A long, steep drop for Americans' standard of living

[toblin]

<p>A very depressing read from The Christian Science Monitor…</p>

<p>

What has led to the most dramatic drop in the US standard of living since at least 1960? One factor is stagnant incomes: Real median income is down 9.8 percent since the start of the recession through this June, according to Sentier Research in Annapolis, Md., citing census bureau data. Another is falling net worth – think about the value of your home and, if you have one, your retirement portfolio. A third is rising consumer prices, with inflation eroding people’s buying power by 3.25 percent since mid-2008.

</p>

<p>[Link</a> to article](<a href=“http://www.csmonitor.com/Business/2011/1019/A-long-steep-drop-for-Americans-standard-of-living]Link”>A long, steep drop for Americans' standard of living - CSMonitor.com)</p>

[dstark]

<p>Toblin…thanks for the link…</p>

[qdogpa]

<p>In reality, if you continued to invest thru the downturn,you are should have recouped most of your losses in your retirement account…considering your house as an investment is/ was a bad concept…always considered my home a place to live, never considered what it may or may not be worth at some point in the future…income has increased from beginning of recession, so we have been very fortunate…I don’t think we are alone in dodging a bullet during this difficult period.</p>

[dstark]

<p>You are not alone…but you are rare…</p>

<p>The stock market really hasn’t done much for over a decade…
And homes in many areas are selling at prices last seen in the 90’s.
And wages aren’t rising much.</p>

<p>Plus …even if you are even over the last 4 years…you are a loser.
Your buying power is less.</p>

<p>Well…i guess you can buy a cheaper house…the government should really look at the inflation calculations.</p>

[qdogpa]

<p>Granted my home has lost significant money,but we came from a very costly area,some sold an overvalued home for another…losing 30%± when you doubled the value of the home you sold is really irrelevant…</p>

<p>Actually he declining housing market is in ones favor if they are trading UP,10% loss on a 500,000 home is 50k, when buying a 900,000k home saves you 90k…</p>

[dstark]

<p>That’s true…</p>

<p>Of course, I was trading down. :)</p>

[qdogpa]

<p>Ya gotta live somewhere. ;)</p>

<p>My guess is housing is a decade away from even coming remotely close to the inflated home values of 2005-2007…but what will happen to prices IF interest rates start increasing? Prices will have to decline further…</p>

[dstark]

<p>Rising interest rates will not help housing prices.</p>

[qdogpa]

<p>Dstark, it is all paper gains and losses, and i never consider my home as an asset,whether it is worth X or X -30%</p>

[dstark]

<p>Yeah…I took the edit out…because it gets kind of complicated…</p>

<p>It is not really paper gains and losses though.</p>

<p>People spend and borrow more if their home value rises.</p>

[qdogpa]

<p>Some likley do, we don’t ;)</p>

[dstark]

<p>That is probably helpful to not consider your house an asset…I know a few people that don’t consider their homes assets. Keeps them out of trouble…they don’t take the money out of the houses and load up with home equity loans.</p>

[momofthreeboys]

<p>We never considered our house as an “asset”…it was a place we lived and we paid it off as quick as we could so we saw it “rise” in value to amounts that we considered ridiculously unrealistic and it proved out…I’m more concerned I won’t have time to make up the losses. We had plenty for retirement and the kids college but I had over a year unemployment at the very worse of the losses so we were drawing down for the kids and to keep afloat and losing money simultaneously. Ughhhh.</p>

[dstark]

<p>Unemployment and asset prices declining…not a recipe for an increase in a standard of living, is it?</p>

[alh]

<p>I thought this was interesting:</p>

<p><a href=“http://www.nytimes.com/2011/10/19/business/economic-outlook-in-us-follows-home-prices-downhill.html[/url]”>http://www.nytimes.com/2011/10/19/business/economic-outlook-in-us-follows-home-prices-downhill.html&lt;/a&gt;&lt;/p&gt;

<p>

Economists have only recently devoted serious study to how a decline in housing prices affects consumer spending, not least because this is the first decline in the average price of an American home since the Great Depression. A 2007 review of existing research by the Congressional Budget Office reported that people reduce spending by $20 to $70 a year for every $1,000 decline in the value of their home.</p>

<p>This “wealth effect” is significantly larger for changes in home equity than in the value of other investments, such as stocks, apparently because people regard changes in housing prices as more likely to endure.

</p>

[dstark]

<p>me too…</p>

[qdogpa]

<p>From my vantagepoint, the restaurants are packed, and I’m not talking chains,or casual dining places…we dine at least once a week, usually midweek, and places are crowded…at $100 ± per couple,apparently many more people have no issues with the economy then I had given thought to…another example of job market is a former colleague had been ‘let go’ 3 months ago with 18 months severance and full benefits,they now have 2 offers to choose from at a salary close to their former level…I have been concerned BIGTIME with the economy,but I may need to adjust my views…</p>

[alh]

<p>

not least because this is the first decline in the average price of an American home since the Great Depression.

</p>

<p><a href=“http://www.nytimes.com/2011/10/19/bu…-downhill.html%5B/url%5D”>http://www.nytimes.com/2011/10/19/bu…-downhill.html</a></p>

<p>Is this true? Does anyone here know? If this is true, is it just another marker that we are in a situation where it is impossible to predict what will happen based on past historical precedents?</p>

<p>qdogpa: High end restaurants where I live are busy, too. However, my favorite restaurant recently sold out to new owners. I asked if they had been in economic trouble and was told, no … they weren’t, but there was a really good offer and they felt they better take it. We followed the bar tender and wait staff to a new lower end establishment. It is much more bustling than the newly bought restaurant, with new management, in the old locale. I can think of several restaurant owners locally who have sold successful establishments and started something new. That is kind of fascinating. What’s up with that?</p>

[lizard]

<p>Maybe all the unemployed should open high end restaurants?</p>

[lia_b]

<p>Not sure where you are but many restaurants my way outside of NYC have actually “downgraded” their menus to more affordable choices. Many have gone out of business. I wonder if the high end restaurants are near an affluent area and have a good following. A couple of years ago, my company never frowned on expensive business dinners. Now, you better come up with a good reason not only to have a business dinner but to expense a large bill. </p>

<p>I also noticed a trend in some local restaurants where they are using lower quality ingredients in order to not increase the prices. My favorite Italian restaurant disappointed me during my last visit by using frozen seafood and plain iceberg lettuce in their salad. This experience has actually led to us eating out less and less. Why pay for low quality food. I can do this at home for a lot less. </p>

<p>On the other hand, I notice the pubs are very crowded and those restaurants with a good bar are packed to the nines on a Friday and Saturday night.</p>