Interesting Statistics: Are We Worse Off Financially Than Previous Generations?

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All those experts, and we’re still unsure how to really interpret the numbers. It’s amazing to me how statistics can be misrepresented or important figures omitted or overlooked when making claims and comparisons, hence reports like the one cited below, which seem to contradict conventional wisdom and hopefully make people think twice about how figures are represented, what comparisons are being made, what other relevant statistics might be needed to paint an accurate picture. Who to believe?

“Bankruptcy law expert and Harvard University Professor Elizabeth Warren spent a lot of time crunching consumer spending numbers for her popular books, “The Fragile Middle Class” and “The Two-Income Trap.” In both, she makes this point: Despite all those $200 sneakers you hear about and the long lines at Starbucks, consumers are actually spending less of their income — much less — on discretionary items like clothing, entertainment and food than their parents did. In fact, after taking care of essentials like housing and health care, today’s middle class has about half as much spending money as their parents did in the early 1970s, Warren says.

The basics, according to Warren, now take up close to three-fourths of every family’s spending power (it was about 50 percent in 1973), leaving precious little left over at the end of the month — and leaving many families with no cushion in case of a job loss or health crisis.

Warren’s theories fly in the face of conventional wisdom and those crowded malls. But the premise is simple: Even though household incomes have risen about 75 percent from 1970, most of that is the result of a second earner — generally a woman — joining the work force. And that added income has been swallowed by rising fixed expenses, such as child care and housing costs, Warren argues. The average family pays at least twice as much for housing compared to its counterpart in the 1970s, Warren says, and in some competitive areas with good schools, housing costs have risen by as much as 600 percent.”

Life is harder now, some experts say
Generation gap: After paying the bills, middle-class pockets are emptier

Photo by: Jeff Belmonte

Bonus mp3: Daft Punk: Louis Vuitton Mix

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