study is biased against the U.S.

The study only considered income mobility of children at 40 years old. Most wealth is generated after 40 years of age when incomes are higher.

The study never defined what poverty is. Is poverty being in the bottom 10% of earners? If that is the definition, we could never get any better than having 10% in poverty.It does state that incomes in the U.S. have consistently improved.
 
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iatrogenic said:
Bad news Musberger. The actual income facts I found don't support your theory. It seems as though incomes have improved for every income level measured in real terms since 1959, and income disparities between different strata of income earners has remained the same or close to the same. Even better news is that income mobility is good; in other words an individual does not remain in poverty even though they may have been in poverty at one point in time. In fact, the level of those that remain in chronic poverty is less than 1% of the population. Sorry to burst your bubble.
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We're talking apples and oranges. In fact, we're not even that close. I'm trying to discuss the effect of globalization and international capital mobility on the US economy and you are spouting about statistics dating back to 1959. It would be more than 30 years from that time until the dynamics I'm talking about became a reality. Hell, Nixon didn't even visit China until the 1970's. The US monetary system was still on the gold system. Labor unions were in thei hay day, and NAFTA wouldn't be enacted for another 35 years.

The relevant time frame would be the past 20-25 years. Anything beyond that doesn't pertain to the discussion.
 
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Musburger1 said:
We're talking apples and oranges. In fact, we're not even that close. I'm trying to discuss the effect of globalization and international capital mobility on the US economy and you are spouting about statistics dating back to 1959. It would be more than 30 years from that time until the dynamics I'm talking about became a reality. Hell, Nixon didn't even visit China until the 1970's. The US monetary system was still on the gold system. Labor unions were in thei hay day, and NAFTA wouldn't be enacted for another 35 years.

The relevant time frame would be the past 20-25 years. Anything beyond that doesn't pertain to the discussion.
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Okay, show me the basis (data) for your relevant time period that support your theory.(edit: of incomes falling)
 
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https://fred.stlouisfed.org/series/MEHOINUSA672N

The graph covers 1985-2014. There are two large moves upward in the last 25 years. The first coincides with the technology boom in the 90's which took place in the United States and employed thousands of people with high paying jobs. Part of this was due to innovation, and part of it was due to a debt enhanced technology bubble which imploded in the last year of Clinton's presidency. A downtrend followed as tech companies began to offshore operations leading to a recession.

Bush and the Fed then helped ignite an economic expansion based on construction resulting from a fraudulent housing boom. Low interest rates, fraud, and an explosion of debt kept the party going until 2007-2008 when the bubble blew up. In the aftermath we were left with a crushing recession, a shrinking labor participation rate, and falling wages for much of the population. Meanwhile, corporate profits zoomed as labor costs decreased for those mega companies that were able to relocate substantial amounts of capital and production.
 
Median income of households is a poor measure because it does not differentiate between the increases and decreases of the number of households with one earner, two earners, and 3+ earners over the period of time under consideration.

From 1990 to 2010, households with one earner average about $40,000 per year. Households with 2 earners earned about $80,000 per year. Households with 3+ earners earned about $100,000 per year.

The number of single person households in the U.S. has increased from 21.61 million in 1990 to 42.13 million in 2014. That is a 185% increase in single earner households over that period of time. The increase in the number of total households from 1990 to 2014 was 29.28 million (a 31.2% increase). Hence, single earner households accounted for 73.8% of the increase in U.S. households from 1990 to 2014.

When you use median income, and the number of single person households (which are lower earning households because there is only one earner) increases by 21 million households, which is 73.8% of the increase in all households over the same period, the median household income is going be lower despite the fact that incomes are actually rising on the whole.

Therefore, your contention that incomes are dropping is incorrect regardless of the tortured machinations you use to explain the (non-existent) decrease.

Number of single person households in the U.S. 1960-2014
http://www.statista.com/statistics/242022/number-of-single-person-households-in-the-us/


Average Personal Income:
https://fred.stlouisfed.org/series/MAPAINUSA646N

Median household income by number of earners:
http://www.census.gov/newsroom/pdf/cah_slides.pdf
 
iatrogenic said:
Median income of households is a poor measure because it does not differentiate between the increases and decreases of the number of households with one earner, two earners, and 3+ earners over the period of time under consideration.

From 1990 to 2010, households with one earner average about $40,000 per year. Households with 2 earners earned about $80,000 per year. Households with 3+ earners earned about $100,000 per year.

The number of single person households in the U.S. has increased from 21.61 million in 1990 to 42.13 million in 2014. That is a 185% increase in single earner households over that period of time. The increase in the number of total households from 1990 to 2014 was 29.28 million (a 31.2% increase). Hence, single earner households accounted for 73.8% of the increase in U.S. households from 1990 to 2014.

When you use median income, and the number of single person households (which are lower earning households because there is only one earner) increases by 21 million households, which is 73.8% of the increase in all households over the same period, the median household income is going be lower despite the fact that incomes are actually rising on the whole.

Therefore, your contention that incomes are dropping is incorrect regardless of the tortured machinations you use to explain the (non-existent) decrease.

Number of single person households in the U.S. 1960-2014
http://www.statista.com/statistics/242022/number-of-single-person-households-in-the-us/


Average Personal Income:
https://fred.stlouisfed.org/series/MAPAINUSA646N

Median household income by number of earners:
http://www.census.gov/newsroom/pdf/cah_slides.pdf
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OK. Let's break down into individual income, or more specifically individual wages.
https://www.ssa.gov/oact/cola/central.html

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There is also a table at the link that presents the data shown in the graph. What the Purple triangle shows is that the median wage has steadily dropped in comparison to the average wage over the past 25 years, reflective of growing inequality.

But statistics don't tell the whole picture. The fact that Sanders and Trump received so much support is partially due to the frustration and pessimism so many people are feeling because of economic pressures. The debt load, especially in terms of education and car loans, illustrate that a greater number of Americans are having to substitute debt for income in order to purchase an education and transportation.
 
Here are some numbers that make sense using constant 2009 dollars:

Household income change from 1967 to 2009:
-the percentage of the households making under $35,000 went from 43.6% to 36%
-the percentage of the households making $35,000 to $75,000 went from 42.2% to 32.6%
-the percentage of the households making $75,000+ went from 14.4% to 31.6%

So 17.2% of the population moved from the lower class and middle class to the upper class in 42 years. That is good economic mobility given the negative effects that unions, farm subsidies, various licensing laws enacted by certain professions, the Davis-Bacon Act, and the 1964 Civil Rights Act that led to quotas have had on the poorer members of society.

It seems to me that the frustration being shown by voters is aimed at government inefficiency and federal debt, flaunting of immigration laws by the current administration, the lack of accountability of politicians that violate laws, a Supreme Court that has traded upholding the constitution for partisan political beliefs, and the inability of the government to address the rising Islamic terrorist problem. Whether or not a person can make their car note, or student loan note payment each month, in my opinion, has a minimal effect on the frustration of the majority of voters.
 
Here are some numbers that make sense using constant 2009 dollars:​

Household income change from 1967 to 2009:
-the percentage of the households making under $35,000 went from 43.6% to 36%
-the percentage of the households making $35,000 to $75,000 went from 42.2% to 32.6%
-the percentage of the households making $75,000+ went from 14.4% to 31.6%​

By 2009, $75,000 wasn't so good if you want to be considered middle class. If you are single, that's a decent income. If you are married without kids, you can get buy. If you have kids, you cannot save on that kind of household income, much less pay for college, take vacations, are put aside a significant amount of money toward retirement. Depending on where you live, $100,000 is probably the minimum amount of income where a family can be considered middle class. By middle class, I mean being able to save some money, take an occasional vacation, have health coverage, and eventually be in a position to put a child through college without going into debt.

I'm dubious as to using government figures of "constant 2009 dollars" because the figures are based on how government defines inflation through the consumer price index. Health care insurance, rent, and education expenses have skyrocket the past 15 years and aren't sufficiently factored into the formula in my opinion.

So the facts you presented above appear positive, but they are based on the governments calculation of the CPI.

So 17.2% of the population moved from the lower class and middle class to the upper class in 42 years. That is good economic mobility given the negative effects that unions, farm subsidies, various licensing laws enacted by certain professions, the Davis-Bacon Act, and the 1964 Civil Rights Act that led to quotas have had on the poorer members of society.
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Again, $75,000 isn't the upper class. I'd argue it isn't even the middle class.

And while $35,000 in 2009 dollars might have allowed you to live a lower middle class lifestyle in 1967 for most folks, by today $35,000 in 2009 dollars qualifies you for EIC if you have any kids and other subsidies. In other words, you won't be paying income tax, you will be receiving refundable tax credits.

It seems to me that the frustration being shown by voters is aimed at government inefficiency and federal debt, flaunting of immigration laws by the current administration, the lack of accountability of politicians that violate laws, a Supreme Court that has traded upholding the constitution for partisan political beliefs, and the inability of the government to address the rising Islamic terrorist problem. Whether or not a person can make their car note, or student loan note payment each month, in my opinion, has a minimal effect on the frustration of the majority of voters.
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Those things you enumerated matter a great deal, but so does economic reality. Approximately 50% of the population pays zero federal income tax and a large portion of that number is a net tax recipient. Over 40 million Americans are on food stamps. I think most school children in the US now qualify for free lunch. The bulk of the country is not more economically independent than they were 20 years ago. Go ahead and believe your numbers reflect reality. Then go to Walmart or the grocery store and take a good look around.
 
Living wage calculator in Travis County Texas:
http://livingwage.mit.edu/counties/48453

Obviously, definitions and lifestyle choices of individuals affect how they view various levels of income. You may not be able to afford a luxury car, but that doesn't mean you can't buy a Dodge.

The income numbers provided divide the population into lower 36%, middle 32.3%, and upper 31.6%, which is close to 1/3 each.

By almost every income measure, the population is better off now than it was 42 years ago, and we are much better off than other countries despite an inept Federal Government that hurts more than helps. We can certainly improve. I'm sorry to sunshine on your parade, but you just seem so negative.
 
iatrogenic said:
Living wage calculator in Travis County Texas:
http://livingwage.mit.edu/counties/48453

Obviously, definitions and lifestyle choices of individuals affect how they view various levels of income. You may not be able to afford a luxury car, but that doesn't mean you can't buy a Dodge.

The income numbers provided divide the population into lower 36%, middle 32.3%, and upper 31.6%, which is close to 1/3 each.

By almost every income measure, the population is better off now than it was 42 years ago, and we are much better off than other countries despite an inept Federal Government that hurts more than helps. We can certainly improve. I'm sorry to sunshine on your parade, but you just seem so negative.
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I give up. We're all freakin rich and getting richer! The fact that the percentage of people in their 20's choosing to live at home rather than move out isn't for economic reasons. They just love their parents more than they used to. The fact than over half the kids in the country qualify for free lunch is irrelevant. The fact than young adults are buying fewer houses because of student loan debt isn't relevant. They are still upper class!
 
It's not for lack of effort. If I ever decide to morph into a politician you'll be the first person I request for PR manager.
 
Vol Horn 4 Life said:
To be fair, Wal Mart closing stores has more to do with extremely poor business decisions than the Chinese, oil prices, markets, etc........
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True dat. Wal Mart, which drives sales almost exclusively by low prices, does well when the economy goes south. Wal Mart closures are actually evidence that things are not quite so bad, yet.
 
4th_floor said:
True dat. Wal Mart, which drives sales almost exclusively by low prices, does well when the economy goes south. Wal Mart closures are actually evidence that things are not quite so bad, yet.
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Buy Walmart and McDonalds if a recession.
 
JF,

There's no salary growth because there is no productivity growth because there is no investment in new equipment because there is no confidence in our leaders who want to tax and regulate. Have you noticed most of the job creators in this country outside of Hollywood, Silicon Valley and a Wall Street are not Dem supporters?
 
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