Current Income Gains are Unequal

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steross

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#1



https://awealthofcommonsense.com/2021/12/the-pandemic-has-made-everyone-richer/

The Pandemic Has Made Everyone Richer
Posted December 21, 2021 by Ben Carlson


The net worth of American households has gone from $110 trillion to $137 trillion since the pandemic disrupted our lives in the first quarter of 2020.

That’s from new Federal Reserve data through the end of the third quarter 2021, which was released last week.

As is often the case, those gains have not been equally distributed.

It’s no surprise the top 1% have seen their wealth surge throughout this ordeal.

This one may surprise you — the bottom 50% have also seen their wealth soar.

But an interesting dynamic is playing out in the middle class. Those households are slowly but surely seeing their share of the overall pie shrink.
 
Mar 11, 2006
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#2



https://awealthofcommonsense.com/2021/12/the-pandemic-has-made-everyone-richer/

The Pandemic Has Made Everyone Richer
Posted December 21, 2021 by Ben Carlson


The net worth of American households has gone from $110 trillion to $137 trillion since the pandemic disrupted our lives in the first quarter of 2020.

That’s from new Federal Reserve data through the end of the third quarter 2021, which was released last week.

As is often the case, those gains have not been equally distributed.

It’s no surprise the top 1% have seen their wealth surge throughout this ordeal.

This one may surprise you — the bottom 50% have also seen their wealth soar.

But an interesting dynamic is playing out in the middle class. Those households are slowly but surely seeing their share of the overall pie shrink.
Interesting graph about wealth. Not sure this applies to "income".

Certainly shows all wealth levels increased during the pandemic. But the real winners were the bottom 1%.

The bottom 1% saw their net worth surge 74%.
The top 1% saw their net worth increase 29%
The HH from 50% to 99% saw an increase of 18%
 

kaboy42

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The oddity for me during this pandemic and (inflated) weird market...

I feel like my net worth has gone up, because I haven't spent jacksh*t.

I've essentially only made two "major" purchases in the last ~2 years. I lost my job and thus had to buy a new laptop just to update a resume and start a job search. Ended up moving my career to Houston because of this and thus, sold a house in OKC and bought a new one in south Houston.

Buuuuuuut other than that, I really haven't spent on any "unforced", uneeded/frivolous purchases. Every stimulus check has gone straight to savings. Same for the money made off the house sell. Same for last two years company bonus checks and severance pay. Same for some inheritance money. Same for the relocation bonus that the new job gave me.

No vacations... no new "toys"... no new big ticket electronics... etc...

My savings account is FAT. I mean REALLY FAT! I just feel like I need to keep saving it. I mean, I've kinda been in the market for a newer vehicle for two years now... but I'm a cheapass and refuse to pay the out-of-control market prices on a new/used vehicle. I just keep waiting for the bubble to pop.

Who out there right now is paying $60k + for a used truck with 107k on the odometer OR $12k over MSRP for a new vehicle?!????! Because many people are, but I personally don't know anyone that has.

Maybe I'm alone, but surely I'm not the only one that just turned in to a penny pinching, cash hoarder. :runaway:
 

steross

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Interesting graph about wealth. Not sure this applies to "income".

Certainly shows all wealth levels increased during the pandemic. But the real winners were the bottom 1%.

The bottom 1% saw their net worth surge 74%.
The top 1% saw their net worth increase 29%
The HH from 50% to 99% saw an increase of 18%
Fair enough but it would be a remarkable feat to increase your wealth by double-digit percentages in a little over a year without a change in income.
 
Nov 6, 2010
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#6
The oddity for me during this pandemic and (inflated) weird market...

I feel like my net worth has gone up, because I haven't spent jacksh*t.

I've essentially only made two "major" purchases in the last ~2 years. I lost my job and thus had to buy a new laptop just to update a resume and start a job search. Ended up moving my career to Houston because of this and thus, sold a house in OKC and bought a new one in south Houston.

Buuuuuuut other than that, I really haven't spent on any "unforced", uneeded/frivolous purchases. Every stimulus check has gone straight to savings. Same for the money made off the house sell. Same for last two years company bonus checks and severance pay. Same for some inheritance money. Same for the relocation bonus that the new job gave me.

No vacations... no new "toys"... no new big ticket electronics... etc...

My savings account is FAT. I mean REALLY FAT! I just feel like I need to keep saving it. I mean, I've kinda been in the market for a newer vehicle for two years now... but I'm a cheapass and refuse to pay the out-of-control market prices on a new/used vehicle. I just keep waiting for the bubble to pop.

Who out there right now is paying $60k + for a used truck with 107k on the odometer OR $12k over MSRP for a new vehicle?!????! Because many people are, but I personally don't know anyone that has.

Maybe I'm alone, but surely I'm not the only one that just turned in to a penny pinching, cash hoarder. :runaway:
I feel very fortunate that I haven't needed to be in the market for anything major since Covid. Bought my truck in 2019, house a year before that, and that's just blind luck. I feel like I robbed a bank now getting both of those at sub 3% interest rates, and before the real inflation kicked in. But I hate to hear you've got your savings in cash right now. Inflation is eating that up, but the stock market is super high and probably not buyable across the board. I'd say if you have debt, your best bet for that pile of cash you're sitting on is to pay that down, but again, if you're fortunate enough to have your debt financed at these super low rates, maybe not paying it off is the best bet.
 
May 4, 2011
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#8
An appreciated asset is income.
Not according to the federal government and not if it's my primary residence that I've held onto and made less than 500k off of. Even then it's called a "capital gain" rather than regular income. That doesn't even get into adjustments for inflation and the fact that deflation could improve your inflation adjusted wealth without making a single dollar.

Not trying to be a jerk, but more pointing out that it's semantics. What most of us would consider income (primarily wages from a job) didn't have to increase dramatically for someone to have a double digit gain in wealth and for many who owned a house pre pandemic, you did likely get a nice bump in your inflation adjusted wealth.
 
Mar 11, 2006
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Not according to the federal government and not if it's my primary residence that I've held onto and made less than 500k off of. Even then it's called a "capital gain" rather than regular income. That doesn't even get into adjustments for inflation and the fact that deflation could improve your inflation adjusted wealth without making a single dollar.

Not trying to be a jerk, but more pointing out that it's semantics. What most of us would consider income (primarily wages from a job) didn't have to increase dramatically for someone to have a double digit gain in wealth and for many who owned a house pre pandemic, you did likely get a nice bump in your inflation adjusted wealth.
I know this is semantics, but a capital gain is income, even a reinvested capital gain. But you are correct that income via a capital gain is treated differently than ordinary income for tax purposes.

An appreciated asset is not normally defined as income unless the appreciated asset changes forms (ie in a distribution, a sale, a trade, or a donation).
 

steross

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Not according to the federal government and not if it's my primary residence that I've held onto and made less than 500k off of. Even then it's called a "capital gain" rather than regular income. That doesn't even get into adjustments for inflation and the fact that deflation could improve your inflation adjusted wealth without making a single dollar.

Not trying to be a jerk, but more pointing out that it's semantics. What most of us would consider income (primarily wages from a job) didn't have to increase dramatically for someone to have a double digit gain in wealth and for many who owned a house pre pandemic, you did likely get a nice bump in your inflation adjusted wealth.
A capital gain is a type of income.
Just because a particular type of income is partially excluded from federal income tax by the current laws of the USA does not make it not income. I made income overseas that was excluded from taxation in the country I made it but was still taxed by the US. Would you call that income? Even earned income from labor is excluded from taxation below a certain amount. Still, it is income.

You aren't being a jerk but you are trying a semantic game. But, it is still income no matter how you slice it.

https://simplicable.com/new/income
https://www.investopedia.com/terms/i/income.asp
 

TheMonkey

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I remember the “hollowing out of the middle class” being a major topic 8-10 years ago. It’s still happening.
 

llcoolw

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#14
A capital gain is a type of income.
Just because a particular type of income is partially excluded from federal income tax by the current laws of the USA does not make it not income. I made income overseas that was excluded from taxation in the country I made it but was still taxed by the US. Would you call that income? Even earned income from labor is excluded from taxation below a certain amount. Still, it is income.

You aren't being a jerk but you are trying a semantic game. But, it is still income no matter how you slice it.

https://simplicable.com/new/income
https://www.investopedia.com/terms/i/income.asp
Another thought. Those that played by the rules and read them, haven’t done anything wrong but make future plans based off of the rules. Why change the rules instead of teaching them to the next generation? It’s not money going into stocks that make them gain value, it’s time. If we started kids at birth with fractional stocks, by the time they’re 10, they’ll start to see the compounding of dividends. By the time they’re in college, they’ll have a favorable view of capital gains. By the time they start 401k investing, they’d be savvy enough to have multiple investment vehicles.
 

steross

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Not according to the federal government and not if it's my primary residence that I've held onto and made less than 500k off of. Even then it's called a "capital gain" rather than regular income. That doesn't even get into adjustments for inflation and the fact that deflation could improve your inflation adjusted wealth without making a single dollar.

Not trying to be a jerk, but more pointing out that it's semantics. What most of us would consider income (primarily wages from a job) didn't have to increase dramatically for someone to have a double digit gain in wealth and for many who owned a house pre pandemic, you did likely get a nice bump in your inflation adjusted wealth.
I don't agree with you on income but it is an impressive feat that you got cable and I to agree on something.
 
May 4, 2011
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#16
A capital gain is a type of income.
Just because a particular type of income is partially excluded from federal income tax by the current laws of the USA does not make it not income. I made income overseas that was excluded from taxation in the country I made it but was still taxed by the US. Would you call that income? Even earned income from labor is excluded from taxation below a certain amount. Still, it is income.

You aren't being a jerk but you are trying a semantic game. But, it is still income no matter how you slice it.

https://simplicable.com/new/income
https://www.investopedia.com/terms/i/income.asp
Even by the definitions you cite, no it's not, as long as I did not receive money for it. I literally did not have any incoming money from it in that scenario. If I sell my house under that definition, then yes, but I don't have to sell my house to have that asset valuation improve my inflation adjusted wealth.
 

steross

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Even by the definitions you cite, no it's not, as long as I did not receive money for it. I literally did not have any incoming money from it in that scenario. If I sell my house under that definition, then yes, but I don't have to sell my house to have that asset valuation improve my inflation adjusted wealth.
Say a house increases in value from 100K to 120K. What do you call the $20k?
 

jobob85

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So....where to begin. Well, with a few glasses of scotch. Not going to quote anyone because it might be everyone. Here goes:
Wealth, Income and Net Worth are all kind of nebulous terms and why and how our politicians intermingle them to confuse us. Capital gains and income remind me of my old physic classes before I left engineering college. It's like kinetic energy vs potential energy. A capital gain is potential income until said asset is sold then it becomes income.

The middle class are always going to get squeezed because that is where the majority of income lies. You hear politicians talk about the 1% and the billionaires and finish by wanting to tax millionaires. There is a vast gap between millionaires and billionaires. Plus the 1% are based on taxable income, that potentially leaves out all those f#$kers that borrow against their stock. And that middle class didn't participate in the wealth increase as well as the others because - all the small businesses that took a covid bath.

I keep a rough net worth spread sheet that I update at least quarterly. Sure there some estimates but, overall I have a 22% year over year increase (probably because I'm middle class wealth wise and lower class in everything else (except liquor)). Now the bottom 50% got plenty of government assistance during this covid situation and I think that may have helped increase their networth along with the increase in home ownership which for them would significantly increase it. Remember if your networth is $1000 it only takes another $1000 in equity to double your networth.

Finally, all my assumptions can be shot down with outlier but, we are looking at averages here. Good day and good drinking.
 
Mar 11, 2006
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#20
I don't agree with you on income but it is an impressive feat that you got cable and I to agree on something.
I agreed with you on capital gains as income. A normal definition of a capital gain is an increase of an assets value when that asset is sold, traded, donated.

However, I don’t agree that an appreciated asset is necessarily income. An appreciated asset needs to be realized in some form (ie a trade, a sale, or a donation).

A house rising from $100K to $120K without a sale is not income. A stock price rising from $50/share to $75/share is not income.