Real State of the Economy

Cactus at Angry Bear gives Us an excellent Post consisting of statistical analysis of the growth of Real Median Income through Presidential Administrations over the last fifty years. The first striking element I noticed immediately was that Real Median Income did not suggestively change over the interim; there being only approx. $7-8k of change for the entire Period. This seemed strange considering the vast expansion of the U.S. Economy over the Time, but then One has to consider the vast increase in the number of Households over the same epoch. This leads to several other ruminations.

The first Thought contemplated by me was that Carter preceded over the Period of greatest creation of Households, dragging down his numbers more than economic considerations, and Reagan reigned in a time where the Household Creation of the Baby Boomers had been fulfilled. I had another Thought that the JFK/LBJ era probably had the least Household creation dragging down the real Median Income growth, seconded by the Reagan Period. The Clinton years are fundamentally indicative of economic growth because there was essential Household creation in the Period, but growth of Real Median Income was still Second in the rankings, hard evidence that the ‘tough Love’ of increased Tax rates were necessary for that economic growth. The real glaring element comes in the negative growth of the GWB era; Housing growth has been massive, and Taxation has been extremely low, but actual Household creation has been lower unlike the other negative growth Periods of Nixon/Ford, Carter, and HWB.

The statistical information for the foregoing has not been checked by myself, I relying only on personal knowledge attained by living through the whole Age. It still is worth checking out, because elemental Household creation undoubtedly remains the sole economic factor outside economic growth determining Real Median Income growth. The possible exception here lies in the Immigrant Household Creation data. The negative Income growth shown in the George W. Bush administrations, connected to a slowed rate of Household creation, dictates that economic growth during this Period has been only of Inflation origin, and that economic models have been skewed by refusal to check the data against real Physical Output. Such a condition may be called ‘Hidden Recession’. lgl