I wonder how many people in countries like the United States , Switzerland , South Korea, Brazil , Canada , Russia , and China
Say what? You must be crazy! Prices are not falling, you are thinking! They are rising way too fast is probably what you believe!
Yes, most citizens see their purchases as becoming more expensive when, in actuality, most goods and services are becoming relatively less expensive. Of course, the paradox is that although nominal prices (the actual price tags) are, in fact, increasing, nominal income (the average, actual wage or salary) has been growing even faster over the decades. This is a topic that in economics is called “real income” or a macroeconomic measurement that compares a nation’s nominal income growth relative to the nominal growth in prices that the same income buys. In the United States, and virtually every country around the world, nominal income has grown at a faster percentage than nominal prices causing real income to increase, meaning that most Americans enjoys greater access to more and better goods and services than ever before.
Let’s take some specific facts:
In the United States real median household income grew from $42,934 to $53,657 from 1967 through 2014 for a total percentage gain of 25% (source: U.S. Census Bureau). Both of the aforementioned median household incomes are stated in current dollars, which makes the comparison valid meaning that inflation is stripped out of the comparison. Median household real income is an attempt to quantify the progress that the “middle American” family or typical family has made over time. So, in summary, the median household in America can buy 25% more with their income today than they could in 1967. In other words, relative prices are lower than they have ever been before. Due to productivity (think PPC curve shifts right due to technology, education, and trade) we are producing more products and services than ever before and anytime there is more of something the price will fall relative to income.
If we look at the same United States
Now let’s get back to the main premise of the title of this blog and the opening assertion that prices are lower than ever. What we are really saying is that you have to benchmark actual product price increases to nominal income increases in order to really understand whether things are becoming relatively more expensive or inexpensive. The vast majority of products and services are relatively cheaper today in all nations than they have ever been before, which helps explain why more citizens than ever before can afford to own much larger homes, drive more and better cars, have cable and computers, and have access to better healthcare and prescription drugs. The reason we are led to believe differently (ie, prices are out of control!) is because we are victims of our own human nature, which tends to focus on the problem areas (higher actual or nominal prices) and not the true picture (lower relative prices when compared to income). Many citizens observe things adversely “at the margin” and quickly notice those products and service prices that are rising faster than average like gasoline prices, education, and healthcare! Hey, even gasoline prices are not at an all-time relative price high as incomes have increased faster over time.
Now, you may say to yourself that statistics can lie or mislead and you are sure in your gut that things are getting more expensive relatively. You can try to validate that incorrect “gut feeling” by examining whether a country’s middle class has access to more or less products and services. “Real income” really is just a measurement of the quantity of the products and services that the median family personally has, although it says nothing of the quality of those goods but quality has improved as well. The median and average American continually has more actual products and services in the aggregate as U.S.
Now let me introduce one word of caution; over the last 15 years in the United States, there has been an increase in real average incomes of 2.7% per year, but little of those real income gains have accrued to our nation's middle class, working class, or poor, but rather to the more highly educated and skilled. The purchasing power (real incomes) of the middle class has actually fallen from $56,080 in 1999 to $53,657 today, which is a 4% decline!. The primary reasons for this fall off in real incomes for the middle class family is attributed by most economists to increased global competition and increased technology integration into companies, which tends to keep wages down (more supply of global labor substitutes and technology keeping middle class workers keeping middle class wages in check). The educated and highly skilled, however, have seen their real incomes increase consistently over that same period.
So fellow APers, my first new car, a 1979 Buick Regal that I bought out of college costing $6,700 with my $14,500 annual salary working for Price Waterhouse was a lot "more expensive" than the first new car of comparable status that you may buy immediately after college for $20,000! Get it?
Review Questions:
1. Before reading this blog, did you have an impression created by the media that the average American was somehow worse off economically than the previous generation?
2. Why are goods and services today relatively less expensive than they were for the previous generation? Provide an answer using the terms "nominal income", "inflation", and "real income".
3. In Fairfax County, do you think nominal (actual) incomes have risen much faster than product prices when compared to the US overall average? Support your answer! Hint: you can get the correct answer if you trust your visual observation as you drive through the County! You don't need to do research via Google!
4. What has happened to the purchasing power or real income of the middle class in America since 1999? What is the cause? Do you have any recommendations or policy actions that you would take if you were President to increase middle class American's real income?
5. Explain the answer to my "car riddle" in the very last paragraph of the blog?
1. The pessimistic whine of mainstream media is that our generation is somehow worse off in every way possible as compared to the previous generation. Supposedly, we face significantly greater debt, a rash of environmental problems, and even a lack of motivation: "kids these days are so much less motivated than they were in my time." It is good to know that at least we are better off economically as opposed to the previous generation.
ReplyDelete2. Previously, the nominal income (income as compared to the prices of goods) was less for the previous generation. However, when adjusted for inflation (a general increase and decrease in purchasing power) the nominal income, also known as real income, is greater for our generation than it was for the previous generation. In other words, we can purchase more goods and services with our income today than our parents and grandparents could in their day.
3. Fairfax County is the third richest county in the entire US by median household income. Obviously the nominal incomes have risen much faster than product prices compared to the US average or the median household income would decrease, and Fairfax would fall to a lower spot on the wealthiest counties list.
4. The purchasing power (real income) of the middle class in America has fallen by 2.7% in the past fifteen years. This is due to the absence of high education among the middle class (the highly educated have seen steady wage increases) and, to a lesser extent, an increase in technological integration by companies. I will never become President, and I do not want to (just look at Barack Obama's before and after pictures upon inauguration versus now), but the astronomical price of college education and beyond must be mitigated. The amount of student loans that middle class Americans must take on to put themselves or their children through college is absurd. If I were president, I would enact policies to help Americans pay for high education.
5. Your purchase of a 1979 Buick regal for $6,700 was almost half of your annual income! Immediately after college, Our income would have to be $43,283 to purchase the $20,000 car at the same proportions of your purchase. However, chances are that we will all pursue higher education, and be making significantly more than that, thus taking less of a hit to our income in purchasing the car than you did. This is explained by the steady increase in incomes of the highly educated.
1. Yes, I thought that because of global warming, unsustainable social security, rising collage prices and student debt that my generation might be worse off.
ReplyDelete2. Both nominal income and nominal price were lower than the previous generation. However, median real income has grown twice as fast as prices adjusted for inflation.
3. Fairfax County is one of the richest and most educated counties in the country. There for by having a higher percentage of upper middle class to upper class workers our real income rises much faster than the rest of the country.
4. The purchasing power has been reduced as labor has moved overseas and robots have taken over much of the workload. If I were President I would implement a way to educate people in a way that allowed them to acquire skills that made them better suited to thrive in today’s market place.
5. The average car price rose, but the average salary rose more. Coming out of college, the average grad may make about 60,000 making 20,000 about a third of his yearly income, while the car you bought was almost half of yours.
1. The media always talks about how this generation is worse off, and I bought into that idea a little before reading this blog. However I was skeptical because of how high the standard of living is now. Reading this blog confirmed my suspicions of the media leading me astray.
ReplyDelete2. Goods are relatively less expensive for this generation because our nominal income (actual wage or salary) has risen significantly faster than nominal prices (the actual price tag) over the past several years. This in turn has increased our generation's real income (or a measurement that compares nominal income growth to nominal price growth). The comparison of nominal income growth and nominal price growth takes into account and adjusts for inflation so the numbers that we can look up today are accurate and valid. Because our generation has a higher real income, we can afford more goods and services than ever before thus these goods and services and relatively less expensive today.
3. Fairfax county is known as one of the wealthiest counties in the United States. It is home to more upper middle class and upper class workers. Thus I believe that the nominal income as compared to prices of products has risen significantly faster than the U.S. average. The standard of living in Farifax county is high as supported by the presence of bigger houses, nicer cars, etc.
4. The real income of middle class families has actually declined by about 4% since 1999. This is due to an increase in demand for higher educated workers who make up the upper class. Those in the middle class are seeing their jobs disappear due to new and improved technology and their work skills are consistently outranked by upper class workers with a higher education. If I were to become President I would aim to make college more affordable by subsidizing education and providing aid to those with extreme student debt. I also might try to create jobs for those who lack the higher skill level but are still willing to work hard.
5. In today's world a student can hope to make an average of $40-50,000 right out of college. This is significantly higher than the $14,500 salary, even with regards to inflation. Thus the average college graduate has a much higher purchasing power than ever before. A $20,000 car is cheap when compared to the fact you spent almost half your annual salary on the car.
1. Previous to reading this blog, I was under the impression that the average American was not doing well economically, same as many of us. The media seems to focus on negativity, causing the public to believe we are perpetually in a downward spiral. It seemed as though we were on a sharp decline, doing worse than ever before and still falling.
ReplyDelete2. Goods and services today are relatively less expensive than they were for previous generations. This is because our nominal income (the average, actual wage or salary) has been rising much faster than the prices of goods and services have been. Although prices have experienced a large inflation, the real income has also inflated. We tend to focus on the raise in prices, it is something we notice every time we buy something. Nominal income has risen much faster than nominal prices, causing a raise in the nation's real income. Real income is a macroeconomic measurement that compares a nation’s nominal income growth relative to the nominal growth in prices that the same income buys. This means that Americans have greater access to goods and services than ever before because prices are proportionately lower.
3. I believe that in Fairfax Countu, nominal incomes have risen much faster than product prices when compared to the US overall average. We are fortunate enough to live in a very privileged area, where many families are able to live their lives without worrying about money too much. The answer is easy to see simply by driving around. People who live in Fairfax County have enough money to spend on nice things. If you take the time to look at the cars people drive, for example, you will see they are high quality cars. Most people have fairly new models, and they are mostly nice brands (which are therefore more expensive). If you were to drive in another part of the country and look at the cars the locals drive, you would see much older cars, many of which would be low quality and cheap.
4. Purchasing power for the middle class in America has fallen 4% since 1999, from $56,080 to $53,657. This is because America grows greatly in forms of technology, not workers. The upper class, educated and highly skilled experience rocketing nominal incomes, but the middle to lower class is being replaced by technology or remaining constant. There is not a whole lot of room to grow. I would attempt to pass a policy that made college more affordable. I would encourage more education opportunities and more classes that encourage creativity. This would help students to reach their full potential, and possibly achieve those higher paying jobs.
5. When you first got out of college and bought a Buick Regal for $6,700 with an annual salary of $14,500, you were spending about 46% of your annual salary on a car. It is impossible to know how much you would be making immediately after college, especially since it differs so much from major to major. However, the average income of a student straight out of college would recieve about $45,478 annually, making a $20,000 car only 44% of their annual income. Proportionately speaking, this is less, and one could say that this second car is relatively less expensive!
For Blog 3
ReplyDelete1. Before reading this blog, I had the feeling that the media was trying to make the economic situation in America seem worse than it is actually. Unfortunately, I do not think the average American will take into consideration inflation and education growth because when they hear something bad about the economy, most or all logic might go out the door.
2. Good and services are relatively less expensive in the current generations become of the growing nominal income ( the average wage salary), a real income rise and inflation. In terms of the nominal income, people are getting better paying jobs than ever before. In the terms of the nominal and real income, the United States has become the largest economy the world has ever seen, meaning we will consume more equally high prices on good and services. Finally, inflation plays a major role. When comparing old and new prices, one will simply look at the price, not the time scale. A candy bar could have been $2 in the 90s but today its $4, the product has stayed the same but the amount people were buying was too much for the producer to handle so the price had to be raised. Yet, $4 is nothing in today's economy which illustrates the growth that we have had.
3. In Fairfax Country the nominal income has risen faster than the product prices because people seem to have more and better products. There are several strip malls in a close proximity to each other which contain Game Stops, movie theaters and other good and services for disposable income.As well as Fairfax being a above-average place to live. Families are able to support themselves comfortably and then have some money to spare as seen in the very nice houses in some ares of Fairfax.
4. The purchasing power of the middle class has declined by 4% since 1999 do to an increase in foreign competition and technology doing the work of the labor workers taking the jobs from the middle class. To fix this problem, I propose this, we continue on the technological path but remove some robots and replace them with humans and give those business subsidies. We should so encourage foreign business to open jobs in America while keeping the competition going. Also, strong education should become more available to anyone who is willing to focus. We should make all public college free, all of this would cause more taxes but those taxes can be taken from the very top of the economic spectrum.
5. When you first got out of college, the car was $6,700 but while for income was $14,500. You bought the more expensive car because you knew the average income of a newly graduated student would rise while the price of the car would stay the same. So your nominal income outweighed the actual price of the car, therefore, you could afford the more expensive option.
1. Did I have an impression created by the media that the average American was worse economically than the past generation? Well, maybe because the media always shows people struggling with their jobs, not gaining enough income, and people losing their jobs quickly but this was during the Recession in 2008.
ReplyDelete2. Nominal wages have been lower in the past because we have seen a 25 % increase in modern nominal incomes thus increasing the purchasing power for real income and adjusting inflation. So in summary American households in the present can buy 25% more with their income compared to the past generation due to new jobs and productivity.
3. Nominal incomes in Fairfax have risen faster than their product prices. Fairfax is a rich county, with lot of jobs, education, and wealthy folks living around there, so the nominal incomes should be higher. If Fairfax were compared the US overall average it would be certainly higher because it is a county that has a lot of high nominal incomes. It is an expensive area to live in so in order to live there nominal income must be higher than product costs.
4. The purchasing power in the middle class has been lowered 4% since 1999, The cause of this decline is the result of increased global competition and technology integration into companies thus getting rid of labor forces. If I was President I would set up a policy where if a worker was laid off because of technology integration, he would be able to go back to college with financial aid, in order to learn a new profession to help the economy.
5. So your 1979 Buick’s is $6,700 and your annual salary is $14,500 so you are like spending about half a year’s work of money but that was back in 1979. If you came out of college today, and spent your money on that $20,000 Buick, you would have to have had a job that gives you an income of $45,000-$50,000. This can be explained because nominal incomes have increased more than prices. In one hand, your 1979 Buick that cost ½ of your annual salary, while your new $20,000 car would only cost you 40-45%.
1. Yes, before reading this blog I was under the impression that the average American income was worse off than the previous generation. This is because I thought of the rise in prices but i did not account for the rise in income relative to the rise in prices.
ReplyDelete2. Goods and services today are relatively less expensive than they were for the previous generation because real income is increasing due to an increase in nominal income relative to the nominal price increase. There was a 25% increase in real income with inflation take out of the equation.
3. Yes, nominal incomes in Fairfax County have risen much faster than product prices compared to the U.S. overall because Fairfax i filled with educated, skilled workers, who have increased their nominal incomes dramatically more than others in the U.S. according to statistical analysis.
4. The real income of the middle class has dropped by 4% due to advances in competition and technology. The president could instate a law to increase middle class wages relative to the entrepreneur's profits, but that seems socialist, so there may not be a more practical solution than hard work to advance middle class income.
5. The $6,700 1979 Buick costed more than the modern car at $20,000 relative to the real income of the buyer due to inflation and nominal incomes increasing faster than nominal prices. This is true even though 6,700 is mathematically less than 20,000.
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ReplyDelete1. Yes, before reading this blog, I was under the impression that our generation was not as well off as the previous generation. I did see that we have more advanced good nowadays, but this is only because we are a lot more technologically advanced than the previous generation.
ReplyDelete2. Goods and services today are relatively less expensive than they were for the previous generation because we have found more efficient ways of producing these goods at a cheaper cost. Now, you may be thinking “Why would the companies charge less, then they’d make more money?” This is a true question but the answer is because of competition. Competition says that other competitors are creating the same product at a cheaper price so they are going to charge less for it so that the demand for the product goes up. Another reason they are less expensive for this generation is because our nominal income has risen much faster than nominal prices. The effect of this is an increase in the generation’s real income.
3. In Fairfax County, the nominal incomes have risen much faster than product prices in the United States average. Our area is one of the wealthiest in the country and it is obvious to tell just by driving around our area. Most houses are somewhat larger than the country’s average and most houses have two to three car garages, whereas most houses outside of our area have a small roof for one car in their driveway. These observations are pretty obvious to me, especially coming from a place like Brooklyn, New York, where the nominal incomes are nowhere near Fairfax County’s.
4. The purchasing power for the middle class has dropped about 4% since 1999. One of the reasons for this is a more competitive workforce and the higher education that most Americans are receiving nowadays. Because of a higher education level of the average worker, business are looking for a more skilled and motivated worker, someone who they know they can rely on without a lot of training. If I had a recommendation to offer the government, it would be lower the average tax by giving less money to state colleges, which makes college more affordable. This prevents college students coming out of college with hundreds of thousands of dollars worth of debt and having to continually pay it off for the next 25 years of their lives.
5. When you purchased your 1979 Buick Regal, it cost you almost half of your annual salary while working at PWC. This is strange because most kids coming out of college are making anywhere from $50,000 to $65,000 a year which is a three times the price of the car. You had to split your salary in half to buy your first car. This shows how much the real income has increased in just a few years.
1. Prior to reading this blog, I personally thought that the average American is worse off economically than any generation before. However, the improvements in technology and standards of living have significantly increased in the past years, so I began to question this idea.
ReplyDelete2. Goods and services are relatively less expensive than they were for the previous generation because the normal income has risen much faster than normal prices. This consequently increases our generation’s real income. Nominal price growth and nominal income adjusts for inflation. This is so the numbers we look up today are accurate. Due to this and the higher real income, we are able to afford more goods and services than ever before; therefore, goods and services are less expensive.
3. Fairfax country is the second wealthiest country in the United States to date. Being right outside of Washington D.C., it is home to a higher amount of upper middle class and upper class workers. Therefore, I think the nominal income has increased faster than that of products compared to the rest of the counties throughout the country. In Fairfax County there are larger houses, expensive cars, designer handbags, etc.
4. The real income of the middle class in America has declined 4% since 1999. This occurred because there has been an increase in demand of educated workers who are part of the upper class. Middle class workers are losing their jobs due to the fact their skills do not quite equate to that of the upper class workers with a higher education. If I were President, in order to increase the middle class’s real income, I would help pay for a higher education of the people in order for them to go to college and receive higher paying jobs. For those who are not willing to go to college, I would create more jobs for those who are not quite up to the expected skill level, but are still willing to work.
5. On average, those coming right out of college can find a job with a salary around $50,000. If you buy a $20,000 car with this salary, you still have $30,000 to spare for other needs. However, if you only are making $14,500 and buy a $6,700 Buick regal, you have $7,800 for other necessary things. With this money, it is almost impossible to live off of in the span of a year.
1. Yes. In general, the media seems to be claiming that prices are rising, our economy is lagging behind, China is going to destroy us economically, etc. I did believe these claims before but now I know it’s all wrong.
ReplyDelete2. In the United States, the average real income has increased, meaning that people’s nominal incomes (average salaries) have grown more rapidly than nominal prices (average prices of goods and services). People overall have more buying power than earlier generations, making goods and services relatively more cheap compared to earlier generations. Of course, the comparisons between the real incomes of different generations need to be adjusted for inflation for accurate analysis.
3. I do believe Fairfax County nominal incomes have risen much faster than product prices compared to the rest of the United States. Looking around, you see nice cars, nice houses, and many private schools. You can tell the average standard of living here is much better than most other places in the United States. Fairfax County is ranked in the Top 5 richest counties in the U.S., so it’s safe to assume nominal income has risen much faster than nominal prices.
4. Since 1999, the average real income of the middle class has fallen by 4% ($56,080 to $53,657). This means the purchasing power of the middle class has fallen. This decrease is caused by increased global competition (labor) and increased technology integration into companies, suppressing overall wage growth. As president I would push for affordable college education. If American workers are more educated than international workers, they can be much more competitive in the labor industry.
5. The new car you bought out of college ($6,700) was about half your annual salary ($14,500). If I were to buy a car now for $20,000 and assuming I had an annual salary of $60,000 out of college, that would only be a third of my income. You paid half of yours. So the car I bought would be relatively cheaper even though the price of the car was technically more expensive.
1. Before reading this blog, I did have an impression created by the media that the average American was somehow worse off economically than the previous generation. The media portrays the current generations to be in rising debt, centering solely on the negative but not mentioning the rise of income. The news depicts us to be struggling the most in the future while in truth, we may be better off.
ReplyDelete2. Income has risen more quickly than the price of goods due to productivity of technology and higher wages driven by higher education levels. Technology makes it possible for goods to be produced at a lower price. Nominal income (actual wage or salary) rates have increased more quickly than have nominal prices for goods risen. It may appear that the prices of goods have experienced inflation but the real income has also risen. Real income increase has made it possible for citizens today to afford more goods and services. Therefore, goods have in fact become less expensive.
3. Fairfax County, being one of the wealthiest counties in the country, has probably experienced greater increases in nominal income compared to the national average. It is true that most citizens in Fairfax County receive a high quality college education, resulting in a higher nominal income. Fairfax County does not have a very large unemployment rate as compared to other counties. The quality of homes and abundance of services illustrate this.
4. The educated class is driving the increase in nominal income because people with college education are getting paid more and more for their services compared to the lesser educated whose nominal income has been increasing at a lower rate. The purchasing power of the middle class has declined 4%. The advancement of technology requires highly educated workers, giving fall to the middle class or worker of lesser education. If I were President, minimum wage could be increased to benefit those who have not had an opportunity for a college education. College could also be made more affordable, but not completely free as that would potentially increase the national debt.
5. Nominal income has increased over the years due to education-- therefore college graduates receive a higher nominal income relative to the price of a car-- which is why a car out of college would cost $20,000 today as compared to $6,700 in earlier years. A college graduate now most likely makes $50,000-$60,000 a year while you made $14,500. The new car you bought out of college was $6,700, amounting to about half of your $14,500 salary. A college graduate would buy a car for about $20,000 but this would only be a third of a $60,000 salary-- although the numbers do not show it, the price is still lower today due to a higher nominal income.
1. Before reading this blog, I did have an impression that the average American was worse off economically than the previous generation. After thinking about it, I do realize that the reason for this is mostly because of media and what they choose to put out. You always see stories on the news about how bad the middle class is and how the wealthy have too much wealth. They also imply that this generation is much worse off economically than the last, even though the standards of living are much better now of days.
ReplyDelete2. Goods and services today are less expensive than they were the previous generation because the people today have a much higher nominal income. This income has risen much faster than prices have which has raised our generation’s real income. If we look at the growth of income and prices, we function in inflation. This makes our percentages and numbers correct and since our income is higher than the generations before us and prices are lower than ever, we can get more goods and services.
3. In Fairfax County, I believe that the incomes have risen much faster than prices have when compared to the US average. Fairfax County is one of the wealthiest counties in our country, which is pretty noticeable when you compare driving through our county, and driving through others. The standard of living is much higher than the average county in the US which is why I believe when comparing income to prices, we have risen faster than the average US county.
4. Since 1999, the real income of middle class America has dropped. This is caused mainly because of technology. Technology is replacing many jobs, especially lower class and middle class jobs. This is causing an increase in the need of higher education, because higher educated people are in demand. Since the need of higher education is obvious in America now of days, the price of going to college has risen greatly. If I were President, I would help make college more affordable for the middle class. This would increase the real income of the middle class, thus making our society better and more educated.
5. College has increased the average income of the regular person. Now of days, the regular person coming out of college can get a job paying about $50,000. Your $14,500 salary was nearly cut in half when you bought your new Buick. If the average person that is making $50,000 coming out of college buys a $20,000 car, their income is still not cut in half leaving then more of a cushion to live on.
1. Before reading this blog I would have said that we were worse off economically than the previous generation. The reason is that the media leads us to that conclusion, they leave us with the impression that we are in an economic decline. All the media focuses on is negativity such as rising debt, however they fail to tell us that the standard of living now is higher than before.
ReplyDelete2. Goods and services today are less expensive, than they were in the previous generation today people have a higher normal income. People's normal incomes have risen at a faster rate than normal prices causing the real income to increase meaning most Americans have more access to more and better goods and services. When comparing the numbers for normal income and normal prices the numbers have been adjusted for inflation, so we can be sure that the numbers are valid.
3. I believe that in Fiarfax Country the incomes have indeed risen faster than the prices have in comparison to the US average. Fairfax is one of the most wealthy counties in the country and this is evident when driving through this county and seeing all the thriving businesses and workers in comparison to when I drive through Fauquier country where I live and I see much less businesses.
4. The purchasing power of middle class Americans has declined since 1999. This drop is due to the fact that middle class workers in America are losing their jobs to higher educated workers who have better skills and can do the same jobs more efficiently and better. If I were president I would try to put a policy in place that would make college more affordable for the middle class in order to put a stop to this decline.
5. When you got out of college you were making $14,500 and the car which you bought cost you about half of your income. However today the income of a person just out of college is around $50,000 compared to the $14,000 which you were making. Due to this raise in income the $20,000 spent on their car would not have as much of an impact on their total income, so you would be left with more money after buying the car which would ultimately lead to an increase of you standard of living.
1. Before this blog I actually knew that the average American is better of economically than in the past. I am not a guy who listens to biased media so they don't really interest me. My dad is a business man so I already knew that as more people were making more money the prices of products would go up. That doesn't mean though that people can't afford them if they go up because they as well are making more money.
ReplyDelete2. Goods and Services are cheaper today than in the past because people earn more per year on average then the average of our goods and services going up. If it continues on this trend in the future than goods and services may be getting more expensive price wise but compared to peoples annual salaries they will be better deals than the past.
3. Fairfax County is one of this richest counties in the nation. Thus the income of the people raises must faster than the U.S average. Money is flowing in this county. If people make more money than anywhere else in the nation and the prices of goods are going up at a slower average than obviously the deals will get better and better.
4. The reason that the middle class is making less money than before is due to the advancement in technology in basic jobs. Machines are starting to replace people as this country becomes more technologically advanced. The high skilled jobs are going to the upper class thus they are thriving today. If I were the president I would tax the rich a lot more than the middle class and poor to help them get back on their feet more.
5. When you bought your buick for $6.700 dollar that was almost half of your income! If you compare that to what an average college student makes today out of college buying a car for $20,000 would be less than there income making it cheaper and a better deal due to the fact that kids are making more money in today's society.
1. The media creates the impression that our economy is not as strong as it once was. That message has certainly made it out to the younger more current generation at least.
ReplyDelete2. Due to the raise in normal income goods and services are relatively much cheaper then they used to be. The normal income has a direct correlation with real income and is positively related. Even though there has been an increase in inflation over the current years the real income has overcome the inflation which has to do with why goods and services are relatively cheaper.
3. Everyone in Fairfax County knows that we are one of the richest counties in the country. I do believe that our normal incomes have risen much more fast compared to the US overall average. We have a very low level of unemployment in our county and it seems that just about everyone who wants a job has one here. Based on looking at what the normal family lives in and drives to work in everyday I can make the assumption that compare the the US overall average our normal incomes have risen much faster.
4. Since 1999 the middle class has dropped 4%. Our society calls for more highly educated workers which are typically more well off in terms of wealth than others. An increase in technology has led to not as many needed workers in fields like industry which often make up the middle class. If I were president I would try to create jobs that didn't require a high education and give it those members of the middle class who are out of jobs.
5. Although you made $14,500 at the time the normal income has gone up significantly. A car equal to the car that you got might have cost you $6,700 at the time but due to inflation the car price has gone up along with the normal income. So although the car took up about half of you annual income in today's society the $20,000 is likely to be half of someone else who just got out of college due to a raise in normal income.
1. Yes, before reading this blog I was under the impression that the average American was worse off economically than the previous generation.
ReplyDelete2. Goods and services are less expensive than in the previous generation because the real income has been increasing. Even though nominal prices are increasing, nominal income has increased exceedingly over the past few decades. In fact, according to a 2014 census, there has been a total percentage gain of 25%.
3. I believe that in Fairfax County incomes have risen much faster than prices product prices compared to the US overall average. If one searches the wealthiest counties in the country, Fairfax County would be on the list. It is clear while driving through the county and seeing all the large houses and businesses that are thriving in our economy today.
4. The real income of the middle class in America has declined since 1999. The total percentage of decline is 4%. Today, many jobs are often looking for workers with higher education and skills, leaning away from people middle class families. If I were president I would try to convince more students to attend college and make it more affordable for those middle class families.
5. The average income of Americans is significantly higher now than it was when you graduated college. The income has risen from the $14,500 to $53,657. So instead of spending about half my income on a new car, as you did, I will only have to sacrifice a smaller amount of my income.
1. Before reading this blog I would have said that we were worse off economically than the previous generation. The reason is that the media leads us to that conclusion, they leave us with the impression that we are in an economic decline.
ReplyDelete2. Previously, the nominal income was less for the previous generation. When adjusted for inflation, the nominal income, also known as real income, is greater for our generation than it was for the past generation. We can purchase more and better goods and services with our income today than the past generation could have gotten.
3. In Fairfax County, I believe that the incomes have risen much faster than prices have when compared to the US average. Fairfax County is one of the wealthiest counties in our country, which is very noticeable when I have driven through other places around the country. Our standard of living is much higher than the average county in the US which is why I believe when comparing income to prices, we have risen faster than the usual average US county.
4. The educated class is driving the increase in normal income because people with college education are getting paid more and more for their services compared to the lesser educated whose nominal income has been increasing at a much lower rate. The advancement of technology requires highly educated workers, giving fall to the middle class or worker of lesser education. If I were President, minimum wage would be about the same or maybe increase a bit because i believe those who have put in the work and are more skilled should make much more money than those doing menial jobs. College would also be made more affordable for instate students.
5. The average car prices rose, but the average salary has risen even more. Coming out of college, the average grad usually make right around high $50,000 to low $60,000 while the car is $20,000, about a third of the yearly income. The car you bought was nearly half of your income.
1.I personally thought that America had the best economic now because of rapid development of technology and standards of living does not go with worse than the prior generation
ReplyDelete2. Previously, the nominal was less for the previous generation. However, when adjusted for inflation the nominal income, also known as real income, is greater for our generation than it was for the previous generation.
3. Fairfax County is famous for education and richest counties of the US. Even students like me desire to come to Fairfax County. Real income goes up much faster than the other county because we have upper middle class to upper class workers
4. Real incomes of the middle class dropped by 4% because of the development of higher competition and technology. I would assign a law to increase middle class wages compare to the upper class.
5. When you were first out of college car cost $6,700 when the income was $14,500 which was half of it. You knew that the average income of graduated students would rise but the price of car would be the same. Thus you bought the car in order to afford the more expensive option.
1. Yes, before reading this article I always thought that prices were rising because the number on the tag was increasing. It always seems that the newest phone or TV that comes out is always more expensive than the older one and I haven’t seen a lot of examples where prices have decreased. The Media always says how things are increasing in price and how Americans aren’t earning enough money to buy things.
ReplyDelete2. Goods and Services have become more efficient over the years and the methods of production have changed a lot compared to the older days. This means that companies can make more of a product for less so then they can sell the products for less while still making a profit. Nominal income was lower for previous generations that it was now due to inflation as the dollar is worth less than it was back then. The prices of things have changed a lot as our nominal income has increased more than our nominal price. Thus meaning we can buy more. Our real income has increased which means that we have more buying power so we can buy more goods for less than we used to be able to.
3. Yes I think that nominal income has increased much quicker than the rest of the US on average as Fairfax is one of the wealthiest places in America. Just by driving around you can see big fancy homes and expensive items in the stores. It is near the capital and a lot of big companies are stationed near the capital and its workers often live in Fairfax or northern Virginia. Fairfax has high education levels which allow people to get better jobs which pay more money which means they get more money to spend on goods and services.
4. The average purchasing power and real income of Americans has decreased over the years as companies begin to send production abroad as there is cheaper labor there than there is in the USA. Median Household income has fallen almost 5,000 dollars since 1999 which shows the middle classes income is decreasing. If I was president I would make a better education system that gives people resources and skills that will help them more in life and help them get a better job. The key to being successful is to be educated, so if we have an uneducated work force then we will be less efficient and less productive.
5. Your car riddle show how the ratio of income to price has changed over the years and how the purchasing power has changed due to inflation. The beginning income of graduates has increased so now the 20,000 dollar car would not be as big of a proportion of the person’s income as the 6,000 dollar car is of the 14,000 income. 6,100 is almost half of the persons 14,500 income and although 20,000 is a bigger number it does not cost more relatively to inflation and the income of the person.
1. Yes, I prior to reading this I had the impression that our generation was worse off than those before us. The media is constantly forcing negative stories, leaving us to create assumptions.
ReplyDelete2. Things these days are less expensive because of the increase in most people's nominal incomes. Nominal incomes raise faster then prices, and the real incomes of past generations had to have been adjusted for inflation.
3.I do believe the households in Fairfax County have faster raising incomes, seeing that most people are well off and live in nicer areas then other parts of the country.
4. People who have a better education take the higher paying jobs. This is the cause of the decline in real incomes. It can be fixed by a national increase to wages or by making a proper education easier to obtain.
5. Since national income has greatly increased, the need to spend most of a salary on a car is not necessary. You spent half of your salary on a car; nowadays you would only have to spend about 1/3.
1. Before reading this article, I was under the impression that the average American was worse off than the previous generation. Our mainstream media, however, consistently makes it seem like something is always wrong and "our generation is doomed." They don't take into account the advance in technology or the rise in nominal incomes.
ReplyDelete2. Goods and services are relatively less expensive than they were for the previous generation because the technology and production of these goods have advanced and become more effective, making it cheaper to produce more goods. Also, over the years the nominal incomes have risen faster than the nominal prices have. Things seem more expensive because due to inflation, the dollar is worth less now. When people talk about things being more expensive now, they don't take into account inflation to arrive at the "real income."
3. In Fairfax County, the nominal incomes have definitely risen faster than the product prices when compared to the US average. Fairfax is one of the wealthiest counties in the country, and this can be seen simply by driving down the street and seeing the very nice houses and cars. Most people in Fairfax are expected to attend higher education and training, and in return they will make money and be able to spend it on more goods and services.
4. The average purchasing power and real income of the American middle class has decreased since 1999. The reasons for this include: jobs being shifted overseas to save costs, competition, increase and advancements in technology, and lack of education and training. If I was President, I would increase taxes to provide for cheaper in-state tuition. Though people always freak out when they hear "increase in taxes," this would help them in the long run by allowing them to get cheaper education and get a better paying job, and therefore a higher income.
5. You had to spend almost half of your income on your car, but today you wouldn't have to sacrifice nearly as much (% of your income) to get a car.
1. Before reading this blog, I think I definitely had the perception that everything is more expensive in America now than it was before. I got this perception because I always hear older people complain about how “back in their day” the given product only cost a smaller amount of money compared to the higher price than it is now. More expensive products are also always the talk on television news networks, these days as well.
ReplyDelete2. Products are less expensive than they were before because despite the nominal price increasing, which is what people complain about, nominal income has been increasing as well at a higher percentage than the nominal prices. In other words, real income has increased over the years. Inflation also could’ve made a difference but the real median household income numbers from the U.S. Census Bureau are calculated in current dollars, so in this argument inflation is not included.
3. I think that the Fairfax County’s nominal incomes have risen faster than product prices than the rest of the U.S. because by the looks of the nice cars, houses, and high-end products that are owned in this county, anyone can see that this county is very affluent and the people living here must have relatively high incomes.
4. Despite the increase of real average incomes, the purchasing power or real incomes of the middle class have actually declined 4%. This is a result of their wages being kept low because of a higher supply of global labor substitutes and increased use of technology. Some ways to increase their wages may be upping the minimum wage or if I were president, finding a way to lower the cost of key goods and services such as healthcare and education because then the income of a worker can go a longer way.
5. The new car that is $20,000 can be considered “less expensive” than the $6,700 Buick Regal, if the nominal income that we may receive straight out of college is higher than the income of $14,500. The $6,700 is worth more to the buyer to the $14,500 income but $20,000 may not be that big of deal to the buyer if his or her income is very large.
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ReplyDelete1. Before reading this blog, I totally thought that the average American was worse off economically than the previous generation. The media always talks about how people today are struggling to find work, and the old men on the Fox news shows talk about what it was like “in the good old days” where gas was only .50$. However, none of this really takes into account the evolution of the economy as it has grown and contracted over time.
ReplyDelete2.Goods and services today are relatively less expensive than the previous generation because despite the fact that nominal prices are increasing, the nominal income has increased even more quickly. Since nominal income has increased more quickly than nominal prices, real income has increased so that goods and services are much more accessible to Americans than they ever were before. Inflation has also played a part in this because even though the number on the price tag may be bigger, in actuality the value of that number has decreased. Where it once would have cost $.50 to buy candy at the candy store, it now costs $1.25 because of inflation. However, the value of the $1.25 is actually less than the $.50, meaning that goods are cheaper today than they were previously.
3.Yes, Fairfax County’s nominal incomes have risen much faster than product prices when compared to the rest of the United States. Fairfax is surrounded by many universities and is located at the perfect location for government and military employees to live and raise families. The college educated and highly skilled have a much higher nominal income growth rate. In Fairfax, it is almost assumed that if you are an adult then you have attended college or university at some point.
4. The purchasing power of the middle class has declined 4% since 1999. This is because of global competition and increased technology integration in companies, which means that workers receive lower wages since technology and foreign labor substitutes are competition for the laborers. Some policy to increase the income of the middle class could be tax breaks for businesses that hire American workers as well as tax breaks for businesses that have a certain ratio between people and machines.
5.Education and training has increased the nominal income of Americans substantially over the years. A college graduate today receives a higher salary proportional to the car than that of a college graduate from 1967. When you are only making $14,500 a year, $6,700 seems like a lot more money since it is about half your salary. However, if you make say $55,000 a year, then $20,000 is only about 1/3 of your salary. $20,000 in this case has less value to you than $6,700, therefore making it a “cheaper” car.
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ReplyDelete1. Yes, before reading this blog I did. Prices are so much higher than they were in the previous generation so I thought it was common sense that Americans now are worse off economically, but know I know that is not true.
ReplyDelete2. Goods and services are relatively less expensive today because although nominal prices are increasing, nominal income is increasing even more than nominal prices and has been growing faster over the decades. This causes real income to increase. Inflation caused a rise in prices and also a rise in income, which is why people think everything is more expensive. Our generation has a higher real income, which is why we have more access to better goods and services.
3. Fairfax County is very wealthy and one of the top wealthiest counties in America. So yes the nominal incomes have risen much faster than product prices compared to the overall U.S. average. You can tell by the standard of living. Just by driving through the county you can see the big houses and tons of thriving businesses.
4. The purchasing power of the middle class has declined 4%. The cause for this is the need of higher educated people and increased technology into companies has replaced many middle class workers. If I was President I would try to give people a better education. Help kids that have financial trouble and can’t afford college. Also make college a more inviting place so that more people will want to go and get a better education.
5. When you just got out of college you were only making a $14,500 salary so when you bought the car for $6,700 you had paid almost half of your salary, but today if you bought a car for $20,000 just out of college your average income is much higher so you would have much more money left over, which means the car is relatively less expensive.
1. Considering that I was about 10 when the recession hit in 2007, by the time I began paying attention to the news it seemed that all I heard was how poorly our economy was doing. So yes, prior to now I did have the impression that the previous generation was economically better off than this one.
ReplyDelete2. Goods and services today are relatively less expensive than they were for the previous generation because nominal income, or the average salary, has increased at a faster rate than nominal prices, the actual price tags. This comparison is studied under the title of real income, and after adjusting for inflation to make the evaluation valid, one can compare the real income from two different time periods and make the conclusion that goods and services today are less expensive than they were in the past.
3. I believe that with the economic growth occurring post market crash, Fairfax County would have to have nominal incomes rising faster than product prices compared to the overall U.S. average in order to maintain its spot as the number two richest county in the U.S. While I do not live in Fairfax County, driving through on my way to school and observing my peers I can see evidence of a higher cost of and standard of living.
4. Since 1999, the real income of middle class Americans has decreased by four percent, due in part to technological innovations replacing some of the previously held jobs. Additionally, while as a whole the nation’s real income increased, the increase was found in the real income of those who were more educated than most members of the middle class are. While I am far from an expert in this field, I believe that looking into making trade schools and certificate programs more available, as well as two and four year colleges, would help increase the education of middle class workers and hopefully keep their skills ahead of technological advances.
5. Your first new car cost about 46% of your annual income that year. A comparable car today priced at $20,000 is almost three times more expensive than the car you bought shortly after college, and the salary for a new college graduate today is more than three times $14,500 ($43,500). Say the typical salary one would earn right out of college is $45,000 a year. That $20,000 car would only make up 44% of one’s annual salary, compared with the 46% of your income that your first new car cost you. This difference in percentage shows that your first car was more expensive to you than a new car today would be to a new college graduate.
1. There is no doubt that I had the impression that the average American is worse off economically than before. Probably a lot of this is due to media coverage of politics which has recently focused on the stagnant middle class and the 1% rich. The media clearly paints a picture that the 1% dominate the economy and the remainder, largely middle class, are stuck.
ReplyDelete2. Goods and services today are relatively less expensive than the previous generation due to "real income." "Real income" is a measure of a country's nominal income growth versus the nominal cost of goods and services that the nominal income can buy. This is based on the fact that inflation is not considered. Therefore, today, real income demonstrates that people have more buying power than those of the last generation because nominal incomes have risen higher than nominal costs. It makes sense!
3. Yes, nominal incomes have risen faster in Fairfax County than nominal costs of products and services. It seems like every other person owns a Mercedes or BMW or a "megamansion" house. This was apparently not the case 20 years ago (according to my parents).
4. The purchasing power of the middle class has stagnated since 1999. The purchasing power of the middle class has fallen. This can be attributed to a global supply of labor along with technology improvements and innovations. These keep wages down. The ready supply puts little upward pressure on wages. However, the educated tend to see their wages increase. This explains why the media is focused on this issue although it does not always properly explain it.
5. The increase in nominal product costs did not rise since 1979 as fast or as high as the nominal income growth. Therefore, today, one can much more easily afford a car that in 1979 took up almost half the salary! One makes more money but product costs are lower in comparison what they were in 1979.
1. Before reading this blog, I thought that the average American today was economically worse than the Americans 50 years ago due to the media. The constant negative drum beat from the media suggests that our economy is getting worse, an example; I’ve heard many programs on sites like MSN BC that he Middle Class is being pinched.
ReplyDelete2. The technological breakthrough has pushed the PPC out allowing consumers t be able to consume more products. In real income terms, today people can buy a lot more goods and services than they could 50 years ago. The nominal cost of a car 30 years ago was $1,000 and today its $30,000, but in real income terms, cars today are a smaller share of a persons income. The increase in the nominal income reflects the inflation over that time period, but it does not mean that items have gotten more expensive over 30 years.
3. Real income in Fairfax County has been rising; kids are getting brand new cars, iphone’s, brand name clothing, and credit cards with an unlimited balance. The costs of after school activities; like travel soccer, lacrosse, and dance costs thousands of dollars to participate in, people didn’t have a disposable income like that 50 years ago or I most parts of the country today, in Fairfax County it is totally normal.
4. The purchasing power of the middle class has stayed basically constant since 1999 mainly because of globalization that has held down middle class wages due to things like immigration and international competition. A way to combat this issue is to enact a more fair tax code that promotes business activity and therefore creates jobs.
5. The second car purchased (in real income terms) must have been cheaper than the first car purchased for this riddle to be true.
1. Before reading this, I was under the impression that prices on all
ReplyDeletegoods and services were rising. This was in part to the media and in
part to my ignorance as a consumer, as I failed to realize the higher
standard of living that we experience now. However, this article
changed my view and now I see the process as a whole in a better light.
2. Prices are comparatively lower nowadays due to the fact that the
nominal income (average salary) of workers today has grown, as well
as the inflation (amount of money in circulation), which has in turn
raised the overall real income (growth in income compared to prices).
3. Fairfax County is an extremely affluent area as a whole. This
means that the average income of Fairfax is much higher than the
national average, which would lead one to believe that nominal
incomes are rising faster than product prices.
4. The real income of the nation's middle class has fallen by about 4%
over the past four years. This is because of the expansion of global
competition and technology. In order to prevent this economic gap in
American society as President, I would strongly encourage more
Americans to pursue careers in science and engineering, as it seems
that the best way to adapt to a changing world is to be the changing
force.
5. This riddle relates directly back to the primary argument of the blog.
Due to the fact that you paid $6,700 for your first car in a time when
the national average income was lower and there was not as high a
level of inflation, it would be more expensive in comparison to
purchasing a car for $20,000 nowadays. This is because $6,700 out of
an annual salary of $14,500 is a much greater sum than $20,000 from
today's average salary of over $50,000.
1. Before reading this blog I think that the media played a role in my view of how well off the average American was. I think the media creates this idea that the economy is doing poorly and that the dollar is not going as far as it used to. Also the media like to focus and minimum wage and how so many people cannot live on it. As we learned in class this is not true, but many Americans believe it.
ReplyDelete2. Goods and services today are less expensive than they were for the previous generation because nominal income has increased more than nominal prices. This is what real income is, it compares nominal income growth to nominal growth in prices. Inflation is removed from this equation to make it a valid comparison.
3. I believe that nominal incomes in Fairfax County have risen much faster than product prices when compared to the overall average. Fairfax is known to be one of the richest counties in the United States, it is also made up of very wealthy upper and middle-class families. Since the nominal incomes have risen faster that product prices, people in Fairfax can afford to purchase bigger houses and nicer cars than many other areas in the U.S. that might not have a greater rise in nominal income than product prices.
4. The purchasing power of the middle class in America since 1999 has fallen 4%, from $56,080 to $53,657. The cause of this decline is increased global competition and increased technology integration into companies. Today to be successful in the middle class and upper class it takes a specialized skill and higher education. A policy that I would put into place to increase middle-class American’s real income would be to make higher education more affordable. By making education more affordable the middle class could learn a specialized skill and make more money for their expertise.
5. Your $6,700 car was more expensive in relation to your income at that period in time. It was almost half of your annual salary of your first job. Today, a $20,000 car would be “less expensive” for a person out of college who would be making between $50,000- $60,000 for the same job you were doing out of college.
1. I have generally felt that the standard of living encountered today is better than previous generations’. My mindset was always that technology and education have continually advanced, allowing for a better way of life for most people. The media does tend to only point out the flaws in our economic system, but I feel that the benefits have generally outweighed the costs.
ReplyDelete2. Americans can buy more and better goods and services today than they could in years past. The nominal income of the average American has risen substantially from former decades. This increase is larger than the increase in prices for the goods and services. This difference creates an improved real income, which takes into account nominal income and the inflation of prices. Therefore, products are generally cheaper than before because incomes have grown at a faster rate than the rate in which prices rise.
3. The nominal incomes for the people of Fairfax County have most definitely risen faster than the national average. With its location so close to the heart of the federal government in D.C., as well as the prominent business in D.C., Fairfax benefits directly. It can be seen through the wider variety of goods and services offered in Fairfax County compared to more rural areas in the country. For example, Verizon Fios, arguably the best Internet service, is offered in Fairfax, yet it can’t be found in most other states because the money to pay for the service isn’t there. The standard of living is expensive in Fairfax, which fits the bill for how many financial opportunities there are in the county.
4. While the average real income of Americans has gone up, the real income of the middle class has fallen. The rise of the average is due to the wealthy class, who develop more and better goods and services. By doing this, their production costs decrease, affecting the wages of the average workers. With more advanced technology and production techniques, the work done by the workers isn’t valued as much and therefore doesn’t rise as quickly as the prices. I don’t feel that any action by the government could safely solve this problem. Although the real income of the middle class has dropped, the overall economy has grown, so I wouldn’t want any legislation passed that would harm the economy.
5. Despite the cost of the car only being $6,700, the income received was just $14,500. The chunk of money used to buy the car is a large amount of the overall income. If a new car was bought by a recent graduate of college for $20,000, it would be less expensive for him than it was for the person who bought the car worth $6,700. The real income of the college graduate is a lot higher than that of the person who earned $14,500, allowing him to buy a better car, even though the cost of the car is higher.
1) Before reading this blog, I actually was under the impression that the average American was worse off than the generation before us. The media nowadays brainwashes people into thinking that there is always something wrong with America. These negative statements leave some people to actually believe them. This is wrong because they forgot that in today`s day and age America is advancing in pretty much everything, including incomes and technology.
ReplyDelete2)
Goods and services are cheaper than they were before because of the advancements made in technology. We are now able to produce at high rates effectively and make it less expensive to produce more goods as well. Nominal incomes have risen faster than prices because of inflation, where the dollar is worth less now. “Real income” has increased, which means that now people can buy more goods for less.
3)
Yes I believe that nominal incomes in Fairfax County have risen faster than the product prices when compared to the US average. I believe this because Fairfax County is one of the wealthiest in the nation. This is proven by the high gas prices, store prices, and huge houses we encounter in Fairfax. Fairfax also provides very prestigious education in which people are better prepared to take on the real world and be successful.
4)
The purchasing power and real income of the middle class has decreased since 1999. The cause of this is because some people do not have the proper education they need to do well. Because of this, real incomes go down. To cope with this issue, a good education should be made available to everyone and for a price that everyone can afford. With this, many more people will have chances they would not have had before and the can get a well-paid job ad provide for their families.
5)
You had to spend almost half of your income on your car, but now you don`t have to pay nearly as much as that to get a car because the salaries out of college are much more.
1. Before reading this blog, I was sure that my generation was in trouble economically. The media assured me that this idea was the truth. They made it sound like our economy was still a mess, and that there is incredibly high amounts of poverty.
ReplyDelete2. Prices are much lower now because the nominal income has grown so much. Now that people have more money to spend, the real income has gone up too, because people are spending more. Inflation has also affected america making things cost more money, but being worth less. While the price has gone up, the incomes have gone up more, effectively making items cheaper then they were before.
3. I would say that the nominal incomes in Fairfax County have increased more then the product prices. Compared to the rest of our nation, we are much richer. For example, it is financially easier for the average person in Fairfax County to buy a new car, then it would be from someone from Amelia County, Virginia.
4. The purchasing power in america has gone down since 1999. This is because of the high costs of advanced education. If I was the President, I would try to help make student loans easier to pay off, as I believe debt is a major reason why students don't want to attend college.
5. The car was more expensive in 1979, because it was half of your pay check. Now, people out of college have a higher income, so a car priced around $20,000 would not break the bank as much.
Before reading this blog, I was under the impression that most consumer goods were much more expensive than they were in the past. I assumed that inflation was the causing an elevated price in most products; but I didn't know of any definitive reason why products are so expensive. This was because there was no reason, products are simply not more expensive.
ReplyDeleteGoods and services are less expensive today then they once were because the median and average “real” income (which takes in account inflation) in the United States has increased by over 25%. This gives the average consumer significantly more buying power making their access to products much higher.
I believe that the real nominal income in fairfax county has grown significantly more than the national average; not only is the education superior to almost every other county in the nation, the location of the county provides access to several major businesses and corporations in DC, loudoun, and arlington county. Northern Virginia itself is a completely unique cultural atmosphere, being one of the most affluent areas in America. Just driving through Fairfax City displays the wealth that the county has.
The purchasing power or real income of the middle class in America since 1999 has steadily declined, due mostly to a lack of a college education. The easiest policy solution would not be to make it easier to get a college education; because that would eventually hurt the productivity and efficiency of our workforce, but rather improve primary and secondary education. This would improve the workforce even more because it would benefit not only the standards of colleges and universities but also help those who did not go to or could not afford a college education by giving them more of the skills necessary to survive in our workforce. The more you educate those with the lowest nominal income the more the standard of living raises in our country.
Even though Mr. Latters OG Buick was only $6700, he paid much more for it than we will for a 20000 dollar car when we graduate. This is because Mr. Latter’s nominal income was much lower than our’s will be, he had less buying power at the time than we will. Here is my non scientific semi-logical explanation of how we get more bang for our buck in our current day: One of the most famous cars from 1979 was the Datsun (Now Nissan) 280ZX, which originally went for around $16,000. With inflation; this is around $52,000 today. The Datsun was a top of the line vehicle for the time. For $52,000 now, you can purchase a 2015 Range Rover Evoque, which would probably beat the Datsun in every categeory. Our money now buys us much better products for the price.
1. Yes, I did think that the media played an active role in creating a negative impression economically. I am always hearing things like ‘Prices continue to rise’ and headlines similar to this. Before reading this, I actually thought the economy was worse off than it was in the past.
ReplyDelete2. Goods and services today are relatively less expensive because the nominal income today is rising faster than the nominal prices. When the nominal incomes grow faster than nominal prices that in turn causes the real income to increase. The real incomes of past generation would have to be compared to current US Dollars, which in turn would get rid of inflation.
3. I think actual incomes in Fairfax County have risen faster than the US overall average. After all, Fairfax is one of the ‘richest’ cities in the world. The location is great, near DC, and the colleges we have here are top quality. As I have driven through the County I have noticed a lot of construction, it seems as if we are continually expanding.
4. The purchasing power since 1999 has actually declined by around 4%. The reasons for this decline are increased global competition and increased technology integration into companies. These factors keep wages down. A policy would be to increase more consumer goods rather than capital goods.
5. The 1979 Buick costing $6,700 is more expensive than a $20,000 car today because the real income is higher than it was in 1979. The $20K car is “less expensive” because a nominal income right out of college can be $60-$100K or even higher. 14.5/6.7 is a little less than half of your annual income while 60/20 is a third of your income.
1. The media controls a lot that goes out into the world. I never really gave it a thought that what it said could lead me astray. The media sent out a very negative view on an American economic standpoint. The media also talks a lot about how kids will have it very badly when they grow up because of how bad the economy is but after reading this blog my view on media will be a lot better.
ReplyDelete2. The income that is compared to the prices of goods, or nominal income, has been declining since the older generations. Nominal income which can be also known as real income has increased in recent years which have been shown in the 2014 census. In the 2014 census nominal income has increased almost 25%. Inflation helped cause the rise in prices and income, this has helped with the nominal income.
3. Looking around Fairfax city has shown me that this county has a pretty high average income. Looking around you can see lots of wealthy houses, government buildings, new business, and even better after school programs for students. This shows that the income, compared to the national average, is greater and rising faster that product prices.
4. Since 1999 the middle class has been on an decline in real income. The middle classes real income has declined almost 4%. This decline is mainly due to the increase in technology and the increase in competition. If we put more effort into educating our workers than we would see an increase in the labor industry because of completion against international workers.
5. The car that you bought, the 1979 Buick Regal, was almost half the cost of you annual salary. This is bad because you already lost half your income from buying this car on a $14,500 salary. This is also weird because the amount you are receiving after college, $20,000 because it has definitely changed over the course of many years.
1. Yes, I did think that the average American was somehow worse off economically than the previous generation. I often hear people complain of higher prices, but I never really considered how much incomes were rising as well.
ReplyDelete2. The actual prices of goods (nominal prices) are indeed increasing. However, the average, actual wage (nominal income) has been growing even faster over the decades. This is referred to as “real income,” which is a macroeconomic measurement that compares a nation’s nominal income growth to the nominal growth in prices that the income buys. Since nominal income is growing at a faster percentage than nominal prices, real income has increased. This means that Americans have greater access to more and better goods and services than any other time in our economic history. This is supported by the fact that the US real median household income has increased from $42,934 to $53,657 from 1967 to 2014. This comparison is valid because inflation is stripped out of the comparison. So incomes have a percentage gain of 25%!
3. I think nominal incomes of Fairfax County have risen much faster than product prices because I think the citizens of the county are generally a part of the highly skilled and college educated. The economy in our area probably is doing better than the national economy as a whole because of the large number of people employed by the government or for companies that support the government. Our whole county is well-off, and I think most incomes are rising much faster than product prices.
4. Since 1999, the purchasing power of the middle class has fallen from $56,080 to $53,657 (a 4% decline). The main reasons for this decline in real incomes for middle class families are due to increased global competition and increased technology integration into companies. This keeps wages down because there’s an increased supply of global labor substitutes and technology that keeps middle class wages in check. I would probably not take any policy actions to increase middle class real income. I am concerned for them, but I think they need to be working if different jobs. Hopefully, this will become an incentive for them to seek new skill-sets or further their education.
5. The actual (nominal) price of Mr. Latter’s car was less than the cost of a car today. However, because our nominal income today is increasing significantly faster than current nominal prices, a car (even with a much larger price tag) today is less expensive for us than it was for him. His nominal income was not increasing as fast as it is today compared to prices. Therefore, today our rising nominal incomes can better afford a car of proportional value.
1. I think that the media tries to spin current events in the worse possible light. You always hear about how much debt we have and how the average American is not doing as well. This article taught me out that our generation is better off because of our high incomes.
ReplyDelete2. Technology has made the production so much cheaper over the last few decades which saves both businesses and consumers money. Goods and services are at a lower than ever price because the average American’s real income has increased much quicker than the nominal price of these goods. Inflation is taken into account when comparing the numbers for income growth and product expenses. Americans are able to afford more because they are making more money.
3. Yes, the nominal income has risen substantially. Fairfax County is one of the richest counties in the country. A testimony to this is simply the number of Range Rovers in the PVI parking lot! Because the income of the middle class workers has increased, the standard of living has gone up. There are houses so big I’m surprised they don’t get lost!
4. The real income has unfortunately declined. The cause of this was the need for workers with higher levels of education. Technology has also replaced many in the work force. This is not a problem that can be fixed over-night. A sensible answer is to lower the tuition costs of colleges so that more educated Americans will be able to work.
5. I can’t believe that you spent just under half of the money you made on your car! Normal income has gone up since that point in time and students out of college are making much more. This “riddle” shows the ratio of income to price and how it as changed even in the last 30 years.
1. I knew that the economy had grown significantly since the previous generation, and that living conditions of the average American had improved. However, likely because of the media, I attributed this entirely to improvements in technology, and I believed that if it were not for these technological advances, the average American would be worse off. I certainly did not realize how much better off this generation is.
ReplyDelete2. While the nominal prices of goods and services are increasing, the nominal incomes of Americans are increasing even faster. This means that Americans are seeing an increase in their real income, meaning that Americans can acquire increasingly more goods and services with their incomes. Adjusted for inflation, real household incomes have grown significantly over the past fifty years, which indicates that goods and services have become relatively much less expensive.
3. Fairfax County almost undoubtedly has a higher increase in nominal incomes compared to product prices than the US average. Fairfax, and Northern Virginia in general, has one of the highest costs of living in the country. This means that many very wealthy and skilled people live in Northern Virginia. As the blog post stated, most of the increase in average income has gone to the more highly educated and skilled, which would include many people living in Fairfax.
4. Since 1999, the real income of the American middle class has declined by about 4%. This is largely due to increased competition of middle class labor with labor from other countries and with labor provided by robots. If I were president, I would likely not take any immediate action to increase middle class income. Tackling the main issue keeping it back would involve interfering with competition, which is rarely a good idea in economics.
5. While the nominal price of cars has increased, due to inflation and the more rapid increase of incomes, a car may have a lesser "value" now than it did in 1979. Real incomes have increased, so the purchase of a car takes up a smaller proportion of one's income now than it would in 1979.
1. Before I read this blog I strongly believed that the economy was getting worse and worse. Granted, I think that we tend to focus on only the negative things which explains why I would think that. After reading this, it proves that you cannot always believe what you see/ hear about on TV.
ReplyDelete2. Good and services toady are less expensive now then they were in the last generation because our normal income (actual wage or salary) has grown more than the nominal prices (the amount of the product or service) over time. This has increased our generation’s real income (measurement that compares nominal income growth to nominal price growth). Our generation has a higher real income, which means we can afford more goods and services because they are less expensive.
3. It is well known that Fairfax County is one of the wealthiest counties in the US. Meaning that the nominal incomes are way higher then the product prices. This is way the standard of living is very nice in Fairfax County compared to other counties in the US.
4. The purchasing power for the middle class has declined by almost 4% since 1999. This is result to the increase in demand for higher education needed in order to become part of the middle class. The sad part is that the workers are not being replaced by other people rather they are being replaced by newer technology that can produce more then what the person can do. If I was President I would encourage everyone to attend college and receive the highest degree possible. If they couldn’t afford then we would make a way to afford it because education is so important in the work force and is almost needed nowadays when looking for a career.
5. Your 1979 Buick price was $6,500 and your annual salary was $14,500 so that means that you put almost half of your annual income into purchasing the car. If you were to graduate today your annual income would be much more then what it was in 1979 therefore you could afford the new $20,000 car. Also, you wouldn’t be spending almost 50% of your annual income to purchase that car.
1. Before reading this blog, I assumed that the average American was somehow worse off economically than the previous generation. The media has led me to believe that the average American was earning less money in his or her job and that prices for goods have increased. The media has caused anxiety and panic amongst the general public.
ReplyDelete2, Goods and services today are relatively less expensive than they were for the previous generation because the nominal price is not growing as fast as the nominal income. The nominal price is the actual price of the item. The nominal income is the individual’s actual salary. When the nominal price is compared to the nominal income adjusted for inflation, the nominal income is growing faster. This means that the real income is increasing due to the nominal income growing at a faster percentage than nominal prices.
3. I think that in Fairfax County, nominal (actual) incomes have risen much faster than product prices compared to the US overall average. Fairfax County is one of the wealthiest nations in the country, and many middle-class and upper-class workers live here. As you drive through the county, you see the large homes and nice cars. For this reason, I believe the average nominal income in Fairfax County has risen faster compared to the US overall average.
4. The purchasing power or real income of the middle class in America since 1999 has fallen from $56,080 to $53,657. This represents a 4% decline. The cause of this is increased global competition and increased technology being incorporated into companies. This keeps wages down for the middle class. If I was President, I would attempt to make a law to decrease the price of education. Hopefully, this would entice people to increase their education, especially in technology, and raise the middle class American’s real income by becoming more educated and highly skilled.
5. Many students coming out of college today make approximately $50,000. When they pay $20,000 for their car, it is 40% of their salary. When you came out of college and made $14,500 and bought a car for $6,700, this was 46% of your salary.
ReplyDelete1) Before reading this article, my first impression was that American’s were somehow worse of economically than the previous generations before. With everything the media has to offer and the news you here, you constantly here about the negative things that are going on, and it leaves little to no room for the positive things in our economy. I originally thought that we were economically better off with how we were in the past, which I know come to understand as a false statement.
2) Previously, the nominal income was much less for the past generation at hand. Nominal income is income as compared to the prices of goods. On the other hand, when this is adjusted for inflation, which is an increase and decrease of purchasing power, we see that the nominal income is greater for our generation than it was for those in the past. This basically means that we can buy more goods and services today with the money we receive through our income when compared to previous generations. Our money is going farther for us. Nominal income is also known as real income.
3) Fairfax County is a rather rich county, and we are very lucky to live in it. By taking a look around, one can easily tell that we live in an extremely nice area. This can lead one to conclude that there is a whole lot more money circulating around for us to use and spend. This means that we are growing and that our average income is increasing surely and steadily. When compared to other counties, we can easily see that they are not as wealthy and prosperous as we are.
4) The purchasing power or the real income of America has slightly declined in the years since 1999. As we have come into the next century, new kinds of technology has arrived that is constantly improving the way we do things and how we operate. This checks and balances those in the middle class who lose their jobs to technology, and it slows the middle class people down from gaining too much income and wealth. A way to combat this is to get a good education and a nice paying job. Those who go to school at a nice institution are better rewarded in life.
5) The car riddle in the very last paragraph of the blog is quite simple to explain. The blog stated that almost half of the yearly income was given up to purchase a car, which is completely absurd. The reason for this is income back then is not what it is today, the rates have grown and we are getting more money as well as more for our money. Today, if we were able to get a good education, we could make a decent amount of money and buy a car that does not take up 50% of our yearly income, perhaps something less like 10% of our income for example.
1. Before reading this blog, did you have an impression created by the media that the average American was somehow worse off economically than the previous generation?
ReplyDeleteBefore reading this blog I believed that were better off economically as a generation as we have new technologies and advancements in science and engineering that can help us stimulate the global economy. The media only covers the rising prices in America today as well as the national debt, but they fail to report that the standard of living in America is improving, the unemployment rate is falling, and the GDP is rising.
2. Why are goods and services today relatively less expensive than they were for the previous generation? Provide an answer using the terms "nominal income", "inflation", and "real income".
When our grandparents were children prices were really low. For example, hamburgers were only 30 cents in 1950, but now hamburgers cost 1 dollar or more. This is due to inflation, or the rise/fall of the value of currency. Right now Americans make 25% more than what Americans made in 1967 when adjusted for inflation, and even though prices are rising, incomes are rising as well (nominal income). This means that we can buy more with our money, which means that the real income of Americans today is much greater than the generation before us.
3. In Fairfax County, do you think nominal (actual) incomes have risen much faster than product prices when compared to the US overall average? Support your answer! Hint: you can get the correct answer if you trust your visual observation as you drive through the County! You don't need to do research via Google!
From what I know about Fairfax County, it is one of the wealthiest counties in the country. Due to stimulus from government jobs and proximity to D.C. Fairfax County has probably one of the highest nominal incomes per household as well. In Fairfax County there are many goods and services you can acquire and this shows that we are well off as a county.
4. What has happened to the purchasing power or real income of the middle class in America since 1999? What is the cause? Do you have any recommendations or policy actions that you would take if you were President to increase middle class American's real income?
Since 1999 the purchasing power of the middle class has risen. Because the standard of living and median income per household has increased in America across the board, the middle class has been able to obtain more purchasing power in the economy. Due to an increase of technology the need for low skilled workers has reduced and therefore the need for higher education is needed. Unfortunately, higher education in America is very expensive and subsidized education in America is what we need so that the middle class can improve even more.
5. Explain the answer to my "car riddle" in the very last paragraph of the blog?
This is because the demand for higher education in America is very high. Nowadays, people with masters degrees or higher can receive about 10-30% more than what a person with just an associate’s degree can make. When you got out of college technology in manufacturing wasn’t really developed you, so the need for higher education didn’t really exist so prices and income stayed relatively low to what it is now. So the price of your new $6,700 Buick that you got right out of college, could probably be the same as the $20,000 Mazda that a college graduate got out of college today.
1. I have always been under the impression that we are in a worse economy now rather than in the past. In the 1960’s, the price of a gallon of milk was around 50 cents when now it is around $3.50. Today, things are more expensive, which is why I thought that our economy was worse than in other generations.
ReplyDelete2. Nominal income is increasing at a faster rate than nominal price. This is happening because inflation and the average wages earned by Americans has continued to increase. Nominal price compared to nominal income is what is known as real income. Real income is what determines how well an economy is doing based on their generation.
3. I do believe that nominal income has risen faster than product prices when compared to the US overall average because the majority of people living in Fairfax County are in the upper-middle class. There are more gated communities with huge houses and a BMW in the driveway rather than a modest house with a 2003 Toyota Camry.
4. The real income of the middle class in America since 1999 has fallen because of increased global competition and increased technology integration into companies. In order to increase middle class American’s real income, there needs to be a greater effort to educate and train the workers, which would cause higher wages, which would cause real income to go up.
5. The $20,000 car is numerically more expensive than the 1979 Buick Regal. However, due to the fact that people are earning more money than in 1979, the price of $20,000 is not that expensive.
1. Yes, before I read this blog I had the impression created by the media that the average American was worse off economically than the previous generation. The media portrays the prices of goods and services as increasing every year and makes things seem more expensive now as the media does not mention the fact that incomes are growing.
ReplyDelete2. Goods and services today are relatively less expensive than they were for the previous generation because nominal income is growing faster than the rate of inflation of goods and services, causing real income to increase and a greater access to goods and services.
3. I do think that nominal incomes have risen much faster than product prices in Fairfax County as compared to the US overall average because it is one of the richest counties in the US. There are several innovative businesses and white collar jobs in Fairfax County that provide well-paying incomes to their workers and there are more of these in Fairfax County than in other parts of the US.
4. The real income of the middle class in America has declined 4% since 1999 because of increased global competition and increased technology integration into companies, which cause wages to decrease. Since the middle class's wages are lower, they have less access to goods and services than they did 16 years ago. Members of the middle class are receiving lower wages because they do not have the skills necessary to handle the new technology. If was President, I would work hard to make college more affordable so that members of the middle class can receive the proper education and training required to handle the new technology in jobs.
5. When you bought your 1979 Buick Regal out of college, your annual salary working at Price Waterhouse was lower than it would be for me if I worked in the same position at Price Waterhouse today as nominal income has grown since then. I could buy a more expensive car of $20,000 and pay "less" as my nominal income allows me to buy more expensive things than your nominal income in the past.
1. Before reading this blog, I did have the impression that prices were high and the economy was in a bad state.
ReplyDelete2. Goods for our generation are more affordable for this generation because the nominal income is rising faster than the nominal price. This increases our nations real income. When comparing nominal income and nominal price, we take into account inflation.
3. Fairfax county is one of the richest counties in the country, so our nominal incomes are higher than those in other counties and have are higher than nominal prices.
4. Nominal incomes have decreased by 4%. This is due to new technology being able to do work for people so it keeps their wages down. Ways to fix this would be to find ways to make education more affordable for everyone.
5. Incomes now tend to be higher, so the price of the car would be less than half our income, while yours was half of your income.
1. Before reading this blog, I believed that my generation was worse off economically than the previous generation. The media loves to highlight that there is a growing divide between the super rich and the rest of the country, but don't report on how we have more money to spend than any other generation.
ReplyDelete2. Previous generations made less income compared to the price of goods(nominal income), than our generation does. The real incomes have increased from the previous generation to ours. When adjusted for inflation, we make more money at a rate faster than the increase of prices for items.
3. Compared to the US overall average, the nominal incomes in Fairfax county have risen much faster than product prices. We have one of the richest and most educated counties, There is lots of evidence that income here has risen faster than product prices, such as the nice cars on the roads, the big houses, and the seemingly endless development.
4.The "real income" of the middle class has fallen since 1999. Better technology and an increase in overseas labor have left little demand in America for middle class work, and they are being left behind by more educated and highly skilled Americans, whose incomes are continuing to increase. If I were President I would push for more jobs training and education to give middle class workers a chance to catch up with the work positions now wanted in America.
5. Even though a car costs more in 2015 than it would in 1979, people make proportionately more money now than in 1979. In 1979 the car you bought cost almost half of your annual salary. Today a car would cost a smaller percentage of ones salary than it would in 1979, meaning that it technically is less expensive.
1. Before reading this blog, I was convinced by the media that the average American was worse off economically than before. I always thought the world’s economy was on decline. I heard the unemployment rate is increasing and the worldwide economy is in danger. Another factor that convinced me was increase in normal good price (nominal price) compared to the past. As I walked through the stores, I was able to see increase in price in almost every product. Therefore, these things just made it natural to believe that the average American was worse off economically.
ReplyDelete2. Goods and services today are less expensive than they were for the previous generation because we are thinking of the price relatively. Even though the nominal price (the actual price tags) is actually increasing, nominal income (the average, actual wage or salary) has been growing even faster over the decades. Since nominal income is increasing relatively faster than the nominal price in current world, it is possible to conclude that goods and services today are relatively less expensive than they were for the previous generation. This concept, called “real income,” compares a nation’s nominal income growth relative to the nominal growth in prices that the same income buys. One might bring up the topic “inflation” to the table. Inflation is also a great factor that further explains the situation. Inflation is a general increase in prices. Something that was cheap back then can be expensive now. But it does not mean that everything in the world is becoming more expensive. Even though the price increase, our income increased faster than the increase in price, making goods and services less expensive “relatively.”
3. In Fairfax County, I think nominal incomes have risen much faster than product prices when compared to the US overall average. I can see a lot of luxury, expensive cars in the highways and local driveways these days compared to 8 years ago when I lived in America for one year. Sports cars can be seen easily now in Fairfax county. In addition, crowded malls and restaurants also tell me that nominal incomes have risen much faster than produce prices in Fairfax County. Many people in malls and restaurants imply that people have more money to spend. Even though the nominal prices have increased throughout time, more people spend even more money because their nominal income has increased faster than the increase in product prices.
4. The purchasing power or real income of the middle class has actually fallen from $56,080 in 1999 to $53,657 today, which is a 4% decline. The primary reasons for this are increased global competition and increased technology integration into companies, which tends to keep wages down because more supply of global labor substitutes and technology keeps middle class wages in check. On the other hand, the educated and highly skilled have seen their real incomes increase consistently over that same period. If I were the President, I would make a law that states that a company has to have at least certain amount of labor or workers that work at the company. Even though, advance in technology is good, we cannot undermine people that are willing to work. But overall, I think there are not any good policy at this point that can increase middle class American’s real income because the society to going more and more towards technology based society. Improved technology ignites global competition, which stimulates even more improvements. Due to this unending cycle, I do not think there are any policies that can actually increase middle class American's real income.
5. The cost of your purchase of 1979 Buick Regal is about 46% of your income back then. Keeping in mind that people today make more money than $40,000 after college graduation, the cost of new car is lower than 46$ of the income today. Therefore, it is possible to conclude that the cost of the 1979 Buick Regal is more expensive than the first new car that I may buy immediately after college.
1. Before reading this blog, I definitely had the impression that the average American was somehow worse off economically than the previous generation because I have been told about the massive amounts of debt our country has accumulated and people have told me that the future isn't bright for my generation.
ReplyDelete2. Goods are relatively less expensive than they were for the previous generation because nominal income has grown at a faster percentage than nominal prices causing real income to increase. Therefore, there is a greater access to more and better quality goods than in previous generations.
3. I think that in Fairfax County nominal incomes have risen much faster than product prices when compared to the US overall average. I think this because many people in fairfax county are able to by very expensive cars and other trivial goods that they would not be able to buy if their income wasn't greater than the US average.
4. The purchasing power of the middle class had fallen from $56,000 (1999) to $53,675 which is a 4% decline. The reason for this fall is increased global competition and increased technology integration into companies. I would decrease global competition.
5. The Buick was a lot more "expensive" because the $14,500 salary working for Price Waterhouse is a lot less than salaries you would get immediately out of college today. This means that the better salary or income trumps the higher price of the car toady.
1. Yes. Growing up I was always hearing about how bad the economy was now compared to what it was before. Adults around me always complained about the rising prices of goods, especially gas. The media also had a part in influencing my way of thinking regarding the state of our nation's economy. They made it seem like our country was on the verge of failure and bankruptcy, which now that I am taking this class, is simply not true. I always imagined how nice it must have been to buy things for such a "low cost". However I didn't take into consideration the inflation of money value since then and the rise of the average income.
ReplyDelete2. The reason why things are relatively less expensive than before is because people nowadays simply earn more money, thus allowing them to afford more goods. Inflation has changed the value of money. For example,something that was 50 cents back then is now $3 (I really don't know) give or take. The actual prices of goods and services (nominal prices) may seem to be higher than ever before, but the nominal income (average income of a person in the US) has increased allowing additional spending and allowing the higher costs. The real income of the nation is shown to have increased over the years as our country makes more and more and people earning more and more.
3. I do believe the average nominal income has increased faster compared to other areas of the country. Average salaries have increased over the years and people have started to become well off financially. All this was occurring while price tags in stores remained relatively the same. This allowed Fairfax County to boom and rise to the top as one of the most wealthy counties in the United States. Bigger and more expensive houses are being built around the newly developed suburbs. The cities inside Fairfax County are being renovated and modernized with little to no budget issues. Most people are driving their own cars instead of relying on public transit. The Northern Virginia area is notorious for its wealthy people and the jobs offered in this area. Federal, contractors, and other work have allowed people to increase their income and overall increase the quality of their lives.
4. The purchasing power of the middle class has slightly declined over the years. The cause is competition and the advancement of technology according to economists. People's jobs are being replaced by more efficient robots so they can be relocated somewhere else. I believe allowing more people to work skilled jobs would help the buying power of the middle class since it would get people jobs, which in turn would help them get income again.
5. In 1979, $6700 would be the equivalent to almost half of Mr. Later's income, which was a total of $14,500. Now, people are making around $50k-60k annually, and a similarly classed new car would be around $20k. The resulting purchase using today's money would be only 1/3 of the average income. This results in the new car being "less expensive" than the "more expensive" Buick from 1979.
1. No I did not have an impression that our generation is worse off than the earlier generation, because of several reasons. First, our generation has and will have more wealth than ever before. While our elderly generation is passing away they are passing on the wealth to their later generations. Secondly, due to higher paid jobs are out there and they go along with higher education. Lastly, the minimum hourly wages are increasing too which means more uneducated people can earn money for living.
ReplyDelete2. This is based on supply and demand. We have a wealth of services and products on the market right now and a fair amount of demand and if the supply is higher than the demand than the prices are dropping. Competition generally decreases the pricing of the products. The nominal income has increased in the last 20 years, which includes the percentage of inflation
3. Fairfax County is one of the most affluent counties in the United States. The average household median income is way above the nation median income. You can see this when you drive around the county. The houses are getting bigger and people are driving newer models of cars. All this shows that the disposable income is very high.
4. Unfortunately, middle class income has been stagnant or even a slight decrease. I see the middle class which should be the backbone of every industry slowing deteriorating. The cause is due to high specialized technology advancements which accompany highly qualified workers. Highly qualified workers here in the US usually come from very expensive colleges. The middle class parents cannot afford to send their kids to those prestige colleges. That’s why I would lower the tuition costs or even make it free. If there is no change in the educational system son we will run the risk of having a two class system, which would be only the rich and the poor.
5. The 1979 Buick Regal was almost half of your annual income. In 2015 as a new grad you are more than likely to make over 60,000 therefore its only 25% of you annual income. The Regal turned out to be more expensive.
1.Yes, before reading this blog I did have an impression created by the media that the average American was economically worse off than the previous generation. The media only seems to feed us the negatives that happen in our economy. I know that we can’t always trust the media to give us the full story but, it’s easy to lose site of the truth.
ReplyDelete2. Goods and services today are relatively less expensive than they were for the previous generation because price is reactive to income. Even though the nominal prices on products has indeed been increasing, the nominal income has been growing rapidly. This relationship is called real income. According to the U.S. Census Bureau, the United States real median household income gained a 25% increase from 1967-2014. Since the median household income is stated in current dollars, we know that it is valid because inflation is taken out of the comparison.
3. Yes, I do think that the nominal incomes have risen much faster than product prices when compared to the overall U.S. average. Prices for things in Fairfax are fairly high but, we can afford them. For example houses, houses are relatively more expensive here in Fairfax compared to other places in the country. Even though they are considerably more expensive, we still see a rather large amount of people living in them. The prices may be a bit high in Fairfax compared to other counties and cities but, the people have a high enough income that it’s not a problem.
4. The purchasing power of the middle class in America has decreased since 1999. The main reasons for this decline would be an increase in global competition and technology integration into companies. Since the educated and highly skilled actually benefited from this, I think I would try to make education more available and affordable for the middle class.
5. Nominal income increased faster than nominal price. The nominal income is much higher now then when you had bought your first new car. Your first car cost almost half your salary back then whereas today, a $20,000 car would only be a small fraction of most people’s salaries today.
1. Before reading this blog, I thought that the prices of everything had rose. My mom had always talked about how cheap somethings were. Reading this I know understand how economically wise, the prices have not been rising but moving as the economy has been growing.
ReplyDelete2.Today, prices are relatively lower than in the previous decades. Lets sat the cost of gas compared to the average income a few decades ago is 15% of there income. Now, even though the price seems higher, the nominal income is greater. Also the prices moved up because Previously, there was a lot of inflation. Today our real income has grown because our economy has developed with better technology and we have more educated workers.
3.In Fairfax county, the nominal income has risen substantially to the prices of goods. It is a very rich county mainly because most of the people in it are highly educated. When you look at the percentage of people graduatings from high school and college, it is much higher than in other parts of the world. We are a very rich county, that is why the nominal income has risen much faster.
4. Although the nominal income has increased, the middle classes national income has declined. This is due to the amount of people getting a higher education. Those getting higher education now have an increase in their nominal income. This is why it is important to getting a better education, since it will only help your income.
5. The new car that you had bought after college took up almost half of your yearly income! Today the prices have fallen because even thought the car may be 20,000 if you are right out of college working at one of the top accounting firms in America you would easily make $60,000. That is only 1/3 of your income!
1. Yes. Growing up I was always hearing about how bad the economy was now compared to what it was before. Adults around me always complained about the rising prices of goods, especially gas. The media also had a part in influencing my way of thinking regarding the state of our nation's economy. They made it seem like our country was on the verge of failure and bankruptcy, which now that I am taking this class, is simply not true. I always imagined how nice it must have been to buy things for such a "low cost". However I didn't take into consideration the inflation of money value since then and the rise of the average income.
ReplyDelete2.Goods and services are cheaper than they were before because of the advancements made in technology. We are now able to produce at high rates effectively and make it less expensive to produce more goods as well. Nominal incomes have risen faster than prices because of inflation, where the dollar is worth less now. “Real income” has increased, which means that now people can buy more goods for less.
3. It is well known that Fairfax County is one of the wealthiest counties in the US. Meaning that the nominal incomes are way higher then the product prices. This is way the standard of living is very nice in Fairfax County compared to other counties in the US.
4. Since 1999 the middle class has been on an decline in real income. The middle classes real income has declined almost 4%. This decline is mainly due to the increase in technology and the increase in competition. If we put more effort into educating our workers than we would see an increase in the labor industry because of completion against international workers.
5. The increase in nominal product costs did not rise since 1979 as fast or as high as the nominal income growth. Therefore, today, one can much more easily afford a car that in 1979 took up almost half the salary! One makes more money but product costs are lower in comparison what they were in 1979.
1) I definitely had an impression created by the media that the average American is worse off than previous generation, no doubt. With all the negative, concerned people who sling their views around on tv without having any idea what they are talking about, it would kind of be hard to not have that impression if you are just being introduced to macro.
ReplyDelete2.) Goods and serices today are cheaper than they have been in the past because our normal income has risen at a very fast pace, and the prices of goods and services have not quite caught up yet. A common citizen will just look and see the raised price of a good and automatically think it's bad. But, what they do not realize is that just as the prices experienced inflation, so has our real income. Nominal income rates have increased quicker than the nominal prices for goods have rose.
3.) There is no doubt in my mind that nominal incomes have risen faster than product prices in Fairfax County. Just pick your head up from your phone and you will see that a lot of people in the county are very well off, and some people are just absolutely loaded. The normal incomes having risen faster than the product prices is why when you look around Fairfax you'll see a bunch of fancy cars, watches, clothing, you name it.
4.) Since 1999, the real income of the middle class has dropped by about 4%.
This has happened because of intense competition in the international marketplace and an advance in technology. If I were president I would push for a way for these middle-class workers to recieve a higher education so that they may have the opportunity to catch up to the higher educated and more skilled workers.
5.) The Buick bought for $6700 dollars, which was half of your income, was more expensive, relatively speaking, than the $20,000 dollar car that I would buy coming straight out of college. If the average income for a grad student just coming out of college is 50k-60k a year, then the $20,000 car would be only worth about one-third of my income. So that is why the Buick is more expensive, even though the price is technically lower.
1. Yes, I had a slight impression that the current generation was worse off economically than the last. This impression came from the fact that the media always talks about how bad the debt is and that lots of people are on food stamps or homeless, etc.
ReplyDelete2. Goods are relatively less expensive today than they were for the previous generation because today nominal income has increased faster than nominal prices. This causes real income to increase. Some may say that this is subject to inflation, but prices were stabilized and put into real dollars to show that prices are relatively falling.
3. Yes, I do believe that nominal income has risen faster in Fairfax County compared to the rest of the US. Fairfax is known as one of the more wealthy counties in the country. Some areas are better off than others, but overall Fairfax’s real income is higher than a large portion of the country.
4. Purchasing power of the middle class in America has fallen since 1999. This is due to the fact that much of the increased purchasing power or real income has been with the upper class. This is because of global competition. The competition causes production methods to become more efficient, i.e. technology, and this in effect cuts out jobs for the middle class. The lack of jobs controls wages and keeps them from rising too high. If I was president, I would slightly lower taxes on the middle class.
5. Basically, back in the day, the car seemed like a lot of money because it took up a large portion of the annual salary. Now, even though your first car might be worth 20,000, average incomes are much higher. This again explains the idea of relative prices and incomes.
1. I do believe that the media causes distorted view of our society. Before reading this blog, I did feel that our generation was not doing worse than the previous generation. Because of the development in technology, society continues to grow at a progressive rate.
ReplyDelete2. The reason why goods and services today are less expensive is because the normal income of the consumers is rising, surpassing the nominal price rate. Since people are earning more money and the prices of goods are not increasing at the same rate, people are able to purchase more goods. Real income has increased over the past years, diminishing possibilities of inflation.
3. The nominal income for Fairfax county has definitely increased throughout the years. If you compare Fairfax county to most other suburban counties in the United States, the difference can be sensed solely from visual perspective. Many of the people that live here are able to live fairly comfortable lives. A couple years ago, Forbes rated Fairfax county as #2 richest county in the nation, behind Loudoun.
4. The purchasing power in America has declined, as the upper class begins to expand, more products are being purchased and produced. Education is extremely important in becoming successful- although many people are born with a certain drive to achieve, education is the key to success for all.
5. You purchased the more expensive car because of the income rate in 1979. It proved to be a better investment for your income.