The High Cost of Living vs. The Cost of Living High
Based on a suggestion yesterday from a student in my MBA class (MGT 551 Business Economics), the graph above shows the declining share of disposable personal income (data) spent on food (data), clothing (data), and shelter (housing and household operation) since 1929. From a high of almost 59% in 1933, the percent of disposable income spent on food, clothing and shelter today has continually fallen, and today (2007) is only 33%. Bottom Line: When people today talk about the "high cost of living," they’re usually talking about the "cost of living high" (see Dallas Fed), because they're certainly not spending very much on the basics: food, clothing and shelter - that spending is at an all-time low as a percent of disposable personal income.
10 Comments:
I just wrote a post on my blog that talks about how people are living beyond their means. You can read it here:
http://themaskedmillionaire.com/2008/09/27/in-god-we-trustall-others-pay-cash.aspx?ref=rss
It should be no suprise to anyone that people are not being honest about where they spend their money. Most of their income goes toward things they want and not what they need.
I have always thought that most Americans could afford health insurance if they gave up spending thier money on suv's, travel trailers, motorcycles, expensive vacations, designer clothes..etc.
Have you seen the price of a Cafe Mocha lately?
Times are dire my friend. ;-)
yea, those $4.00 gourmet cupcakes are killing off the consumer.
the masked millionaire said:
I have always thought that most Americans could afford health insurance if they gave up spending thier money on suv's, travel trailers, motorcycles, expensive vacations, designer clothes..etc.
My monthly net income is $1001. $640 goes toward housing and food (package deal I can't get out of until I find more money to get into a cheaper room elsewhere), and $136 goes toward student loan debt.
That leaves $225 per month for everything else.
How much do you propose I spend on health insurance?
Note that I am not spending any money on "suv's, travel trailers, motorcycles, expensive vacations, designer clothes..etc."
don't forget about the cigarettes
My monthly net income is $1001. $640 goes toward housing and food (package deal I can't get out of until I find more money to get into a cheaper room elsewhere), and $136 goes toward student loan debt.
That leaves $225 per month for everything else.
How much do you propose I spend on health insurance?
As much as it takes, it will be much less than your monthly disposable income. Do you think someone else should buy it for you?
Nice to know there's no inverse relation to the value of the USD to the cost of living...
http://en.wikipedia.org/wiki/United_States_dollar#Value
Sounds like you should ask for a refund on your education. What kind of degree gets you an income under $20K? I've got secretaries with a high school diploma that make more than that.
No kidding. Sounds like you should probably go without internet service and concentrate on the basics.
Or maybe even spend more time worknig and less time surfing the 'net.
I'm a hardcore conservative; I brook no whiners and liberal pansies telling me I should pay for their stuff, or compensate them for their own miserable lack of planning and general wasted lives.
HOWEVER, this chart is not adequate by itself. One needs a lot more information to use this information meaningfully. For example, PERCENT means a ratio, something divided by something. What is the ratio here? If it were one person's necessary expenditures divided by their income, I'd say, "good for them." If it is the entire country's aggregated necessary expenditures, divided by their aggregated income, I'd say the chart is deceptive. Bill Gates and the top 1% can make $2 trillion per year and make the overall "percent" look ridiculously low, even though for the "average" subject the "percent" is much, much higher. So the question is--where did the numbers come from? Who ran the study? How were subjects included or excluded? These answers determine everything.
MY disposable income (and I am an MIT grad, bust my hump every day and earn every penny) is nowhere near 67%. So I think this chart is pooling a population that includes the super-rich, which easily tilt the scale and present a false picture.
We have enough truth we can argue, we don't need false claims to make life more painful for us.
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