Courtesy of Mish.
Inquiring minds are wondering “Income-Wise, What Percentage of People are Worse Off Now Than in 2000?“
I asked Doug Short at Advisor Perspectives that seemingly simple question after posting his chart of Real Disposable Income in Illusion of Prosperity: Deflating the American Dream; No Recovery in “Real” Income.
click on any chart for sharper image
My comment from the above link: “Real median incomes are down 7.3% since 2000. That means at least half of the population is worse off now than 13 years ago!“
Notes Regarding Disposable Income
Not only is half the population worse off, it is worse off by at least 7.3% in “real” inflation-adjusted term, using the CPI as the deflator.
Unfortunately, the true situation is far gloomier.
Here’s the primary reason: Disposable Personal Income (DPI) includes income from all sources (including transfer payments – Social Security, Medicare, private pensions, etc.) less all taxes on income: Federal (including FICA), State and (if applicable) local. Other taxes (e.g., property or sales taxes) are not subtracted from income in the DPI formula.
It’s also safe to assume that substantially more than half the population has no disposable income from stocks or bonds. Meanwhile, interest on CDs and other bank accounts is next to zero (not that the bottom half holds substantial CD assets either).
Ignoring sales taxes and property taxes, I asked Doug Short “The chart of median real income since 2000 shows 50% of the people are negative by 7% or so. Where is the zero-Line? In other words, since the year 2000, what percentage of people are actually ahead in terms of real income?“
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