Monday, May 12, 2014

LIES, DAMNED LIES & STATISTICS!

Many folks are sick by now of reading my diatribes about the pathetic economic malaise that has persisted for years.  I have opined that the lack of spending money and market DEMAND among the hoi polloi is a much bigger factor than taxes laid upon wealthier folks, who are stupidly and dishonestly referred to as "job creators" (so, Spunky, where are the jobs?).  Nothing could be further from the truth, but that bit of conventional "wisdom" has stuck like glue among most politicians, INCLUDING many feckless Dems!  I believe that anyone who is not conversant with basic economic market theory is going to be an abject fool when it comes to forming accurate concepts about how markets really work.  Many Republicans will intentionally distort the operation of market forces and many Dems will simply ignore them.

As I said, I have been pissing and moaning my opinions now for some time, but until now I haven't had much solid data to back my observations up--just my gut reactions, primarily based upon my observations in the record business.  Today, I discovered the US Bureau of Census Median (midpoint) and Mean (avg.) household income stats by region, at: 


Here are the most recent extractions for 13 years:

Table H-6.  Regions--All Races by Median and Mean Income: 1975 to 2012
(Households as of March of the following year.  Income in current and 2012 CPI-U-RS adjusted dollars (28))
Region and year
Number (thousands)
Median income
Mean income
Current dollars
2012 dollars
Current dollars
2012 dollars
2012
122,459
51,017
51,017
71,274
71,274
2011
121,084
50,054
51,100
69,677
71,133
2010 (37)
119,927
49,276
51,892
67,392
70,970
2009 (36)
117,538
49,777
53,285
67,976
72,767
2008
117,181
50,303
53,644
68,424
72,968
116,783
50,233
55,627
67,609
74,869
2006
116,011
48,201
54,892
66,570
75,810
2005
114,384
46,326
54,486
63,344
74,502
2004 (35)
113,343
44,334
53,891
60,466
73,501
2003
112,000
43,318
54,079
59,067
73,741
2002
111,278
42,409
54,127
57,852
73,837
2001
109,297
42,228
54,766
58,208
75,491
2000 (30)
108,209
41,990
55,987
57,135
76,180


It should be noted that the averages (means) in Table H-6 are much higher than the medians.  This would happen because the averages must take into account those households with really high incomes.  It is the principle illustrated by Bill Gates walking into a roomful of homeless people, and the average per-person income immediately shoots way up, but it will drop just as soon as Bill Gates leaves the room, and the others will remain no better off.  Such averages are almost worthless as data.

The median incomes are better stats for comparison, because a "median" is a true mid-point: half below and half above.  Note, that in a household getting $51,017 annually, if there are two adult earners therein, each is "averaging" only $25K or so!  That ain't chicken-feed!

The measured median household incomes has risen slowly from almost $42K in 2000 to $51K in 2012.  That is an "average" of about 6.9% a year.


The following table shows the percentage shares of aggregate income distribution by brackets.  The 5 fifths listed add up to 100%:
4 to 5.









Table H-2.  Share of Aggregate Income Received by Each Fifth and Top 5 Percent of Households, All Races:  1967 to 2012

(Households as of March of the following year)


Year
Number (thousands)
Shares of aggregate income

Lowest fifth
Second fifth
Third fifth
Fourth fifth
Highest fifth
Top 5 percent



2012
  122,459 
  3.2 
  8.3 
  14.4 
  23.0 
  51.0 
  22.3 

2011
  121,084 
  3.2 
  8.4 
  14.3 
  23.0 
  51.1 
  22.3 

2010 (37)
  119,927 
  3.3 
  8.5 
  14.6 
  23.4 
  50.3 
  21.3 

2009 (36)
  117,538 
  3.4 
  8.6 
  14.6 
  23.2 
  50.3 
  21.7 

2008
  117,181 
  3.4 
  8.6 
  14.7 
  23.3 
  50.0 
  21.5 

2007
  116,783 
  3.4 
  8.7 
  14.8 
  23.4 
  49.7 
  21.2 

2006
  116,011 
  3.4 
  8.6 
  14.5 
  22.9 
  50.5 
  22.3 

2005
  114,384 
  3.4 
  8.6 
  14.6 
  23.0 
  50.4 
  22.2 

2004 (35)
  113,343 
  3.4 
  8.7 
  14.7 
  23.2 
  50.1 
  21.8 

2003
  112,000 
  3.4 
  8.7 
  14.8 
  23.4 
  49.8 
  21.4 

2002
  111,278 
  3.5 
  8.8 
  14.8 
  23.3 
  49.7 
  21.7 

2001
  109,297 
  3.5 
  8.7 
  14.6 
  23.0 
  50.1 
  22.4 

2000 (30)
  108,209 
  3.6 
  8.9 
  14.8 
  23.0 
  49.8 
  22.1 










Note that the higher the income bracket, the larger the share.  The top 5% share of 22.3% is included in the 51% of the "highest fifth."  So, the top 5% has 22.3% of that nut, and the other 15% have the remaining 28.7%; thus, 49% of the remaining aggregate income is shared among 80% of US households!


The following table shows the actual average incomes shared by each fifth of the households.  The top fifth's average is almost $182K, yet the top 5% within that bracket average $318K!  That means the other 95% of that highest 20% of households pull down that top 5% figure to "only" $182K!   One should compare these numbers with the median household income (Table H-6) for 2012 of $51,017 which, as one can see, hits within the "third fifth" bracket below.  The following table also shows that 40% of US households received less than $30K gross last year, while the top 5% got over $318K.


Table H-3.  Mean Household Income Received by Each Fifth and Top 5 Percent, All Races:  1967 to 2012
(Households as of March of the following year.  Income in current and 2012 CPI-U-RS adjusted dollars (29))
Year
Lowest fifth
Second fifth
Third fifth
Fourth fifth
Highest fifth
Top 5 percent
Current Dollars
2012
  11,490 
  29,696 
  51,179 
  82,098 
  181,905 
  318,052 
2011
11,239
29,204
49,842
80,080
178,020
  311,444 
2010 (37)
10,994
28,532
49,167
78,877
169,391
287,201
2009 (36)
11,552
29,257
49,534
78,694
170,844
295,388
2008
11,656
29,517
50,132
79,760
171,057
294,709
2007
11,551
29,442
49,968
79,111
167,971
287,191
2006
11,352
28,777
48,223
76,329
168,170
297,405
2005
10,655
27,357
46,301
72,825
159,583
281,155
2004 (35)
10,244
26,212
44,411
70,026
151,438
263,896
2003
9,996
25,678
43,588
68,994
147,078
253,239
2002
9,990
25,400
42,802
67,326
143,743
251,010
2001
10,136
25,468
42,629
66,839
145,970
260,464
2000 (30)
10,157
25,361
42,233
65,653
142,269
252,400

These numbers clearly demonstrate my repeated observations that the bulk of the population is losing spending money to the wealthier classes who simply don't spend much money.  That lack of SPENDING is clearly responsible for our economic malaise for the past several years!

The recently reported rise in the stock markets is irrelevant to these numbers because most US households have NOTHING to do with the stock markets!

The OBVIOUS solution is to "redistribute" some of that wealth imbalance through the power of taxation to funnel more spending money to the less wealthy households.

NOT because the wealthy should be punished!  But because their investments and the economy generally will degrade further over the long term if the bulk of the ordinary people do not have spending money!

As I have said many, many times, there is NO SUCH THING as a "supply-side" market--ALL markets are DEMAND-DRIVEN!  It should be obvious that there must be a demand for things before a market for sellers of those things will exist!

So, you can decide for yourself if any of this makes any difference.  I must confess my knowledge and appreciation of late English Prime Minister Benjamin D'Israeli's overriding observation about there being 3 kinds of lies:  Lies, DAMNED lies and Statistics!

No comments: