The Economic Depression No Ones Talking About

In this article I'm going to go over the economic depression no one is talking about but everyone is feeling. Remember months ago when the government told us we were not in a recession well that might have just spilled over into great depression levels and let me show you why. The economy is a weird thing and while we might look at the great depression of unemployment there's another depression in our economy that is currently happening and only getting worse.

Let's dive in and take a look into what I mean by that.

Comparing The Last Depression

When you factor in wages from the first depression to todays wages you come out with a number that's actully better. For example the average net yearly income for Americans was around $1,400 fast forward to today that would compare to a roughly $30,000 a year income which most people now make if not better. In fact if we pull in recent incomes from 2022 BLS show us at closer to $50,000 of ages 25+

When you compare those numbers it would seem we are doing nearly twice as good as we were during the great depression times in terms of wages. Along with low unemployment numbers you'd think by comparing just this data would make us feel that we are not in a recession or a depression. At least on the surface...

What's Changed

But like all things, things change and there's a lot more that goes into it all. Since then transportation has exploded, food is hit or miss but we have seen egg prices skyrocket and housing. Those basic pesky things that are pretty much required to live and live a basic rather healthy ok lifestyle. So let's take a moment and break each of these down so the economic depression I hinted at above starts to make a little more sense.

Transportation

Transportation from a car back in the 1930's would run you about $450 for a brand spankin new car. In todays money that would mean a car should be running you at $10,000 roughly. However with tech, innovation and higher standards you'd be hard pressed to find a brand new car un $30,000 3x higher than what it should be with normal inflation levels when you compare the two.

In terms of money it means that in 1930's you could afford a brand new car for about 4.5 months of work. While today you're looking at a year to a year and a half of full time job income to pay for it. Thus the 3x level which I referred to above. Throw in taxes and you're now more around the 2 - 3 year mark and that's counting if you paid for the car upfront with no credit.

Food

There's not to much to go over here. For the most part food seems to have stayed for the better part the same as the 1930's. There's not too much available data to go off of but with higher food productions and the industrial revolution it seems like food is one thing that's stayed on track. What I mean by food is going to the store buying it and making your own meals. Not going out to eat which is mind blowing expensive.

Housing

Get ready to have your socks blown off once again. During the great depression and into the 40's and 50's how prices where about 1-2 years wages at a full time job. Fast forward to today and your housing prices are now 8 years or more!

That's taking the medium house income of 50k and pushing towards a $400,000 house which would be roughly comparable to houses back in the day.

The Issue

As you can see this starts to paint a real issue. That issue being your dollar even though you've been earning more is able to buy you a lot LESS than you could afford 70 years ago. That's a tricky one to understand that many have a hard time with. But your buying power on your dollar is falling drastically and it looks like it's only going to get worse.

Let me break that down into numbers.

Say you're making $50,000 a year in the USA. Of that you get to actully bring home with you roughly $3,300 per month.

Split that up into the cost of essential living and you get these expenses.
Home - $2,000 (rent or mortgage)
Food - $600
Healthcare - $100 (Granted your jobs paying for it and you're only paying deductibles etc)

That means of that $3,300 take home pay $2,700 if most likely going right out the window for your basic living. Leaving you with a whopping $600 left over!! Party right?... wrong

Now throw in a car payment used: $500 or new $700 and guess what you just blew through all of your money and you don't have a dime left to save.

Throwing on top of that credit card debt which just hit 1 trillion dollars in the USA, needing to save money to retire and simply live a little and do things with your life and you can quickly see how stressed these prices are and why people are really starting to feel it.

Rate Hikes

Throw in the Fed increasing rates while all of this is going on including still high inflation numbers compared to the 1930's which had zero percent interest rates and you have yourself a massive melting pot of doom for the every day working family.

A few years back you could buy a house or a card with a low interest rate of about 2-4% today you'll be paying upwards of 7% and soon maybe higher as the fed has signaled once again it wants to increase the rate.

You'll also be paying record high credit card interest rates of roughly 20% on your cards if not higher. Further making it impossible for people to really spend money on anything other than the basics of living.

This causes everything to come to a halt in terms of buying items, travel, trips and so forth. It's caused record high debts on credit cards and more. Thus you can see where the depression is starting to set in and another year of this could see massive shut downs, layoffs and worse of all higher and higher costs of living.

When we really have to worry about it is when unemployment starts to go up. So what are you thoughts on this depression no one is talking about?

Posted Using LeoFinance Alpha