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Why America's economy is soaring ahead of its rivals

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Re: Why America's economy is soaring ahead of its rivals

#511

Post by hibikir »

standardUser wrote: post #487
jandrewrogers wrote: post #386

Earlier quoted context omitted.

US Federal Reserve studies indicate that the percentage of US households with no excess income after necessary expenses (as distinct from "ordinary expenses" as a term of art) is on the order of 10-15%. This definition roughly matches most people's intuition of what "living paycheck-to-paycheck" means. That isn't nothing but it implies 85-90% of Americans are not actually living paycheck-to-paycheck. There is another…

> The median household can easily accumulate a million dollars in inflation-adjusted net worth, not including their house, over a 40 year career. That sounds like barely enough to retire on.

It's not that great, no, but look at how much people can save in other countries: The idea of saving a million dollars outside of your home in Spain is basically fantasy. Much higher taxes, much lower salaries, and no savings vehicles that allow for strong deferred taxation: The max for the 401k equivalent is 1000 a year! So the vast majority of workers are saving basically nothing that isn't their home, and will rely on social security. Not that they would be happy to save... the wealth tax in large parts of Spain starts after $500k, and you pay yearly. 1 to 2% of wealth starting that early makes retiring early basically impossible: 4% is not a safe withdrawal rate anymore.

So it's not a matter of everyone in the US having it easy, but how hard a road most people have now elsewhere.

Re: Why America's economy is soaring ahead of its rivals

#512

Post by lmpdev »

jandrewrogers wrote: post #386
luizfzs wrote: post #255

But is the majority of the population thriving? It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck. A handful of companies are thriving, but barely any of its employees.

US Federal Reserve studies indicate that the percentage of US households with no excess income after necessary expenses (as distinct from "ordinary expenses" as a term of art) is on the order of 10-15%. This definition roughly matches most people's intuition of what "living paycheck-to-paycheck" means. That isn't nothing but it implies 85-90% of Americans are not actually living paycheck-to-paycheck. There is another…

How about the same statistics but for working age population

Re: Why America's economy is soaring ahead of its rivals

#513

Post by dgoldstein0 »

jandrewrogers wrote: post #386
luizfzs wrote: post #255

But is the majority of the population thriving? It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck. A handful of companies are thriving, but barely any of its employees.

US Federal Reserve studies indicate that the percentage of US households with no excess income after necessary expenses (as distinct from "ordinary expenses" as a term of art) is on the order of 10-15%. This definition roughly matches most people's intuition of what "living paycheck-to-paycheck" means. That isn't nothing but it implies 85-90% of Americans are not actually living paycheck-to-paycheck. There is another…

... And is $1 million enough to retire on?

Practically what probably matters is "how many years do you have to work to take care of your basic needs after you retire, and how does this change if you (a) have medical problems (b) want kids (c) [add your other variants of ordinary life choices people should be able to make]"

Re: Why America's economy is soaring ahead of its rivals

#514

Post by icedchai »

thrance wrote: post #503
mullingitover wrote: post #382

Earlier quoted context omitted.

> But is the majority of the population thriving? It's important to understand that the stock market is a leading indicator . Everyone doesn't immediately get laid off when the stock market tanks. Everyone doesn't immediately get a raise when the stock market is roaring. A lot of people are just now experiencing the stock market mini-crash of 2022, when the pandemic helicopter money dried up. In two years a lot of pe…

The good health of the market is ultimately meaningless if there are no mechanisms in place for redistribution. Historically it's been done through wages, but those have been de facto frozen since the 1970s.

I think financial education is a major problem. People need to be taught about investing. I'm talking long term investing, not day trading, crypto, etc. Start early, invest regularly. This is the simplest way for a normal person to build wealth within their lifetime. Wage increases aren't going to get you there.

Re: Why America's economy is soaring ahead of its rivals

#515

Post by amluto »

jandrewrogers wrote: post #386
luizfzs wrote: post #255

But is the majority of the population thriving? It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck. A handful of companies are thriving, but barely any of its employees.

US Federal Reserve studies indicate that the percentage of US households with no excess income after necessary expenses (as distinct from "ordinary expenses" as a term of art) is on the order of 10-15%. This definition roughly matches most people's intuition of what "living paycheck-to-paycheck" means. That isn't nothing but it implies 85-90% of Americans are not actually living paycheck-to-paycheck. There is another…

IMO a major deficiency in this calculation is children. Raising children costs money, and families without enough income may not feel that they can afford to raise children, and they may therefore not have children. This means that their income looks better than it really ought to, and it also reduces the birth rate. And, while the US’s birth rate is not catastrophically low, it is below replacement. This may have some negative long-term consequences for the economy.

Re: Why America's economy is soaring ahead of its rivals

#516

Post by refurb »

dgoldstein0 wrote: post #513
jandrewrogers wrote: post #386

Earlier quoted context omitted.

US Federal Reserve studies indicate that the percentage of US households with no excess income after necessary expenses (as distinct from "ordinary expenses" as a term of art) is on the order of 10-15%. This definition roughly matches most people's intuition of what "living paycheck-to-paycheck" means. That isn't nothing but it implies 85-90% of Americans are not actually living paycheck-to-paycheck. There is another…

... And is $1 million enough to retire on? Practically what probably matters is "how many years do you have to work to take care of your basic needs after you retire, and how does this change if you (a) have medical problems (b) want kids (c) [add your other variants of ordinary life choices people should be able to make]"

** ... And is $1 million enough to retire on?**

More than enough. The vast majority retire on less and have comfortable retirements.

Despite the narrative, Social Security pays out quite a lot and isn’t going insolvent any time soon. The average payout ($1,900) is more than double that of Canada ($850).

A retired couple would have almost $4000/month in monthly income.

Add on top a paid off home, Medicare eligibility, and Social Security, most people retire with a few hundred thousand, which is very comfortable in most of the US.

Re: Why America's economy is soaring ahead of its rivals

#517

Post by r_hanz »

ossobuco wrote: post #101
thomassmith65 wrote: post #22

That's an excellent summary of the economic state of the world. This excerpt is depressing... The challenge for other advanced economies is not just replicating America’s dynamism. It is to do so while retaining their cherished social safeguards. For all its economic power, the US has the largest income inequality in the G7, coupled with the lowest life expectancy and the highest housing costs, according to the OECD.…

> cheap Chinese plastic junk will continue to eat the world That's a thing of the past. Check the consumer electronics produced today in China. Mobile devices, EVs, infrastructure, newer products are simply incredible, and I'd argue ahead of western technology on many fronts. Cheap plastic stuff now gets produced in other less developed countries.

Very much this. One of the best accounts of this progression I’ve read is the “AI Superpowers..” book by Kai-Fu Lee. China held the “Knock-off/cheap copycat” moniker in the 90s, 00s, and early 1Xs, but the tides are shifting in terms of the quality of goods they produced. They’ve also taken a page from American business and begun outsourcing “cheap labor” to other third-world nations, in addition to playing loan-shark to the likes of Africa… You have to hand it to the way the Chinese have gained their footing in “capitalism” since the 1980s.

Re: Why America's economy is soaring ahead of its rivals

#518

Post by boulos »

lifeisstillgood wrote: post #201

Tech is the problem. The internet is global (or perhaps two or three regions), and winner takes all - so global value creation is being experienced everywhere, but being monetised in the US stock market. Take tech out of the equation and the US is pretty much on par with EU, and China and India are just burning the coal for everyone else.

The article discusses this and disagrees. Even in the same sectors and with the top 7 companies removed, sectors in the US have higher P/E ratios due to higher projected growth rates.

Re: Why America's economy is soaring ahead of its rivals

#519

Post by amrocha »

bdangubic wrote: post #500
amrocha wrote: post #208

Earlier quoted context omitted.

Government debt doesn’t matter. It’s literally fake.

the largest expediture of the US government now is fake interest payments on fake debt then? or we pay that with fake money fake Americans pay with fake taxes? :)

Yes, it’s literally fake. Japan issues government bonds and instructs the central bank to purchase them and uses that to fund its spending. It has been doing that for decades. Any other country could do the same thing.

Re: Why America's economy is soaring ahead of its rivals

#520

Post by bobthepanda »

amluto wrote: post #515
jandrewrogers wrote: post #386

Earlier quoted context omitted.

US Federal Reserve studies indicate that the percentage of US households with no excess income after necessary expenses (as distinct from "ordinary expenses" as a term of art) is on the order of 10-15%. This definition roughly matches most people's intuition of what "living paycheck-to-paycheck" means. That isn't nothing but it implies 85-90% of Americans are not actually living paycheck-to-paycheck. There is another…

IMO a major deficiency in this calculation is children. Raising children costs money, and families without enough income may not feel that they can afford to raise children, and they may therefore not have children. This means that their income looks better than it really ought to, and it also reduces the birth rate. And, while the US’s birth rate is not catastrophically low, it is below replacement. This may have so…

the thing is, this is happening across any remotely wealthy or developed country, and in that sense the US is actually the ninth highest birthrate in the OECD and well above the average. The only OECD country with fertility rates above 2 is Israel, and that's mostly because the ultra-Orthodox have really high birth rates.
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