I swear I had Econ in college, but I don’t remember anyone saying this so succinctly. It’s from a weird place too, but this quote hits home. It’s like population decline, but for money.
It was a truly baffling thing for an American president to say. And University of Michigan economist Justin Wolfers explained on MSNBC that things could get very bad as Trump’s scheme becomes reality. Wolfers ntoed that the idea of how much you can afford to buy with your income is called “real income.” And if real income falls, that’s called a recession. Wolfers went on to explain that if things decline as badly as Trump’s example, where someone who bought 30 dolls could only afford to buy two dolls, that’s called a depression.
Video from MSNBC: https://www.youtube.com/watch?v=sAZxLm6M_V0
“Instead of 30 dolls they’ll have 2. Instead of 2 jobs they’ll have 3. Instead of eating 7 days a week they’ll eat 5. Instead of having roommates in their 20s they’ll have them through their 40s. Instead of inheriting their parents’ house they’ll inherit their parents’ debt.”
But I already have depression ?
You get to enjoy two kinds at once. Don’t let them breed into more depression offshoots.
Yay the double D !
Unless it’s a Democrat in the White House. Then it’s totally fine! What do you mean you can’t afford food?!! The economy has never been better!!
/s
Democrat in office: “Who cares you can’t buy food and pay rent? Many people live paycheck to paycheck! The stocks are up, who cares what the plebs have?”
Republicans in office: “I don’t give two shits about you, the stock must go up.”
Almost like they have the same goals of “line must go up”. It is baffling how people can ignore various national issues because of the economic system the government props up when their favorite group is in office.
Propaganda and wedge issues are super effective in a population of adults that peaked in the 8th grade.
Oh I know, decades of propaganda and teaching people that ignorance is strength has worked wonders for the fascists.
Found this one: https://www.epi.org/publication/charting-wage-stagnation/
I think I have seen similar or parts of that type of data before, but not all of it in one place
This is a good analysis, but it’s slightly different from OP’s statement.
Median real wages actually are up since 1979. It became something of a meme post-2008 to say that median wages have been flat since that time. That was true for a few years following the Great Recession, but they caught up and went quite a bit higher. It’s possible the numbers will cycle around to that again, but it’s not where we’re at right now.
What the graphs in the article are arguing is that wages over that time are much lower than they should be given productivity increases.
Let’s say you work for one hour making a widget, and you get $1 for that time. Your boss sells the widget for $5 and pockets the difference. Now there’s an increase in productivity, and you can make two widgets in the same hour. You still get paid $1 for that hour, but your boss is selling those two widgets for $10 total now. You’re not getting a raise just because of that productivity increase.
You might get a raise due to inflation. With 4% inflation, you get to make $1.04/hour, but your boss is now selling those widgets for $5.20 each. This is more or less the story since 1979.
That difference between productivity and real wages is what’s charted out above. It tells you exactly who the real moochers are in society.
This all tracks very neatly with a decline in union membership.
That’s great info, thanks. I’ll pursue that angle next time.
oh shit…
I have had this dream for a while now that the major media networks displayed real income changes next to the Dow and other stock tickers. Just so normal people are reminded of how their money is doing compared to rich people’s money.
Do you have the formula for that? I might be up for doing that here on Lemmy locally once a month or so.
There is no formula. You’re mainly interested in wages, and those are negotiated.
holy shit! Both of you! PLEASE DO THIS! That’d be AMAZING!
I’m not much a math person or econ person. Do you have any ideas on what that would like like? The Econ professor in the video said the real income is aka GDP. He was loosely speaking though, so I don’t know if that’s a one to one. I guess I could put something up and people will tell me how it’s wrong? I don’t mind that.
lol that’s the BEST way to get the RIGHT answer on the internet. Put something up, say it’s X and someone will tell you you’re wrong and it’s Y. Easier than asking how to do X. :-D
Whelp, here you go. It only does a quarterly GDP or “real income” analysis.
I, too, am far from being either of those things, but it sounds like you could just track purchasing power to get a rough idea. Perhaps I’m misunderstanding it, but it seems to me that, if inflation or other factors have eaten into your purchasing power and you haven’t gotten a corresponding raise to offset it, you can reasonably conclude that the economy is getting worse for you in your personal circumstances.
Although I think it’s great to track that too, I don’t think that includes wage earnings and such. Like for the Big Mac Index by the Economist listed. the price of a Big Mac doesn’t say much about the income levels of who is buying it. It seems to be more focused on the cost of production instead of the person buying it. Minimum wage is still so low across the country and hasn’t been raised for so long, that the price could be kept low. Again, not an economist, but that’s my insecure take.
There is a variable called Gross National Income (GNI) corrected for inflation which is likely the variable Wolfers refers to. You can report it, but it will not be very different from GDP corrected for inflation which the media writes about all the time. Essentially production =income except for some small nuances.
GDI is supposed to be basically equivalent to GDP, so it’s not a better number to use. Sometimes the numbers diverge (see here for a discussion of this issue in 2022) because they use different methodologies to determine the number, but that’s usually a sign that some kind of measurement is off, not that there’s some kind of actual divergence in the true numbers of what they purport to measure.
And we moved away from Gross National Product/Income to Gross Domestic Product/Income because it was a better look at the domestic economy. We care more about the production/income within national borders rather than the production/income of a particular nation’s residents.
GNI still gives a slightly better measure of income which is what OP was asking for. For instance if an American gets dividend income from a foreign company that’s part of GNI but not GDP, and vice versa if a US company pays dividends to a foreign shareholder. But yeah in practice all of this will be negligible.
Did you see my first crack at it? I would love your input. I think the “Real GDP” might be not adjusted for inflation? I can’t tell.
Real GDP is adjusted for inflation. That’s what the term Real means. Nominal GDP is not adjusted. I always think that reporting should primarily focus on real GNI per capita, which is slightly more informative than real GDP, but in practice I think the differences won’t be shocking.
Thanks for taking the time to respond. IMO, economics has some easy concepts that are hidden behind terms. Every industry has it, but all this info is kind of hidden anyway for a noob like me.
Is every 101 college class really just “here’s what all the terms mean in this field”? I suspect the answer is yes.
Mine wasn’t, it was a university known for being one of the best for economics and had huge classes. I did not do well in that class. It was an advanced 101 class.
For decades, ‘middle class’ in America was one income supporting a family of four. In those days, $1 million was considered a vast fortune. Then Reagan got elected. By 1993, when Bush Sr. left office, ‘middle class’ was two incomes to run the home, and $1 million was what a rich guy spent on a party.
They blame it on women wanting careers and a life outside homemaking.
I’ve heard that one dozens and dozens of times. They claim that “Women’s Lib” lowered wages. Ask them to show one time that actual wages were cut and they can’t. Doesn’t stop them from repeating it.
The angle is supply and demand (of labor).
It’s a damn good thing a bunch of boomers died in Vietnam or it probably would’ve been worse, earlier.
Can’t tell if troll or stupid.
Dude… that war had a draft, that is in poor taste.
I wouldn’t be surprised in the least to learn that the draft and the war was a capitalist plot to thin the numbers of boomers.
We didn’t have enough schools or colleges for them coming up. Sure as hell wasn’t going to be enough work around for them to all find gainful employment.
How many US boomers died in Vietnam? How does that compare to a percentage of the total US boomer population at the time?
TIL every year with a rent increase is a recession. Whenever housing prices increase faster than income that’s a recession. When college tuition goes up faster than incomes that’s a recession.
I’m reading this to That’s Amore.
Wheeeeeen youuuuuur
Bank accounts dry
And it makes-a you cry
Thats Recessiooooonwhen the world seems on fire
but you’re told that it’s fine
that’s depression
It’s a-me, a-recession-o!
… is there a brother?
Real question is are there more brothers?
Just Regular Giuseppe, to my knowledge.
correct.
It seems like you’re really close to figuring out why a massive portion of the United States is willing to vote for anything as long as it’s not the status quo.
Yeah, we’ve been in a recession since the 70s and never stopped.
Even by this definition of recession, we’re not. Real wages are up since that time.
Wages have not been keeping up with productivity increases. They’re going to billionaires, not the workers.
pretty much. sometimes did not seem so since we racked up debt to offset. At one point it was considered unsustainable for a country to function with debt/gdp over 100%
That was a right-wing talking point in the years following 2008. After Bush had flooded the banks with money, Obama took office and suddenly Republicans decided they were fiscal conservatives again.
The paper that said a debt/gdp ratio over 100% created a death spiral (I believe it was more like 125%) had a problem: nobody else could reproduce their results. Didn’t matter, Republicans had to remind people that Obama was a spend and tax liberal.
Then an econ student asked the authors for their Excel spreadsheet (econ does everything in Excel; everything). He found a coding error in one of the formulas. Once corrected, the whole conclusion evaporated.
What im talking about goes back to when japan was predicted to go over. Japan was supposedly going to fall apart. Fact is that since reagan we have been running more and more on debt and less and less on income (taxes) and the longer we do so the more will need to tax in the future.
It’s your own personal recession, aren’t we lucky?
Your own / personal / recession
Someone to stall your sleep
Someone who creepsReach out, charge me!
And if real income falls, that’s called a recession.
But by that metric, rich people would never experience a recession. If that’s the case, why do we allow them to cause a recession for the rest of us? Madness.
I can see the lightbulb over your head lighting up…
Yes, great. Now actually do something with it.
Nice try. How about we don’t encourage comrades to violate OPSEC.
So… You’re saying you see something wrong in the world… And you shouldn’t do something about it? Just keep everything as it is?
It’s a huge example of the bystander effect. It would only take a handful of people to change the situation.
By doing what? Posting where the CEOs live so people can … protest. Yea, dox them and/or track movements to organize totally non-violent protests.
Stalk the shit out of them and show up carrying signs. Work in shifts if they come to your area.
It felt like “shoot them in the streets” was plainly obvious a few months ago but that’s harder than an Instagram story.
No … just to protest, nonviolently of course. Find out where they go and when. Someone in the area may have the free time to hang out on a public street and hold a sign or flip them the bird.
A very loose posting of information so everyone knows who these “people that make the world move” are and where they will be.
Make them nervous. Force them to purchase security. They don’t want to pay taxes, but will have to pay it in security.
We are all reasonable people. No one will use the information for violence no matter how deserving these heartless oligarchs are. That would be wrong.
Why indeed
we’re too comfortable with life’s conveniences, and then throw some apathy on top
That isn’t really the definition though. Real income can fall in a recession but it’s not necessarily a recession just because incomes fell. Real income can increase or decrease both during a recession and not during a recession. It’s a lot more complicated than “when your income declines there is a recession”.
The U.S. has been in a recession since Reagan according to the wording right? Housing and such vs wages shows its been in downfall since.
I was a kid in the Reagan years and I can certainly buy shitloads more now than as a young adult. As you say, housing and wages are shit, but I can afford things that were unthinkable back then. For comparison, I was making minimum wage as a 1990 college kid, basically am now at $15/hr.
I’m probably not making sense, but the goods available to me now are stunning compared to previous decades. And I’m not only talking about compute power, but while we’re there… Dad got me a VIC-20 in the 80s, $1,700 in today’s money. For that much I can outfit a family of four with decent phones and likely pay less monthly than our AT&T bill in the day. And what’s “long distance”?
My water bill was around $20 in the 90s, still is today. I had all the tools to cut my water, gas and power back on, I was that poor. Even at $15/hr. I can easily pay all that along with my wife’s $17hr. (Always had roommates or live-in girlfriends, same difference.)
Education and housing prices have exploded, but not so much other stuff. My first ever real shopping trip was $75 (1990), that’s $175 in 2025. $220 is our usual Aldi bill and I’m buying shrimp, chicken, beef, good stuff. Guess I’m saying that consumer goods and services are shitloads cheaper, or were. Give us a few months.
And as ever, I’m fucked once again on health care. Guess where I live.
Housing, education, and healthcare costs have grown much faster than inflation.
Food, energy, cars, appliances and home goods, furniture, apparel, and other durable goods have generally grown slower than inflation, at least between 1980 and 2020. Much of the last 5 years of inflation, though have eaten away at some of those gains of the previous 30-40 years in those categories.
Electronics, technology, entertainment, most services have generally gone down in price.
So the basket of what we buy is different, with different ratios. A time traveler from the 80’s would be shocked to learn just how many ready made rotisserie chickens or pizzas you could buy for the wage equivalent to one hour of warehouse work, or how many big screen TVs you’d need to pay the average monthly rent for a 1-bedroom apartment. Plane tickets between New York and LA are basically cheaper than one month’s rent in the cheapest possible home you can find in either of those cities. The ratios are all different than before.
But with housing costs high, it kind of puts all of the effort into that single basket. When it used to be that 1/3 your income could comfortably go into housing costs, now in many cities it’s closer to half, even for people up the income scale, because the rest of life beyond having a roof over your head is just cheaper in comparison to that very basic need for shelter.
So from 1960-1990 (30 years) prices went from about 60 cents to 1.66 per pound for beef. That’s that’s a 270% increase. The median salary went from 5,600 to 29,900. That’s a 533% increase.
From 1990-2020 (30 years, lucky we are skipping covids inflation) prices went from 1.66 to 3.18. that’s 191% increase. Wages went from 29,000 in 1990 to 68,000 in 2020. That’s 234% increase.
So what we see is a wage to consumer goods ratio decrease from 263% to 43%.
So our economic wealth as a country is managing to increase faster and faster, yet the consumer wealth fell off awhile ago. If you follow the stock market youd see the Dow Jones increased from 2,700 to 30,000 from 1990-2020. So comparably we should see a 1,100% increase, not a 43%.
Granted none of this matters at the end of the day. The fact is, we are producing a fuck ton of products, and fewer and fewer are reaping the rewards of such day after day.
If you evaluate accessibility of things after subtracting the baseline requirements to stay alive it gets real sketchy how close many Americans are getting by.
Beef is a bad example. It used to be cheaper than chicken and similar to pork, but the real cost of that land use policy that would allow such grazing in the west, and then the subsidies that make factory farm feedlots possible, wasn’t properly borne by the ranchers themselves. Today’s cost of beef is a better reflection of the true cost of raising that meat, that inefficiently.
If you do the same analysis with chicken or pork, you’ll find that we can and do afford to eat a lot more of those particular meats than we used to.
I fully expect beef to go like tuna, and slowly become a luxury item only for the rich within my lifetime. That is more of a trend with beef itself than broader trends in inflation generally.
It isn’t the definition at all.
Real income is income less inflation.
And a recession is two consecutive quarters of negative GDP growth.
EDIT: Sorry, thought I was replying to someone else originally.
There have been recessions with less than two quarters of negative growth, it is not a requirement. The NBER uses a variety of indicators, there can be recessions lasting only a few months.
And what metric is this measured in? Big Macs?
It is a unitless measure, since you divide income (euro) by price of goods and services (euro).
Entry level codling job, 3.2 - 4.5 Big Macs/hour 17 years of experience in Java, PHP, Rust, Python, Cobol, C#, C++ and Typescript required
…that isn’t what a recession means. I mean decreasing buying power is concerning but there are lots of times when that can happen when the economy is hot. In fact, a weakening economy can lead to deflation which increases buying power.
…that isn’t what a recession means. I mean decreasing buying power is concerning but there are lots of times when that can happen when the economy is hot. In fact, a weakening economy can lead to deflation which increases buying power.
You can’t say all that and not tell us what you think it is. Also, I think they’re talking overall, not the top 10% buying power.
Well, the official definition is when GDP contracts for 2 straight quarters (although apparently the fed can fudge that a little bit if the decline is negligible and unemployment goes up, like what happened under Biden)
That’s not actually the official definition. It’s more complicated than that, and it’s not the Fed but the National Bureau of Economic Research: https://www.nber.org/research/business-cycle-dating/business-cycle-dating-procedure-frequently-asked-questions
I edited this in, but you might have missed it. He’s saying real income is equal to the GDP. https://www.youtube.com/watch?v=sAZxLm6M_V0
Its usually the opposite, for wage earners buying power increases during a recession and falls during a boom.
But economists aren’t concerned with that, they looks at all incomes in aggregate, and during a recession fewer people are employed and work less hours so the aggregate fiscal demand from incomes is lower.
So something like when d[income*(1-unemployment)]/dt < inflation, that’s a recession?
Wrong community?
Economics just redefines terms as needed for the moment. Recession is really a label that can’t really be applied until after you’re in it anyway.
Inflation has also gotten watered down to be less meaningful once it started being a problem.
Inflation got watered down, what do you mean? It’s just math for inflation. Capitalism uses inflation as a tool to expand the economy but at the end of the day by the definition listed on the post they are just saying if your wage doesn’t increase faster than the inflation your life resources are in recession. That’s at least how I read it. If you can’t buy as much shit as you used to, you’re doing worse. Which happens to individuals without happening to everyone, but if the average person can’t buy as much shit as they could before, then it seems like recession is an adequate term.
Inflation was tweaked to mean any increase in prices instead of a measure of the loss in value of a currency.
