Where is the economic resurgence for middle class workers

Discussion in 'Business & Economics' started by cosmictraveler, Jan 22, 2015.

  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Thinking there is one rate of inflation that applies to all customers is your fundamental error. Some can only eat (about 1 in every 6 Amerians now) as they get "free food." - The cost of many items essential to health, like milk for baby, etc. has been increasing faster than the "head line" inflation. Old people and those with children going to college have personal inflation rates much higher than BLS publishes. Don't you remember the hard working wife that caught GWB in a crowd and explained that now she could never buy even cheapest cuts of beef but was reduced to "franks and beans" and them only once or twice per week?

    People are not choosing to become renters at current rapid rate because they want a land-lord to complain to. - They no longer can afford to be home owners. Etc. Times are growing economically tougher for many, if not most. There will come a day, when they say: "I'm mad as hell and I'm not going to take it any more." What happens then, I don't know, but it will not be nice, even though it will at least triple then number of police the rich will hire to try to control the riots. US will likely regret its easy hand gun policy (NRA promoted) as there is more than one hand gun for each adult male, many of whom will be hungry and robbing food stores, etc.

    Part of why the US has by far the world's highest per capital prison population is the local neighborhood supports the pre-college schools. The poor of that neighborhood can not hire even average skill teachers who can earn more in school of a richer neighborhood with much better working conditions (less likely to be assaulted by student, etc.) I recently read that there are now 5 million job openings, but too few are qualified to fill them.
     
    Last edited by a moderator: Feb 12, 2015
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  3. joepistole Deacon Blues Valued Senior Member

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    Are you denying wealth the great disparities in income and wealth? Because those really do exist.
     
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  5. cosmictraveler Be kind to yourself always. Valued Senior Member

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    It took oil prices to lower down to 45.00 US a barrel over 8 months but now oil prices have risen to over 50.00 within a week which is a 10 percent increase but hey there's no inflation because prices , the government says, have increased by about one percent last year. Seems like even with the abundance of oil Americans are now seeing the greed that oil companies have.

    https://www.google.com/url?sa=t&rct...uYCYCg&usg=AFQjCNG2hfTuWiA_2fhuqzA-GvUMOH-L0w
     
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  7. billvon Valued Senior Member

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    I don't think there is one inflation rate that applies to all people. But at the same time, saying "there's no way to know what the inflation rate is, so everyone is losing money!" is not supportable as an argument. You can certainly pick a demographic and say "for an average person in this demographic, the inflation rate is about X%."

    I haven't seen any really authoritative study on this. One, from fivethirtyeight, indicated that inflation was highest for the rich and the poor and lowest for the middle class.

    But again you have to define what your average is. If you are averaging the prices of milk over all milk sold, and including 100% organic no-rBST omega-3 milk, then that is not representative of milk prices for a poor family just trying to provide milk for a baby. If you are averaging "essentials" and including cigarettes (which is one of the fastest-growing expenses that many poor report) then you're not really talking about essentials.

    OK. So how fast have the cheapest cuts of meat risen in price?

    In college I couldn't afford to eat anything other than vending machine food for a whole summer. Does that mean that, during that summer, inflation was really high? Or was that just due to my (poor) financial situation? That's the danger of relying on anecdotes rather than data.

    Agreed, although that is something of a separate problem.
     
  8. iceaura Valued Senior Member

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    30,994
    One of the benefits of losing the equity in your house to bubble collapse is that the price of housing in your demographic class has deflated. If that is a major part of your cost of living, overall inflation rates for your demographic class are much lower than they would be otherwise. If you are an individual houseowner, rather than an arithmetical average of household incomes, that may not be much comfort.

    Some years ago when the median hourly wage for a 40hr job was 11.75 per hour (I noticed this because one of my jobs paid exactly that) I had a personal limit of $1 @ lb for meat - and no real problem finding something good for Sunday dinner. So ordinary hamburger could be found routinely for 10% of the median hourly wage minus payroll deductions.

    Now the median hourly wage is something like 17.50, and that is artificially high because the layoff and rehiring patterns have knocked much of the low end out of the 40 hr category. So hamburger that costs more than about 1.50 @ lb has risen in price, without consideration of individual circumstances (such as recently hired - the median hourly wage of the recently hired, all jobs, was less than $12 last I looked).

    Such quick calculations may indicate, if the impressions of whoever grocery shops at your house are not reliable, what has happened to food prices in the US, compared with hourly wages in the US, over the past working generation: http://money.cnn.com/2014/04/14/news/economy/beef-prices/index.html

    They are up. And not only the speed of the rise counts - the absolute amount does as well, because it crosses tipping points beyond which adjustments (buying cheaper cuts, buying bulk on sale and freezing, etc) stop working and actual loss of the item in the diet happens. Furthermore, other aspects of life are affected in ways various and cumulative; when I was poor and living on rice and beans mostly, the thrift allowed me to save a few dollars - which meant I didn't lose my job when the starter went out on my car, didn't lose my front teeth when they got cracked in a work accident, etc. Now, if replaced into that situation, I would be unable to save money in any significant amount - so I would lose my job, be interviewing for the next one with a missing front tooth, etc. It's a numbers game, and attrition gets the majority - differential inflation in the necessities amplifies the role of luck, and reduces the payoff to work and investment, in the bottom 2/3 of the economy.

    And differential inflation in necessities is an all but inevitable, arithmetical consequence of growing income inequality, as the share of overall productivity - the total of which sets the price of the necessities - skimmed off by the return to capital rises.

    Growing income inequality eventually drops an industrial economy to a lower equilibrium, and that is one of the mechanisms.
     
    Last edited: Feb 17, 2015
  9. joepistole Deacon Blues Valued Senior Member

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    Is there a point buried in there somewhere? Inflation is price change over a defined period of time. They don't measure inflation weekly. It's measured monthly and reported as an annualized rate. The inflation rate is an economic metric. It isn't drama for the partisan and the devotees of right wing entertainment.
     
  10. joepistole Deacon Blues Valued Senior Member

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    22,910
    That is why the BLS provides several different CPI calculations. The most frequently cited CPI number is CPI-Urban. It measures CPI for your average urban resident, which is most of the country (81%).

    We don't each get our own inflation measure and from a macroeconomic perspective, it isn't important. Policy makers are not concerned with Joepistole's individual inflation rate nor should they be. But they are concerned with the overall inflation rate. But that doesn't mean they don't provide more granular CPI metrics.

    Further CPI isn't the only measure of inflation. There is another inflation indicator called the Produce Price Index. It measures price changes experienced by producers of goods and services. So your notion that there is just on measure of inflation is incorrect.

    http://www.investopedia.com/university/inflation/inflation2.asp
     
  11. cosmictraveler Be kind to yourself always. Valued Senior Member

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    I just was pointing out that the prices of oil went up substantially for no reasons at all just as I said they would. I do remember I said in January they would go up so I was only off by a few days. Watch it , it is rising not declining.

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  12. iceaura Valued Senior Member

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    30,994
    You can probably remember when you had a Federal administration that tried to free the US economy from the manipulations and necessities of Big Oil. Unfortunately, that President failed to get the support of the American public. Too bad.

    I'll bet the people who decided to throw Jimmy Carter out of office and replace him with a whole series of Big Oil friendlies

    - culminating in having their entire tax system and foreign policy (the one we have now, including the wars we are fighting) set up by a President, Vice President, and Secretary of State who were Big Oil executives and in constant consultation with the heads of the Big Oil companies -

    are embarrassed now, and have changed their political stances, and apologized for such miserably incompetent and foolish political decisionmaking by adult citizens.
     
  13. joepistole Deacon Blues Valued Senior Member

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    Well actually there was a reason for the rebound in oil prices. In fact it is fairly typical to see a rebound in prices of virtually anything after a steep sell off as we saw in oil prices. Prices rarely go straight down or straight up. A few days or a few weeks does not a trend make.
     
  14. Doug Coulter Registered Member

    Messages:
    34
    Prices always overshoot at either end of a trend, it's human psychology, and yes, I traded for a living for some years. Follow the money! At any rate, geopolitical forces are in play just now, and some players would really like to see the high cost, highly leveraged players out of business long enough for them to have to close rigs, which have a rather high cost for a restart and take a long time to start again. A few of the players have large reserved bucks (so they can continue to pay their populations to not-revolt), and can afford to wait out the new frackers and tar sands guys till their debts come due and they fail.

    Most of the new plays haven't turned the first dime of profit yet, but are continuing to pump from existing rigs/mines as fast as they can (even at a loss), keeping the prices down for now, since it's better to lose 100 million a day than 500 million...but it's an extend-pretend game till they have to pay the piper; eg, redeem their bond issues, no one is going to want to let them roll them over with new issues at any reasonable interest rate.

    The excitement about the eventual re-rise in prices for hydrocarbons is palpable on the street. But they're wrong about when. It won't be next week, or next month, I believe, and a lot of them will get burned. Everything that can store oil is almost full, and we'll see a big dip in price again when it's all completely full. People are even renting full tankers, paying them to go around in circles in the ocean, hoping the price will rise before the rent costs get too high. I think this is merely what we call a "dead cat bounce" on the street.

    Always follow the money. I'd say there's more than meets the eye, but in this case it's actually pretty easy to see what's going on, and no one is even effectively hiding what they are doing as far as I can tell. No tinfoil hat required.
    Qatar and the Saudis want to stop flaring off NatGas and sell it to Europe instead, which requires a pipeline through Syria. Boom, unrest and war. That Qatar put out $3 billion in bucks to arm some people to make trouble is a matter of public record (people saw it go by on SWIFT as it happened. They're not real subtle, like we are, accidentally dropping weapons out of a C131 or something so it's hard to trace).

    And oh, the Russians who are currently selling most energy to Europe need a pipe through Ukraine/Crimea to do that (Victoria Nuland and her "fsck the EU" comment), and of course don't want to lose that money, as they are even more dependent on it. All that killing is over plain old bucks - and even the people doing most of it or getting killed don't know it. Disgusting, but in this case, fairly obvious.
     

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