U.S. Consumer Debt at Record Levels

In around the last decade in the U.S., there has been a particular theft of wages into a conversion of corporate profits. From about 1977 to 2007, the main story of income inequality there was upwards redistribution (theft) of income directly to higher-income professions. (See chapter 2 of the book Rigged for further data.) If wages hadn’t been largely stagnant over the last four decades (among other policy failures) for many workers, there wouldn’t be consumer debt of this magnitude. This is because stagnant wages and rising costs (such as U.S. university) force many to borrow more than they’d otherwise have to with higher incomes.

Also, $193 billion is a lot of money, and the reporting would be better if it and other figures were expressed in terms that most people could understand more easily. An increase of household debt by $193 billion is an increase of about $1529 per U.S. household.

Total household debt rose by $193 billion to an all-time high of $13.15 trillion at year-end 2017 from the previous quarter, according to the Federal Reserve Bank of New York’s Center for Microeconomic Data report released Tuesday.

Mortgage debt balances rose the most in the December quarter rising by $139 billion to $8.88 trillion from the previous quarter. Credit card debt had the second largest increase of $26 billion to a total of $834 billion.

The report said it was fifth consecutive year of annual household debt growth with increases in the mortgage, student, auto and credit card categories.

What More Journalists and Reporters Should Know

There are key elements to valuable journalism. Among those are expressing important ideas with clarity and being adversarial to those who wield corrupt power at the top of society. Beyond that, however, there are also necessary critiques about the details of much mainstream press coverage that need to be seen more. This link focuses primarily on journalism and reporting related to economics, but some creativity will allow someone to see that there are similar critiques available to reporting in other fields.

And much of those similar available criticisms come down to relevance and comparisons. In foreign policy coverage, the root causes of crises (such as militarism being motivated by profits for weapons manufacturers and stateless terrorism being worsened by state terrorism) are not noted enough. There is also a disturbing trend of whitewashing war crimes and not providing context to important historical events that relate to the present, such as the 1953 Iran coup being backed by the U.S. government for oil resources. North Korea being obliterated in the Korean War (to the extent that their civilian infrastructure — notably the dams — were flattened, a war crime) is one of numerous other possible examples that reveal underlying causes of animosity in foreign relations today.

In a lot of political coverage, too much focus is on the personalities instead of on the issues. In technological coverage, it’s rarely noted that technology has no moral imperative and that it must be used appropriately to actually help people. There’s more I could say here, but the reader should understand the main point of this post by now.

Numbers in Context

There is perhaps no area of economic reporting that I find more frustrating than the failure of reporters to put numbers in a context that is understandable to their audience. I say this because it is not really an arguable point. When a news story tells readers that, “the federal government will spend $180 billion on transportation over the next six years,” it might just as well have said “the federal government will spend a REALLY BIG NUMBER on transportation over the next six years.”

The audience for the elite news outlets is highly educated, but as a practical matter very few readers of The New York Times or listeners to National Public Radio have any idea how much money $180 billion is to the federal government over the next six years. They spend their days working and their time off is with their families or dealing with other responsibilities. They are not reading documents from the Congressional Budget Office or Office of Management and Budget. On the other hand, if these outlets reported that it would be 0.8 percent of total spending or $100 per-person, per-year, it would be providing meaningful information on the size of the transportation budget.

This issue of putting numbers in context comes up in a wide variety of ways but is especially important in people’s views of anti-poverty programs both domestically and internationally. If people hear that we are spending $20 billion a year on Temporary Assistance to Needy Families (TANF) or foreign aid (roughly what we are actually spending), they are likely to think we are spending a great deal of money in these areas. After all, almost no one will ever see $20 billion in their lifetime. In fact, very few people will even see $20 million in their lifetime. When people hear these numbers, they tend to think of them as huge sums, which of course they are.

But relative to the federal budget they are not especially large. $20 billion dollars is less than one-half of one percent of federal spending. While that comparison doesn’t mean that the sum is trivial or that we shouldn’t be concerned if it is wasted, it does mean that we will not see a qualitative change to the budget picture or our tax obligations if these lines of spending were drastically cut back or even eliminated altogether.