Thursday, May 19, 2016

This One Number Foretold Donald Trump’s Rise

What rings home here is that the slight decline of the medium income is in the face of plenty of number games to keep those numbers up and that is not enough.  Far too many families are not happy.  It also explains the stagnation of housing markets as well.  If the Middle class were expanding dynamically the income base would show a rise.  Thus we have added 13,000,000 new workers and have not increasded family incomes.  That was not 13,000,000 new families and much of that new income went to sustain family incomes which still fell. 

Thus it is actually much worse than thought.  Of course they are angry and a centrist business man who has their back has to be very attractive.. Trump will not magically solve every problem or necessarily a lot of them even but he will voice the interests of the American people and ensure everyone gets on that page.  And you cannot realistically ask for more.

And yes that is why a socialist is been given a hearing as well since socialism essentially helps families by picking up a significant share of social costs for the whole community.  It is not the best way to do it but presently it is the only way.  That is why Donald Trump will install a sane medical insurance system that is single pay and universal.  A working system can always be made better.

This one number foretold Donald Trump’s rise

By Rick Newman | Yahoo Finance – 19 hours ago

Pundits and prognosticators are in a rare mea culpa moment, acknowledging how badly they misjudged Donald Trump as a presidential candidate and apologizing for being so narrow-minded. But they didn’t need to travel to dozens of campaign events or poll hundreds of Iowans to understand Trump’s appeal. All they had to do was understand one single number: $55,191.

That was median household income, adjusted for inflation, in June 2015, the month Trump declared he was running for the Republican presidential nomination. That number is neither good nor bad on its own, but when you compare it with a second number, the problem becomes clear. In January 2000, median household income was $57,371, which means when Trump declared his candidacy, the buying power of the typical family had fallen 4% during the prior 15 years.

This simple chart, courtesy of Sentier Resarch, shows the problem. This is an index of median household income, in today’s dollars, which accounts for inflation and other factors over time. That allows apples-to-apples comparisons between now and then. The red line represents the income index (left scale), while the gray line shows the unemployment rate (right scale).

Income has improved considerably during the last 12 months, and the latest reading, from March, is just about equal to where it was in 2000. But that is not progress – for many families, it’s 15 lost years in which they fell behind on quality of life, saving for retirement and providing for their kids. And while median household income reflects a midpoint, there are undoubtedly many families that are worse off than they were 15 years ago, and may never catch up.

Trump has never indicated that falling household income was the one single thing that motivated him to run for president. But his entire populist campaign is built on a theme of America in decline. “America doesn’t win any more,” he says repeatedly on the trail, citing suspect trade deals, offshored America jobs and waning national pride. “We need to make America….” Well, you know the rest.

The coastal elites who are fortunate enough to have their opinions publicized in the press – and are now retracting various predictions about Trump’s inevitable flameout -- cited all kinds of familiar data as evidence Trump’s raw-knuckled populism would never catch on: Strong job growth, a low unemployment rate, new highs for the stock market, a rebound in the housing market, new records for overall net worth.

Those are all legitimate data points, but understood correctly they actually reinforce the troubling picture of the typical family enduring hard times. There are now nearly 13 million more U.S. jobs than there were in 2000, for instance, but if median household income is essentially the same, that’s de facto evidence that many jobs pay less than they used to. Housing and financial net worth are indeed at or near new highs, but if the gains are clustered among the wealthy that doesn’t tell you anything about the fortune of the middle or lower classes. Meanwhile, we know income inequality has worsened, meaning the haves have more and the have-nots – well, they flocked to Donald Trump (and his Democratic populist cousin, Bernie Sanders).

For those wondering, Yahoo Finance has been calling out the problem of stagnant income since way before the 2016 elections, and since Trump declared his candidacy we’ve highlighted the legitimate hardships faced by many of his ardent supporters. We never went as far as predicting Trump would triumph over 16 fellow Republicans in the primaries, and we’ve faulted Trump for bad logic on trade, a wildly improbable tax plan and another economic absurdity or two. But last year, when the press was mostly dismissing Trump, we argued that “something is brewing in America, and that helps explain Donald Trump’s popularity.”

The question now is whether America is so bad off, and Trump’s prescription has such broad appeal, that he’ll win the White House in November. The evidence strongly suggests no. As the chart above shows, income gains have picked up nicely during the last year or so, and many economists think it’s inevitable that strong hiring during the past three years will start to push wages up even more.

It’s also true that for all the displaced, pitchfork-weilding workers, many Americans are getting ahead. Half of Americans surveyed tell Gallup they’re upbeat about their financial situation, the highest portion since the bubble year of 2007. And the policies that have helped the wealthy will trickle down at least a little further into the economy, as homeowners, for instance, start to feel more confident spending money and rising interest rates help savers earn a bit more. Anybody stupid enough to make predictions risks being wrong, of course, but Trump hasn’t upset everything about the U.S. economy. He’s just shone a floodlight on the part that has tipped badly out of balance.

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