PeakTrader.com

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PeakTrader:

Growth in the
Residential Segregation
of Families by Income,
1970-2009

“The proportion of families living in affluent neighborhoods doubled from 7 percent in 1970 to 14 percent in 2007.

Likewise, the proportion of families in poor neighborhoods doubled from 8 percent to 17 percent over the same period.”

My comment:

In 1970, the proportion of Americans in the “affluent” and “upper income” classes, and also in the “low income” and “poor” classes were relatively small, while the proportion of Americans in the “high middle income” and “low middle income” classes were very large.

If you break down those six classes into three classes, the high and low classes grew and the middle class shrunk. Those three categories are almost equal in size today.

In 1970, both the high and low classes were about 18% each, while the middle class was over 60%. In 2007, both the high and low classes were about 30% each, while the middle class was over 40%.

I suspect, many middle class Americans moved into the higher classes, while many immigrants from poor countries moved to the U.S. and into the lower classes.

However, U.S. living standards improved substantially, including through real median income. Chart:

http://research.stlouisfed.org/fred2/graph/?id=MEHOINUSA672N

Also, data on classes on page 12 of this PDF:

http://graphics8.nytimes.com/packages/pdf/national/RussellSageIncomeSegregationreport.pdf

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The top 20% are the fastest growing income group:

Rising riches: 1 in 5 in U.S. reaches affluence
December 6, 2013

“New research suggests that affluent Americans are more numerous than government data depict, encompassing 21% of working-age adults for at least a year by the time they turn 60. That proportion has more than doubled since 1979.

Sometimes referred to by marketers as the “mass affluent,” the new rich make up roughly 25 million U.S. households and account for nearly 40% of total U.S. consumer spending.

In 2012, the top 20% of U.S. households took home a record 51% of the nation’s income. The median income of this group is more than $150,000.”

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Consumers want low prices and producers want low wages.

When goods are abundant, prices fall. When labor is abundant, wages fall.

We need more pro-growth and fewer anti-growth policies from our politicians, to raise employment and living standards.

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Income = GDP = output is an incomplete measure of living standards. For example, Americans live in bigger houses and drive bigger autos than Western Europeans and even Canadians. Americans pay a much smaller proportion of their incomes in taxes than Europeans and Canadians. U.S. consumption represents 70% of GDP compared to 60% in Europe, even after subtracting net imports from consumption..

Furthermore, I stated before (and measuring only domestic growth is incomplete):

In the Keynesian consumption function (or identity), Y = C + I + G + NX; trade deficits, or negative net exports (NX), subtract from GDP growth, because consumption (C) is overstated.

For example, in a $10 trillion economy, a 5% one year increase in GDP expands the economy by $500 billion. Also, if imports are greater than exports, e.g. $1 trillion of imports and $600 billion of exports, then net imports are $400 billion in one year, which adds to our trading partners GDPs and subtracts from U.S. GDP. However, the total added to the U.S. economy is $900 billion ($500 billion from GDP growth in one year and $400 billion from net imports in one year), because the U.S. is consuming more than producing in the global economy.

U.S. trade deficits became increasingly larger reaching $800 billion a year by the mid-2000s (or 6% of GDP). China, for example, to a large extent, is a giant U.S. assembly plant, not counted in U.S. GDP (actually subtracting from U.S. GDP).

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That’s where much of the increase in real compensation went: Over 100,000 pages of health care regulations, which drove-up the costs of health care.

Government has been busy keeping the health care industry busy boged down in paperwork, inefficiencies, and waste.

So, now government will try to take over health care and create scarcity to lower the cost of health care.

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Also, I may add, the ACA, or Obamacare, is designed to make consumers pay more and government pay less for health care. So, consumers will have less money to spend for everything else.

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The “middle class” that don’t qualify for the tax credits will pay a lot more in premiums, and the huge deductables will hurt everyone.

Moreover, many doctors won’t deal with the massive increase in red tape.

Consumers, in general, will pay more for health care, while government pays less. That’s what the Affordable Care Act really means, i.e. less consumer spending for everything else and freeing-up government money from health care spending.

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