Americans are 40% poorer than before the recession

Calculating how poor people are based on comparing against a time known to have unrealistically high and unsustainable housing prices, which made up a very large portion of net worth, seems like clickbait. We haven't re-entered a housing bubble massive enough to make every a paper millionaire. We shouldn't sulk about that.

&quot;The recession is over&quot; has always struck me a political double-speak. We never left the recession; mainstream America just collectively forgot how it felt to have enough money. We have become accustomed to the 60 hour work weeks for folks fortunate enough to have jobs, chronic unemployment for those unfortunate enough to work outside of tech, the cheaper processed food, the increasing debt, and the lower standard of living. Being poor is the new norm, and &quot;the recession is over&quot; translates to &quot;get used to it buddy, it&#x27;s not getting any better.&quot;<p>Given that&#x27;s the case, I wonder what the phrase &quot;double dip recession&quot; we hear thrown around referring to impending repeat economic troubles actually translates into?

Why are they using the height of the real-estate bubble (2007) as the measure of previous net worth? If home prices were so out of whack in 2007, I would think their values might be influenced considering they include &quot;homes&quot; in the valuation.

I&#x27;m really worried about our economic future.<p>I think job creation has been decoupled from economic growth. That&#x27;s terrifying for the lower class today, and will eventually be terrifying to nearly everyone.<p>I also think central banking has lost its effectiveness. We&#x27;ve had 6 years of 0% interest and money printing -- the pedal is to the metal -- but labor participation for working-aged citizens is stuck at a low not seen since the mid-1980s.<p><a href="http://www.washingtonpost.com/blogs/wonkblog/files/2013/09/EmployPop2554Aug.jpg" rel="nofollow">http:&#x2F;&#x2F;www.washingtonpost.com&#x2F;blogs&#x2F;wonkblog&#x2F;files&#x2F;2013&#x2F;09&#x2F;E...</a><p>Scary stuff...

This study uses 2007 as it&#x27;s baseline which is like saying that lake levels are 40% lower than they were at the height of the last flood. Asset prices were overinflated in 2007, so you&#x27;d probably want to baseline somewhere between 2003 (the end of the early 2000s recession and 2007 to get a sense of how much worse off people actual are.

It looks like they don&#x27;t know the difference between nominal value and real value. In a housing bubble, the nominal worth of your house increases, but its real worth stays the same - unless, of course, you have a stock of houses that you can sell, but that&#x27;s not the case of most Americans.

It&#x27;s really amazing to contrast this thread with the thread currently up about the Gates Foundation report on good news in reducing disease in poor countries. I live in the United States, I do NOT own a house (I never have), I&#x27;ve had several career changes (bad planning on my part, no one else to blame) but I still consider myself very well off. I have use of this amazing device called the Internet to have intellectual conversations with friends any hour of the day or not. That alone would have been unimaginable in my childhood. There has been a lot of progress, and Americans are staggeringly wealthy by any reasonable worldwide standard. Moreover, Americans are living longer and healthier lives than ever before, and mostly don&#x27;t even notice that.[1] So, sure, many Americans don&#x27;t have as many on-paper financial assets as they appeared to have at the peak of the housing bubble, but so what? Americans can still take care of their children, still enjoy leisure, and still change where they live and what they do for a living with a freedom unknown in much of the world. If this is what it&#x27;s like to be poor in America, I have no problem with being poor. (Disclosure: I have lived outside the United States, and I have been to places with stark poverty. I have a point of comparison as I type this.)<p>[1] <a href="http://www.slate.com/articles/health_and_science/science_of_longevity/2013/09/life_expectancy_history_public_health_and_medical_advances_that_lead_to.html" rel="nofollow">http:&#x2F;&#x2F;www.slate.com&#x2F;articles&#x2F;health_and_science&#x2F;science_of_...</a> <a href="http://www.nature.com/scientificamerican/journal/v307/n3/box/scientificamerican0912-54_BX1.html" rel="nofollow">http:&#x2F;&#x2F;www.nature.com&#x2F;scientificamerican&#x2F;journal&#x2F;v307&#x2F;n3&#x2F;box...</a>

So, everyone&#x27;s already pointed out that it&#x27;s dumb to compare the amount of money you have now to the amount of money you had at the height of a bubble (where that money was unsustainable and over-inflated).<p>One thing that&#x27;s missing here, though, is the idea of amount of money to cost ratio.<p>For example, say you had $1000 in 2007. Now say that, in 2007, a loaf of bread cost $1000. In that year, you had enough money to buy 1 loaf of bread. Now, in 2014, you have $600 (40% less than 2007). But now, instead of $1000, a loaf of bread is $100. Now you have enough money to buy 6 loaves of bread. You technically have less money, but the value of each dollar you have is significantly more. So, are you really &quot;poorer&quot; now?<p>The issue with just looking at a single number when analyzing economic health is that it will never tell you the whole story. I can have a million dollars and still be in poverty if a gallon of milk costs 2 million.

I&#x27;m guessing most Americans net worth is based on the value of their homes, and property values for the most part have declined since 2007, this would make sense.

And that doesn&#x27;t even take into account inflation. (at least the article makes no mention of it, maybe the original report does)

Should have drawn a trend line to avoid a comparison that includes the bubble in real-estate value... but then it wouldn&#x27;t likely be such an ominous number.

Is this page violently broken for anyone else on desktop?

This makes me want to ask: Where did all of the money go? It had to go somewhere, right?

Man, I hate it when the rich get richer and the poor get poorer.... Ooh look, new iPhone!

40% of a random number is still a random number. People calculate stuff like this all the time without any actual basis in fact. Unless you have a rigorous knowledge of statistics and a careful process, most of these definitive statements are basically pulling numbers out of your ass.

Absolute trash analysis. Worse than garbage. I say worse because the analysis is so catastrophically wrong that the complete inverse could be true.<p>It&#x27;s using average. Average is a terrible data point. I think if you replace &#x27;average&#x27; with &#x27;median&#x27; you&#x27;ll have something more useful &gt;95% of the time. Maybe more.<p>For example, it is widely circulated that the gains have all gone to the rich. Well the losses also went to the rich. It&#x27;s theoretically possible that the median household, or even 90% of all households, have exhibited slow but linear growth since just before 2007. Meanwhile the upper echelon could have swung wildly down than up.<p>Now I&#x27;m not saying that&#x27;s the case. What I&#x27;m saying is that could be the case. The data presented provides insufficent information to make any type of determination on how &quot;Americans&quot; are doing.<p>Bah hum bug!<p>Edit: Yup. I deserve that for failure in reading comprehension. Oops.