Median Net Worth $57K

[JPatrick]

Yeah... exactly... I don't have the answer, except to ask why the wealth has decreased for the middle class, and increased in the 1%.
.

There's reason for that old saw--The Rich Get Richer and The Poor Get Poorer.
When times get tough, it is a whole lot easier to stay rich than it is to get rich.

 

[ERD50]

I cannot see any way in which investment in business can, by itself, create jobs or increased profits, without a consumer base to buy product or services.

Not any way? What about things that create value? Let's take one simple example - VOIP phone systems. That took some investment, and now many of us save money on our phone bills, we can make long distance calls any time (and that might save money from time to time). So now we have more money to spend, and some other business can create a product we can buy with that money that's burning a hole in our pocket.

That's two businesses that created jobs. OK, maybe the first business displaced some jobs, but that has been happening with every technology improvement, and the unemployment rate doesn't just keep going up.

NSFW...

Sam Kinison on World Hunger - YouTube

Classic! I remember seeing him doing that routine (cleaned up) on prime time TV. "We have deserts in America! We don't try to live in them!"

-ERD50

 

[Nemo2]

Or, as the Eagles sing: "So often times it happens that we live our lives in chains, And we never even know we have the key".

And, as the Eagles also sing:

"I turn on the tube and what do I see
A whole lotta people cryin' "Don't blame me"
They point their crooked little fingers ar everybody else
Spend all their time feelin' sorry for themselves
Victim of this, victim of that
Your momma's too thin; your daddy's too fat

Get over it
Get over it
All this whinin' and cryin' and pitchin' a fit
Get over it, get over it

You say you haven't been the same since you had your little crash
But you might feel better if I gave you some cash
The more I think about it, Old Billy was right
Let's kill all the lawyers, kill 'em tonight
You don't want to work, you want to live like a king
But the big, bad world doesn't owe you a thing"

 

[target2019]

imoldernu said:

"I cannot see any way in which investment in business can, by itself, create jobs or increased profits, without a consumer base to buy product or services."

The Richmond Fed discusses this:

"In a 2011 paper, Karl E. Case of Wellesley College,
John M. Quigley of the University of California at
Berkeley, and Robert J. Shiller of Yale find a large
wealth effect on consumption from rising house
prices and an equally significant effect from falling
house prices."

http://www.richmondfed.org/publications/research/economic_brief/2012/pdf/eb_12-01.pdf

So according to Shiller, who is a keen observer of housing markets, when house prices move up, so will consumption spending.

No song lyrics to back up your words?

Not enough time to read the article right now, but thanks for posting this.

Is it clear that rising house prices cause consumption, or is the rising house price correlated with rising consumption?

 

[pb4uski]

....Is it clear that rising house prices cause consumption, or is the rising house price correlated with rising consumption?

I would think the latter, but to some degree it is a distinction without a difference. Just because the value of your house is rising you can't spend it (short of doing a cash-out refi but to do that you would need to be confident in you ability to make the higher payments) but you would feel more confident of your financial situation and willing to loosen those LBYM restraints a scosche.

 

[growing_older]

Anecdotally, I know several co-workers who did just that. Always increasing their HELOC or cash out refinancing whenever they could to maintain ever increasing lifestyles. Their description of what they were doing was taking advantage of rising equity. Whether the rising values fueled the consumption (as they described) or the other way around is possible to debate, but they seemed to treat it as another source of income.

 

[bld999]

I would think the latter, but to some degree it is a distinction without a difference. Just because the value of your house is rising you can't spend it (short of doing a cash-out refi but to do that you would need to be confident in you ability to make the higher payments) but
you would feel more confident of your financial situation and willing to loosen those LBYM restraints a scosche.

@target2019:

I think pb4uski said it well ^^^ , although most policy people might wish for "opening floodgates" instead of "a scosche". [ Remember Bush 2 imploring us to go out and spend?] The number that is frequently kicked around is that the US economy is ~70% consumer driven.

Once career-age folks are convinced that the housing recovery is solid,
this outlook will wane:

___________________________
"...It's a mean old town
To live in by yourself

Yeah work for a dollar or several thousand
Could not save a dime
You know I worked for a dollar,
Or several thousand
Man couldn't save a dime"

lyrics ; Johnny Winter, Mean Town Blues
_________________________________