The economy is "booming"? Maybe not.

There are a number of ways to evaluate the status of the economy. Many of these relate to factors that are germane primarily to the wealthy, e.g. stock prices, and others are large, overall factors that regular people don’t relate to, e.g. GDP, trade balance, etc. And maybe by those vague and distant measures, the economy is “booming,” which is what we keep hearing. However, according to the federal reserve board, 40% of Americans could not come up with $400 for an emergency expense. $400 represents a fairly small emergency given the prices of, say, car repairs, home repairs, medical treatment, and the like. And since such emergencies are fairly common across a wide array of people, this seems to suggest that individual people are not only not experiencing “booming” times, they are precariously balanced on the financial edge between hope and doom.
Given the fact that so many people are without sufficient financial support, the status of the economy for individual people seems to be crappy, not booming. The economy, while a lovely expression for a huge system of interlocking sub-systems, is also the economic reality of individually lived lives. It’s not booming.

How does that compare historically?

While I don’t disagree with your analysis, I think you may be conflating objective aggregate measures of economic performance with economic disparities, which are both valid but entirely different things. It is possible, for instance, for the overall economy to be booming while an increasing number of people fall into financial distress – indeed, I think this is increasingly the story of American society in the late 20th and the 21st century. And the performance of the stock market is generally a good indicator of overall economic health, pretty much by definition, actually, since it reflects the consensus of expectations. This is true even if only a minority of the population are direct participants. Not that I credit the Orange Wanker with any of it, and in any case, the Dow and S&P both recently dropped on recession fears.

In re recession fears: Search “inverted yield curve” and you’ll get a pageful of scary articles from major outlets.

NPR has:

The bond market experienced an inversion between short and long term interest rates. Normally, returns are longer on longer bonds as holding IOUs with longer payout periods is more of a risk than those that are repaid in the short-term. The market is saying that shorter-term bonds are becoming riskier. This alone might indicate a recession is coming – or it may be a false alarm. Nobody knows yet.

It’s indeed alarming that so many households don’t even have $400 in emergency savings - even more worrisome to think about how whatever they do have in the bank would shrink if the price of gas goes up like it did in the summer of 2008. And there are plenty of entities who want to see higher energy prices.

Sherrerd, you ninja, you.

It’s actually lower than it was in 2013 (50%). So comparatively, things are better, I suppose. But in absolute terms, the 40% number tells us that a LOT of people are not living like we are in a booming economy.

I was discussing it yesterday on Twitter, so I was primed to slide into this thread.

But seriously: I’m sure none of us want to be rooting for the economy to tank, but on the other hand, maybe we’re better off with a failing economy than with thermonuclear annihilation. (Or in other words, the faster we can get a majority of voters to demand that their Senators vote to convict the impeached Trump, the faster we can get started on fixing the economy, free of the fear that Deranged Donnie will end civilization.)

I was thinking of the last 200 years or so, not just the past few years. And in relative terms, of course,

It’s the catch 22 of a consumption economy. A “booming” economy requires people to be spending their money, not sitting on it.

I know quite a few folks in that 40% earn very decent, middle-class salaries. Their problem isn’t poverty, but that they do not know how to manage their money.

Could it be that the cost of housing and necessities are going up up up, and wages have been stagnant since the seventies? It couldn’t be that, could it?

It could be, but ultimately it’s just that those people are bad at money; that’s why they have none. It has nothing to do with external forces that they cannot control or influence: it’s all because of personal deficiencies that they have problems, right Coastal Maineiac?

Here’s an inflation-adjusted chart of household income (not the same as salaries, I know, but it’s what I could find) for the past 51 years, ending at 2018. The second chart has households divided into quintiles by income, as well as showing a line for the top 5%. The middle quintile has gone up 35% (adjusted for inflation) since 1967. That’s an average of about 0.7% over inflation per year. The other quintiles have done worse or better, but that is the middle one. That’s the 2nd chart.

The next chart down shows the same information by age group. For ages 34 and up, 2018 was their best year since 1967; for ages 19-33, however, their best years were 1999 and 2000 (the tech boom, if that’s not coincidental) and since then they have lost from 2.2% to over 9%.

The top 5% in the second chart, and ages 65+ in the third chart, have had far the best percentage growth, which isn’t surprising.

In the case of the people I was thinking of when I wrote that, it is absolutely a money management issue. They make close to $80,000 per year (or so they claim, anyway), but live paycheck to paycheck, and would be unable to pay an extra, unanticipated bill unless it happened to come due on payday. And before anyone talks about costs of living, this is rural Maine, not Silicon Valley. A household income of $80,000 here is very well off.

I’m sure for many, it is due to circumstances beyond their control, and I don’t mean to discount that. I’m also sure, after doing some quick online research, that the people I mentioned are not an isolated case, but are indicative of a wider problem in American society. Almost 60% of Americans do not follow a budget (cite). Poor financial decision-making is a very real problem in this country, and it is all fueled by the consumption based economy we have. Everywhere you go, the message is spend, spend, spend, and spend some more. And when you run out of money, be sure and apply for our store’s credit card so you can spend even more. Actually saving up to buy something seems to be a rarity anymore. People seem to buy everything on credit these days, and only about 35% of credit card users actually pay the balance off at the end of the month (cite).

It’s a personal soap box of mine, because I’ve known so many people who—even with incomes well above average—have run themselves to financial ruin by trying to keep up with the consumerist society. IMO, a big part of the problem is our society does not teach the value of saving or the perils of debt. If I had not had both instilled in me at a young age, I’d probably be in the same circumstances as the co-workers I mentioned above.

its been almost 12 years since the last recession so we’re about due for one …if our fearless leader gets reelected id like it to happen about 9 months in just to see how he react …

The added benefit is that maybe more people would come out of it with a better understanding of how republican policies in general screw the average person, irrespective of Trump, though I don’t disagree with you there.

I doubt these types of adverse experiences really change people’s minds or educate people unless they’re so severe that they impact people on a deep and emotional level - like the financial crisis or more so, the great depression. My hypothesis is that it’s only when people fear for their economic survival, watching neighbors around them disappear from their homes as they go into foreclosure or watching people in neighboring cubicles disappear as the pink slips roll out - only then do people start to ‘get it’.

Indeed we’re due, and what worries me is how our current growth is being fueled.

With interest rates being still very, very low during a time of strong economic activity, there’s a tendency for companies of all stripe to find novel ways to make money, which has often involved high risk investing. The high risk investing in the mid-2000s was in the form of repackaged mortgage debt; the high risk investing now involves collateralized debt obligations, which can involve different types of debt. But we’re still talking about the same kind of set-up: investors are investing in debt markets not having any real idea about the risk. That’s what worries me even more than a recession, because a major blow-up there could turn a recession into something much worse.

I don’t disagree that our society is poorly educated when it comes to managing personal household finances. But there’s a difference between a household income of $80,000 and an individual income of $80,000 per year. Not to mention, a lot of earners are paying back loans for their degrees and paying high health insurance premiums. There’s also the understanding that if someone gets injured or becomes ill, it’s a financial game-changer. Even people with high income and relatively health savings are not necessarily financially secure.

The yield curve inversion usually means we have 2-6 quarters before shit/fan.

I don’t think the emergency savings number tells us much, given how dependent that is on personal behavior.

It’s hard for me to accept the fact that the $400 dollar stat is simply a reflection of bad money management strategies on the part of so many people. I do concede that we are inculcated with the ideas that spending and having “stuff” should be our goal. Hell, we’re reading all these stories lately about college admissions and the underlying ethic in all that is that college is not for educating a person; it’s for preparing them to get a job with a higher income. That’s the goal. Income. Money. That impulse for accumulating more and more is everywhere. But it’s simply stupid to leave yourself with no financial cushion at all. On the other hand, as many posts allude to, we have elected some pretty incompetent and corrupt people recently. Maybe we actually are stupider than I thought or hoped.