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Comment by milesskorpen | Hacker News Reader

This is not true: https://fred.stlouisfed.org/series/A939RX0Q048SBEA This is real GDP per capita

GDP says almost nothing about what individuals lives are like, just look at the various petroleum states. As to poor people’s lives in the US, it’s basically flat with wage growth or loss depending on how you calculate inflation over the last 40 years.

The median income earners in Q1 1990 made 408$/week, one inflation source puts that at 951.17$/week in Q1 2023, vs 1095$ so is what the actual dividing line was. https://fred.stlouisfed.org/series/LES1252881500Q https://www.usinflationcalculator.com/ So 0.3% annual growth over that timeframe with many ups and downs so numbers also look different depending on what exact dates are chosen.

The line between 1st and 2nd quartile is again basically flat, though the data doesn’t go before 2000. https://fred.stlouisfed.org/series/LEU0252916100A

Though again there’s many ways of calculating inflation, and many of them show that hypothetical person worse off. And of course individuals aren’t going to stay at exactly the same income band so many many people really are significantly worse off.

This doesn't address the claim oblio was making - 'People are poorer than they were in 1990, especially the mid to lower classes' - real GDP per capita could double but it all be captured by the top quartile, for example.

(I think the claim is still wrong, and that all quartiles are doing better in real terms, but that's a tougher thing to measure)

https://wtfhappenedin1971.com/

Annual wages are about 15% higher today compared to 1971 in real terms. Real terms is a bit suspect in this case as wage earners are more likely to pay nominal rent then owner equivalent rent. It may well be accurate that the average wage earner is worse off today then they were in 1971.

I'd venture a speculation that this is reflected in media, sitcoms of the 70s rarely had roommates - and the 80s/90s poked fun of those who lived in their parents basements. Roommates are relatively common in shows today.

Shared living arrangements have been prevalent long before the 70s, boarding houses and the like. I wouldn't rely on film and television industry to be exactly that representative of the times.

Well forget that facile analysis and go back to your parents generation. They afforded houses, current generation cannot afford houses. It’s obvious that the current generation got gypped.

> Annual wages are about 15% higher today compared to 1971 in real terms.

Since 1971, the cumulative inflation rate was around 700%, with an average annual inflation being well over 3%.

So while wages increased 15%, the price of everything else around us increased over 700%.

The 15% increase in wages is in real terms, meaning it's already been adjusted with inflation. Think of it this way: in nominal terms, wage increase would be 715%.

+15% is x1.15, +700% is x8. 1.15x8 is 9.2 so the number you want is +820%.

Mean GDP per capita, real or nominal, is a useless metric for almost all purposes. When we're talking about average people's lives, it's worse than useless.

As someone alive 30 years ago, it isn't as clear cut as the biased graph.

Gasoline was roughly 1/3rd the price, but 4 years of state college was 20k, not 100k.

A house I grew up in, while 30 years newer, cost 80k compared to 300k now, even though it needs a lot more work.

Minimum wage there went from 4.25 an hour 30 years ago to 7.5.

Health care costs have gone up way more than double.

So maybe people make twice as much cash, but their costs for the things they actually need, without bullshit fake adjustments, cost 3 to 4 times more than they used to.

One could argue for better, lik how react is "better" than html forms. But it isn't really worth the cost to me.

Excite was about as good at getting me search results for what I am looking for as google has enshittified itself to now.

GDP per capita is a poor measure of general wellbeing since it doesn't account for changes in the cost of living and is skewed by funny business in stock markets.

Most importantly, it's measured using something that is halving in value every ten years.

https://fred.stlouisfed.org/series/M2SL

Real GDP is supposed to account for that with the GDP deflator. Whether it actually does or not is a different story since I'm not knowledgable to know the details of that calculation, but I agree with your sentiment. Per-capita GDP has nothing to do with wealth distribution and with a depreciating currency, those at the bottom get the short end of the stick.

As with most calculations in Keynesian economics, it doesn't take into account the devaluation of the monetary unit, at best it only looks at CPI which is extremely misleading. CPI is misleading because it doesn't consider the devaluation of the basket of goods - it assumes they've stayed the same value - and it completely ignores hard assets like housing even though that's something everyone wants to buy. Money supply expansion (total debt), or price increases of hard assets is a much better indicator of devaluation of the monetary unit, but that doesn't provide the figures they want the public to see.

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." Henry Ford

Real GPD...

Real GDP uses CPI as a correction factor making it highly misleading.

CPI is thoroughly flawed. It doesn't take into account that consumables are actually falling in value by 5%/year due to ever increasing efficiencies of production, and it only includes a carefully selected basket of goods which notably doesn't include hard assets like real estate. It's algorithm is even changed through years and if we use algorithms from previous decades, they produce much higher figures.

It completely ignores the fact that the fiat currencies are devalued through money supply inflation (the real inflation)

GDP is a terrible metric to illustrate your point. People have less disposable income because living costs have increased far quicker than wages, it’s really that simple. The majority of adults know this through lived experience, it’s extremely obviously that people are poorer on average than in the 90’s. That you’re having to search for statistics to answer this question reveals something about your living situation.

You're measuring GDP in something that's being devalued by half every ten years through supply expansion.

https://fred.stlouisfed.org/series/M2SL

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