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USD Purchasing Power in Real Time Since 2000

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Re: USD Purchasing Power in Real Time Since 2000

#51

Post by slg »

JumpCrisscross wrote: post #20
slg wrote: post #18

Earlier quoted context omitted.

It's a problem that our society is designed for and judged in relation to capital. Most people are paid in dollars, not shares of the S&P 500. 38% of the population doesn't even own any stocks[1]. We can't act like the dropping dollar value is fine simply because stock investments are outpacing those losses. Maybe that tradeoff benefits the people reading this, but it hurts a huge number of Americans. [1] - https://n…

> Most people are paid in dollars Real wages are up since 2000 [1]. (Even the federal minimum wage went up 40% in nominal terms [2], though that is less than inflation.) [1] https://fred.stlouisfed.org/series/LES1252881600Q [2] https://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007

And by "real wages" you mean "Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over". You chose a number that specifically factored out the negatives like dropping participation rate[1] and underemployment (couldn't find the isolated number for underemployment in 30 seconds of googling, so here's one that's tempered by including unemployment too)[2]. It also glosses over the heart of the problem by using median. If 38% of the population suddenly had their wages drop to $0, it wouldn't show up when looking at the median values.

I also don't see why you're citing the nominal federal minimum wage. The nominal value is totally irrelevant to the conversation. $1 is still nominally $1, but according to the link it is also now $0.51 in purchasing power.

[1] - https://fred.stlouisfed.org/series/CIVPART/

[2] - https://fred.stlouisfed.org/series/u6rate

Re: USD Purchasing Power in Real Time Since 2000

#52

Post by SpicyLemonZest »

drbig wrote: post #5

As much as the notion of "Purchasing Power" is economic, thus perhaps having a greater chance of being related to reality, I've been wondering if - and how - could these long-term measures account for greater diversity and "scale" of "things money can buy". Nowadays if you're properly rich you can buy a seat on a sub-orbital flight. This wasn't an option in '00, no matter how rich you were. On the other end of the sc…

The PCE measure attempts to account for this in a more principled way. But precisely because it's trying to, it can't be reported as quickly, since there's no way to know how much a price change impacts PCE until you know how consumer behavior changed along with it. So the CPI data gets reported first (we got February CPI data in the middle of last month while PCE data isn't expected until Thursday), and thus drives media conversations about inflation.

Re: USD Purchasing Power in Real Time Since 2000

#53

Post by JumpCrisscross »

slg wrote: post #51
JumpCrisscross wrote: post #20

Earlier quoted context omitted.

> Most people are paid in dollars Real wages are up since 2000 [1]. (Even the federal minimum wage went up 40% in nominal terms [2], though that is less than inflation.) [1] https://fred.stlouisfed.org/series/LES1252881600Q [2] https://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007

And by "real wages" you mean "Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over". You chose a number that specifically factored out the negatives like dropping participation rate[1] and underemployment (couldn't find the isolated number for underemployment in 30 seconds of googling, so here's one that's tempered by including unemployment too)[2]. It also glosses over th…

> by "real wages" you mean "Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over"

Yes.

> You chose a number that specifically factored out the negatives like dropping participation rate[1] and underemployment

I chose a consistent dataset. One of many. (Dropping participation rate is affected by stuff like demographics in addition to underemployment.)

If you have a credible source that shows declining real wages since 2000, I'd love to see it.

> don't see why you're citing the nominal federal minimum wage. The nominal value is totally irrelevant to the conversation. $1 is still nominally $1, but according to the link it is also now $0.51 in purchasing power

If $1 is 51¢ today, then $1.40 is 71¢ today. Rising nominal wages is how real wage gains are generated.

Re: USD Purchasing Power in Real Time Since 2000

#54

Post by traviswingo »

vikingerik wrote: post #40
nrclark wrote: post #9

This isn't very surprising. Typical US economic policy aims for 2-3% annual inflation. That counter shows an average 2.6% inflation across 26 years, which is kind of right in the range we'd expect. It's debatable whether this is good longterm policy - but it's been the norm in the US for decades.

This ticker's current speed is faster than that, though. It's going about 1e-9 dollar per second. That comes to about $0.03 per year, which as a fraction of the current base of $0.50, comes to 6% inflation per year. I don't know how that speed was determined. Either it's using a linear decrease since 2000 (which isn't correct, the inverse of exponential inflation would be logarithmic decay, not linear), or it's weigh…

Good eye. The ticker was using the observed rate of change over the two most recent data points, so it's actually biased towards the most recent inflation numbers. I've updated it to simply use the slope between the oldest (January 2000) and the most recent data.

It won't be 100% accurate, but it's close enough to create a visual. And the number is always updated monthly with real data anyways.

Re: USD Purchasing Power in Real Time Since 2000

#55

Post by throwaway173738 »

Aurornis wrote: post #27
slg wrote: post #18

Earlier quoted context omitted.

It's a problem that our society is designed for and judged in relation to capital. Most people are paid in dollars, not shares of the S&P 500. 38% of the population doesn't even own any stocks[1]. We can't act like the dropping dollar value is fine simply because stock investments are outpacing those losses. Maybe that tradeoff benefits the people reading this, but it hurts a huge number of Americans. [1] - https://n…

> It's a problem that our society is designed for and judged in relation to capital. Cash is also capital. If you were trying to say it’s a problem that our economic system favors deploying capital into investments instead of hoarding cash, I disagree. An economy where everyone is incentivized to hoarde cash instead of deploying it to investments doesn’t progress because the smartest thing you could do with your mone…

I think the problem here isn’t the preference that we create with the way inflation is chosen as a target but that we try to exert influence at all. It should be possible for many people to lead good lives without investing cash in the stock market. And the stock market should be a good place to raise capital. But when our retirement savings are bundled up in the stock market it creates a perverse incentive to manipulate the market to prevent us from losing our retirement savings.

Re: USD Purchasing Power in Real Time Since 2000

#56

Post by engineer_22 »

If each digit right of the cents place was 1/2 as tall as the digit to its left, I could process it more intuitively.

A change of one hundred millionth of a percent is not enough to consider even if I have 10 million dollars.

How is this calculated? It's a rate based on historical purchasing power parity index trends, or it's tied to live market data?

Re: USD Purchasing Power in Real Time Since 2000

#57

Post by Avicebron »

JumpCrisscross wrote: post #50
Avicebron wrote: post #34

Earlier quoted context omitted.

The point isn't that CPI excludes healthcare and housing, CPI shelter sub-index https://fred.stlouisfed.org/series/CUSR0000SAH1 and the medical care sub-index https://fred.stlouisfed.org/series/CUSR0000SAM2 have grown ~500% and ~770% respectively in the same time frame. The _overall_ CPI they are blended into grew ~300%, which means real wages are deflated. So if personal spending is weighted towards healthcare and h…

> have grown ~500% and ~770% respectively in the same time frame. The _overall_ CPI they are blended into grew ~300%, which means real wages are deflated If you spend a third of your income on housing and 8% on healthcare [1], then those components–assuming your 5x and 7.7x multiples–will raise your cost of living by 2.25x. That leaves 1.75x for the other components (to get to the overall 3x). That sounds reasonable…

> Well, yes. There are regional CPIs and income-indexed CPIs and all manners of privately-calculated costs of living.

Great. So we agree, you are just dismissing the distributional analysis and equating fungible goods with inelastic ones. You can't substitute away from something like region-locked housing supply so those folks face higher effective inflation (BLS R-CPI-I).[1]

[1] https://www.minneapolisfed.org/article/2024/lower-income-hig...

Re: USD Purchasing Power in Real Time Since 2000

#58

Post by engineer_22 »

traviswingo wrote: post #54
vikingerik wrote: post #40

Earlier quoted context omitted.

This ticker's current speed is faster than that, though. It's going about 1e-9 dollar per second. That comes to about $0.03 per year, which as a fraction of the current base of $0.50, comes to 6% inflation per year. I don't know how that speed was determined. Either it's using a linear decrease since 2000 (which isn't correct, the inverse of exponential inflation would be logarithmic decay, not linear), or it's weigh…

Good eye. The ticker was using the observed rate of change over the two most recent data points, so it's actually biased towards the most recent inflation numbers. I've updated it to simply use the slope between the oldest (January 2000) and the most recent data. It won't be 100% accurate, but it's close enough to create a visual. And the number is always updated monthly with real data anyways.

Nice job, thoughtful execution

Re: USD Purchasing Power in Real Time Since 2000

#59

Post by engineer_22 »

gritspants wrote: post #32
selcuka wrote: post #31

Earlier quoted context omitted.

The Federal Reserve's Real Broad Dollar Index (RTWEXBGS) is 113.51 as of February. Not saying it would crash losing all of that 13.51 excess overnight, but it's still overvalued against foreign currencies.

Is this not what the current US administration seeks? You can't simultaneously be the reserve currency and hope to be a net exporter at the same time.

Perpetual trade deficit is modern system of tribute.

Re: USD Purchasing Power in Real Time Since 2000

#60

Post by engineer_22 »

gdulli wrote: post #48
sanex wrote: post #30

I question the accuracy. In 2010 I could buy a McDonald's double cheeseburger for $1. Now they're like $3 and they took off a slice of cheese.

In the last 12-24 months the price of fast food in particular has risen at a higher rate than inflation has hit other types of food and goods. Fast food makes no economic sense anymore. And you're right, the food has gotten worse as well.

Fast food is gut wraughting
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