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Americans are 40% poorer than before the recession

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Re: Americans are 40% poorer than before the recession

#71

Post by Amezarak »

api wrote: post #25
lottin wrote: post #24

It looks like they don't know the difference between nominal value and real value. In a housing bubble, the nominal worth of your house increases, but its real worth stays the same - unless, of course, you have a stock of houses that you can sell, but that's not the case of most Americans.

The trouble is when nominal value shrinks, it shackles people to endless cycles of debt slavery. Either that or people default, which causes follow-on cascades of defaults. If we had a low-debt cash-only economy this might not be the case, but our economy is so far from that it's not even worth talking about. We are absolutely a credit economy, and when the numbers get smaller in a credit economy pretty much everythi…

FWIW, the US is actually doing a great job of deleveraging its private debt, especially relative to other countries.

http://www.mckinsey.com/insights/global_capital_markets/unev...

Re: Americans are 40% poorer than before the recession

#72

Post by branchless »

sillysaurus3 wrote: post #54
hawkice wrote: post #26

Calculating how poor people are based on comparing against a time known to have unrealistically high and unsustainable housing prices, which made up a very large portion of net worth, seems like clickbait. We haven't re-entered a housing bubble massive enough to make every a paper millionaire. We shouldn't sulk about that.

It doesn't seem like clickbait. It seems pretty important to think about, actually. Little story: In 2007, a member of my family landed a lot of signed contracts to commission him to do a certain type of job. These were actually so lucrative that he quit his dayjob. Then 2008 happened. All of those signed contracts became meaningless. People simply said no, we're not paying you anymore, sorry. Fast forward a month, a…

Sorry to hear of his issues, but surely perpetuating high house prices means his children would also be under huge stress as they stretch themselves to the limit (and assume zero unemployment like this guy).

The "wealth" created by pulling forward demand through credit through housing wasn't real. That's why living standards fell - we stopped creating wealth and started adding zeros to numbers on a screen.

Reducing house prices means more disposable income for our children. And their children. And theirs.

Yes there was a hit to the housing crash, but only because the loss in living standards was a result of the misallocation during the "boom". 2008 was just Wile E Coyote looking down having already run off a cliff.

Want to avoid a fall? Don't run off the cliff. Not looking down isn't an option long-term.

Re: Americans are 40% poorer than before the recession

#73

Post by TheOtherHobbes »

pachydermic wrote: post #21
pvnick wrote: post #9

"The recession is over" has always struck me a political double-speak. We never left the recession; mainstream America just collectively forgot how it felt to have enough money. We have become accustomed to the 60 hour work weeks for folks fortunate enough to have jobs, chronic unemployment for those unfortunate enough to work outside of tech, the cheaper processed food, the increasing debt, and the lower standard of…

"Recession" means that GDP is shrinking, not growing. That's the definition of that word: noun: recession; plural noun: recessions 1. a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. So technically, the recession is over. There's not much room for interpretation there unless you choose a different definitio…

>There's not much room for interpretation there unless you choose a different definition of "recession".

Inexplicably, the mainstream definition of GDP omits to explain how GDP growth is distributed.

Equally inexplicably, almost all of mainstream economic policy and theory makes similar - let's be kind - interpretations about economic experience which privilege a certain perspective while ignoring other equally valid perspectives.

So technically you're correct.

Politically, in terms of the everyday experience of most of the population, 'The recession is over' is raving nonsense.

>It will probably just take a while for society to sort all of this out.

I'm betting on a millennium or two. (At least I would if it were practical.)

>I think most people reading this will be just fine and probably live really nice lives.

So that's just fine, I guess?

Re: Americans are 40% poorer than before the recession

#74

Post by api »

Amezarak wrote: post #71
api wrote: post #25

Earlier quoted context omitted.

The trouble is when nominal value shrinks, it shackles people to endless cycles of debt slavery. Either that or people default, which causes follow-on cascades of defaults. If we had a low-debt cash-only economy this might not be the case, but our economy is so far from that it's not even worth talking about. We are absolutely a credit economy, and when the numbers get smaller in a credit economy pretty much everythi…

FWIW, the US is actually doing a great job of deleveraging its private debt, especially relative to other countries. http://www.mckinsey.com/insights/global_capital_markets/unev...

As with most things, it could be worse. But the overall picture -- especially of wages vs. asset prices -- is not exactly good.

Re: Americans are 40% poorer than before the recession

#75

Post by mynewwork »

eyeareque wrote: post #51

This makes me want to ask: Where did all of the money go? It had to go somewhere, right?

It didn't have to go anywhere, and in many cases it didn't. Imagine you have a house (500k) and a car(20k) in 2007. Today you still have the same house (now valued at 400k) the same car (now valued at 10k). Your net worth has dropped substantially but the money didn't go anywhere, nobody else gained by the depreciation of your car or the market price correction of your house.

Re: Americans are 40% poorer than before the recession

#76

Post by thaumaturgy »

hawkice wrote: post #26

Calculating how poor people are based on comparing against a time known to have unrealistically high and unsustainable housing prices, which made up a very large portion of net worth, seems like clickbait. We haven't re-entered a housing bubble massive enough to make every a paper millionaire. We shouldn't sulk about that.

I found a slightly older article which appears to use methodology that's at least mostly similar to Pew's (which is where this article came from). It includes a nice little graph: http://blogs.reuters.com/felix-salmon/2012/06/12/chart-of-th...

The $81,400 median net worth number cited in the article is roughly comparable to 1995 numbers in the article I found, which very well pre-dates the period that most people consider to be the beginning of the housing bubble.

The housing bubble is readily apparent in the 2004-2007 period in the graph I found, but there was still a period of rising median net worth from 1992 to 2004, most of which shows comparable or better median household net worth than today.

The article also directly addresses your point: "In 2007, median household net worth was $126,400, while the median amount of home equity was $110,000; in 2010 net worth had dropped to $77,300, while home equity had dropped to $75,000. These days, home equity is net worth." (i.e., the net value of a family's home is now pretty much their entire net worth; in 2007, that wasn't the case.)

Re: Americans are 40% poorer than before the recession

#77

Post by kyllo »

drzaiusapelord wrote: post #52
pvnick wrote: post #9

"The recession is over" has always struck me a political double-speak. We never left the recession; mainstream America just collectively forgot how it felt to have enough money. We have become accustomed to the 60 hour work weeks for folks fortunate enough to have jobs, chronic unemployment for those unfortunate enough to work outside of tech, the cheaper processed food, the increasing debt, and the lower standard of…

>mainstream America just collectively forgot how it felt to have enough money. Yeah, no more easy line of credits for deadbeats and people with zero collateral who want to flip a home they can't afford and sell at a price that won't work. Banks shouldn't provide insurance for investing. > We have become accustomed to the 60 hour work weeks for folks fortunate enough to have jobs This kind of thing happened way before…

Do nothing jobs like HR pay six figures

Not to fresh college graduates, they don't. Six figures in HR is seniority pay.

The vast majority of entry-level office jobs available today pay very poorly compared to junior SDE. An entry-level HR coordinator is typically making ~$20/hour.

Re: Americans are 40% poorer than before the recession

#78

Post by pc86 »

pvnick wrote: post #61
sillysaurus3 wrote: post #37

Earlier quoted context omitted.

Even though pvnick was incorrect about their claim that the recession isn't over, we should try to look past that. Their more important claim was that people have forgotten what it's like to have enough money. It's hard to dispute that. In the tech sector, most of us have "enough" money, but it's not the case anymore for the vast majority of people in the US.

> Even though pvnick was incorrect about their claim that the recession isn't over I was not, please see my reply adjacent to your's

Based on the definition of the very word, yes you were incorrect. If you want to make an argument that we should ignore the definition, provide a reason, but as far as the definition of the word goes, you were incorrect.

Re: Americans are 40% poorer than before the recession

#80

Post by pc86 »

kyllo wrote: post #77
drzaiusapelord wrote: post #52

Earlier quoted context omitted.

>mainstream America just collectively forgot how it felt to have enough money. Yeah, no more easy line of credits for deadbeats and people with zero collateral who want to flip a home they can't afford and sell at a price that won't work. Banks shouldn't provide insurance for investing. > We have become accustomed to the 60 hour work weeks for folks fortunate enough to have jobs This kind of thing happened way before…

Do nothing jobs like HR pay six figures Not to fresh college graduates, they don't. Six figures in HR is seniority pay. The vast majority of entry-level office jobs available today pay very poorly compared to junior SDE. An entry-level HR coordinator is typically making ~$20/hour.

Six figures is seniority pay in almost any field outside of medicine, particularly if you exclude the Standford PhD folks going straight to Google, Microsoft, or Amazon.

$20/hr is about $40k a year. I don't live in in a city, so my first job as a developer was $42k a year. I think it's safe the say the developers I worked with provided more value than the HRC.

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