Here Come The Money Helicopters

Source: Wikimedia. 

Dear Diary,

The summer is slipping away. In the morning, mists hang over the fields. The chestnut trees have already turned a rust color. We start a fire in the kitchen fireplace to keep our mother warm.

It wasn’t much of a summer in Europe this year. Still, we’re sorry to see it go. This weekend we will pack up the house… turn off the water… close the shutters… and head for the airport.

We’re headed to China first. Stay tuned…

A Puzzling Paradox

Meanwhile, the first revision of the GDP numbers for the second quarter. We expected them to show substantial weakness. Instead, they show what looks like strength. The US economy expanded at a 4.2% rate in the second quarter, adjusted for inflation.

The economy may be growing. Stocks may be near a record high. But the typical American owns no stocks and his prospects are depressing. Here is a report from the New York Times:

For five years, the United States economy has been expanding at a steady clip, the stock market soaring, the headlines filled with talk of recovery. Yet public opinion polling shows most Americans still think the economy is pretty miserable.

What might account for the paradox? New data from a research firm offers a simple, frustrating answer: Middle-class American families’ income is lower now, when adjusted for inflation, than when the recovery began half a decade ago.

This is hardly news to us. We’ve been following the real economy – as best we could – for the last 15 years. Dear readers already know household income, hourly wages and household wealth were all down – for most people.

The averages are distorted by the few at the very top, but the typical American suffered a big plunge in wealth in 2008-09… and has never recovered. In fact, he is worse off today than he was at the bottom of the hole in 2009.

In June of that year, according to Sentier Research, the median family earned $55,589. Today, that figure is $53,891, adjusted for inflation. That “median” family is right at the middle of all US households. So, half of the people you see on the streets or in the shopping malls have suffered even bigger income losses.