A Long, Steep Drop for Americans' Standard of Living
October 24, 2011
The standard of living for Americans has fallen longer and more steeply over the past three years than at any time since the U.S. government began recording it five decades ago. While it is tempting to blame falling incomes alone for these required changes in consumer behavior, net wealth and inflation-driven price increases have also played a part, says CNBC.
- Per capita disposable personal income peaked in the spring of 2008 at $33,794 while this same metric was $32,479 for the second quarter of 2011, constituting almost a 4 percent drop.
- Sixty-four percent of Americans worry that they won't be able to pay their families' expenses at least some of the time.
- Inflation has been pegged at 3.25 percent since mid-2008, with large price increases in gas and food.
- Since 2007, Americans' collective net worth has fallen about $5.5 trillion, or more than 8.6 percent, with $4.7 trillion of this loss coming from the depreciation of real estate value.
Inflation has damaged Americans' standard of living, particularly for those on a fixed income. This is true of senior citizens who often rely on Medicare and Social Security payments to get by. Whereas seniors would at one time have made up this difference by dipping into savings or investment funds, declines in asset values have had hugely detrimental effects on net wealth. A poor investment environment in which the Standard & Poor's index is up a mere 3.2 percent since 1999 has caused 401(k) plans to fail to achieve expected gains (especially given the roaring stock market of the 1990s).
Source: Ron Scherer, "A Long, Steep Drop for Americans' Standard of Living," CNBC.com, October 19, 2011.
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