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Why Americans Are So Sensitive To Even The Smallest Increase In Prices

Tyler Durden's picture




 

In the last year, even the 'smartest men in the room' PhDs with advanced degrees have seen their wages shrink, according to a new study by the Economic Policy Institute. As The WSJ notes, inflation has been low by most measures in recent years, but wage growth for the majority of workers has been even lower.

That means even small amounts of inflation have been painful for vast swaths of the workforce.

In recent years, one thing is clear: Neither monetary policy nor labor market policies nor fiscal policies have been able to boost earnings for most Americans. Only workers in the 80th percentile and up have seen their wage gains outpace inflation, though not by much.

 

Even the PhDs are losing money this year...

 

But since 2007, only the 80th percentile of wage-earners and above have seen any gains...

As EPI notes,

“The poor performance of American workers’ wages in recent decades - particularly their failure to grow at anywhere near the pace of overall productivity, is the country’s central economic challenge,”

*  *  *

In recent years, one thing is clear: Neither monetary policy nor labor market policies nor fiscal policies have been able to boost earnings for most Americans.

Source: WSJ and EPI

 

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Thu, 08/28/2014 - 19:23 | 5156297 thethirdcoast
thethirdcoast's picture

Thanks Captain Obvious!

Thu, 08/28/2014 - 19:47 | 5156388 Aknownymouse
Aknownymouse's picture

Does anyone have any of the FED members emails or phone number? I think they might find this info interesting. It is obvious that since 2007 none of them found anything related to that report

Thu, 08/28/2014 - 19:46 | 5156391 Say What Again
Say What Again's picture

Well that explains everything.  I was wondering why I can't afford even the basic stuff anymore. By the time I pay my mortgage, and other bills, I have enough left to go out to dinner twice a week.  And forget any vacations.!

But if this guy could tell me how to improve my situation, then he would really have something to say.

Thu, 08/28/2014 - 20:06 | 5156440 Grouchy Marx
Grouchy Marx's picture

Improve your situation? Easy, become a banker, marry a ketchup heiress, or run for Senate!

Sheesh, sometimes people don't just see the obvious and take responsibility for themselves.

Thu, 08/28/2014 - 20:06 | 5156444 Dr Strangemember
Dr Strangemember's picture

Perhaps it's time we all start selling weed for extra cash.  If I get caught by the fuzz, I'm totally going to tell them I'm part of the Choom Gang.  What they gonna do then??????

Thu, 08/28/2014 - 21:45 | 5156763 sessinpo
sessinpo's picture

You go out to eat twice a week.

Damn, you are living the life of luxury compared to me.

Thu, 08/28/2014 - 23:44 | 5157112 Stuck on Zero
Stuck on Zero's picture

As we speak Obama is meeting with a bunch of billionaires to arrange a limitless expansion of new immigrants to make everything better.

 

Thu, 08/28/2014 - 19:22 | 5156299 NOTaREALmerican
NOTaREALmerican's picture

Just another article by a hippy fomenting Class Warfare who hates everything Merica stands for, and the troops!  

Thu, 08/28/2014 - 19:29 | 5156327 buzzsaw99
buzzsaw99's picture

...we're not going to sit here and listen to you bad-mouth the United States of America! [/otter]

Thu, 08/28/2014 - 19:25 | 5156307 FieldingMellish
FieldingMellish's picture

Soon only the 99th percentile will see gains, then the 99.9th, then the 99.99th.... until only a few people will actually be increasing "earnings". Probably Uncle Warren and a few of the TBTF CEOs. 

Thu, 08/28/2014 - 19:26 | 5156317 nakki
nakki's picture

Just add 1% more inflation per year which is being very kind and it looks like everyone is taking the pipe. Thank god the S&P is helping out the top 20% and really I mean really helping out the top.01%. After all the top .01% have to feed their families.

Thu, 08/28/2014 - 19:38 | 5156351 813kml
813kml's picture

 After all the top .01% have to feed their families.

It ain't easy eatin' on the cheap when your bear claws and infant formula are the genuine article.  

Thu, 08/28/2014 - 21:14 | 5156665 quasimodo
quasimodo's picture

No foolin there friend. Maybe a bit OT but I just went and got some Halls cough drops that I had not bought in years. I swear the fuckers are much smaller than they used to be. I mean come on, I noticed this with other stuff but WTF, suck on that bitch for five minutes and it's gone, used to last half hour.

Thu, 08/28/2014 - 21:54 | 5156786 Dapper Dan
Dapper Dan's picture

I just told my wife the same thing,  "Honey it's smaller because of inflation"

 or infelletion as it may be.

But keep sucking

 

Thu, 08/28/2014 - 19:27 | 5156320 ebworthen
ebworthen's picture

We're sensitive about prices BECAUSE WE ARE FUCKING BROKE!

It just kills me to hear those "Feed the Pig" commercials about saving from the CPA council or some bullshit .org

Save what!?!?  And if I save, what does the FED pay me for saving?  CRAP!

What a sad depressing house of cards Ponzi hath been built!

Thu, 08/28/2014 - 20:24 | 5156483 Freddie
Freddie's picture

Well maybe Americans might get a brain cell and unplug TV and Hollywood.  The good news is music/record/CD sales are plummeting.  Starve the F**king beast and TV watching and Hollywood shit movies watching - "ain't" helping the good team.

Your TV and Hollywood viewership makes Yats, Porky, Nudelman, Soros and the other dual citizen scum very happy.

Fri, 08/29/2014 - 10:13 | 5158218 yellowsub
yellowsub's picture

The only thing Americans is buying into is fear that the gov't spreads.  They're still believers of the BS.  Sales dropping is because they're broke...

Thu, 08/28/2014 - 19:27 | 5156321 Notsobadwlad
Notsobadwlad's picture

The double whammy of stagflation and a liquidity trap... Covering massive corruption and glossed over with liberal propaganda and advertisements.

That is what happens when a country's leaders have a policy to intentionally export all value adding labor and turn into a consumerist pit of indeterminable depth.

... at some point one finds the bottom.

If one survives the fall then one can try to climb out.

Thu, 08/28/2014 - 19:31 | 5156342 Fuku Ben
Fuku Ben's picture

Because they insist on living a lie or believing in the illusion (or delusion) that was the American Dream at all costs. Because they subconsciously know its over and are so desperate to hang on at all costs they overreact instantly to even the slightest outward sign that would confirm their worst fears.

And many will refuse to acknowledge it is over until they're shot by UN, US or foreign troops, shoot themselves with a nail gun, are severed in 2 by a train or carted off kicking and screaming into in a globalist concentration camp.

FYI: Another "suicide by train" Private Banker cut in 2 pieces. Similar to the recent one in the US

http://en.prothom-alo.com/bangladesh/news/52637/Banker%E2%80%99s-body-fo...

Thu, 08/28/2014 - 19:36 | 5156361 blu
blu's picture

When my wages no longer matches prices I steal.

Not really. I don't really steal. Stealing from someone on the street would make me look like a banker or politician and I would then be forced to commit suicide for shame.

Thu, 08/28/2014 - 19:48 | 5156395 Big Corked Boots
Big Corked Boots's picture

"Shame." What an archaic concept.

 

Thu, 08/28/2014 - 19:55 | 5156415 NOTaREALmerican
NOTaREALmerican's picture

If we start talking about morals and economics the growth will end.

Thu, 08/28/2014 - 19:55 | 5156413 Say What Again
Say What Again's picture

-- "When my wages no longer matches prices I steal."

I understand that worked out real good for the folks in Ferguson -- and most urban areas.

Thu, 08/28/2014 - 19:53 | 5156408 oklaboy
oklaboy's picture

is it getting stale in here?

Thu, 08/28/2014 - 19:57 | 5156416 NOTaREALmerican
NOTaREALmerican's picture

Not if you've got economic morality OCD. 

Thu, 08/28/2014 - 20:00 | 5156430 starman
starman's picture

No offense but any fucking body that claims that inflation has been low was born in 2009!!! Go and google any consumer good price going back ten year's,  thats your true inflation! 10 - 30%!

Thu, 08/28/2014 - 20:19 | 5156478 disabledvet
disabledvet's picture

"It's the second move that kills ya."

The assumption that those prices will continue to compound.

"Larding up on debt" as if it can all be inflated away...let alone economic growth "conjured."

Still..it could be worse...there is in fact still a yield curve in the USA unlike Japan and now the entire Continent of Europe.

Financial "breathing space" as it were.

Of course having the biggest energy boom in world history hasn't hurt the USA either. The all electric drive system has already been field tested. If that Tesla battery really does solve the problem of "intermittency" in the electrical market you could also get a "two-fer" namely not only far cheaper electricity but pretty much "free energy."

Tesla Motors has begun deploying their charging system to downtown areas. If your car can get charged while eating dinner...that's like free Wi Fi.

Thu, 08/28/2014 - 21:49 | 5156775 sessinpo
sessinpo's picture

And what you don't take into account is all the massive debt.

Thus with all the printing, what would normally be hyperinflation of 100% plus of inflation is not. Why, because much of the money is going to service debt instead of flowing into the economy.

Thu, 08/28/2014 - 20:03 | 5156437 q99x2
q99x2's picture

I won't be happy until I see Bern Bernanke's helicopter in the sky. I quit trying. I figure my chances will be better during the collapse.

Thu, 08/28/2014 - 21:33 | 5156726 I Write Code
I Write Code's picture

Bogus - WSJ article says 95th percentile is $52.23 an hour?  Either that's wrong, or it doesn't account for contract/parttime workers, I'm too lazy to look it up yet again but I thought a 95th percentile salary was about twice that high.

So things are MUCH WORSE than they say.

Thu, 08/28/2014 - 21:49 | 5156762 JR
JR's picture

If you’re in the top 5%, don’t spend those millions yet. Your group is categorized as those making over $167,728, regardless of location, be it San Jose or Detroit. Now if you’re in the  cream of that 5%, i.e., the top 1% of the top 5%, well, you’re on your way up, starting with an AGI of $388,905 in 2011 but still a long way from reaching Lloyd in the 0.01% whose income skews the whole darn mess and makes everyone richer than he really is.

Based on the latest IRS data from 2011 tax returns, Kiplinger tells us the 1% are those 1.37 million American elites who reported 18.7% of all the country's taxable income.”

Kiplinger: Breakdown of Income and Taxes Paid by Category 2011 AGI | Reported January 2014

Top 1%, over $388,905, 18.7% of all income, 35.1% of income taxes paid; Top 5%, over $167,728, 33.9% of all income, 56.5% of income taxes paid; Top 10%, over $120,136, 45.4% of all income, 68.3% of income taxes paid; Top 25%, over $70,492, 67.8% of all income, 85.6% of income taxes paid;  Top 50%, over $34,823, 88.5% of all income, 97.1% of income taxes paid; Bottom 50%, under $34,823, 11.5% of all income (non-cash welfare payments and subsidies are not included in income), 2.9% of income taxes paid.

Note: Kiplinger’s "income and tax-burden breakdowns come from information reported on 2011 individual income tax returns. Income categories are based on adjusted gross income.” (The type of tax return is filed by an individual. Both single and married taxpayers, with and without dependents, file this type of return. Individual filers always file their returns on a version of Form 1040.)
Read more at http://www.kiplinger.com/article/taxes/T054-C000-S001-where-do-you-rank-as-a-taxpayer.html#TcFe0cgbSXg0qeAc.99

As for those tech riches in San Jose …

“San Jose, Calif., has the highest median household income among the country’s 25 most populous cities, with the city’s level approaching $77,000 last year (2011), about 50% higher than the national median of $51,000, according to data released by the U.S. Census Bureau. The city boasts that it’s ‘home to the largest concentration of technology expertise in the world — more than 6,600 technology companies employing more than 254,000 people.’ Taking a broader view, California is home to several top cities for household income. However, the state is one of only five where inequality is higher than the U.S. level. Median household income in California is higher than for the U.S. as a whole, but the state’s poverty rate is also above the national average. -- The richest and poorest U.S. cities by income, MarketWatch, Sept 20, 2012

http://www.marketwatch.com/story/the-richest-and-poorest-us-cities-by-income-2012-09-20'

Here are the top 25 cities by income, published Sept 20, 2012: 1. San Jose, 76,593; 2 San Francisco, 69,894;  3 District of Columbia, 63,124; 4 Seattle, 61,037; 5 San Diego, 60,797; 6 Charlotte, 50,177; 7 Austin, 49,987; 8 New York City, 49,461; 9 Boston, 49,081; 10 Fort Worth, 47,399; 11 Denver, 47,371; 12 Los Angeles, 46,148; 13 Jacksonville, 44,802; 14 Phoenix, 43,960; 15 Chicago, 43,628; 16 Houston, 42,877; 17 San Antonio, 42,613; 18 El Paso 40,702; 19 Dallas, 40, 585; 20 Columbus, 40,463; 21 Indianapolis, 39,015; 22 Baltimore, 38,721; 23 Memphis, 34,960; 24 Philadelphia, 34,207; 25 Detroit, 25,193. (Source: Census Bureau)

The range of inequality in America has come down to much more than a split between the rich and poor. It has developed into a split between the leveraged occupations and the exploited occupations. Leverage comes from the political clout behind government positions (teachers) or unionized positions (San Jose nurses bargaining for $130,000 annually with benefits), or contrived shortages (doctors) and exploited (engineers).

A mechanical engineer starting salary in America, reports Elizabeth Layne of Deman Media,  in the early 2000s “puts them among the highest wage earners of recent college grads.”

And what is that starting salary? Well, “entry-level mechanical engineers holding bachelor's degrees earned average annual starting salaries of $58,600, according to the National Association of Colleges and Employers' Spring 2012 Salary Survey.”

In 2011, the Bureau of Labor Statistics reports that “the mean average annual salaries of mechanical engineers overall was $83,550. Wage earners in the lowest 10th percentile -- which would include entry-level mechanical engineers -- earned a mean average salary of $51,340.”

That’s how America is working out for those among her "highest starting salary wages earners," mechanical engineers, who “design the machines and mechanical systems of tomorrow that bring about human progress,” who “play a major role in designing automobiles, airplanes and spacecraft…involved on the front lines of the biotechnology, computer and electronic industries.”

Destroy America’s engineers, especially her electrical engineers, and you destroy the American Dream.

http://work.chron.com/average-entrylevel-mechanical-engineers-salary-11090.html

Fri, 08/29/2014 - 06:49 | 5157516 doctor10
doctor10's picture

"Top 1%, over $388,905, 18.7% of all income, 35.1% of income taxes paid; Top 5%, over $167,728, 33.9% of all income, 56.5% of income taxes paid; Top 10%, over $120,136, 45.4% of all income, 68.3% of income taxes paid;"

 

And that right there is why there has developed an "oligarchy" in America. The top 10% have effectively "bought" government -paying more than 2/3 of the taxes

Thu, 08/28/2014 - 22:03 | 5156818 10mm
10mm's picture

Well. Until i hear a candid conversation about i cannot get shit for my dollar. FUCK EM.

Thu, 08/28/2014 - 22:04 | 5156824 Deer Hunter
Deer Hunter's picture

I want $10 a gal gas to get all the expendable crewmen off the road and out of my way. 

Thu, 08/28/2014 - 22:14 | 5156867 Deer Hunter
Deer Hunter's picture

We buy good food, energy, ammo, real estate and insurance, nothing else. Ammo is only one deflating, go figure.

Fri, 08/29/2014 - 00:03 | 5157149 AdvancingTime
AdvancingTime's picture

While inflation appears tame and government claims it is low it is growing. The seeds have been planted, and the number of them is somewhat shocking. Inflation lurks beneath the surface and is hidden away in the dark corners of our future. 

Want to know where the real cost of things is going, just look at the replacement cost from recent storms and natural disasters. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/06/inflation-lurks-beneath-and-hidde...

Fri, 08/29/2014 - 02:22 | 5157336 JR
JR's picture

Interesting, Bruce…

“Another factor that masks what is really happening is super and artificially low interest rates created by expansion of the monetary base, for example you can now rent or buy an automobile with a payment so low that it becomes difficult to say no, to many a lower payment means no inflation. This is really apparent in the housing market where mortgage rates have plunged causing the monthly payment of principle and interest on a thirty year loan to be $435 for each hundred thousand dollars borrowed down from $665 just a few years ago. This is a one-off and has temporarily skewed values playing havoc with both construction and rental markets. Do not be lulled into complacency as low interest rates have a dark side that includes discouraging saving and hurting those that have.

“Those who do not see inflation as a threat point to the fact that a computer cost far less today then in the past, innovation does help, but one factor concerning cost that often gets over looked is how long an item will last. Face it, we live in a disposable society. Many things are built not to last, or in ways that they cannot be repaired. When an item is purchased we should look at the length of its useful life and if it will have any residual value, then amortize the cost over the life of the item. This becomes more interesting when factoring in how instant gratification based our society has become. In the morning when I open the original front door of my home built in 1920 I often think of the new homes today where a front door has to be replaced after only ten years, this is a ‘quality inflationary cost factor’ that we tend to forget.”

Fri, 08/29/2014 - 01:25 | 5157275 BeerMe
BeerMe's picture

It is impossible for wages to grow with an artificial 0% interest rate.

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