The proliferation of payment plans.
Everyone can "afford" a flagship smartphone. Only 36$ per month Everyone can afford a car only : 340$ a month.
numbers add up fast digging themselves into a hole
Gen Z have 86% less purchasing power compared to baby boomers in their twenties
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Re: Gen Z have 86% less purchasing power compared to baby boomers in their twenties
#32It seems the annual income vs. CPI is the core chart here. Something happened in the decade of 2000-2010 to throw things out of whack. I'm not informed enough to know if that was the result of policy decisions or what, but I'd like to know how wage growth declined so dramatically during this time while prices seemed to maintain its projected linear growth.
Unsubstantiated guess: insane P/E ratios became the norm and maintaining them is harder when you’re raising salaries.
How do large P/E ratios impact salaries?
Re: Gen Z have 86% less purchasing power compared to baby boomers in their twenties
#33It seems the annual income vs. CPI is the core chart here. Something happened in the decade of 2000-2010 to throw things out of whack. I'm not informed enough to know if that was the result of policy decisions or what, but I'd like to know how wage growth declined so dramatically during this time while prices seemed to maintain its projected linear growth.
Unsubstantiated guess: insane P/E ratios became the norm and maintaining them is harder when you’re raising salaries.
> insane P/E ratios became the norm and maintaining them is harder when you’re raising salaries
P/E is the inverse of earnings yield. It varies with rates. So 2% -> 1% equity yield means a doubling of P/E. But framed as a yield shift it looks less dramatic (and more familiar).
Re: Gen Z have 86% less purchasing power compared to baby boomers in their twenties
#34It seems the annual income vs. CPI is the core chart here. Something happened in the decade of 2000-2010 to throw things out of whack. I'm not informed enough to know if that was the result of policy decisions or what, but I'd like to know how wage growth declined so dramatically during this time while prices seemed to maintain its projected linear growth.
One thing jumps out in my mind. I think of the 2000s as being the decade in which tech companies that survived the dot com bust turned into tech giants. And these companies would go on to rack up market caps that broke historical records. I remember everyone was sort of in awe of the numbers and generally had a pretty positive sentiment towards the success. However, I'm not sure I can craft a really clear narrative that connects this back to stagnant wages. But it seems related. Perhaps in the sense that large corporations like the tech giants seemed to be free to monopolize and suck up all the money without allowing it to circulate in the economy.
The tech giants may have just been a particular touch stone in a long trend of increased, unchecked corporatization of US business. Perhaps that culminated in a kind of phase transition that took place in the 2000s.
But there's another interesting detail to that chart which is that wages appear to be back on track since 2010 and have trended upward pretty sharply since then compared to the 2000s. If the slope of the wage line is to be believed (and were to continue), we'd be in pretty good shape in another decade or so. So, to play devil's advocate, perhaps it's wrong to look sideways at some of the big players in the space right now. I don't know. Not an economist.
Re: Gen Z have 86% less purchasing power compared to baby boomers in their twenties
#35This is the stuff that can cause or facilitate revolutions.
It bears repeating[1]: the mob doesn't replace the king; the court does, using the mob to do it. Nothing will get better under a revolution unless we're EXTREMELY, infinitessimally small chance lucky.
Re: Gen Z have 86% less purchasing power compared to baby boomers in their twenties
#36Earlier quoted context omitted.
Absolutely agree. This is a piece about relative poverty in disposible income against current inflation and % of post-tax income which has to go to rent/power &c against truly disposable income. I'm not in the cohort, but I still believe the model. Look to UK power bills, and Australian rents, and rates of home ownership since the 1960s.
I'm an older millenial, should be earning a good wage (doctor/consultant etc..) in the UK. Correction, I am earning a good wage. My parents can't understand how so much of my money goes towards mortgage, commuting costs, bills, childcare. Some things are a lot cheaper. A midi controller, DAC converter, HDMI splitter - these are all cheap imports from china these days. Toys for kids are cheaper, but also cheaply made.…
People sometimes point out how cheap things like TVs or computers are now, but they're such different scales of cost. In the 90s, a decent computer might run you a few thousand $. A house now costs hundreds of thousands more than it did back then. The savings in commodities isn't making up for rising costs in housing, education, energy, etc.
Re: Gen Z have 86% less purchasing power compared to baby boomers in their twenties
#37Earlier quoted context omitted.
Absolutely agree. This is a piece about relative poverty in disposible income against current inflation and % of post-tax income which has to go to rent/power &c against truly disposable income. I'm not in the cohort, but I still believe the model. Look to UK power bills, and Australian rents, and rates of home ownership since the 1960s.
I'm an older millenial, should be earning a good wage (doctor/consultant etc..) in the UK. Correction, I am earning a good wage. My parents can't understand how so much of my money goes towards mortgage, commuting costs, bills, childcare. Some things are a lot cheaper. A midi controller, DAC converter, HDMI splitter - these are all cheap imports from china these days. Toys for kids are cheaper, but also cheaply made.…
I think its odd a cohort (me basically) had the golden years, between the one before which had to live through postwar rebuild and industrial conflict, and the ones we leave our somewhat blasted legacy to, refusing to die, spending the inheritance.
I don't entirely feel good about this outcome. I am pretty sure higher taxation may be necessary, a return to the state, not the free market. But in the UK and Australia, older voters are holding this back. It's impossible absent revolution to change without waiting for my cohort and older.. to die.
Re: Gen Z have 86% less purchasing power compared to baby boomers in their twenties
#38To be fair, most (the vast majority) of people I know in gen z I know works significantly less hard than my parents did, I did, etc.
Those who do work hard are fairly well off. They work two jobs, didn’t go to college, but own their homes and have a steady income.
There’s definitely systemic issues, but work ethic is the major issue. And that’s a cultural issue.
Would you want the gen z you know building your house? I know some that I would, but not many.
Re: Gen Z have 86% less purchasing power compared to baby boomers in their twenties
#39It seems the annual income vs. CPI is the core chart here. Something happened in the decade of 2000-2010 to throw things out of whack. I'm not informed enough to know if that was the result of policy decisions or what, but I'd like to know how wage growth declined so dramatically during this time while prices seemed to maintain its projected linear growth.
Not saying it's related, but 9/11 happened.
Re: Gen Z have 86% less purchasing power compared to baby boomers in their twenties
#40No post body was provided.