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Funny you say that since this drop was mostly caused by inflation, which in turn was partly caused by putting money in the pockets of the people. There’s no fr

Funny you say that since this drop was mostly caused by inflation, which in turn was partly caused by putting money in the pockets of the people. There’s no free lunch. Inflation was up above 6% and people saw their buying power drop by 8%. That’s about it right there.

SubiculumCode 3y ago
This drop wasn't caused by inflation..it was post-tax decrease, but not a pre-tax decrease. That is, its exacly because of a change in tax policy. Inflation didn't even appear in the article, unless I'm blind.
- RhodesianHunter 3y ago
  It's literally the first sentence. "Real median household income" - the real means that it's inflation adjusted. "After tax" just tells us specifically what's being measured.
  - Retric 3y ago
    After tax is used because inflation adjusted before tax median income only dropped by 2.3%. Inflation may have represented at most 1/4th of the drop ignoring all other causes, but 3/4 comes from changes in tax policy.
alex_young 3y ago
Most of the stimulus went to business and governments, not individuals: https://web.archive.org/web/20230920080933/https://www.nytimes.com/interactive/2022/03/11/us/how-covid-stimulus-money-was-spent.html https://web.archive.org/web/20230920080933/https://www.nytim...
- cpursley 3y ago
  Yes, creating massive inflation.
- Aurornis 3y ago
  The article refers to changes in tax policy that go beyond pandemic stimulus. Focusing only on pandemic stimulus misses the big picture. Either way, injecting money into the economy at this scale creates significant inflation. This inflation reduces inflation-adjusted incomes. It doesn’t matter all that much if it’s going to people or businesses, it’s going to cause inflation.
  - oehpr 3y ago
    I dunno why this always gets brought up. What causes inflation? Money moving in the economy. Don't want to cause inflation? Give your money to rich people, they will just sit on it. Same as burning it. Give it to poor people and they use the money to get the things that they need. Moving the money. Causing inflation. Which means your assets are less valuable, and poor people move up. It's only reflecting the relative shift of the country. You reach your hand down to lift someone up, and shock and horror, you are no longer above them.
    - slashdev 3y ago
      > Causing inflation. Which means your assets are less valuable, and poor people move up. You’ve got it backwards. Assets tend to track inflation. Rich people do just fine. Wages do not. Poor people suffer the brunt of it. Inflation increases the inequality.
    - sangnoir 3y ago
      > Give your money to rich people, they will just sit on it Which does precious little for the economy, so there's bo economic reasoning for doing this. If you want an economic stimulus, give money to poor people instead.
  - Projectiboga 3y ago
    This is a real decline not inflation adjusted. When the child tax credit and the stimulus money was given out, the lower half of the individuals spent their money quickly. This is a long standing economic fact as your income grows your ability to spend it all efficiently and especially quickly declines. There are huge differences in the velocity of income circulation between the bottom quintile and the top quintile. It gets easier to wait to make a big purchase when your not hand to mouth so the 2017 tax cuts along with their punitive incremental middle class tax hikes every odd tax year through 2017. That tax bill made the wealthy tax cuts permanent but has a stealth increase every odd tax year, which are reductions in temporary adjustments to pull the wool over our eyes. The GOP gamed the way the CBO scores bills actual costs with this monstrosity. The top quintile isn't creating jobs they are enjoying their higher interest rates while they wait for bargains to materialize later.
Mistletoe 3y ago
Household income after taxes has nothing to do with inflation as far as I know. What scares me most about this article is people taking home 8.8% less while everything inflated around them and the median price of a home went from 320k in 2020 to 480k by the end of 2022. https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS
- RhodesianHunter 3y ago
  "Real median household income" is inflation adjusted, so yes it does.
  - Retric 3y ago
    Except the before tax incomes only fell by 2.3% so inflation was largely irrelevant. The real story is our median household is worse off by 6.5% due to changes in tax policy. That’s a huge shift.
    - RhodesianHunter 3y ago
      We know for a fact that inflation was roughly 8% during the period in question, so I'm not sure how the math works on what you're suggesting.
      - deleted 3y ago
        [deleted]
      - Retric 3y ago
        Because inflation also raised people’s nominal before tax incomes. The net effect from inflation accounting from both the impact on wages and expenses was therefore negative 2.3%.
  - Mistletoe 3y ago
    Oh I totally missed the Real part, you are right thanks.
- 3y ago
RhodesianHunter 3y ago
> which in turn was partly caused by putting money in the pockets of the people Folks with no or little economics education have no concept of supply driven inflation, which is exactly what you get when a pandemic cripples global JIT supply chains.
rahimnathwani 3y ago
this drop was mostly caused by inflation No. Median real income before taxes (i.e. income measured in 2022 dollars) dropped by 2.3%. But after taxes the drop was 8.8%.
- deleted 3y ago
  [deleted]
- spullara 3y ago
  Do you know how they calculate median real income? By taking into account inflation. "Real median household income fell by 2.3% from $76,330 in 2021 to $74,580 in 2022. Income estimates are expressed in real or 2022 dollars to reflect changes in the cost of living. Between 2021 and 2022, inflation rose 7.8%; this is the largest annual increase in the cost-of-living adjustment since 1981."
  - ethbr1 3y ago
    Both pre- and post-tax sides are inflation-adjusted to 2022 using C-CPI-U.
srsqsonyl 3y ago
[flagged]
metabagel 3y ago
I think supply chain disruption was a bigger factor.
- Farfignoggen 3y ago
  The supply chain disruptions caused by the Pandemic is the one major factor that's often overlooked and specifically the longer term disruption that event caused to the Supply Chain Economy Of scale and all that can not be reestablished overnight. The disruptions caused by all those pandemic related restaurant closings drastically altered the Agricultural supply chain economy of scale as farmers were forced to discard all that food/dairy production for lack of any functioning restaurant industry to purchase that production. And the Trucking/Shipping interests in that Agricultural supply chains losing all that business and having layoffs there and some interests going out of business as the result and Independent Truckers finding work in other market goods transportation/shipping if they could at that time. So just measure the time it will take to reestablish a longer term Agricultural products supply chain economy of scale and that's a good part of the reason that food prices remain higher to this day regardless of the supply of money in the economy!
  - deleted 3y ago
    [deleted]
flapjaxy 3y ago
I've recently heard there's the IMF has been looking at the effect of supply side effects on inflation. The best summary I can find is in this NY Fed post (https://libertystreeteconomics.newyorkfed.org/2022/08/how-much-did-supply-constraints-boost-u-s-inflation/ https://libertystreeteconomics.newyorkfed.org/2022/08/how-mu...) "Our analysis of the relative importance of supply-side versus demand-side factors finds 60 percent of U.S. inflation over the 2019-21 period was due to the jump in demand for goods while 40 percent owed to supply-side issues that magnified the impact of this higher demand." I've always found it interesting that econ discourse usually takes such a rigid view for the causes of phenomenon, if this were another quantitative discipline I imagine there'd be a softer position. Anywho, just chiming in to opine that the models for economics folks argue about is likely more nuanced than portrayed.
throw0101b 3y ago
> There’s no free lunch. Inflation was up above 6% and people saw their buying power drop by 8%. That’s about it right there. Except that only a portion of the inflation may have been caused by all that money. Or have you forgotten the geopolitical events that caused a spike in food (grain) prices and especially energy costs? Let's not forget about supply chain issues: * https://www.frbsf.org/economic-research/publications/economic-letter/2022/june/how-much-do-supply-and-demand-drive-inflation/ https://www.frbsf.org/economic-research/publications/economi... * https://www.frbsf.org/economic-research/indicators-data/supply-and-demand-driven-pce-inflation/ https://www.frbsf.org/economic-research/indicators-data/supp... On the flip side we don't have high unemployed that takes over a decade to slowly go down (like Obama had to deal with post-2008 because the GOP didn't want to spend). Biden was there for the long slog to get people working again. Yes, inflation was high for ~18 months: would have a not-hot economy be better or worse than that?

SubiculumCode 3y ago

This drop wasn't caused by inflation..it was post-tax decrease, but not a pre-tax decrease. That is, its exacly because of a change in tax policy. Inflation didn't even appear in the article, unless I'm blind.

RhodesianHunter 3y ago
It's literally the first sentence. "Real median household income" - the real means that it's inflation adjusted. "After tax" just tells us specifically what's being measured.
- Retric 3y ago
  After tax is used because inflation adjusted before tax median income only dropped by 2.3%. Inflation may have represented at most 1/4th of the drop ignoring all other causes, but 3/4 comes from changes in tax policy.

alex_young 3y ago

Most of the stimulus went to business and governments, not individuals: https://web.archive.org/web/20230920080933/https://www.nytimes.com/interactive/2022/03/11/us/how-covid-stimulus-money-was-spent.html https://web.archive.org/web/20230920080933/https://www.nytim...

cpursley 3y ago
Yes, creating massive inflation.
Aurornis 3y ago
The article refers to changes in tax policy that go beyond pandemic stimulus. Focusing only on pandemic stimulus misses the big picture. Either way, injecting money into the economy at this scale creates significant inflation. This inflation reduces inflation-adjusted incomes. It doesn’t matter all that much if it’s going to people or businesses, it’s going to cause inflation.
- oehpr 3y ago
  I dunno why this always gets brought up. What causes inflation? Money moving in the economy. Don't want to cause inflation? Give your money to rich people, they will just sit on it. Same as burning it. Give it to poor people and they use the money to get the things that they need. Moving the money. Causing inflation. Which means your assets are less valuable, and poor people move up. It's only reflecting the relative shift of the country. You reach your hand down to lift someone up, and shock and horror, you are no longer above them.
  - slashdev 3y ago
    > Causing inflation. Which means your assets are less valuable, and poor people move up. You’ve got it backwards. Assets tend to track inflation. Rich people do just fine. Wages do not. Poor people suffer the brunt of it. Inflation increases the inequality.
  - sangnoir 3y ago
    > Give your money to rich people, they will just sit on it Which does precious little for the economy, so there's bo economic reasoning for doing this. If you want an economic stimulus, give money to poor people instead.
- Projectiboga 3y ago
  This is a real decline not inflation adjusted. When the child tax credit and the stimulus money was given out, the lower half of the individuals spent their money quickly. This is a long standing economic fact as your income grows your ability to spend it all efficiently and especially quickly declines. There are huge differences in the velocity of income circulation between the bottom quintile and the top quintile. It gets easier to wait to make a big purchase when your not hand to mouth so the 2017 tax cuts along with their punitive incremental middle class tax hikes every odd tax year through 2017. That tax bill made the wealthy tax cuts permanent but has a stealth increase every odd tax year, which are reductions in temporary adjustments to pull the wool over our eyes. The GOP gamed the way the CBO scores bills actual costs with this monstrosity. The top quintile isn't creating jobs they are enjoying their higher interest rates while they wait for bargains to materialize later.

Mistletoe 3y ago

Household income after taxes has nothing to do with inflation as far as I know. What scares me most about this article is people taking home 8.8% less while everything inflated around them and the median price of a home went from 320k in 2020 to 480k by the end of 2022. https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS

RhodesianHunter 3y ago
"Real median household income" is inflation adjusted, so yes it does.
- Retric 3y ago
  Except the before tax incomes only fell by 2.3% so inflation was largely irrelevant. The real story is our median household is worse off by 6.5% due to changes in tax policy. That’s a huge shift.
  - RhodesianHunter 3y ago
    We know for a fact that inflation was roughly 8% during the period in question, so I'm not sure how the math works on what you're suggesting.
    - deleted 3y ago
      [deleted]
    - Retric 3y ago
      Because inflation also raised people’s nominal before tax incomes. The net effect from inflation accounting from both the impact on wages and expenses was therefore negative 2.3%.
- Mistletoe 3y ago
  Oh I totally missed the Real part, you are right thanks.
3y ago

RhodesianHunter 3y ago

> which in turn was partly caused by putting money in the pockets of the people Folks with no or little economics education have no concept of supply driven inflation, which is exactly what you get when a pandemic cripples global JIT supply chains.

rahimnathwani 3y ago

this drop was mostly caused by inflation No. Median real income before taxes (i.e. income measured in 2022 dollars) dropped by 2.3%. But after taxes the drop was 8.8%.

deleted 3y ago
[deleted]
spullara 3y ago
Do you know how they calculate median real income? By taking into account inflation. "Real median household income fell by 2.3% from $76,330 in 2021 to $74,580 in 2022. Income estimates are expressed in real or 2022 dollars to reflect changes in the cost of living. Between 2021 and 2022, inflation rose 7.8%; this is the largest annual increase in the cost-of-living adjustment since 1981."
- ethbr1 3y ago
  Both pre- and post-tax sides are inflation-adjusted to 2022 using C-CPI-U.

srsqsonyl 3y ago

[flagged]

metabagel 3y ago

I think supply chain disruption was a bigger factor.

Farfignoggen 3y ago
The supply chain disruptions caused by the Pandemic is the one major factor that's often overlooked and specifically the longer term disruption that event caused to the Supply Chain Economy Of scale and all that can not be reestablished overnight. The disruptions caused by all those pandemic related restaurant closings drastically altered the Agricultural supply chain economy of scale as farmers were forced to discard all that food/dairy production for lack of any functioning restaurant industry to purchase that production. And the Trucking/Shipping interests in that Agricultural supply chains losing all that business and having layoffs there and some interests going out of business as the result and Independent Truckers finding work in other market goods transportation/shipping if they could at that time. So just measure the time it will take to reestablish a longer term Agricultural products supply chain economy of scale and that's a good part of the reason that food prices remain higher to this day regardless of the supply of money in the economy!
- deleted 3y ago
  [deleted]

flapjaxy 3y ago

I've recently heard there's the IMF has been looking at the effect of supply side effects on inflation. The best summary I can find is in this NY Fed post (https://libertystreeteconomics.newyorkfed.org/2022/08/how-much-did-supply-constraints-boost-u-s-inflation/ https://libertystreeteconomics.newyorkfed.org/2022/08/how-mu...) "Our analysis of the relative importance of supply-side versus demand-side factors finds 60 percent of U.S. inflation over the 2019-21 period was due to the jump in demand for goods while 40 percent owed to supply-side issues that magnified the impact of this higher demand." I've always found it interesting that econ discourse usually takes such a rigid view for the causes of phenomenon, if this were another quantitative discipline I imagine there'd be a softer position. Anywho, just chiming in to opine that the models for economics folks argue about is likely more nuanced than portrayed.

throw0101b 3y ago

> There’s no free lunch. Inflation was up above 6% and people saw their buying power drop by 8%. That’s about it right there. Except that only a portion of the inflation may have been caused by all that money. Or have you forgotten the geopolitical events that caused a spike in food (grain) prices and especially energy costs? Let's not forget about supply chain issues: * https://www.frbsf.org/economic-research/publications/economic-letter/2022/june/how-much-do-supply-and-demand-drive-inflation/ https://www.frbsf.org/economic-research/publications/economi... * https://www.frbsf.org/economic-research/indicators-data/supply-and-demand-driven-pce-inflation/ https://www.frbsf.org/economic-research/indicators-data/supp... On the flip side we don't have high unemployed that takes over a decade to slowly go down (like Obama had to deal with post-2008 because the GOP didn't want to spend). Biden was there for the long slog to get people working again. Yes, inflation was high for ~18 months: would have a not-hot economy be better or worse than that?