MMQH: What You Might Not Hear on the News
Monday Morning Quick Hits:
“We cannot absolutely prove that those are in error who say society has reached a turning point—that we have seen our best days. But so said all who came before us and with just as much apparent reason.”*
— Thomas Babington Macaulay, British historian, writing in 1839
In light of all the negativity and divisiveness coming out of Washington lately, we thought it would be a good time to share some positive anecdotes on the economy and our society from some of our recent readings. These are not data points or topics you will see or hear on the news, unfortunately, but we feel they are important to share.
From Brian Wesbury, “Fear the Spending, Not the Debt (Sept. 23, 2019)”…
“But here’s another reason not to fear the current debt of $22.5 trillion: the assets of all US households combined are $129.7 trillion. Yes, they have debts worth $16.2 trillion, but that still leaves a net worth of $113.5 trillion.
Now let’s imagine households paid off not only their own debts but the federal government’s as well. That would have left them with $91.4 trillion in mid-2019. That’s about 4.3 times GDP. From the early 1950s through the mid-1990s, this ratio – the net worth households would have after paying off their debt and the national debt – hovered between 2.8 and 3.3 times GDP. Now it’s near a record high.
None of this means US fiscal policy is in a good place; it’s just that the debt is manageable, we’re not going bankrupt.”
From Mark W. Perry, “America’s middle class is disappearing…but it’s because they’re moving up,” July 30 on aeir.org.
“Yes, the ‘middle class is disappearing’ as we hear all the time, but it’s because middle-income households in the US are gradually moving up to higher income groups, and not down into lower-income groups. In 1967, only 9% of US households (only 1 in 11) earned $100,000 or more (in 2017 dollars). In 2017, more than 1 in 4 households (29.2%) were in that high-income category, a new record high. In other words, the share of US households earning incomes of $100,000 or more (in 2017 dollars) has more than tripled! At the same time, the share of middle-income households earning $35,000 to $100,000 (in 2017 dollars) has decreased over time, from more than half of US households in 1967 (53.8%) to less than half (only 41.3%) in 2017. Likewise, the share of low-income households earning 35,000 or less (in 2017 dollars) has decreased from more than one-third of households in 1967 (37.2%) to below one-third of US households last year (29.5%), a near record low.”
From a WSJ editorial, “The 99% Get a Bigger Raise,” July 30.
On the BEA’s Annual Revisions to Personal Income Data: “The revisions show that employee compensation rose 4.5% in 2017 and 5% in 2018—some $4.4 billion and $87.1 billion more than previously reported. The trend has continued into 2019, with compensation increasing $378 billion or 3.4% in the first six months alone. Wages and salaries were revised upward to 5.3% from 3.6% in May year over year. And in June wages and salaries grew at an annual rate of 5.5%, which is a rocking 4.1% after adjusting for inflation…”
“The BEA also revised overall personal income up by 1.7% for 2017 and 2018 and transfer receipts down 0.7%. In sum Americans are earning more and relying less on government. Personal savings estimates were also increased by $217 billion for the last two years and are now $1.3 trillion, which means Americans are socking away more of their earnings. The personal savings rate was revised upward to 8.1% from 6.1% in May, which is much higher than the roughly 5% before the last two recessions…
“Corporate after-tax profits increased by about $220 billion between 2016 and 2018 while employee compensation swelled nearly $1 trillion. Corporate profits declined 2.9% in the first quarter of 2019 even as wages grew at an annual rate of 10.1% (emphasis added). This sure sounds like an economy that is benefiting the 99%.”*
And Last But Not Least, John’s beloved Green Bay Packers are 4-1!
We hope you have a great week, and please remember, it’s not all bad out there.
Source *Nick Murray (September 2019)