A few thoughts on the American dream, by Doug Short.
What is the single best indicator of the American Dream? Many would point to household income growth. My study of the Census Bureau’s data shows a 600.7% growth in median household incomes from 1967 through 2011. The ride has been bumpy, but it equates to a 4.5% annualized growth rate. Sounds impressive, but if you adjust for inflation using the Census Bureau’s method, that nominal 600.7% total growth shrinks to 19.0%, a “real” annualized growth rate of 0.4%.
But if we dig a bit deeper into the method of inflation adjustment, the American Dream looks more like an illusion, as in “money illusion“.
Biderman on nobody telling the truth with regards to the US Economy. Forget the ISM and other bullshit figures….
While vacationing at the Mauna Kea on the big island of Hawaii, which by the way is my favorite resort hotel on the planet, I realized during a dinner time conversation that no one is talking the truth about the US economy. The truth is that the US is being bankrupted by the actions of the Obama Administration hand in hand with the Bernanke Fed. Bankruptcy sooner or later has to occur when an individual, company or government keeps borrowing more then they can pay anytime soon. The US has borrowed and continues to borrow more money then it will ever be able to repay, and that is true even if economic growth zooms.
The below chart shows a pair trade gone very bad. No wonder Occupy Wall Street is flourishing. From Sentier Research.
Real median annual household income has fallen significantly more during the economic recovery period from June 2009 to June 2011 than during the recession lasting from December 2007 to June 2009.
Two Charts by D Short that make you wonder about the American Dream. The Average Joe is incurring more debt for education, paying more for medical costs, while not adding to income growth, unless you join the banksters team. All this, while life expectancy is not better than the rest of the Western World. Social Unrest Next?
As our HFT News Algo is waiting for the new server, let’s view some charts of the real Economy and how people actually are doing, compared to a couple of decades ago. Interesting charts from DShort.
Among the many subtle details evident in these charts, one that especially caught my attention was the fact that the bottom quintile has grown faster than the third and fourth quintiles. This curious fact is not apparent in the dollar charts above.
Also not evident in the dollar charts is the grim reality that in real (inflation-adjusted) terms, households in the bottom quintile earned slightly less in 2010 than they did in 1973 — 37 years earlier. Even the top 5% of households have suffered an uncharacteristic decline, with their mean 2010 real income hovering around the level first achieved in 1996.
Full reading here.