20070821_tax_graphic
I’ve been talking about this for years, but I am glad to see quantifiable proof has now been adduced. According to IRS data:

"Americans earned a smaller average income in 2005 than in 2000, the fifth consecutive year that they had to make ends meet with less money than at the peak of the last economic expansion, new government data shows.

While incomes have been on the rise since 2002, the average income in 2005 was $55,238, still nearly 1 percent less than the $55,714 in 2000, after adjusting for inflation, analysis of new tax statistics show.

The combined income of all Americans in 2005 was slightly larger than it was in 2000, but because more people were dividing up the national income pie, the average remained smaller. Total adjusted gross income in 2005 was $7.43 trillion, up 3.1 percent from 2000 and 5.8 percent from 2004. . ."

Incidentally, the lack of real income growth was calculated using BLS data measures of CPI. It’s even worse than this in reality, as we have long demonstrated that CPI does not accurately measure inflation.  So the true, after inflation, "Real Income,"  is actually far, far worse. 

Perhaps this explains why 2/3rds of the people interviewed in a WSJ/NBC
survey
believe that we are either in a recession or will be within a
year
. . .

Also no secret: Income growth has been concentrated in the highest few percentile:

"The growth in total incomes was concentrated among those making more than $1 million. The number of such taxpayers grew by more than 26 percent, to 303,817 in 2005, from 239,685 in 2000. These individuals, who constitute less than a quarter of 1 percent of all taxpayers, reaped almost 47 percent of the total income gains in 2005, compared with 2000.

People with incomes of more than a million dollars also received 62 percent of the savings from the reduced tax rates on long-term capital gains and dividends that President Bush signed into law in 2003, according to a separate analysis by Citizens for Tax Justice, a group that points out policies that it says favor the rich.

The group’s calculations showed that 28 percent of the investment tax cut savings went to just 11,433 of the 134 million taxpayers, those who made $10 million or more, saving them almost $1.9 million each. Over all, this small number of wealthy Americans saved $21.7 billion in taxes on their investment income as a result of the tax-cut law."

So long as we are popping economic myths, let’s also dispatch with the 4.5% unemployment rate. That number has been largely caused by several million exhaustees and others simply leaving the work force:

Nilf_costs

The actual unemployment rate is closer to 6.5%. And if we measured it the way the Europeans do, its closer to 8%. This explains why wages and labor costs have remained subdued despite the alleged 4.5% UE measure.

Anyone with more than 4 functioning brain cells should be able to figure out that a 4.5% unemployment rate would be causing huge labor shortages and wage increases.

Instead, the average income gain is merely a measure of inflation: reported gains reflect increased costs for medical care — the exact same coverage (but with a higher copay) which costs 15% more year-over-year shows up as increased total wages.   
>

You may now return to your previously scheduled economic propaganda 

>

Sources:
Average Incomes Fell for Most in 2000-05
DAVID CAY JOHNSTON
NYT, August 21, 2007
http://www.nytimes.com/2007/08/21/business/21tax.html

America’s Economic Mood: Gloomy
JOHN HARWOOD
WSJ, August 2, 2007; Page A4
http://online.wsj.com/article/SB118600572789185278.html

Study #6074 (PDF)
NBC News/Wall Street Journal
July 2007
http://online.wsj.com/public/resources/documents/WSJ0707_poll.pdf

Category: Data Analysis, Economy, Employment, Psychology, Wages & Income

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

89 Responses to “Real Income Fails to Rise for most of the 2000s”

  1. critical thought says:

    Funny, we hear a lot about immigration in the media today, but not in this article. . . in fact not even one mention.

    Furthermore – the article is very concerned with the population of people making over $100K – but, doesn’t mention whether 2000 to 2005 was above or below average in immigration (legal or otherwise).

    I’m a bit of bush apologist, so take my word with a grain of salt – but, it is rather odd that the article makes absolutely no mention of immigration.

  2. dark1p says:

    CT–I’m old and I just got up and trying to parse your point from only the word ‘immigration’ is more than I can handle right now.

    Could you explain what immigrants have to do with the several issues Barry raised in his post? Numbers and facts would also be appreciated, if you have any.

    Thanks.

  3. D. says:

    You could find a chart of household income here…

    http://www.whitehouse.gov/fsbr/income.html

    It’s been clearly down since 2000 but they’ve stopped producing the number since 2005. I wonder why?

    I’m still convinced that the real estate souffle had a huge impacts on people’s desire to work. When equity extraction becomes a distant memory, many more people will be looking for a job.

  4. bjk says:

    Immigration goes up (due to Bush non-enforcement), wages go down. Supply and demand. This is especially true at the bottom of the wage scale, where there is less complementarity.

  5. Sue says:

    This is what 6 years of conservative rule has produced – a poorer country with its infrastructure failing, business profits siphoned off from investment in the United States to fund more profitable investments abroad, a shrinking middle class, and a declining economy disguised by faking statistics. Not to mention a tragic, unsuccessful war and the enmity of the whole world.

    And, guess what! Bush moved today to limit *states* from trying to insure more children’s health.

    If I ever had any respect for conservatives, if I ever were inclined to vote for one, never again.

  6. jake says:

    foxconn the largest ems company pays its chinese factory workers 60 cents an hour

  7. Barry,

    I long suspected that whenever certain ideologues in country A claim that they are better off than country B, because B’s unemployment is much higher that there are different data collection methods at work.
    I have not been successful in locating a reliable data source.
    Can you provide any links regarding the actual US unemployment figure at 6.5% and 8% respectively?

    Thank you.

  8. Quiddity says:

    A few weeks ago (on the McLaughlin group, IIRC) Maria Bartiromo said, “A rising tide raises many boats.”

    So what’s the worry?

  9. Tom says:

    Anyone with more than 4 functioning brain cells should also be able to figure out that free trade equals manufacturing jobs shipped out to low wage countries which means lower
    incomes in the U.S.

  10. Dan says:

    What do the numbers look like when you factor in benefits?

    Dan

  11. jake says:

    paulson shouldnt have gone on cnbc…….hes making the markets more nervous

  12. Pool Shark says:

    Sue,

    “This is what 6 years of conservative Republican rule has produced.”

    There, Fixed that for you.

    Please don’t confuse anyone in the current administration with a true conservative.

    Democrats = Tax and spend”
    Republicans = “Borrow and spend”

  13. SPECTRE of Deflation says:

    The old bait and switch tactic. Your wages will be stagnant, but we can make you feel wealthy with the alchemy of rising asset prices while you take on more “liquidity”. Now that they have blown the world’s largest bubble ever, the only thing left is the debt.

    And people wonder while I call the masses sheeple.

  14. Your initial post, after quoting my article, states: “Incidentally, the lack of real income growth was calculated using BLS data measures of CPI.”

    Not so in my article. The data has nothing to do with the Bureau of Labor Statistics. It is tax return data, while the BLS uses survey data.

    Also, there is nothing in the data, referring here to a later poster, about immigration. When you file a tax return you are not asked where you were born or, if you immigrated or if you emigrated (Congress taxes Americans on their worldwide income regardless of residency.

    ~~~

    BR: Thanks for commenting and clarifying your article. I just assumed that the inflation data was BLS derived (my bad).

    “still nearly 1 percent less than the $55,714 in 2000, after adjusting for inflation”

    If not the BLS CPI data, then what was used as the measure of inflation?

  15. SPECTRE of Deflation says:

    This is what 6 years of conservative rule has produced – a poorer country with its infrastructure failing, business profits siphoned off from investment in the United States to fund more profitable investments abroad, a shrinking middle class, and a declining economy disguised by faking statistics. Not to mention a tragic, unsuccessful war and the enmity of the whole world.

    And, guess what! Bush moved today to limit *states* from trying to insure more children’s health.

    If I ever had any respect for conservatives, if I ever were inclined to vote for one, never again.

    Posted by: Sue | Aug 21, 2007 8:36:29 AM

    This is a problem concerning elitism and not Conservatives and Liberals. Neither can give a rat’s ass concerning you or I. You still don’t get it even at this late hour.

    You keep waiting for the Liberals to help you out, but be very careful what you ask for because you just may get it.

  16. A falling tide lowers many boats. Except the ones already sunk on the bottom. — Sum Dope.

  17. Steve C says:

    Sue,
    Would you rather have had 8 more yrs. of Jimmy Carter or the 8 we had of Ronald Reagan? I suggest that your current standard of living is significantly better today due to “conservative” Reagan than “liberal” Carter.

  18. Given the steady loss of quality manufacturing jobs (esp. pulp and paper mills) in Maine, the average real income data is not surprising. Domtar just permanently closed its large pulp and paper mill near Calais, Maine at the loss of about 200 high paying manufacturing jobs. Given how bad the economy is in Downeast Maine it is going to be hard for these people to find any work, even at a convenience store.

  19. bullbust says:

    Please don’t confuse anyone in the current administration with a true conservative.

    Please. We’ve had enough of the mythical conservative. Lets leave fairy tale characters aside.

    Conservatism is simply defined by what conservatives *actually* supported and cheered these years. And also defined by what they *actually* opposed and crushed these years. This is your baby.

    Owing up – accountability – isn’t that like a cardinal conservative principle?

  20. rj says:

    “This is a problem concerning elitism and not Conservatives and Liberals. Neither can give a rat’s ass concerning you or I. You still don’t get it even at this late hour.

    You keep waiting for the Liberals to help you out, but be very careful what you ask for because you just may get it.”

    I think both parties are idiots whose desire for power lets them be easily manipulated by vested interests and the sooner each of them die the better our country will be.

    One reason I support Ron Paul even if I know he’ll lose.

  21. Neal says:

    Can we finally drive a stake into the heart of the Bush administration claim that this is a good economy?

    The economy, plain and simple, looked good only because of the unsustainable run-up in the house prices over the the last few years.

    Without the construction employment and construction worker spending, home building and home builder employee spending, building materials and their employee spending, mortgaging industry and their employee spending, re-financing and their employee spending, secutitization and their employee spending, home owners and their weath effect spending, local government (and their property tax windfall) and their employee spending the economy would have been ZERO or less.

    The only other growth factor in the economy was the defense industry.

    This economy was built on debt that everyone irrationally hoped would never have to be repaid. This hope was unusually encouraged by the Bush administration with their push for “home ownership” and “go out and spend”.

    I think the analysis made by history will show that the much vaunted “tax cuts” meant very little to economic growth when compared to the effects of the home buying and building frenzy.

    This is going to turn out very badly.

    Picture the end of the dot-com bust. Then add a huge overhang of debt over all sectors of the economy. Add a severe drop in tax revenues. Add the effect of essentially ignored energy crisis. Add the
    the short-term and long term effect of a failed foreign policy. And on and on.

    Like the song, “Life goes on, long after the thrill of living is gone.”

  22. KP says:

    Easy credit has made it easy for Americans to sweep the inflation all around them under the rug and when that easy credit goes away they will HAVE to face facts. I hope that doesn’t happen anytime soon. Oh wait…

  23. jake says:

    paulson is the wrong guy to calm the markets…..he reminds me of lloyd bridges in the movie “airplane” i keep waiting for paulson to say “i sure picked the wrong week to stop drinking”

  24. wunsacon says:

    Just like Jimmy Carter, the next president is going to inherit many untractable problems. And just like Jimmy Carter, many people will blame him and not Nixon/Bush for their ills and celebrate the following president. The blame is very misplaced.

  25. wnsrfr says:

    Inflation on things we need, deflation on things we want…

    How about in-home entertainment and communication costs? Is that want or need?

    I have four kids, 3 of cellphone age, and standard cable (well, got the DVR and HD, can’t say no for the hockey and baseball).

    My monthly costs for phone (wireless included, text messaging, insurance, excise and sales taxes etc, etc), cable and Internet is $300+.

    Thirty years ago, in 2007 dollars, it would be about $80 for the phone and long distance.

    If the economy goes south, are the cable and cellphone companies good or poor bets…will the middle class/majority drop cable and cellphones? Aren’t we addicted?

  26. Neal says:

    Hasn’t the past few weeks revealed the “dark matter” that was much discussed by economists last year?

  27. Toro says:

    I agree with the wage stagnation argument, but I’m not so sure about the 8% unemployment. There are too many signs where I live looking for workers for that to be the case. I remember looking for work in the early 90s when there was 8% employment and you couldn’t get a job as a waiter. Not the case today.

  28. dark1p says:

    It’s all clear to me now. I blame the immigrants that Carter let into the country.

  29. AD says:

    Several points:

    1 – Wunascon is most likely correct; those who will suffer the blame are those who attempt to fix the problems they have inherited, not those who caused them. If you care about a political party, you should be cheering very hard for them not to win the presidency in the next election. The historical pattern of blame allocation to presidents does not favor the next commander in chief.

    2 – If we are going to argue about liberals and conservatives, can we pause and define them first? Perhaps it’s because I am currently and will always be an independent, but nothing amuses me in political discussions more than seeing people hurl buzzwords back and forth with a complete and abject lack of actual content.

    3 – “Calming” the markets is ultimately impossible when fundamentals are extremely ugly. Financial engineering can hide rot for a while, but eventually it comes down in the end. If real wages are down as per this kind of report, employment is dropping, and debt is rising, the bill will come due. We might be able to change ‘when’ and ‘how bad’ (to ‘later’ and ‘a lot worse’, respectively), but that is all. Attempting to calm the markets is putting a band-aid on a severed head.

    To a point, finding whoever makes the markets most nervous and having them profess the end of the world on television very loudly might be the smart maneuver. Take your medicine now.

  30. michael schumacher says:

    >>There are too many signs where I live looking for workers>>

    You have to factor in what those jobs pay since most of them are not what I call career producing. American business is notoriously cheap when it comes to paying workers. I suspect the signs you see are for very low wage jobs that make up the bulk of the reported increases in the BLS #’s we all get.

    unemployment is much higher than is reported….if it were not then we would see real wage pressure as the competition for jobs would drive wages up to reflect it. IT has’nt but we are all told (via the BLS) that jobs are plentiful and so are workers….bullshit.

    Ciao
    MS

  31. SPECTRE of Deflation says:

    Where the Hell was Chris Dodd while all this alchemy was going on for years? Oh that’s right, he was praising Greenspan for his approach of managing the economy. What a friggin’ blowhard!

    Hey Chris you want to help the sheeple? Forgive the tax bill that floreclosed houseowners will have to pay. Otherwise shut the Hell up moron!

  32. Aaron Byrnes says:

    Could someone briefly explain how Europeans measure the umenployment rate and why ours would be 8.5% if we measured in the same way.

  33. michael schumacher says:

    If these guys can’t make money with all the connections they have we are all doomed-lol

    Carlyle Group shores up listed fund holding RMBS

    LONDON (Dow Jones)–Carlyle Capital Corp. Ltd. (CCC.AE) – a highly leveraged fund listed in Amsterdam by U.S. private equity firm Carlyle Group that invests in residential mortgage-backed securities – has been forced to borrow money from its parent to meet margin calls.
    In a statement Tuesday, Carlyle Capital said Carlyle Group has extended a $100 million one-year loan to help it fund itself, and that it has already tapped the loan for $10 million.
    The move underscores how sharp drops in the market value of asset-backed securities have raised financing costs for funds and institutions using these kinds of securities as collateral.
    On Monday, KKR Financial Inc., a real estate affiliate of rival private equity firm Kohlberg Kravis Roberts & Co., said it will raise new shares to help fund itself after “unprecedented disruption” in the residential mortgage and global commercial-paper markets forced it to sell assets at a loss.
    Carlyle Capital floated on Euronext Amsterdam in July with about $880 million, and said it would use borrowed money to leverage its portfolio of asset-backed securities by about 29 times. At June 30, it had exposure to roughly $22.7 billion in investment assets – or 26 times its equity.
    The company’s shares were trading Tuesday at $16, up 20 cents on the day and down 16% from their July 4 listing price of $19.
    Carlyle Capital’s portfolio consists mainly of triple-A-rated residential mortgage-backed securities from U.S. agency issuers Freddie Mac (FRE) and Fannie Mae (FNM). It also invests in debt from U.S. and European companies, and some structured credit vehicles.
    Because mortgage-backed bonds from Freddie Mac and Fannie Mae carry an implicit guarantee against default from the U.S. government, Carlyle Capital was able to borrow against them many times over.
    In its prospectus, it said it would leverage its agency mortgage-backed bonds by up to 37 times, and that it previously had used more than 51 times leverage on these securities to amplify its returns.
    However, the market value of these bonds has been hit over the past few months as investors have reassessed their exposure to any type of credit risk, making it harder to borrow money against them.
    Since the end of May, spreads on agency mortgage bonds to swaps or Treasuries have widened by about 50%, said Jim Vogel, executive vice president of fixed income research for FTN Financial Capital Markets in Memphis.
    Carlyle Capital President and Chief Executive John Stomber in a statement said the fair value of these assets has declined, “due to diminished demand for these securities in the market.”
    He said the loan from Carlyle Group “enhances” its ability to meet margin calls and means it can take advantage of new opportunities.
    According to its prospectus, Carlyle Capital funds the bulk of its assets through repurchase agreements with 10 banks including Bear Stearns Cos. (BSC) and Lehman Brothers (LEH). It also has a $2 billion loan and note facility, which is rated triple-A by Moody’s Investors Service.
    At its listing, the company said it would set aside a liquidity cushion of around 20%, or about $176 million, “to meet reasonably foreseeable margin calls.”
    Carlyle Capital said in the prospectus it had performed “extensive statistical testing, including testing during periods of significant financial market volatility and stress, to determine the level of this liquidity cushion.”
    The company had been scheduled to hold a call with analysts on Wednesday to run through its second-quarter results, which were issued July 27. Tuesday, it said the call is postponed by a week to Aug. 29.
    Company Web site: http://www.thecarlylegroup.com
    -By Margot Patrick, Dow Jones Newswires; +44 20 7842 9451; margot.patrick@dowjones.com
    (END) Dow Jones Newswires
    August 21, 2007 10:29 ET (14:29 GMT)

  34. bsneath says:

    Most of the drop in income happened in 2001 & 2002. Incomes have been rising quite well since then. This nation has faced and survived a stock bubble burst, an interent bubble burst, 9/11, SARs, & ultra high energy costs. The situation today could be much much worse had Greenspan not taken decisive action in lowering interest rates in 2001 & 2002 (along with assist from tax cuts and gov’t defense spending).

    While a mild recession is beneficial in shaking out the economic excesses, depressions result in the permanent loss of economic value-creating institutions.

    We were, without doubt, cruising towards a major recession/depression post 9/11. I hope Bernanke prevails in guiding the economy through the current subprime mess.

    While Greenspan’s actions over time will be looked at favorably (imo), Bush’s tax cuts will not. His tax cuts preserved (and greatly expanded) “old money” wealth but did not in any significant way assist middle and lower income groups who have been increasingly relying on home equity withdrawals to meet daily living expenses.

    I believe this nation will see a significant shift back to class distinction and damaging populism-based actions as a result.

    Evidence of such can be found in the anti-immigration posts in this blog.

  35. Toro says:

    “You have to factor in what those jobs pay since most of them are not what I call career producing. American business is notoriously cheap when it comes to paying workers. I suspect the signs you see are for very low wage jobs that make up the bulk of the reported increases in the BLS #’s we all get.”

    MS

    I think low end employment is a great indicator of local employment trends. When I was a teenager in the early 90s in Canada, it was difficult to get a job at a fast food place. There were simply too many people looking for work. Now, in Calgary, fast food outlets are closed in the middle of the day because there simply aren’t enough bodies. Today, where I live, you can walk into a retail outlet and get hired on the spot. That is changing, however, with the housing bust where I live, and I expect unemployment to start rising. However, the current environment is nowhere near anything like high single digit unemployment.

  36. Mark says:

    “Also, a walk down Main Street in the vast majority of towns and cities suggests that jobs are there for the taking.”

    My experience in doing research at county court houses throughout several states has found the opposite. Most counties are rural with a major city standing on the intersection of two state routes. A drive through the main street of most counties (which is realitically the only area that is close to something we would call urban) shows a lot of vacant stores and restaraunts, and not much else. However, the Walmart is usually also on state route right outside of the main city area and that is where it looks like everyone is working, shopping, and eating out.

  37. Toro says:

    “Could someone briefly explain how Europeans measure the umenployment rate and why ours would be 8.5% if we measured in the same way.”

    Johann Norberg argues that,in fact, European unemployment is higher if you include all the adults who are enrolled in higher education, which many more are in Europe than America. Having said that, and not living in Europe so I don’t really know, I did meet up with a Danish medical products salesman a month ago who said the economy is booming.

  38. Cherry says:

    Incomes have been rising quite well since then.

    Not really. Inflationary forces have made it appear “wages have moved well” but if they had, they would have been argueably signifigently more impressive. The fact is, debt expansion has covered alot of tales and that is falling apart.

  39. michael schumacher says:

    retail jobs are the best dressed poorest people out there.

    This is not 1990′s Canada, with all due respect. We are in an environment where we are told that unemployment is low and that good wage paying jobs are abundant….I respectfully disagree. Wages have gone nowhere relative to all of this gainful employment we are force fed each month. And they always seem to revise the numbers upwards in the preceeding month so that the current data allows the unemployment % to either stay where it is at or actually lower it by 1/10 of a %.

    There are jobs out there should one need to find one….what I am saying is that the picture that the commerce dept. wants you to believe is VASTLY differnet from what the reality is.

    Until we get some wage pressure then I refuse to believe the #’s that come out of the BLS or Burger King Index as I have grown accustomed to calling it. It is statistical engineering..nothing more or less.

    Ciao
    MS

  40. SPECTRE of Deflation says:

    Chris Dodd to speak…blah…blah…blah. He was all smiles for years with the meastro, but he seems to have taken a real turn once the alchemy that had taken place for years suddenly went toxic. Chris, isn’t it your job to oversee the FED and the other market players? This is what I mean about elitism. They can give a rat’s ass concerning anyone but themselves and their cronies.

  41. Cherry says:

    “Until we get some wage pressure then I refuse to believe the #’s that come out of the BLS or Burger King Index as I have grown accustomed to calling it. It is statistical engineering..nothing more or less”

    Yes, yes. But the BLS has these complaints against them in the late 80′s as well……..the opposite way. That is why I don’t use the UE rate much anymore. It is very subjective to modeling. It sounds like they have underestimated people willing to work in this labor market. That doesn’t mean all these people can’t find a 8.00hr job. But they simply don’t feel it is worth taking with rising inflationary prices(thinking 03-06 period) and such. Hence they dig down into trenches living off family members, spouses or friends(lol).

    I was one of those people to early 06. I waited almost 4 freaking years for a decent job after leaving college with a business degree then everybody laughing with me over the long wait and how much better it was in the late 90′s.

    It is no joke. We overproduce low paying service jobs through debt consumption while not producing enough higher paying jobs because the economy hasn’t grown fast enough(the downward revisions to 2004-07 growth isn’t helping the believers). Time for a change.

  42. Marcus Aurelius says:

    “A few weeks ago (on the McLaughlin group, IIRC) Maria Bartiromo said, “A rising tide raises many boats.”

    So what’s the worry?”

    ______________________

    For every tide that rises in one place, a tide recedes equally in another. China is rising. Guess who’s receding.

  43. jake says:

    when did chris dodd become president? how long have i been in a coma?

  44. SPECTRE of Deflation says:

    Chris Dodd is more full of shit than a Christmas Turkey!!!

  45. AD says:

    “For every tide that rises in one place, a tide recedes equally in another. China is rising. Guess who’s receding.”

    I don’t believe this is necessarily true; economics is not a zero sum game, unless we want to assume all progress has ceased and everyone is producing along some kind of efficient frontier or equivalent.

    This is not to say it’s not sometimes the case (it is), but it is far from a universal fact. In this case, I think the US / China dynamic has more to do with the missteps of the US than anything China is doing, to be fair. Perhaps an unpopular view, but often the way to solve a problem is looking in the mirror.

  46. SPECTRE of Deflation says:

    Chris Dodd wants a bailout plain and simple in order to bail out his cronies. What a complete slimeball!!!!!!!!!!!!!!!!!!

  47. Marcus Aurelius says:

    Chris Dodd is more full of shit than a Christmas Turkey!!!

    Posted by: SPECTRE of Deflation | Aug 21, 2007 11:09:33 AM

    ________________

    I am sorry to report that I must decline your gracious invitation to dine with you on Christmas day.

  48. SPECTRE of Deflation says:

    What a lying POS Chris Dodd is. Where were you for all these years blowhard? Who did you get your campaign contributions from Chrissy? Always a kind word for Greenspan when he hauled up the Hill twice a year.

    I’m going to find quotes from Senator Dodd praising Greenspan since he’s now such an advocate for the poor homedebtor.

  49. techy2468 says:

    i disagree with the high unemployment data.

    i dont feel it in the real world (interaction with friends….help wanted signs are plenty in my part of country etc..)

    employment is pretty good right now….so why wages are not increasing. my guess is that upto 2004 we were in a negative job market (please hire me, i will work my butt off, attitude).
    hence we are still not comfortable asking for a raise or changing jobs for more money.
    thats for white collar jobs……but in blue collar and labor jobs…..the story is that of depressed wages due to illegal immigrants…..and housing slowdown.

    but unemployment is still low enough that anyone willing to work (with good references and background) can get a job right now.

    but that may change in the next few months….i am expecting retail to not add a lot of jobs for coming holiday season in anticipation of reduced sales.

    finance/banks are going to lay off as we all know…same with construction/mortgage etc

    IT is doing great right now….but i am expecting them to stop new projects in OCT-NOV. and if economy tanks there will not be much hiring by IT come january.
    (if i am not wrong…IT hiring is max in Jan-FEB when new projects are kicked off)

  50. michael schumacher says:

    and on the the HOD…….just priceless!!

    Check out COF….news just does’nt get much worse from them earlier today and we’re gonna take it higher.

    This cheap money needs to end…and end now…

    fucking Paulsen…….now I feel better.

    Ciao
    MS

  51. SPECTRE of Deflation says:

    Committee: US Senate Committee on Banking, Housing, and Urban Affairs
    Title: The Nomination of Alan Greenspan
    Date: 6/15/04
    Time: 11:00 AM
    Place: 538 Dirksen Senate Office Building
    Agenda:
    The Committee will meet in OPEN SESSION to conduct a hearing on the re-nomination of Alan Greenspan, of New York, to be the Chairman of the Board of Governors of the Federal Reserve System.

    Senator Dodd doesn’t appear to have been there. I find no opening statement by Senator Dodd, nor do I see any questioning of the nominee by said Senator.

  52. Frankie says:

    And the fat-cat republicans operatives complained (and still complain!) that the President does not get recognition for the “strong” economy.

    And pray tell, which economy are they talking about?

    Whichever side on the political spectrum one choose to live in, facts are facts. This is the new Gilded Age.

    A big part of responsibility for that miserable state of affairs lies directly at the feet of Congress and the White House.

    How so?
    By refusing to let ordinary people:

    1) access to the financial instruments needed to manage risks. It is pretty galling to see people with more assets having the RIGHT to invest in hedge funds and other “non-traditional” securities while using the tax code to their advantage. The working stiff has 401k, Roth and IRAs. Very limited choices of investments, OR, limited funds allowed in without Uncle Spam greedy hands grabbing its “fair share”. And don’t get me started on the restrictions within these

    2) Tax bias: The tax system is very good at capturing wages, utterly deficient in capturing income. Read David Cay Johnson for more on that; very instructive. Even more instructive is the flurry of epithets he regularly gets to dare write on the topic. Please focus on WHO hurls the epithets (or on whom’s behalf) and ask yourselves the perennial question “Cui bono?”

    3) Campaign Finance: *evil grin*

    I can see it from my keyboard: eyes rolling, thoughts of “Damn liberal Troll!”. Tsk tsk tsk! This is not rocket science folks. Politicians (and judges too btw) serve those who help them keep their jobs. Who does that best, given the exorbitant cost of an election in this country? Those with money.
    Thus, with what kind of bias one think the laws and regulations will be crafted? A bias favoring those who are eager to help…those with money.

    Will Durant might have been correct when he wrote that economic fairness is an historical rarity and that the ordinary order of things is a tendency to concentrated wealth. If that is the case, and let this situation keep on going like that without doing nothing about it, our children will have every reason to spit on our graves.

    Francois

  53. Northern Observer says:

    Sue,
    Would you rather have had 8 more yrs. of Jimmy Carter or the 8 we had of Ronald Reagan? I suggest that your current standard of living is significantly better today due to “conservative” Reagan than “liberal” Carter.
    Posted by: Steve C | Aug 21, 2007 9:29:35 AM

    Steve C
    You can’t be fond of living in the Past
    If you do, there’s no way you’re gonna last

    Vote for the people who are going to protect the bottom of the American Pyramid. Even if you are a free market purist, it’s in your economic interest to make sure the bottom doesn’t fall out. If this means healthcare for kids and 1993 tax levels, big deal, it’s a small price to pay compared to the alternative.

  54. techy2468 says:

    Francois i could not have said that better….

    but the bright side…..all the sheeple who are busy earning with their 9-5 jobs….and spending by borrowing. who dont care about elections…other than right or left…

    they may all wake up and start thinking about fixing this country……

    we will have to get much worse before we get better…..i am feeling like a commie looking for a revolution from the sleeping sheeps….

  55. SPECTRE of Deflation says:

    HEARING BEFORE THE COMMITTEE ON
    BANKING, HOUSING, ANDURBANAFFAIRS
    UNITED STATES SENATE
    ONE HUNDRED EIGHTH CONGRESS
    FIRST SESSION ON THE RECENT DEVELOPMENTS IN HEDGE FUNDS (AN INVESTMENT
    COMPANY THAT USES HIGH-RISK TECHNIQUES, SUCH AS BORROWING
    MONEY AND SELLING SHORT, IN AN EFFORT TO MAKE EXTRAORDINARY
    CAPITAL GAINS)
    , FOCUSING ON INVESTOR PROTECTION
    IMPLICATIONS, THE DIFFERENCES BETWEEN HEDGE FUNDS AND INVESTMENT
    COMPANIES, REGULATION UNDER FEDERAL SECURITIES
    LAWS, AND CONFLICTS OF INTEREST

    Here I see that Senator Dodd attended, but had no prepared remarks, top of your game Senator, nor do I see any written questions to any of the wintnesses. I can tell he was really worried.

  56. Frankie says:

    techy2468:
    “all the sheeple who are busy earning with their 9-5 jobs….and spending by borrowing. who dont care about elections…other than right or left…”

    Most “sheeple” have not had anyone helping them understand the connections between Washington DC and their daily life. And quite frankly, few people take the time to understand those. But they’re there.

    “.i am feeling like a commie looking for a revolution from the sleeping sheeps….”

    ROFL!! There IS a reason why Communism appeared on the historical landscape. People so easily forget the why.

    Seriously, I sometimes feel the same way. But you are correct: Professor Pain will need to dispense quite a few more lessons to its slow-witted students before they wake up and smell the coffee.

    In the meantime, it’ll get worse for most of us. Or at the very least, we’ll have to work much more and sacrifice more just to make things stay the same. Now, THAT is no fun.

    Francois

  57. me says:

    “Sue,
    Would you rather have had 8 more yrs. of Jimmy Carter or the 8 we had of Ronald Reagan? I suggest that your current standard of living is significantly better today due to “conservative” Reagan than “liberal” Carter.”

    Hey Steve, I see you conveniently left out Bill Clinton and his 230,00 jobs per month, every month, for 8 years.

  58. me says:

    “I don’t believe this is necessarily true; economics is not a zero sum game, ”

    Can you explain, IBM fires 250 in Atlanta and hires 250 in Brazil? IBM fires 20,000 in the US and hires 20,000 in India?

    Or HP, or Intel, or Pfizer, take you pick. It appears to be a minus for the US.

    “Rising powers have the US in their sights
    By Dilip Hiro

    With the collapse of the Soviet Union in 1991, the United States stood tall – militarily invincible, economically unrivaled, diplomatically uncontestable. and the dominating force on information channels worldwide. The next century was to be the true “American century”, with the rest of the world molding itself in the image of the sole superpower.

    Yet with not even a decade of this century behind us, we are already witnessing the rise of a multipolar world in which newpowers are challenging different aspects of US supremacy – Russia and China in the forefront, with regional powers Venezuela and Iran forming the second rank. These emergent powers are primed to erode US hegemony, not confront it, singly or jointly.”"

    http://www.atimes.com/atimes/Middle_East/IH22Ak01.html

  59. PAC says:

    “Can you provide any links regarding the actual US unemployment figure at 6.5% and 8% respectively?”

    Not exactly, but here are two articles that try to account for the differences:

    1) http://tinyurl.com/3y2lqy (not a PDF)

    2) http://tinyurl.com/2t75vc (not a PDF)

    “If we compare employment rates in 2005 of the 25-55 age group, there is virtually no difference; e.g. the employment rates are 86 and 88 per cent for the EU-15 and the US respectively (ignoring differences in how the data are recorded). The US data show a higher employment rate for youth (15-24) and a much higher rate for pre-retirement (55-64) and post retirement (65 and over) groups. What the average employment and unemployment figures hide is the age-specific nature of the ‘European problem’. The picture remains much the same when comparing the US and the EU-25.”

    One other huge factor in reducing the effective UE rate of the US has to do with the 2 million plus of your fellow citizens currently behind bars.

    http://tinyurl.com/yo5ky3 (not a PDF)

    “The United States’ prison total constitutes a rate of 738 per 100,000 of the national population, making it pro rata by far the biggest user of prison in the world.”

    “With a prison population rate of 148 per 100,000, England and Wales lock up more prisoners per head of population than any other country in Western Europe, apart from Luxembourg, and far in excess of countries such as France, Germany, Italy, Belgium and Ireland. The prison total (in England and Wales) has increased by 18 per cent in the last five years.”

    A very rough calculation would indicate that those 2.19 million US prisoners reduce the unemployment rate by a full 1% to 1.5%, relative to Europe.

  60. Camille says:

    Articles like this one are the reason I don’t bother watching the news on TV anymore. They simply never show this sort of information, but it’s real, it’s meaningful, and it should tell us something about how government manages taxes. On the boob-tube, it’s just business as usual.

    Let me guess…the inflation correction was made with numbers from the BLS. The wage profile is worse for the average American than is reflected in the graph shown above. Our macro-economic numbers (unemployment, inflation) simply don’t reflect the economic burden that’s weighing down on families in this country. It’s this disconnect that will ultimately fuck this country financially…when things are getting bad, but the people making the big financial decisions are blind to the economic reality of the bulk of the population (willingly or not), their fixes won’t work.

  61. RobM says:

    I am surprised by Barry’s comment about anyone with 4 brain cells would see 4.5% UE as leading to massive wage inflation. It seems to be a particularly naive comment, especially given both the global market for labor and immigrant labor.

    If you look at a field that has seen global job growth, such as software development, you can see it. Real wages in States were largely stagnant through 2005 and still are today, at some level. However, unemployment in software is very close, if not at, full employment levels. The ability to move software development from high cost locations to lower cost locations has allowed growth in demand for developers without large increases in aggregate real wages for US developers. The movement to lower cost locations does not necessarily mean off-shoring. It also means companies adding development facilities in Phoenix, Boise, Salt Lake, etc instead of expanding existing facilities in Si Valley or Seattle.

    Yes, off-shoring has been one of the reasons for stagnant growth in real wages in software. Or at least stagnant growth in the US. That may very well be changing. The cost advantages of moving to (say) India are rapidly decreasing as software/IT in India is facing wage inflation and retention problems that are comparable, if not worse, to what was seen in Si Valley in the late 90s. This is not just my anecdotal experience, it was also noted in the WSJ (http://online.wsj.com/article/SB118342455118256110.html) in July. Other off-shore locations that would continue to keep real wages down in the US are limited. Central and Eastern Europe do not have enough software engineers to handle a massive shift from India to CEE. Pakistan (IMHO) is too unstable. China is attractive from a cost standpoint but is not there yet in terms of productivity and innovation, or at least in software development compared to India, the US, and CEE.

    Before the attacks begin, I am not discussing whether any of this should or should not happen but rather that it is/has been happening. Most of my observations are anecdotal but come from spending the relevant time period attempting to balance development costs, off-shoring efficiencies, and overall productivity on a daily basis.

    Rob

  62. VJ says:

    Steve,

    Would you rather have had 8 more yrs. of Jimmy Carter or the 8 we had of Ronald Reagan?

    Carter, HANDS DOWN.

    * There were more jobs created, per year, during the Carter administration than during the Reagan administration.

    * Carter left office with about a $70 Billion deficit (about the monthly rate for the current administration). Reagan’s tax cuts for the Rich & Corporate added a couple trillion dollars to the federal debt.

    * The inflation-adjusted wages of the vast overwhelming majority of American workers went backwards by about 20% during the 12 years of Reagan/Poppy Bush (about 80% of that during Reagan’s eight years).

    I suggest that your current standard of living is significantly better today due to ‘conservative’ Reagan than ‘liberal’ Carter.

    You would be wrong.

    Not to mention that, as “me” posted, the real comparison with Reagan’s two terms would be Clinton’s two terms, but it’s quite understandable why some would not want to make such a contrast.
    .

  63. VJ says:

    bsneath,

    We were, without doubt, cruising towards a major recession/depression post 9/11.

    The recession began months prior to the 9/11 attacks.
    .

  64. VJ says:

    techy2468,

    employment is pretty good right now

    Care to explain how that is possible, given that there are fewer workers in the national workforce now than there were in 2000 ?

    You would need far more just to keep up with the population growth, and far more than that to cause falling unemployment.

    The ‘Unemployment Rate’ over the past number of years has only been falling because the national workforce has been shrinking, not because more jobless workers had been returning to work.
    .

  65. donna says:

    “Would you rather have had 8 more yrs. of Jimmy Carter or the 8 we had of Ronald Reagan?”

    I would rather have those in charge who don’t mess around behind the scenes to make sure hostages aren’t released until someone else is elected president. I would rather have people in charge who don’t sell weapons to our enemies in Iran in exchange for funding contras. I would rather have people in charge who don’t lie us into a war for oil in Iraq.

    Haven’t you had enough of being lied to already? Republicans are liars.

    Oh, and when they get in power, the economy sucks, too.

  66. Rick DeMent says:

    I don’t believe this is necessarily true; economics is not a zero sum game…

    Nor is it bandwidth on demand.

  67. techy2468 says:

    i would like to add:

    how much credit does clinton deserves for a great economy….which landed in a bust??

    in the same breath….how unlucky was bush to have got a stinking economy….no way to fix other than depression…he postponed it for 6 years….but he may not be lucky in 2008, just before he quits office….people will not forget his legacy (cuss word even at mention of his name)

    i dont know much about reagan’s or carter’s policies….but the take home message is always same….its not the administration’s policies to help comman man…or to prosper america……its always to help big business.

  68. Tyler says:

    Everyone parses data to make their own pre-conceived point. For example, it is convenient for an anti-Bush person to compare today’s data to 2000, the peak of the last cycle. It makes more sense to compare 2005 to 1994, both of which are 4 years from the economic trough. In this case, 2005 would look much more favorable, on an inflation-adjusted basis. The effect of a business cycle and technology is far more impactful on people’s working lives than any particular administration’s policies, whether it’s Carter, Reagan, Clinton or Bush.

  69. chad says:

    i can’t comment on barry’s UE numbers, or inflation numbers because i dont know exactly how he arrives at them, but still – using gov data we can bend the data in other ways too.

    ok we have a 0.85% drop over the 5 years in median household incomes, yet the median household declined from 2.62 to 2.57 – a 2% drop. if you spread the same people with the same income over more households, you get lower “household” income.

  70. AD says:

    Me:

    “I don’t believe this is necessarily true; economics is not a zero sum game, ” (mine)

    “Can you explain, IBM fires 250 in Atlanta and hires 250 in Brazil? IBM fires 20,000 in the US and hires 20,000 in India?

    Or HP, or Intel, or Pfizer, take you pick. It appears to be a minus for the US.” (yours)

    It’s interesting you didn’t quote the rest of my post, given that you are objecting to the first part which, ironically, was conditional in the first place. I chose my words carefully, so to throw them all in:

    “I don’t believe this is necessarily true; economics is not a zero sum game…”

    I am saying here that making a blanket statement that, when someone gains, someone else must lose. I did not say that wasn’t the case here; I am saying I object to the blanket statement. All swans are not white. To wit…

    “This is not to say it’s not sometimes the case (it is), but it is far from a universal fact. In this case, I think the US / China dynamic has more to do with the missteps of the US than anything China is doing, to be fair. Perhaps an unpopular view, but often the way to solve a problem is looking in the mirror.”

    Here I am stating that I think the US has been hurt in this particular exchange and, more so, that many of the wounds are self-inflicted. Specifically, the very point you are accusing me of not seeing I actually made in the second paragraph of my post. Please, in the future, do not cherry pick out-of-context portions of my comments and ignore the rest. I am not a member of the 10 second sound bite crowd. Most of what I say is not going to have strong meaning outside of the context in which it was said, or, worse, the wrong meaning. I do believe the current situation is bad for the US; more so, I don’t believe we are really debating any useful alternatives as is.

    Barry is pointing out a good trend above, which is that more of the population is not working at all. This trend will not abate any time soon if we also consider retirees, indeed, it will balloon for a while before retracting. This could be an interesting ride, to say the least.

  71. Old Ari says:

    Just don’t confuse the approach of a Tsunami, with a tide.

  72. Bourgeois Liberal says:

    “Would you rather have had 8 more yrs. of Jimmy Carter”

    Just wanted to, um, point out that Carter was only President for four years, not eight.

    In 2008, Republicans will have held the White House for 28 of the previous 40 years.

    Ahem.

  73. bsneath says:

    “The recession began months prior to the 9/11 attacks.”

    VJ, Please let me clarify

    Yes, we had a mild recession in place prior to 9/11.

    My point is that this mild recession would have turned into a major recession or a full fledged depression, with far more catastrophic consequences to the long-term health of the economy, had Greenspan not taken decisive steps to quickly lower interest rates.

    I suspect Greenspan did not lower rates on a whim. It was after hearing from leaders in finance and industry that the wheels had fallen off and swift action was needed.

    Did the Federal Reserve manage interest rates perfectly? Of course not. But I bet they did a lot better than you or I could have. In hindsight rates may have stayed too low for too long.

    On the other hand, maybe lower rates were not the primary culprit behind the current subprime mess.

    Maybe, just maybe, the primary cause was 1) the desire to liberalize mortgage lending rules so that more poor folks would be eligible, coupled with 2) a greedy and opportunistic investment banking community that found a new angle for making money.

    What I do not understand though, and maybe someone can shed light on this is; Why were the rating agencies asleep at the switch?

    BR, RN, CR and many other bloggers have been warning us of today’s mess for over 18 months. And are there not about 100 or so blogs dedicated just to the housing bubble impending crisis?

    Weren’t the rating agencies at least a little bit curious about the implications on their “historical trend-based” models?

    My best guess is that Moody’s, S&P & Fitch IT Depts. must have installed firewalls to prevent thier analysts from accessing blog sites !??!

    Two predictions on the fallout:

    1) New York will no longer be the premier global center of finance.

    2) New Asian and European-based rating agencies will be established.

    I suspect a lot of investors in Europe and Asia and really pissed right about now and they will be placing the blame squarely on the shoulders of the USA-based investment banks and rating agencies.

    It is going to be one helluva black eye.

  74. me says:

    I am one of the losers. My IBM sent my job to India in 2001. The highest paying job offer I received was less than 1/2 my previous pay.

    I am one of those not in the labor force. Yes I look for a job every week, but I am not counted.

    You may put as many paragraphs around it however you like but the fact remains there are less people working in IT today than in 2000.

    I am sick and tired of hearing how 90,000 jobs is a Goldilocks economy yet under Clinton it was 3 times the number.

    Some of you may not consider it a zero-sum game, but the fact is there are no jobs being created in this country. The last 6 years under Bush one-half of the jobs are in real estate with many of the balance in waitresses and bartenders.

    So write as many paragraphs as you feel necessary but BR post bears out that private sector economy sucks, for most of us it is a zero sum game and for 2/3 of us we believe we are in a recession.

    Oh, and I didn[t blame China.

  75. Pat Gorup says:

    Days, then weeks, then months and years go by with millions of Americans “blogging” onto sites like this one complaining about what is wrong with our country and its elected officials. Time is running out and soon it will be too late for us to right the ship regardless of our resolve. The power to make it happen is right here at our fingertips and I’m not referring to sending anyone in Washington an email as they have made it abundantly clear that they could care less. Think about it…

  76. At what terminal is this “flight to quality” , when does it depart, what country is it landing in, and do they serve peanut-free peanuts in coach ?

  77. Pat Gorup says:

    It has now been an hour since I posted my last entry and there has been no response. This is reflective of what has happened to America, we are all talk and no action. And this is what our Government counts on. The issues in this blog discussing FED and unemployment rates are symptoms of a much larger problem. But no one discusses that cure. In the grand scheme of things all of this talk is trivial when compared to the real “big picture”. And in support of that position, I’m leaving you with some bedtime reading: http://www.teamliberty.net/id275.html Good night…

  78. Winston Munn says:

    I’m still waiting for my part of the trickle from the trickle down theory; however, my plumber has just informed me that only one thing he knows of goes downhill.

    Ah, the sweet smell of Reagenomics!

  79. Bourgeois Liberal says:

    It has now been an hour since I posted my last entry and there has been no response. This is reflective of what has happened to America, we are all talk and no action

    Actually, we’re all planning to storm the Winter Palace about an hour from now.
    Better hurry or you’ll be late!

  80. VJ says:

    techy2468,

    how much credit does clinton deserves for a great economy….

    So who would deserve credit for reversing failed RightWing Reaganomics, turning massive deficits into surpluses, and lifting millions of Americans out of Poverty ?

    which landed in a bust??

    The national economy “landed in a bust” during Clinton’s term ?

    DO tell.

    how unlucky was bush to have got a stinking economy

    What does the implementation of failed RightWing policies have to do with “luck” ???

    i dont know much about reagan’s or carter’s policies.

    Yet you had no compunction about (inaccurately) claiming the former was superior to the latter.
    .

  81. VJ says:

    Tyler,

    it is convenient for an anti-Bush person to compare today’s data to 2000, the peak of the last cycle. It makes more sense to compare 2005 to 1994, both of which are 4 years from the economic trough.

    That’s gibberish.

    The Clinton administration’s policies were enacted only a year earlier in 1993, whereas the failed RightWing policies of this administration have been in effect since 2001.

    Not to mention that the Clinton administration’s superior economic performance was certainly not limited to just the year 2000, as it was not a mere “cycle“.
    .

  82. VJ says:

    bsneath,

    Yes, we had a mild recession in place prior to 9/11.

    What was “mild” about it ?

    What I do not understand though, and maybe someone can shed light on this is; Why were the rating agencies asleep at the switch?

    They weren’t sleeping. They were whoring. They rated sub-prime paper as AAA in exchange for CA$H.
    .

  83. Tamas says:

    There are different ways to interpret the same data. Looking at after tax incomes for the median household the chart looks rather differeent

    http://engram-backtalk.blogspot.com/2007/08/misleading-income-statistics-courtesy.html

    Have a look at the after-tax incomes of the top 20% !

  84. ricardo says:

    Interesting juxtaposition with the previous post.

  85. bsneath says:

    Tamas – good point – you beat me to the draw. i came back to this site to make the same point.

    http://bp1.blogger.com/_2-oDfgGpQKg/Rss70j_qTPI/AAAAAAAAAqs/airZL7govQk/s1600/Average%2Bafter-tax%2Bhousehold%2Bincome.jpg

  86. Tyler says:

    VJ – I’m not arguing which policies are superior or not. I am arguing that the effeect of those policies pale in comparison to the effect of the business cycle. Government policy tends to be backward-looking and reactive, no matter who is in charge. The private sector drives economic growth. The late 1990s saw the benefit of a technology spending boom with unknown future profitability, which led to a speculative bubble, but also employment and wage gains. Now we are riding the productivity-enhancing benefits of those investments, which cyclically accrue to capital in the early part of the cycle and labor in the later part of the cycle. The same thing happened in the early 1990s with all the “downsizing” and corporate restructurings that occured prior to the boom in the late 1990s.

    I’m not sure you care though, since your political bias obviously colors your analysis.

  87. There has been no income growth since 2000, and our unemployment numbers are all lies

    There has been no income growth since 2000, and our unemployment numbers are all lies