Illusion of Prosperity: Deflating the American Dream No Recovery in "Real" Income By Mike "Mish" Shedlock September 23, 2013 In The Morning After; Price Discovery is Zero; PUT on the Bond Market? Is Inflation Really Under 2%? I posted a chart with a caption of "wages" buy the corresponding chart showed "income". The post is now fixed, but newer data has come in, and Doug Short at Advisor Perspectives has updated charts that I would like to share. From Median Household Income Growth: Deflating the American Dream , by Doug Short. What is the single best indicator of the American Dream? Many would point to household income growth. My study of the Census Bureau's data shows a 600.7% growth in median household incomes from 1967 through 2012. The ride has been bumpy, but it equates to a 4.5% annualized growth rate. Sounds impressive, but if you adjust for inflation using the Census Bureau's method, that nominal 614.2% total growth shrinks to 18.8%, a "real" annualized growth rate of 0.39%. But if we dig a bit deeper into the method of inflation adjustment, the American Dream looks more like an illusion, as in " money illusion ". Click for a larger image The data for the charts is from Sentier Research . Sentier uses the CPI as the deflator for computing their real household income data series. The above chart goes back to 1968. It shows that income growth since 1968 is nearly all inflation. Closer scrutiny shows "real" income growth has been negative since the year 2000. Incredible Shrinking Income Please consider this chart from Real Median Household Incomes: Another Monthly Decline by Doug Short. Click for a larger image Real median incomes are down 7.3% since 2000. That means at least half of the population is worse off now than 13 years ago! Think the CPI is a flawed measure? Doug Short has a comparison using different deflators, including the Alternate-CP I from John Williams' Shadowstats . Click for a larger image Doug comments " The Alternate CPI is a rather bizarre outlier. What this deflator is telling us translates into something like this: The 1967 median household income of $7,143 chained in 2012 dollars would have had the purchasing power of $185,588. " By the way, a close look at the above chart shows that the Williams' deflator is 72% since 1989, not all the way back 1967! Although it's easy to believe CPI is off somewhat, "bizarre" is a polite description of how far off Williams is in the other direction. And Williams' views of hyperinflation in the US and when it is likely, go far beyond bizarre to the point of absolute ridiculousness. No Recovery in Real Economy While Bernanke can talk of "recovery" things started deteriorating badly, not in 2008 but all the way back in 2000. The stock market is back to previous highs, but the real economy sure isn't. Originally posted at Mish's Global Economic Trend Analysis (c) Mike "Mish" Shedlock Investment Advisor Representative www.sitkapacific.com
Is This Why Gold Is Spiking Submitted by Tyler Durden on 08/14/2013 10:56 -0400 That JPMorgan has been scrambling day after day in the past week to meet gold delivery requests directed to its vault located deep under 1 CMP is no secret, at least not to our frequent readers. This peaked on Monday when, courtesy of a color-coded Comex scheme, we showed how panicked the lateral moves between various Comex gold vaults had become to preserve the illusion of physical availability. However, as yesterday's Comex report showed , instead of tapering, JPM was just slammed with yet another 70K delivery (registered to eligible warrant detachment), which will likely appear on either today's or tomorrow's settlement. And since the other gold vaults appear to have no more freely transferrable gold to hand over to JPM as everyone is now scrutinizing their every move under a microscope, JPM may no longer have the option of ignoring the mess its vault is in. Which means it has one option: to start buying the metal in the open market. And sure enough, breaking from the "standard" of the past 8 months, in which JPM was drowning in Issues, for both House and Customer accounts, the firm's House accounts just saw the largest Stop (i.e. taking delivery) since December of 2012, amounting to over 210K oz. Has JPM, flooded with demands for physical, finally thrown in the towel, and seeing that the deluge in delivery requests is "untapering", had no choice but to turn to the one place it has left to replenish its stocks: the market? Still, here is the big picture - until the 2103 August Stop, the balance for JPM House accounts was: Issues: 15,293 Stops: 636 And Clients: Issues: 17,458 Stops: 1,444 In other words, there is a ways to go. Source: CME Average: 4.78125 Your rating: None Average: 4.8 ( 32 votes) !-- -- Tweet !-- - advertisements - .AR_2 .ob_empty {display: none;} .AR_2 .rec-link {color: #565656;text-decoration: none;font-size: 12px;} .AR_2 .rec-link:hover {color: #565656;text-decoration: underline;font-size: 12px;} .AR_2 {float: left;width:50%} .AR_2 li {list-style: none outside none !important;font-size: 10px;padding-bottom: 10px;line-height: 13px;margin:0;} .AR_2 .ob_org_header {color: #000000;text-decoration:bold; margin-left: 0px; font-size:14px;line-height:35px;} .AR_3 .rec-link {color: #565656;text-decoration: none;font-size: 12px;} .AR_3 .rec-link:hover {color: #565656;text-decoration: underline;font-size: 12px;} .AR_3 .rec-src-link {font-size: 12px;} .AR_3 li {padding-bottom: 10px;list-style: none outside none !important;font-size: 10px;line-height: 13px;margin:0;} .AR_3 .ob_dual_left, .AR_3 .ob_dual_right {float: left;padding-bottom: 0;padding-left: 2%;padding-top: 0;} .AR_3 .ob_org_header {color: #000000; text-decoration:bold; margin-left: 0px; font-size:14px;line-height:35px;} .AR_3 .ob_ads_header {color: #000000; text-decoration:bold; margin-left: 0px; font-size:14px;line-height:35px;} -- - advertisements - Login or register to post comments 30814 reads Printer-friendly version Send to friend Similar Articles You Might Enjoy: Goldman's Head Gold Trader On The Recoupling Between Gold (Which Is Up 14% YTD) And Money, And Why This Is 2008 All Over Again Is This Why Gold Is Outperforming? Is This Why Gold Is Selling Off? Is This Why Gold Dumped And Stocks Pumped Today? Is This Why Gold (And Europe) Is Underperforming US Stocks (For Now)?
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