Main article: US economy
Salaries and pensions in the United States
2024
Manipulations to revise statistics ahead of presidential election paint rosy picture of savings
At the end of September 2024, at the finish line for the presidential elections USA , the presidential administration Biden decided to sharply correct bad economic statistics.
Macroeconomic analysis for the United States was largely based on a lack of financial support. Earlier, the US Bureau of Economic Analysis (BEA) reported that the household savings rate collapsed to a historic low (3.4% on average in 7 months 2024 and 2.9% in July.24) with a fixation of only 600 billion savings in July.24.
It turns out that all that was before - lies, misinformation and statistical inaccuracies, but new data is completely different.
Now the problem with the resource deficit has been eliminated by the light movement of the manipulative BEA claws. Savings almost doubled from 599 to 1067 billion (an increase of 78% at once), and the savings rate increased by almost 2 percentage points to 4.8%. In total, it was worth a little tweaking the methodology, getting enough of the "refined data" and immediately jerking into another dimension.
Statistical barbarism began in 2019, but the spread of the error has been concentrated for the past 12 months. From January 19 to August 23, the discrepancy between new and old data was minus 0.15 percentage points at the savings rate, and from September 23 to July 24, the error reached plus 1.4 percentage points, where the last three months on average 2 percentage points (according to new data savings are higher than old data) according to Spydell Finance calculations.
In monetary terms, from September 23, it suddenly turned out to be 300 billion more than previously unaccounted for savings.
If, according to the old data, the savings rate was in the zone of "total devastation," now it is "barraging" near the minimum levels of 2013-2019 and only 1 percentage point below the average savings rate of 2013-2019, i.e. not so critical.
Previously, there was already a large-scale revision of statistics, but it concerned more with the data of a distant retrospective, now they are actively modifying the current reality, and they are doing it in the most perverse way possible, completely changing the conclusions and balance ratios.
That is not all. Now it turns out that household incomes have become 3.3% higher than the old data, and the reason is not in any separate data set, but broke all the statistics at all.
The most significant contribution to the positive revision of statistics was made by income from financial assets, providing 1.04 pp in the total growth of 3.3%, and now income from financial assets is 6.8% higher than they were before.
Salary revenues became 1.5% higher, making 0.93 percentage points of the contribution to the total increase.
Significantly revised for the better income from entrepreneurial activity immediately by 5.7%, providing 0.45 pp of a positive contribution.
The most paradoxical thing is the revision of budget transfers (where every dollar is calculated) by 4.6% in plus with a positive contribution of 0.83 pp.
The assets of American households reached $120.8 trillion. Shares overtake pension savings for the first time in 55 years
Under liquid assets are taken into account: cash, deposits, bonds of all types, shares and investments in investment funds of various types, insurance and pension reserves are not taken into account, investments in non-public companies (entrepreneurial activity, family business) and cryptocurrencies are not taken into account, the analysis of which is impossible.
By April 2024, the liquid financial assets of American households increased significantly: from December 19 - an increase of $21 trillion, where + 13 trillion in shares, + 3.5 trillion in investment funds (partially take into account investments in shares), + 3.2 trillion and 1.4 trillion in debt securities at market valuation according to Spydell Finance calculations based on the Z1 report.
Total financial assets, including insurance, pension reserves and non-public business - 120.8 trillion.
- Cash and deposits - 14.3 trillion as of 1Q24, the share in total financial assets - 11.8%, and the average share in 2010-2019 for the 1st quarter in order to maintain seasonality - 12.8%, i.e. cash decreased by 1 pp.
- Debt securities of all types - 5.7 trillion, share 4.7%, average share 2010-2019 was 6.2%.
- Shares - 34.1 trillion, share - 28.2% against the average share of 19% due to record market growth and active investment 2020-2021.
- Investment funds - 15.7 trillion, a share of 13% against 12.4% in 2010-2019.
For the first time in 55 years, equity investment has overtaken pension reserves. The concentration of assets in insurance reserves has been declining for the past 70 years, reaching a historic low. In debt securities near lows, despite active investment in 2022-2023.
Cash and deposits, investment funds and non-public business plus or minus have a comparable share since 2010.
Major stock changes. It should be borne in mind that there are more real shares, because pension, insurance and investment funds invest in shares.
2023
Accumulations of Americans remain below the level until the start of the COVID-19 pandemic
American consumers have spent their savings faster than any other major advanced economy.
According to one version, happy consumers used government assistance. Much of the excess funds came from fiscal stimulus, while savings abroad were mostly derived from lower spending. In other words, it was easier for consumers to spend money as it was received unexpectedly.
American households own $115 trillion in financial assets
In mid-2023, American households owned $30 trillion of assets in shares with direct participation without intermediaries, $10.6 trillion in mutual funds (over 70% they hold in shares) and another $3.5 trillion in money market funds. To this can be added $5.6 trillion in bonds and another $14.3 trillion in cash and deposits.
In total, $64 trillion of liquid financial assets and this excluding 17 trillion in non-public companies and business, closed in entrepreneurial activity, and another 34 trillion in pension and insurance reserves. Total over 115 trillion financial assets.
For comparison, in Russia, the population has financial assets - $1.1 trillion, and liquid assets about $1 trillion.
How wealth in the US is divided between citizens: a society of homeless people and millionaires
The US is a society of homeless people and millionaires. No country has such a pronounced contrast when a significant part of society can spend the night under bridges or in trailers, and another part of society can own tens of trillions of dollars in assets.
Who owns $115 trillion in assets in the United States? The Fed tries once every three years to make calculations in the SCF survey, and each time accuracy leaves much to be desired. There are estimates for average assets, while a more representative indicator is the median concentration of assets, but it is not in the context of all financial assets, Spydell Finance wrote.
If financial assets are divided by the number of households, there are staggering indicators. $404 thousand in shares, almost $1 million in investment funds, another $1 million in bonds and from $62 to 100 thousand in various types of monetary assets on average for each American family that owns assets.
However, almost 45% of the entire stock market and investment funds are owned by the 1% of the richest in the United States, which greatly shifts the average from the median. The richest 10% account for $1.2 million in stocks, $2.2 million in investment funds and $1.7 million in bonds per family.
Blacks own less than $40 thousand in shares, compared with $450 thousand from whites.
About 40 million Americans use food stamps, 80% of which are in the group of 20% of the poorest families, covering about 70 million people (!).
The net reduced ability to save in this category is no more than 31% of the number of families that save at least some money, while for the 10% of the richest - about 84% of families regularly form savings.
The average of assets in stocks is strongly shifted to the category over 75 years old.
The Fed believes that the average American old man over 75 owns more than 1.1 million in stocks and another 1.4 million in the investment fund.
Baby boomers over 70 own more than 30% of U.S. wealth, though they make up 11% of the population. One of the main factors was the sharp increase in the value of houses and shares during the COVID-19 pandemic, from which representatives of the older generation, most often owning a house or two, as well as shares or mutual funds, benefited.
$115 trillion of financial assets and $64 trillion of liquid assets owned by American households - an incredible amount that is difficult to correctly account for in terms of distribution.
Per American family, an average of about 1 million financial assets are obtained, excluding real estate, cars, patents, and so on.
The American stock market + units of investment funds hold the top 1% of the richest by 45% and another 43% of the 19% of the upper echelon, that is, the top 20% accounts for about 88% of all assets in the market, and the bottom 40% hold less than 3% of the market.
The contrast in the bond market is more pronounced, since the top 20% hold 99% of the bond market.
According to the Fed's calculations, the median measure of net wealth (total financial and non-financial assets minus liabilities) by percentile in accordance with the volume of cash income:
- 0-20 (poorest) - $17K
- 20-39.9 - $55K
- 40-59.9 - $171 thousand
- 60-79.9 - $299K
- 80-89.9 - $793K
- 90-100 (10% of the richest) - $2650 thousand with an average value of 6.5 million.
For all families - a median of $193 thousand with an average value of $1.1 million per family. It is believed that the average American family has net wealth of almost $200,000.
The nationwide median net wealth for all Americans over 75 is $335 thousand (average value - $1.6 million), and in the range from 65 to 74 years - $410 thousand (average value - $1.8 million).
According to the Fed, it follows that a highly qualified American over the age of 60 has a net wealth of over $1 million at a median with an average wealth of over $6 million.
A highly qualified American - a master's or bachelor's degree, over 35 years of experience in leading specialties (research and development, financier, economist, lawyer, IT specialist, highly qualified doctor, leading engineer, top manager, etc.) - the probability of becoming a dollar millionaire is about 80%.
Phenomenal contrast in the distribution of financial assets and revenues in the United States.
According to the Fed's calculations, the group of 20% of the poorest in terms of income has an average of $52 thousand financial assets per family or only $1.4 thousand in median, $224 thousand non-financial assets ($49 thousand in median (and the same amount of total financial assets (median - $29 thousand), $43 thousand debts ($10.5 thousand) and $196 thousand net wealth ($17 thousand).
Such a large range of average and median values is due to the concentration of savings and the method of accounting for data. The fact is that a significant part of the poor have no assets at all, and families even with insignificant assets strongly deviate from the averages from the zero values of conditional "homeless."
For the group of 10% of the richest financial assets, the indicators of financial assets look fantastic - on average $3.3 million of financial assets ($1.3 million by median), $3.7 million of non-financial assets (median - $1.3 million), $6.9 million of total assets (median - $3 million), $530 thousand debts (median - $375 thousand) and $6.5 million of net wealth (median - $2.6 million).
Here, a strong deviation is provided by the top 1% group or even the top 0.1% group of multimillionaires and billionaires - the main owners of the American financial system.
From the point of view of determining the "strong middle class," a more indicative group in percentile 80-90 (the second profitable ten in the top), where on the median, total financial assets, taking into account real estate, are estimated at over $1 million with liabilities of $214 thousand and median net wealth of about $0.8 million.
Accordingly, the definition of a strong middle class in the United States can be the concentration of assets from $1 million per family and up to 70 million people can potentially fall into this group.
At the same time, it should be borne in mind that a significant part of American families do not have savings at all or have less than 15 thousand dollars of liquid assets, it is fair to talk about at least 30% of all American families.
On the other hand, there is no such significant concentration of dollar millionaires anywhere in the world.
Large-scale revision of statistics has dramatically overestimated the amount of savings that form 70% of US GDP
In October 2023, a large-scale revision of statistics was carried out in the United States. In fact, we are talking about the formation of an alternative idea of reality with a fairly significant modification of the conclusions.
Almost all aspects of macroeconomic statistics were revised, at least regarding the structure of household income, spending and national savings, forming directly up to 70% of US GDP.
The revision touched on the data, starting from 2 April 1979 (a more sensitive revision became noticeable since 1981). Extreme spread began to accumulate from 2013. There was a significant underreporting of the comparison database of retrospective data to 1.5% and a significant revision for the better of current data.
The 2019 base was underestimated by 1.5% on average, and the 2023 base was overestimated by more than 1.5%. As a result, only one revision of the data (accounting, manipulations with figures) gave more than 3% of the positive effect.
It turns out that now, the income of American households in real terms turned out to be 3.5% higher, comparing the beginning of Q3 2023 with February 2020, while according to old data near zero.
The main reason for the revision of the data is concentrated in:
- income from financial assets (made a negative contribution of 73% for 2019 in the structure of data revision),
- income from tangible assets (mainly rental housing with a negative contribution of about 6%) and
- from entrepreneurial activity (about 20% of the negative contribution).
- Salaries and revenues from the state remained unchanged.
For 2023, on the contrary, for the better, there were revisions of income from financial (40% of the positive contribution) and material (35%) assets. Plus, they revised the budget statistics, including on taxes.
The system's sustainability resource is limited and should have ended by the beginning of Q4 2023, which could catalyze destructive macroeconomic processes in the United States, Spydell Finance wrote.
A low savings rate, when interest-bearing debt service costs are accelerated, inevitably hits the low and medium-income segment of households, which reduces the potential for consumer spending.
Given that this group is very large (up to 60-70% of the US population) on the effect of scale, the compression of consumer spending will affect the income of companies, slowing down investment and hiring.
The system from destruction was limited by accumulated savings during the period of fiscal and monetary rabies, which, according to Spydell Finance, exceeded $2 trillion relative to the dock normality.
From 2022, accumulated savings began to be eaten for two reasons:
- household consumption inflated on budget incentives 2020-2021 by unsecured incomes has become impossible to maintain in the context of a reduction in "helicopter money" in 2022, and private sector incomes have not grown enough.
- skyrocketing interest expense consumed all available disposable income buffer to meet obligations to creditors.
According to conservative estimates, by the beginning of September 2023, 1.7 trillion of 2.1 trillion excess savings at the peak of 2021 had passed, i.e. about 400 billion remained, but rather it was already strongly negative if mortgage debt was balanced.
Then suddenly BEA appears with its revision and publishes data according to which the previous savings rate is underestimated, and the current savings rate, like income, is overestimated.
As a result, only half of excess savings were allegedly absorbed (more than $1 trillion remains), and the compression rate is less intense than according to old data. Thus, the stability resource is higher, and the system breakdown point is postponed from Q4 2023 to Q2 2024.
Not everything is that simple. The source of revision is income from assets and entrepreneurial activities, which affect the top 20% in terms of income, which have a high savings rate and are not burdened with debt.
Savings flow from deposits to bonds
The collapse of several banks USA in and higher yields have pushed U.S. citizens to move deposits into bonds.
Annual disposable income per capita - $59 thousand per year, savings rate - $4.4 thousand
Annual disposable income per capita in the United States is $59 thousand per year as of April 2023, taking into account babies, pensioners, unemployed, incapacitated and persons in places not so remote.
Disposable income takes into account all income in favor of the population at the national level - salaries, bonuses and bonuses, entrepreneurial income, income from tangible property (rent and royalties), income from financial property (interest on deposits and bonds, dividends), all types of state support and subsidies minus all types of fees and taxes in favor of the state.
Disposable income is what the population receives after fulfilling obligations to the state. It turns out that the average American family of four has a disposable income from all sources of about 236 thousand dollars a year.
Spending on goods and services amounts to 54.6 thousand dollars per year per capita and, accordingly, the savings rate is formed at the level of 4.4 thousand dollars per year per person.
Taking into account inflation, the disposable incomes of American households per capita have not changed since December 2019 (within the limit of the limit of about zero), and from July 2022 to April 2023 there is an increase of 3.3% in real terms, which is mainly associated with tax maneuvers and an increase in income from property financial and material.
For 40 months (from December 2019 to April 2023), the zero change in real disposable income per capita is good or bad? During this period, there was the strongest inflationary impulse in 42 years and a sharp compression of the state's antiquated programs as the most significant negative factors of income impact, but so far they have survived, Spydell Finance wrote.
About ¾ of the increase in real disposable income of the population over the past 9 months was associated with state tax maneuvers, so the state is back in business and saves consumer demand from collapse.
2022
Sharp decline in savings and net capital amid conflict in Ukraine
In 2022, the net worth of American households fell by $4.1 trillion, the second largest decline in history after 2008.
17.6% of Americans' income - government contributions
Transfers to Americans under social programs such as Medicare and Medicaid led to 17.6% of Americans' income being government aid (up from 8% in 1970).
The government is actively "stuffing" the population with money - half of the so-called counties in the United States receive at least 25% of their income in the form of subsidies. All this leads to an increase in public debt and active populism from the two competing parties.
Most interestingly, many counties heavily dependent on state support are in the "border" states on which the outcome of the presidential race depends.
Real income decline of 8.4% and record low savings rate of 2.7%
The sustainability of consumer spending on goods and services by American households is supported by a depletion of savings. Over the past 6 months, the US savings rate is at a record low of 2.7-2.8%, which repeats the 2005 record (2.7%).
The average savings rate from 2010 to 2019 was 7.3%, and after the spread of helicopter money, savings rose to 16.8% in 2020 (a record in history) and 11.8% in 2021 - comparable to 1950-1970.
What is the reason for the decline in savings from 1980 to 2008? The unwinding of the consumer economy with all the ensuing consequences, including through the transformation of psychology and value points on current consumption, plus the growth of inequality, noted the Spydell Finance channel.
Such dynamics indicate that the largest group (the first 80% of the population by income) does not have enough income to maintain the "typical," i.e. the standard of living adopted in society with a mandatory list of conformity attributes. This forces you to empty your pockets to the bottom.
Now it's about the same. An attempt to maintain an unsecured standard of living formed by helicopter money in 2020-2021 led to the collection of an additional 5% of income in comparison with 2020-2019.
Net state support for the population during the COVID-19 crisis reached almost 10% of income on average per year (the transition from minus 3.5% in 2019 and plus 6.5% to March 2021), now minus 5.5%.
The state in 2022 withdraws 2% more from income than it distributes in comparison with 2016-2019, i.e. the budget policy is tougher than in 2010-2019, but less rigid than in 2007-2008, when net state support was minus 7%.
Spending on goods and services per capita in real terms for 2022 increased by 0.7% compared to 2021 and are 4.4% higher than 2019.
Per capita income in real terms collapsed by 8.4% YoY in 2022 and is 2% lower than in 2019.
The shutdown of the state support switch and high inflation quickly unfolded the income trend, but since July 2022, the improvement has been against the background of a slowdown in inflation.
See also
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