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For those in other countries wondering how the U.S. has sustained fifty years of household wage deflation and corporate profit inflation — it’s by issuing seque

For those in other countries wondering how the U.S. has sustained fifty years of household wage deflation and corporate profit inflation — it’s by issuing sequential waves of lower and lower ‘quality’ consumer credit (such as the subprime tranches popularized by the Big Short). That they’ve reached the point where they’re targeting advertising of grocery debt towards the half of the country’s population that could not afford food, medicine, and shelter without debt suggests that we’re nearing the limits of what the latest wave can solve. There certainly isn’t much runway left if they’re down to loans for utilities. So, the underlying question raised by this for me is: What will happen to the workforce when BNPL debt runs out?

sobellian 2mo ago
Household income has not deflated. https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N
- altairprime 2mo ago
  https://alfred.stlouisfed.org/series?seid=MEHOINUSA672N https://alfred.stlouisfed.org/series?seid=MEHOINUSA672N This is a better version of that chart; the Y-axis is pinned at $0 and it’s quite remarkable to see the year-over-year shift between 2024 and 2025 presented across the full timespan. If you’d like to explain your position on this and how either chart supports your own viewpoint on what’s going down with BNPL and debt and wages, I’m listening.
  - sobellian 2mo ago
    I'm just evaluating the claim that household income has deflated for 50 years. So I took the start of the data series at ~60k and compared it against the latest datapoint at ~80k. So I concluded that the data does not support your claim that household incomes have deflated for 50 years. I have no position on how household income influences BNPL.
    - john01dav 2mo ago
      What basket of goods does your source use for determining income in real terms? The ratio of money on essentials versus luxuries has changed over the past few decades, and it's done so unevenly across the population. For example, a young person looking to find a place to live today is going to face astronomically higher rents while someone who bought 30 years ago in a place like California that caps property tax growth may find that their monthly (or total over a long time) housing cost is vastly lower. Whether real wages have gone down depends on what you use as a benchmark for said wages. The federal reserve even has an article about this topic: https://www.federalreserve.gov/econres/notes/feds-notes/differences-in-rent-growth-by-income-1985-2019-and-implications-for-real-income-inequality-20211105.html https://www.federalreserve.gov/econres/notes/feds-notes/diff...
      - sobellian 2mo ago
        You can look at the linked page. It uses "Income in 2024 C-CPI-U (2000-2024) and R-CPI-U-RS (pre-2000) adjusted dollars." I would be interested in a dataset that shows deflated household income over this same period using a reasonable basket of goods. The FRED dataset shows an increase of roughly a third. It would take a very large adjustment to knock that down to significantly negative growth.
      - kelseyfrog 2mo ago
        While we can find extreme examples, we should be hesitant to conclude that they are a representative sample of the population. We should let outliers update our beliefs about means and medians very little to none for population level values. What analysis that has been done of disparate inflation points out: > The cost of medical care has more than quintupled since 1983, growing almost twice as fast as the overall price level. The BLS calculates that people 62 and older devote 11 percent of spending to medical care, while the general population devotes 8 percent. Figure 4 shows basket-share differences between older adults and the general population, and the price changes for those categories over the past 10 years. Loading figure 4... > Older adults also spend considerably more on housing (49 percent versus 45 percent for the general population). They spend relatively less in other major categories, including food and transportation, that had lower rates of inflation than medical care and housing. https://www.minneapolisfed.org/article/2024/breaking-down-inflation-by-race-age-parenthood-and-more https://www.minneapolisfed.org/article/2024/breaking-down-in...
altairprime 2mo ago
Related: New paper shows that 37% of workers in US saw real wages decline from 2021-2024 (1 hour ago) https://news.ycombinator.com/item?id=49355142 https://news.ycombinator.com/item?id=49355142

sobellian 2mo ago

Household income has not deflated. https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N

altairprime 2mo ago
https://alfred.stlouisfed.org/series?seid=MEHOINUSA672N https://alfred.stlouisfed.org/series?seid=MEHOINUSA672N This is a better version of that chart; the Y-axis is pinned at $0 and it’s quite remarkable to see the year-over-year shift between 2024 and 2025 presented across the full timespan. If you’d like to explain your position on this and how either chart supports your own viewpoint on what’s going down with BNPL and debt and wages, I’m listening.
- sobellian 2mo ago
  I'm just evaluating the claim that household income has deflated for 50 years. So I took the start of the data series at ~60k and compared it against the latest datapoint at ~80k. So I concluded that the data does not support your claim that household incomes have deflated for 50 years. I have no position on how household income influences BNPL.
  - john01dav 2mo ago
    What basket of goods does your source use for determining income in real terms? The ratio of money on essentials versus luxuries has changed over the past few decades, and it's done so unevenly across the population. For example, a young person looking to find a place to live today is going to face astronomically higher rents while someone who bought 30 years ago in a place like California that caps property tax growth may find that their monthly (or total over a long time) housing cost is vastly lower. Whether real wages have gone down depends on what you use as a benchmark for said wages. The federal reserve even has an article about this topic: https://www.federalreserve.gov/econres/notes/feds-notes/differences-in-rent-growth-by-income-1985-2019-and-implications-for-real-income-inequality-20211105.html https://www.federalreserve.gov/econres/notes/feds-notes/diff...
    - sobellian 2mo ago
      You can look at the linked page. It uses "Income in 2024 C-CPI-U (2000-2024) and R-CPI-U-RS (pre-2000) adjusted dollars." I would be interested in a dataset that shows deflated household income over this same period using a reasonable basket of goods. The FRED dataset shows an increase of roughly a third. It would take a very large adjustment to knock that down to significantly negative growth.
    - kelseyfrog 2mo ago
      While we can find extreme examples, we should be hesitant to conclude that they are a representative sample of the population. We should let outliers update our beliefs about means and medians very little to none for population level values. What analysis that has been done of disparate inflation points out: > The cost of medical care has more than quintupled since 1983, growing almost twice as fast as the overall price level. The BLS calculates that people 62 and older devote 11 percent of spending to medical care, while the general population devotes 8 percent. Figure 4 shows basket-share differences between older adults and the general population, and the price changes for those categories over the past 10 years. Loading figure 4... > Older adults also spend considerably more on housing (49 percent versus 45 percent for the general population). They spend relatively less in other major categories, including food and transportation, that had lower rates of inflation than medical care and housing. https://www.minneapolisfed.org/article/2024/breaking-down-inflation-by-race-age-parenthood-and-more https://www.minneapolisfed.org/article/2024/breaking-down-in...

altairprime 2mo ago

Related: New paper shows that 37% of workers in US saw real wages decline from 2021-2024 (1 hour ago) https://news.ycombinator.com/item?id=49355142 https://news.ycombinator.com/item?id=49355142