Personal Income

To understand why so many people are still hurting, take a look at the graph below.  This is per capita inflation adjusted income less what are called transfer receipts – government payments to people like Social Security, food stamps, Unemployment insurance, etc.  Previous recessions have seen a flattening of income and a few have seen a decline in income but nothing like what we have experienced during this past recession.  The “cliff” is a decrease of 12.5%.

Including transfer payments from the government, the decline is only 8.5%.

The difference is about $1.5 trillion dollars per year that goes to people to pay bills, to pay for housing, to buy food and medicine.  Almost all of that money gets spent.  It is true that government is borrowing to pay out that money but without that extra “juice”, we would no doubt have been in a depression.

The federal government is about to hit the $16 trillion mark in debt.  Eventually interest rates will go up and the government will have to pay several hundred billion dollars more each year in interest payments on that debt.  That is billions of dollars that won’t be available for people or guns.  The worst of the decline is over.  Now is the time for us to stop shouting at each other and talk earnestly about some really tough problems.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s