We have occasionally followed new reports on the economic condition of the public and the news is rarely good. After an extremely very poor jobs report, a new study found that twenty-eight percent of Americans have nothing in their savings accounts and another 21 percent have no savings account at all. Only 29 percent has $1,000 or more in their accounts.
The recent survey by America Saves, as part of a campaign from the Consumer Federation of America, surveys 1,000 people three times per year for its Personal Savings Index.
Not surprisingly, top earners continue to sock away savings — 84 percent of people who earn more than $100,000 annually reported to be interested in saving compared with 72 percent of people with annual incomes between $50,000 and $75,000 and 68 percent of people who earn less than $25,000.
The economic situation in this country is far worse than most people appreciate. We live in economically stratified areas where there is little interaction between distant economic classes. These reports are a startling wake up call for policy makers. The goal of everyone having a few months cushion for bad times is clearly not occurring — leaving at least half or more of the population on the razor’s edge of poverty.
Source: CNBC
Yes, your kids and millions of others need cities that have affordable housing. You know how that can happen? Government subsidies.
God forbid government subsidies. Listen for the howls that erupt from the readers here.
Socialism! Communism! Overthrow the evil government!
So sorry, Dusty. Break into your retirement and give the kids the down payment AND sign on the mortgage. (Credit terms are damn tight)
It’s called capitalism and free enterprise.
Developers go where they will make the most money. That is NOT low income housing. Modest size house? Modest size profit and bigger risk, and as you note, weigh that against the capital investment. Apartment building? YEARS before you make a return and lots of capital are required. Much of that is cement, steel, and wages – not regulation. Well some regulation. But are you willing to risk a deadly fire in a high rise because of no sprinklers? or faulty elevators?
Best return? Nice suburbs. Nice suburbs want a nice home next to their nice house so their nice house value grows. How do you insure a nice house is built next to yours? Zoning and regulation. How do you insure your schools excel? Expensive homes that pay high property taxes and build great schools.
@ MIke
Yes. The housing situation is really bad in many areas, especially urban areas where most of the desirable jobs are. My daughter and her husband used to live in SF and the rents were nosebleed outrageous. It isn’t much better where they are now.
One of the reasons for the lack of rentals or high costs of housing in that particular area, again is partially due to the zoning which discourages affordable housing and the skyrocketing demand for rentals and homes. http://priceonomics.com/the-san-francisco-rent-explosion/ (and these are OLD prices….yikes!) Supply and demand.
It isn’t just SF, which in reality doesn’t have much space inside the city to expand, but many other places where the zoning and planning rules, impact fees and other costs discourage affordable housing to be built. I don’t mean slums or high rise tenements….just a modest sized house or apartment building that mid income people could actually afford.. Often the capital investment is more than the projected return on investment therefore, developers go elsewhere.
Dusty
I hadn’t thought about the drought’s impact on eggs. But it is something we should NOT forget because it is something that is going to effect the inflation rate on food – big time.
I had thought ‘organic’ had been the driver behind food inflation, but you have probably noted the bigger driver – drought.
I’m not up for a trip down climate change, but as no doubt you know, water regulation will play a huge role in our future. I don’t see how libertarian policy could ever prevail if we plan to have sustainable agriculture.
Oh, yes. One must always stay “on topic.” Never digress. Never meander. Stay. On. Topic. Control-freaks abound.
Dusty
Agree on food inflation. However, housing is the absolute killer. Annie’s chart doesn’t lie about the percentage that goes to housing. And I am not talking about owning a home. The rental market is outrageous. And the poor and lower middle income families are all renters – at least in cities.
BTW
A lot of foreclosures were the result of greed – not ignorance of how mortgage rates and ARMs work. Think Florida investors.
@ MIke
California. http://www.latimes.com/food/dailydish/la-dd-eggs-prices-expensive-california-20150617-story.html
And …yes a decimation of the nationwide numbers of birds from disease. And an epic drought in the West. Perfect storm. We are fortunate in that at least in my wide open rural location we can buy eggs from some local growers….as long as you don’t mind the bird crap and feathers on the egg shells 🙂
Nevertheless….to stay on topic…..the inflated cost of food (for whatever reason) which is not included the the official Government statistic, is one of the main reasons that low income workers have little to no money left over to save. That part isn’t a mystery.
Credit terms for mortgages are much much tighter now – due to those nasty government regulations.
If the Republicans sweep, I wonder if those will go away again.
And a financial course for high school students should be mandatory. Lacking that, Sen. Warren’s Consumer Protection Agency has improved disclosure mandates. More of those nasty government regulations.
Dusty
Do you know why eggs in your region are $7 a dozen? You imply government regulation, which is true, but omits the rather important underlying reason for the regulation.
Now how about discussing BIRD FLU?
I think most farmers are pretty much in favor of killing the flocks in order to contain bird flu.
However, I don’t know what else is effecting your particular region, since the midwest cost is around $2.90. Must be something really special about your wide open rural ‘best place to live’.
Usury does this. It rewards the lenders who give young people a rope of easy credit to hang themselves with and it punishes the borrower with an unpayable debt.
This is also true. Easy credit for people who don’t have the disciple to save for their purchases or the disciple to “just say NO!” to the new Iphone or car or furniture etc., will trap them into a never ending cycle of high debt, punitive interest rates and the inability to ever get off of the treadmill of debt.
Young people are not taught basic economics in school, likely never learned it from their parents and do not have the skills to resist the easy credit. I firmly believe that the schools should have a required course on basic economic education that covers these things: debt, credit, budgeting, general finances.
Article is a bit old, but the economic principles are true today as they were yesterday.
http://www.bankrate.com/finance/personal-finance/is-inflation-higher-than-you-think-1.aspx
The all-items inflation rate represents everything people spend money on: haircuts, plane tickets, medical care, clothes — you name it. But, that number is puffed up by the pesky necessities — food and energy. So those two categories are discarded when calculating the core inflation rate.
Theoretically, the core inflation rate more accurately reflects the increase in costs without factoring in the capricious nature of weather and political winds that impact food and fuel costs.
“Food and energy prices are quite random,” says Hampel. “Usually our best guess of inflation going forward for the next few months is anchored at the core rate.”
Nevertheless, food and energy prices have increased at a much quicker pace than core items. Food prices increased at nearly twice the rate of core inflation over the past year, rising 1.8 percent compared to the core inflation rate of 1 percent for the year ending in January.
But that’s nothing compared to fuel costs. “The big culprit has been energy prices, which are up 7.3 percent” over the same time frame, says Hampel
Usury does this. It rewards the lenders who give young people a rope of easy credit to hang themselves with and it punishes the borrower with an unpayable debt.
Bring back the anti-usury laws that the Supremes struck down in the 70s!
One of the main reasons that low wage earners don’t save money is that every dime is spent on the roof over their heads, the clothes on their and their children’s backs and the food in their mouths. Many documentaries have been made proving exactly that.
This is absolutely correct. Inflation as calculated by the Government does not include many of the components that most people need to live on a daily basis. So what if the cost of a new computer is less? Or if a new car is statistically less? People do not buy computers or cars every day. They buy milk, eggs (which are $7 a dozen here!!! due to government regulations), meat, gasoline to go to work, pay rent, buy clothing, HEAT and electricity.
When those items are going ever up and your wages are not, it is a no brainer that there is little to nothing left over to put into savings.
Many people are just living paycheck to paycheck. Raising the minimum wage is not the complete answer either since prices of goods will rise in the same amount as the cost of producing and providing those goods rise. As wages rise, the cost of goods goes up and the amount of entry level/low wage earner jobs goes down. Seattle is a real time example. http://www.americanthinker.com/blog/2015/03/seattle_restaurants_going_dark_as_15_an_hour_minimum_wage_goes_into_effect.html
Regarding the reduction of net worth of ORDINARY Americans …
Much of that reduction is due to the collapse of the housing market. Many are still underwater.
http://lifeandmyfinances.com/wp-content/uploads/2015/05/20150513-rich-vs.-poor-spending.jpg
One of the main reasons that low wage earners don’t save money is that every dime is spent on the roof over their heads, the clothes on their and their children’s backs and the food in their mouths. Many documentaries have been made proving exactly that.
http://www.washingtonpost.com/wp-dyn/content/article/2010/01/01/AR2010010101196.html
For most of the past 70 years, the U.S. economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households. But since 2000, the story is starkly different.
The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation’s growth.
It was, according to a wide range of data, a lost decade for American workers. The decade began in a moment of triumphalism — there was a current of thought among economists in 1999 that recessions were a thing of the past. By the end, there were two, bookends to a debt-driven expansion that was neither robust nor sustainable.
There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.
Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 — and the number is sure to have declined further during a difficult 2009. The Aughts were the first decade of falling median incomes since figures were first compiled in the 1960s.
And the net worth of American households — the value of their houses, retirement funds and other assets minus debts — has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s.
Dusty is annoyed.
It’s understandable. It’s hard to build an argument around the closing of 31 DMVs that serve African American communities when one needs an ID in order to vote.
But my apologies, Dusty. I’m sure YOU have never strayed off topic.
Haha … bfm thinks that a presidentially appointed Fed Chairperson then becomes a completely independent thinker with no deference to or influence from the White House. Wishful thinking. And I’ll fix this for you “BTW, there is pretty good evidence that the great recession of 2007-2009 was caused, or at least exacerbated, by excess gov’t involvement in the financial industry (specifically, the mortgage backing monopoly FM/FM created for itself, leading to a predictable crash in the artificially inflated market that sparked a more widespread financial collapse).
philat goes full-on socialist … because we know how great THAT works for increasing economic mobility and standard of living. Not. “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of misery.” Winston Churchill