econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 08 April 2017

Screwing Up Metrics In A Consumer Driven Economy

Written by

During the 1928 presidential campaign, Herbert Hoover promised “a chicken in every pot and a car in every garage." The vast majority in 2017 can afford the chicken and the car.


Please share this article - Go to very top of page, right hand side for social media buttons.


Chicken has roughly doubled in price since 1980 whilst the CPI has gone up 4 times. Chicken is still affordable.

Used car prices are falling (even using current dollars as the metric). [below graph is not inflation adjusted]

Even inflation adjusted new car prices have been trending down.

And the proof is that registered cars on the road are returning toward pre-Great Recession highs.

Based on spending, there is no indication that the median consumer is under duress until one starts looking at income. From Voxeu:

First, our data show that the bottom half of the income distribution in the US has been completely shut off from economic growth since the 1970s. From 1980 to 2014, average national income per adult grew by 61% in the US, yet the average pre-tax income of the bottom 50% of individual income earners stagnated at about $16,000 per adult after adjusting for inflation. In contrast, income skyrocketed at the top of the income distribution, rising 121% for the top 10%, 205% for the top 1%, and 636% for the top 0.001%

Combine what has been conveyed on the above chart [declining income of the lowest 50% of income earners relative to the top 1%] with the knowledge that the median consumer's inflation adjusted income is still slightly below 2000 levels. From Sentier:

Median household income at the beginning of the great recession in December 2007 was $58,226, so we have now surpassed that level. The Sentier Household Income Index (HII) for February 2017 was 99.7, significantly higher than the January reading of 98.7 (January 2000 = 100). The level of real median annual household income in January 2000 was $58,918, which marks the beginning of this statistical series.

Source: Sentier Research

Putting It All Together It Does Not Add Up - Or Does It?

I am beginning to believe that the non-GDP economy is growing much faster than the economy overall. It could be enough to adjust GDP up 1% to 2%. After all, if you are shopping for clothes at the Salvation Army, buying existing homes, or visiting Shady Dan's Used Cars - your spending is unnoticed in GDP. Add to it the evolution into the sharing economy with the likes of Uber, Airbnb, TaskRabbit, et al which is not captured in GDP.

If one is short income, you search for alternatives. With few exceptions, there is little evidence that the lower end of the population is going without as cheaper non-GDP sources abound .

Other Economic News this Week:

The Econintersect Economic Index for April 2017 improvement trend continues although the value remains in the territory of weak growth. The index remains below the median levels seen since the end of the Great Recession. Six-month employment growth forecast indicates modest improvement in the rate of growth.

Bankruptcies this Week from bankruptcydata.com: Privately-held Angelica (f/k/a Angelica Healthcare and Angelica Image Apparel), Privately-held Payless (f/k/a Collective Brands)

Weekly Economic Release Scorecard:

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Was Marx Right?
Angst in America, Part 5: The Crisis We Can’t Muddle Through
News Blog
Death Toll Still Rising Two Years Into Yemen Conflict
Citizen Scientists Discover New Type Of Aurora
A Drop In The Bucket
What We Read Today 30 April 2017
Voice Recognition Elevator In Scotland
May 2017 Economic Forecast: Return to Normal Growth
Guanxi: How Business Is Done In China
Measuring Interest Rate Risk In The Very Long Term
2016 Small Business Credit Survey: A Significant Majority Relied On Personal Finances
How Economic Changes Affect Congressional Budget Office's Budget Projections
Three Public Relations Blunders And How Your Company Can Learn From Them
Infographic Of The Day: Cheat Sheet: NAFTA's Mixed Track Record Since 1994
Early Headlines: Trump Blames Dems And Constitution For Chaos, US Child Poverty, Winter Leaves North New England, Labour Gains In Polls, And More
Investing Blog
Market Update 29 April 2017
Technical Thoughts: Finding Contrarian Ideas
Opinion Blog
Investors: Super Size Me
How Our Addiction To Safety Could Lead To Another Financial Crisis
Precious Metals Blog
A New Age For Gold
Live Markets
28Apr2017 Market Close: Wall Street Closed Mostly Down On News The U.S. Economy Grew At Its Weakest Pace In Three Years, WTI Crude Settles In The Low 49 Handle
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved