Latest Inflation Numbers and Discussion

OFC, everyone realizes that the way infltion is calculated was changed in 1980 and again in 1990 - so any comparison over longer term may not have accurate reaults as compared to todays methodology. Using the 1980 method of calculating inflation, current inflation is a tad north of 10%. Data on Shadowstats.com. OFC, the government needs to report low(er) inflation to keep SS COLAs low.

This has been a very good thread discussion, with timely, quality data and solid analysis. Let’s not derail it by bringing in views from shadowstats. Their analyses and conclusions were debunked over a decade and the math doesn’t add up - and never did.

If you want to talk about shadowstats please take it to another thread.
Please delete - thanks
 
Sorry, but I simply don't believe that the bottom 50% own only 1% of the stocks.

Exactly what statistic is being expressed here?

Is it the bottom 50% of the 62% of Americans that own stocks only own 1% of the stocks?

Is it the bottom 50% of wealthiest Americans only own 1% of the stocks?

Is it that 1% of the total cumulative values of the stocks in the investment world is owned by the bottom 50% of wealthiest people?

Are children included in these numbers? (They are "Americans", after all...)

This article is hot mess of confusion.

I would submit that the bottom 50% of wages earners must own more than 1% of the stocks since many (most?) of them have 401k plans.
FRED disagrees with you:
fredgraph.png
 
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I would submit that the bottom 50% of wages earners must own more than 1% of the stocks since many (most?) of them have 401k plans.
Now that many 401K plans default to some type of Target Date fund and not a simple MM fund, I would think the number of adult workers owning stocks in some way is going up.
 
FRED disagrees with you:
fredgraph.png

Do you have a link to the original data?

Again, is it the bottom 50% of all Americans?
The bottom 50% of net worth individuals/households?
The bottom 50% of wage earners?

I could perhaps believe that the bottom 50% of net worth individuals own only 1% of stock, but even that is mind blowing considering the 401k plans.
 
I see a real issue of definition in these charts. Are they saying that the lower 50% of wage earners own 1% of the value of the all the shares in the equities markets? Or is it 1% of the number of the shares? Or are they saying that only 1% of the lower 50% of wage earners own shares? Those are 3 very different things and can lead to very different conclusions about the effect of inflation on any particular person's portfolio. Turbo's posts lead me to believe that he thinks it is the third of these options - that the lower 50% do not own equities, so they are not aided by markets rising. On the other hand, as Q's laptop suggests, if many of the lower 50% of wage earners have stock (direct or through mutual funds) in their 401k etc, then the dollar value of the effect may be low, but all will benefit from a rise in the market.

I do not know the answer to my question, which is why I ask it. I will continue to research, but if anyone does know, I would appreciate their input.
 
Do you have a link to the original data?

Again, is it the bottom 50% of all Americans?
The bottom 50% of net worth individuals/households?
The bottom 50% of wage earners?

I could perhaps believe that the bottom 50% of net worth individuals own only 1% of stock, but even that is mind blowing considering the 401k plans.
Also good questions regarding the definition. The legend on the charts suggest bottom 50% of net worth, but I would appreciate more clarity as well.
 
We know that the lower wage earners hold less or even zero stock. We were there at one time.

Recall that a large number of folks could not pull together $1000 for an emergency. Doubt they own much stock. But whatever they do own is a good.

But the answer is not to decry this fact but simply to avoid being non-investors.

I do recall an early investment I made when gas prices were rising and crimping budgets, including mine. So I bought ARCO, an integrated producer of O&G and a petroleum retailer. Can't beat 'em? Join 'em!
 
So people are ignoring this macroeconomic data or disregarding it in favor of their specific observations of the price of goods and services or something else subjective.
I think it's the last one... "something else." That something is the media and so-called "social" media, spinning people up for clicks and votes. The way to get those is to spread fear, uncertainty and doubt.

It makes perfect sense that a majority think the economy is horrible. That's what they're being told, and they believe their talking heads and influencers over their stock portfolio statements.
 
I think it's the last one... "something else." That something is the media and so-called "social" media, spinning people up for clicks and votes. The way to get those is to spread fear, uncertainty and doubt.

It makes perfect sense that a majority think the economy is horrible. That's what they're being told, and they believe their talking heads and influencers over their stock portfolio statements.
While I don't disagree with the first part; regarding the second - the stock market is not the economy.
 
While I don't disagree with the first part; regarding the second - the stock market is not the economy.
You are correct, of course. I guess my point is that people's beliefs are colored by whichever on-line echo chamber they join, to the point where they make decisions, and vote, against their own interests because their "tribe" tells them to.
 
Gallup just came out with a poll, on 5/24/24, showing stock ownership across income levels.

For households with incomes of $40k or less, stock ownership is 29%.

For households with incomes of $40k-99,999k, stock ownership is 63%.

For households with incomes of $100k or greater, stock ownership is 84%.



Median household income was $74,580 in 2022 according to the Census Bureau.

So almost 1/3 of household with incomes well under the median still owned stocks.

If the wealth effect is real, it may sustain higher consumer spending and persistent inflation.
 
Charts can lead to false conclusions. "1/3 of households under median still owned stocks."

Follow that thinking a bit further. People near or in poverty may have "stock" through a retirement plan. But that's not anywhere near what is going on with wealthier families.

For example, we hold stock, take an expensive trip, and return to higher balances in all of our accounts.

Uncle Bill and Aunt Mary go to the food store and battle rising prices across the board.

The fact that we all hold "stock" does not help the bottom half in the way it helps us wealthy folk.
 
Sure I’m not saying it will change spending behavior.

But it should change perceptions of the economy or people being asked by pollsters if the stock market is doing well and in that one poll, over half the respondents said that the markets are down, not well up.
 
Charts can lead to false conclusions. "1/3 of households under median still owned stocks."

Follow that thinking a bit further. People near or in poverty may have "stock" through a retirement plan. But that's not anywhere near what is going on with wealthier families.

For example, we hold stock, take an expensive trip, and return to higher balances in all of our accounts.

Uncle Bill and Aunt Mary go to the food store and battle rising prices across the board.

The fact that we all hold "stock" does not help the bottom half in the way it helps us wealthy folk.

I'm afraid I'm not seeing how the bottom half owning stock is not helping them in the same way it's helping wealthy people. Surely if a wealthy person and a less wealthy person hold the same stock and the wealthy goes on vacation and the less wealthy goes to the grocery store, the stock performs the same for both, does it not?
 
Charts can lead to false conclusions. "1/3 of households under median still owned stocks."

Follow that thinking a bit further. People near or in poverty may have "stock" through a retirement plan. But that's not anywhere near what is going on with wealthier families.

For example, we hold stock, take an expensive trip, and return to higher balances in all of our accounts.

Uncle Bill and Aunt Mary go to the food store and battle rising prices across the board.

The fact that we all hold "stock" does not help the bottom half in the way it helps us wealthy folk.
All you are saying is that higher income people are financially better off than lower income people. Hardly a novel observation. The question is whether a rising market aids anyone who owns stock. And the answer is unequivocally yes. Obvious, the more stock a person owns, the more they benefit from a rising market, but anyone who owns stock benefits, even if only a little.

The cost of vacations and grocery store prices are red herrings. The prices rise for everyone at the store regardless of income and everyone who takes a vacation pays for it. If you have more disposable income, you can take more frequent and more expensive vacations, and if you are higher income, your grocery bill likely is a smaller percentage of your total spending. But neither of these things negates the conclusion that anyone who owns stock benefits from rising stock markets.
 
The data for stock and wealth distribution comes from 2 Fed papers published regularly. The Fed Survey of Consumer Finance (here) and the Fed Distributional Financial Accounts (here). The DFA uses data from the SCF.

The data point of 50% of households owning just 1% of equities is measured in value of the holdings. What is not clear is if that number includes indirect holdings, such as pension funds. Nonetheless, all data analyses of wealth distribution show a clear concentration of assets among the top 0.1%, 1% and 10% of households.
 
Nonetheless, all data analyses of wealth distribution show a clear concentration of assets among the top 0.1%, 1% and 10% of households.

Thus, the conclusion is once people become wealthy they buy a lot of stock! :2funny:
 
Sure I’m not saying it will change spending behavior.

But it should change perceptions of the economy or people being asked by pollsters if the stock market is doing well and in that one poll, over half the respondents said that the markets are down, not well up.

But inflation-adjusted portfolios are not "well up". Stocks have just recently exceeded 2021 highs on an inflation-adjusted basis, and bonds are still down. For example, my 60/40ish portfolio has now exceeded its 12/31/21 high, but only by less than 3% nominal - so still down on an inflation-adjusted basis. While not a lost decade, it is a lost 2.5 years. I suggest that is how people look at their portfolios - compared to prior peaks, not the last 6 months or year.

But as I said above, the market is not the economy.
 
Gallup just came out with a poll, on 5/24/24, showing stock ownership across income levels.

For households with incomes of $40k or less, stock ownership is 29%.

For households with incomes of $40k-99,999k, stock ownership is 63%.

For households with incomes of $100k or greater, stock ownership is 84%.



Median household income was $74,580 in 2022 according to the Census Bureau.

So almost 1/3 of household with incomes well under the median still owned stocks.

If the wealth effect is real, it may sustain higher consumer spending and persistent inflation.
Do you think this is because a lot of new employees with 401ks are now enrolled by default with automatic increasing-incremental contributions? You now have to opt-out of a 401k.
 
I'm afraid I'm not seeing how the bottom half owning stock is not helping them in the same way it's helping wealthy people. Surely if a wealthy person and a less wealthy person hold the same stock and the wealthy goes on vacation and the less wealthy goes to the grocery store, the stock performs the same for both, does it not?
Because per capita stock ownership is very low for bottom 50%.
Math:
Assumptions: Adult US population = ~250 Million, US stock market cap = ~25 Trillion

Per capita stock ownership for lower 50% of population = ($25T*.01)/(250M*0.50) = $2 K
Per capita stock ownership for top 10% of population = ($25T*0.375)/(250M*0.10) = $375 K
Per capita stock ownership for top 1% of population = ($25T*0.48)/(250M*0.01) = $4.8 M

So you see, there is simply more money which can grow in absolute terms for people who are higher on the wealth spectrum. i.e. if stock market goes up by 1% then the lower 50% see their balance increase by $20 vs the top 1% see their balance increase by $48,000. What kind of vacation you can get with those numbers?
 
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I'm afraid I'm not seeing how the bottom half owning stock is not helping them in the same way it's helping wealthy people. Surely if a wealthy person and a less wealthy person hold the same stock and the wealthy goes on vacation and the less wealthy goes to the grocery store, the stock performs the same for both, does it not?
See above, pjigar helped me out on this.

One chart or one fact does not capture the reality for the many classes we have in the U.S.

If the lower 50% holds $2,000 in stock or fund, realistically, how long will that sustain an individual as prices rise?
 
See above, pjigar helped me out on this.

One chart or one fact does not capture the reality for the many classes we have in the U.S.

If the lower 50% holds $2,000 in stock or fund, realistically, how long will that sustain an individual as prices rise?

Now you are moving the goalposts of the discussion. The point being discussed was the percentage of stock owned by the lower 50% of <something, not sure>.

Anyway, I don't know how long $2,000 in stock would last a person in the lower 50%. No one does.
 
Now you are moving the goalposts of the discussion. The point being discussed was the percentage of stock owned by the lower 50% of <something, not sure>.

Anyway, I don't know how long $2,000 in stock would last a person in the lower 50%. No one does.
I'll have to bail out of this one. I can see we're going nowhere.
 
Because per capita stock ownership is very low for bottom 50%.
Math:
Assumptions: Adult US population = ~250 Million, US stock market cap = ~25 Trillion

Per capita stock ownership for lower 50% of population = ($25T*.01)/(250M*0.50) = $2 K
Per capita stock ownership for top 10% of population = ($25T*0.375)/(250M*0.10) = $375 K
Per capita stock ownership for top 1% of population = ($25T*0.48)/(250M*0.01) = $4.8 M

So you see, there is simply more money which can grow in absolute terms for people who are higher on the wealth spectrum. i.e. if stock market goes up by 1% then the lower 50% see their balance increase by $20 vs the top 1% see their balance increase by $48,000. What kind of vacation you can get with those numbers?

I don't understand how the ability to take a vacation even entered the discussion.

If, indeed, the metric being measured is in the gross value of the investment holdings, then the idea that the lower 50% of ? (I guess net worth, but still don't know) only own 1% of market value of stock, this is hardly earth shattering news. Seems like it would be a bit more considering 401k plans, 1% but not surprising.
 
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