<p>While “middle-class” incomes have been relatively flat their wealth has risen significantly with the rise of home values and the stock market. Also so many people seem to be self-employed these days I suspect incomes are underreported.</p>
<p>Everyone should thank Alan Greenspan and the Fed.</p>
<p>It is remarkable to me how few people relate the changes in the economy since the current bull market commenced in August 1982 to the decline in short term interest rates from about 20% to less than 3% a short while ago.</p>
<p>No one can go far wrong with that backdrop of falling rates for renting money.</p>
<p>The market will keep going up for a few more years. When we babyboomers start retiring we’re going to be in trouble.</p>
<p>Relying on home value increases as an investment tool is fine as long as you are willing to downsize to pull the gains out. Some do, many don’t. </p>
<p>Depending on where you live the market is still going or homes are sitting for months and months and selling prices are declining. While I encourage home ownership it is not a liquid investment and requires some effort (friction) to sell. However, you can call your broker today and your investment can be sold at NAV, in the same day. </p>
<p>While it is certainly fine to include home appreication as part of an investment portfoilio, banking on it as certainity may lead to some disappointment. I bought my first house during the Carter administration (remember home loans at 14%) in order to sell, buyers had to kiss my ring.</p>
<h1>22. The rent of college costs got down to less than 3% (2004-05). Our consolidated student loans will be slightly more than 3% for the next 25 years. Good luck, current and new college parents. The interest ride is over.</h1>
<p>W’s tax cut only affected our fed tax payments by a few thousands, but when you add the increased property tax, state tax, and fuel costs, we are not ahead. When you look at the lowering of interest rates, we added multiple tens of thousands in student loans that we did not have to. The student loans added many more jobs than our spending the W’s tax cuts. </p>
<p>thankyou Alan.
W gets a just passing grade for economics. Which he did. Too bad most college students will not understand Macro either.</p>
<p>Parent2noles - what you say used to be true, but the rising tide stopped lifting all boats around 1980. Honest. You can look it up. The easiest way used to be to link to it from rushlimbaugh.com, but that link is now dead. Go to <a href=“http://www.irs.gov/pub/irs-soi/04in05tr.xls[/url]”>http://www.irs.gov/pub/irs-soi/04in05tr.xls</a> to see the IRS figures from 1986 through 2004. The increase in (inflation adjusted) income for the top 1% and top 5% of income earners can bee seen by comparing cell C52 to C70, and D52 to D70. The lack of any increase in the income at the 50th percentile can be seen by comparing G52 to G70. That’s essentially zero tide lifting at the 50th percentile in 18 years. The net result is that the share of income received by the top 1% has gone from 11.3% in 1986 to 19% in 2004.</p>
<p>The tide’s only been lifting the yachts for a long time now. Wealth and income is being increasingly concentrated in the hands of the very wealthy. I have an issue with that.</p>
<p>Am I wrong, but the DJIA rose 18% over 6 yrs. Inflation rate from 2000 to 2006 was 17.5. So what is the big deal?</p>
<p>“Economists agree that the bulk of clintons good economy was the effects of reagans tax cuts finally settling in.”</p>
<p>Sure. It was Reagan’s 1981 tax cuts finally kicking in all of those years later. Of course, Reagan signed a repeal of some of those cuts in 1982, and later signed a bill increasing payroll taxes substantially (increasing the total tax burden on the middle class). And who could forget George “Read My Lips” Bush’s signature on a series of tax increases in 1990. Clinton signed another in 1993. But economists agree that the prosperity of the late 1990’s was due to Reagan’s tax cuts of 1981. </p>
<p>I can hardly wait until Bush’s tax cuts “settle in” in 2018 or so. Thank God these Republican presidents are such long range planners!</p>
<p>The funny thing is, the economy chugs along, year after year. People work hard, come up with clever ideas, productivity increases, the Dow (and/or the Nasdaq, and/or the S&P 500) goes up, blah, blah, blah. You’ll see good economic growth in years of higher taxes, lower taxes, Republican, Democrat. Anything good happens and the party in power takes credit. Anything bad - they blame it on the previous administration. Other than the obvious “borrowed” – and therefore temporary – prosperity you get from running a deficit, the minor tweaks of government policy and taxation don’t seem to have a consistent effect one way or the other.</p>
<p>Doesn’t keep the well-financed propagandists from spreading the word that favors their pocketbooks, though.</p>
<p>My stock hasn’t done squat - I should have sold in '98 when it was really high.</p>
<p>What’s the big deal? Is that the cost of attendence to your college of choice has increased 5-6%+/year.</p>
<p>5% per year on top of inflation. For the past 25 years.</p>
<p>The Dow was above 12,121 for a bit today…a new record.</p>
<p>Isn’t it the economy, stupid?</p>
<p>the economy is strong. I just dont see how someone can sincerely say otherwise</p>
<p>golani,</p>
<p>The economy is strong. But personal income has been weaker. Worse, what personal income growth there is goes to upper income folks. See here for more details: <a href=“http://bea.gov/bea/regional/data.htm[/url]”>http://bea.gov/bea/regional/data.htm</a></p>
<p>To put it bluntly, I could care less what the dow shows, or what GDP growth is taking place. What I care about is whether my income is growing faster than expenses or not.</p>
<p>For quite a few years, for 90% of the population or more, the answer is “Not”. Income has been growing more slowly than expenses.</p>
<p>golani, maybe your family is part of the lucky few percent that have gained in recent years. Lucky you, then. But don’t forget about the huge numbers left behind, and wondering how their paychecks can be going down (probably due to no raises and rising healthcare share!) while expenses go up.</p>
<p>Come out of your hole. Look around a bit. Think.</p>
<p>Unfortunately, no. The media has completely downplayed the economic recovery and focuses only on areas of weakness such as the housing market (which IMHO might be ready to turn around sooner than later with lower interest rates coming in the next 6 mos.)</p>
<p>I don’t think “luck” has that much to do with it. Being serious about education and getting a graduate professional degree has paid well for most people.
I also think many of the growing group of the self-employed grossly underreport incomes.</p>
<p>The rich get richer. It’s really very simple.</p>
<p>barrons,</p>
<p>The personal/family income situation has been triangulated from a number of different directions. The flatlining/dropping for most deciles is NOT because of off the books income. </p>
<p>And, the media has not downplayed the “recovery” IMHO. They’ve effectively told the story:</p>
<ul>
<li> corporate profits are at record levels now.</li>
<li> GNP has grown nicely.</li>
<li> personal income for everyone but the top few percent is flat to down.</li>
</ul>
<p>What is not to like about such a story? - if you’re one of those upper income folks.</p>
<p>To me, what is sad is that it’s taken <strong><em>6 years</em></strong> to get back to where we were pre GWB, just for the DOW. Other indices are not back above their peaks yet.</p>
<p>So, this is a “story” of great economic strength being ignored by the media?</p>
<p>I don’t think so.</p>
<p>You mean back to pre-9/11 levels, after the recession - starting before Bush took office? Yes, that would take a while.</p>
<p>I would dispute that very much of the economy depends on who is in the White House or controls Congress. Both parties want to stay in power and will try hard not to damage the ability of the voting public to make money and vote for them. Neither party is that inept.</p>
<p>I would suggest that there are important aspects to the economy that are simply unsustainable, that will affect many folks - Medicare, Social Security, and some large defined-benefit retirement plans. These will have to be resolved…</p>
<p>Some progress is better than no progress.</p>