Thursday, July 03, 2008

Cheer Up! Here's Some Good News You Don't Often Hear From the "Disaster Sells" Media

Wealth. The mainstream media played this up recently, but only because it fell by nearly $2 trillion in the first quarter. Stand back and a different picture is revealed. Americans' net worth — what they owned less what they owed — was $55.97 trillion. That's down from the peak of $58.196 trillion in the third quarter of 2007, but still $15.3 trillion above where it was seven years ago (see chart above).

Put another way, a bit more than one-quarter of all the wealth created in America in the 232 years since our founding was created in the last seven years.

• Incomes. We keep hearing that American incomes are "stagnant." The official data show that average real pre-tax income per worker hit a record $48,957 in April, 11% above what it was when President Bush entered office. Real family incomes are growing slowly. But that's because families have been shrinking in size since the 1960s.

• Jobs. People constantly worry about jobs, but we've created 9.2 million jobs since 2001, the year of the last recession. Unemployment today is 5.5%, below the 6.1% average since 1980.

• Consumer pleasures. Americans own more and better things than ever, despite our pining for the good old days. The average American has a larger home, and more and better cars, color TVs, computers and home appliances than ever before. They have more leisure time and take more vacations, too.

• The poor. Those officially defined as poor in America aren't thriving. But they, too, are faring better than you might imagine. For instance, 80% of poor households today have air conditioning vs. 36% of the entire population as recently as 1970. Some 97% of our poor own a color TV, and half own two or more. Thirty-one percent own two or more cars. The typical poor American has more living space than the average individual living in Paris, London, Vienna, Athens and other cities throughout Europe.

Poor people typically often consume more than they earn. The average person with income before taxes of $17,462 — a level that qualifies as poor — consumed $24,422 in goods. The difference is welfare and subsidies.

• Energy. America is in fact energy-rich, not energy poor. In the U.S., we have at least 139 billion barrels of oil that we can profitably get using current technology at current prices. All we have to do is decide to get it. It can be found in the Arctic National Wildlife Refuge in Alaska, in shale-oil deposits in Colorado, Utah and Wyoming, and in our offshore reserves.

• Life Spans. The average person born today can expect to live more than 78 years. That's up from 75 just 20 years ago. Infant mortality has plunged to about 6 per 1,000 live births, a 25% drop since 1990, with the best gains among minorities, especially African Americans.

See related
CD post here.

8 Comments:

At 7/03/2008 9:10 AM, Anonymous Anonymous said...

US household wealth doesn't look particularly impressive in the 6 years ending 2007. 2008 could be another negative year (declining real estate and equity markets), meaning that the Bush43 administration would oversee 3 out the 4 years since 1946 when net wealth declined.

 
At 7/03/2008 6:42 PM, Blogger David said...

Including housing prices in national wealth figures seems to me problematic. Given that residential real estate sales are almost always from one American to another American, a price increase will benefit one group at the expense of another. Ditto for a price decrease. Except to the extent that we are talking about the physical improvement or destruction of real estate, or its transfer to non-Americans, the price changes are really a form of asset inflation or deflation.

 
At 7/03/2008 7:22 PM, Anonymous Anonymous said...

Some folks just don't like good news of any kind. I sympathize...I have an entire family of that species.

It is however, very easy to see that the average person has far more today than when I was young back in the 1970s. In my average neighbourhood, each household averages 2 or more vehicles (some households have more cars than people), more than 1 TV, AC & an endless array of consumer electronics and gadgets. My neighbours are fire fighters, security guards, teachers, retired nurses, and middle managers. When I was a kid, most of this would have been upper middle class territory the turf of drs & lawyers. Almost no one buys a second hand car except me (call me the fiscal conservative scot on the block) and most of these folks eat out several nights a week.

If you don't think life has improved since 1940, it's time to rent an old movie to see how folks used to live. The empirical numbers support what one can observe.

 
At 7/03/2008 7:59 PM, Blogger OBloodyHell said...

> If you don't think life has improved since 1940, it's time to rent an old movie to see how folks used to live.

You forgot one word in that first clause -- vastly.

Most of this is just a side effect of BDS. What will they do when McCain is their whipping boy, instead?

> the Bush43 administration would oversee 3 out the 4 years since 1946 when net wealth declined.

Excepting for the fact that the majority of the middle class is now much, much richer, since the mid-90s (and that is a fairly smooth curve), that note might be somehow significant.

In addition, any idiot would grasp that any downturn in the first two years were a direct affect of Clinton admin policies, not Bush policies, and anything else for the whole first term might have something to do with a certain notable event that occurred later in 2001. Perhaps you remember it?

Of course, you see things in a vacuum -- no doubt since your reasoning faculties "suck" (since it is necessary to point out the above) -- so of course you could not grasp the clear and self-evident relevancy of either of those facts to your thesis -- you probably still can't, even now that I've pointed them both out to you.

You know, you might want to see a specialist about that condition. One can only guess what the longer-term ramifications of it might be.

 
At 7/03/2008 9:50 PM, Anonymous Anonymous said...

I guess Senator McCain has an advantage. He is the only presidential candidate to have been tortured. I imagine that the mental strength to survive such an experience will be useful to survive the never-ending assault to which he will be subjected in Washington.

The one quality which few appreciate about GWB is his ability to withstand this personal onslaught. Few people really appreciate what kind of courage and self-confidence that really takes.

 
At 7/03/2008 10:19 PM, Anonymous Anonymous said...

Excepting for the fact that the majority of the middle class is now much, much richer, since the mid-90s

Really. Through the end of 2007, this decade thus far has been by far the worst decade for household wealth creation since WW11. You could look it up here. And 2008 is not helping your case.

 
At 7/04/2008 6:50 AM, Anonymous Anonymous said...

Anon. 10:19,

These declines seem to be largely attributable to the bursting of the housing bubble. Downturns in the real estate market are hardly a new or even a unique phenomenon. They come & they go, like recessions.

Doesn't one look at the larger trend over the last 60 years rather than focusing on any temporary economic anonolies?

Let us imagine that the subject was China which is presently having problems with inflation, high gas prices, pollution and billions in earthquake damage, we could focus on these things or we could look at the overall trend over the last 30 years. Would one not conclude that tremendous gains have been made by a country which has averaged 10% growth for the last decade?

You have presented information regarding the last 6 years. Are you suggesting that we can expect declining household income going forward? Are you suggesting that the world's largest economy, a world leader in innovation will be in a pattern of economic decline for the next say, 20 years or are you just saying you don't think GWB has done a good job?

 
At 7/04/2008 6:09 PM, Anonymous Anonymous said...

Downturns in the real estate market...come & they go, like recessions.

Hardly. The US has not faced a housing crash like the current one since the 1930's.

rather than focusing on any temporary economic anonolies?

Something is amiss. From 1946 to 1999 household net worth increased every year and averaged over 7% per year per decade. If the second half of 2008 is similar to the first half, then household net worth will have declined in 4 of the last 9 years and will have increased at a 3% per year rate this decade.

Carpe Diem attempted to pimp Bush43's household net worth record. The record is pitiful. I called him out on it. Plain and simple. I am just as prepared to call out Bush43's job creation, GDP, etc. records as well.

Are you suggesting that the world's largest economy, a world leader in innovation will be in a pattern of economic decline for the next say, 20 years or are you just saying you don't think GWB has done a good job?

Yes, on both counts.

 

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