The new American standard of living

Americans are getting poorer faster than they got rich

In 2005, few people on the planet could afford Americans’ standard of living. Not even Americans.

But now the wheel has turned. The US is facing financial reality. And yesterday, we gave you our most audacious forecast ever: the popolo minuto are headed for the barricades. Yes, dear reader, prepare for revolution, repression, and ruin. Buy stocks in companies that make police batons and pepper gas…prisons and window glass…drones and bandages.

The Christian Science Monitor:

A Long, Steep Drop for Americans’ Standard of Living

Think life is not as good as it used to be, at least in terms of your wallet? You’d be right about that. The standard of living for Americans has fallen longer and more steeply over the past three years than at any time since the US government began recording it five decades ago.

Bottom line: The average individual now has $1,315 less in disposable income than he or she did three years ago at the onset of the Great Recession — even though the recession ended, technically speaking, in mid-2009. That means less money to spend at the spa or the movies, less for vacations, new carpeting for the house, or dinner at a restaurant.

In short, it means a less vibrant economy, with more Americans spending primarily on necessities. The diminished standard of living, moreover, is squeezing the middle class, whose restlessness and discontent are evident in grass-roots movements such as the tea party and “Occupy Wall Street” and who may take out their frustrations on incumbent politicians in next year’s election.

Per capita disposal personal income — a key indicator of the standard of living — peaked in the spring of 2008, at $33,794 (measured as after-tax income). As of the second quarter of 2011, it was $32,479 — almost a 4 percent drop. If per capita disposable income had continued to grow at its normal pace, it would have been more than $34,000 a year by now.

The misery index — which combines inflation and unemployment — is almost back to where it was 30 years ago — after inflation had reached 13% and stocks had been going down for 16 years.

But wait. Things didn’t turn out so bad after that, did they? In the early ’80s came “Morning in America” and a 20-year boom.

Don’t count on it this time, dear reader. 1981 was everything 2011 is not. Back then, interest rates and inflation were sky high. Stocks were low. And Paul Volcker had just taken over at the Fed. When he said he was going to turn things around, he meant it.

Today, interest rates are at a half-century low…stocks are still expensive…and Ben Bernanke is as confused as Volcker was clear-headed. Turn things around now and you get rising interest rates, falling stock prices…and more misery. Look out the window. You can see the sun on the horizon twice a day. But only once is it rising.

The world has turned. Against us. Mitt Romney may have God in his pocket. But from our perch here at The Daily Reckoning headquarters in Paris, it looks more likely that the gods have gone over to the other side.

Here’s more…from Atlantic Monthly. There are six million more ‘workers’ in the US than there were 10 years ago. Well, they would be workers…if they could get jobs. Trouble is, there are fewer jobs today than there were then. In other works, over the decade, the US economy backed up. Here’s more:

Americans are getting poor faster than they got rich.