Income averaging

Submitted by Prometheus 6 on May 8, 2006 - 8:51am.
on |

One of the reasons for the disconnect between statistics and most people's quality of life is where prices rise and fall .

Most everybody these days can point to their own list of rising expenses. Electricity, air travel, medical care and even staples such as diapers cost more. Rents are jumping as the housing boom cools, just as property taxes are soaring to reflect the price appreciation of the hotter days.

Plus, interest charges are rising on credit card balances, home-equity lines of credit and adjustable-rate mortgages.

This is how it feels when the days of cheap energy and easy money give way to $70 barrels of oil and ascending interest rates. The economy may be strong, but many people are feeling pinched.

I find it interesting how the price of necessities climb while the price of crap, frills and luxuries fall.

Another reason for the disconnect is Republicans present their favored statistics as individual points and no one connects the dots. For instance, the Bureau of Labor Statistics says for urban consumers the Consumer-Price Index for the twelve months ending Dec 2005 increased by 3.4%. Minor inflation...sounds good.

The BLS also says wages increased nationally over that same time frame by 2.6% . If you say "Inflation is under control and wages increased by 2.6%" sounds cool, and has the added benefit of being true. But if (wage increase - inflation) resolves to a negative number, as it does in this case, you are losing to net inflation.

And yes, it's more complex than that. The massive inequality in the distribution of wealth and income means it's actually much worse.