Comment by Someone1234
5 days ago
> US real median household income has been steadily rising[1] for the last 40+ years.
Compare it to the Consumer Price Index:
5 days ago
> US real median household income has been steadily rising[1] for the last 40+ years.
Compare it to the Consumer Price Index:
REAL income is adjusted for inflation. If real median income is increasing then it is outpacing inflation by definition.
Why is it that the cynics and doomers always have such a poor grasp of the data?
Because the basket of goods for inflation doesn't separate optional from mandatory consumption.
If housing, healthcare and education are outpacing the topline inflation number, a lot of marginal families will be squeezed. The cheap LG TV doesn't really make up for it.
6 replies →
I think once you have a good command of data and broader trends its harder to be cynical or a doomer. You just see that things aren't perfect but are larger better than the past on most metrics.
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I think CPI is a poor measure, because it's a moving meter stick that understates inflation. When beef is overpriced, hamburger switches into the basket. When hamburger is a luxury, then chicken swaps into it instead. It understates inflation.
M2 change is a much better measure in my opinion. Using M2 is literally comparing supply of item to supply of cash which could immediately buy it. When scaling SPX or GC1! by M2SL[0]/M2SL, you get a surprisingly flat time series over decades, which reads to me that the effects of the change in M2 are being filtered out of an otherwise exponential price curve.