These 4 charts might change what you think you know about the American economy

It’s not just what you earn that matters, it’s what you get to keep.

The Congressional Budget Office has just released some great charts on what’s been happening to American living standards over the past four decades. And based on what the Twitterverse frequently informs me about the US economy, some priors may need to be updated. I mean, are Americans really no better off than they were during the late 1970s? I hear that stated quite frequently. But this chart of real income growth tells a different story. Please note that all the lines have been headed higher. Also note the 79 percent gain for the bottom 20 percent in post-transfer/tax income:

Source: These 4 charts might change what you think you know about the American economy – AEI


  1. “79 percent gain for the bottom 20 percent in post-transfer/tax income:”

    SO WHAT!

    U.S. Inflation Rate, $100 in 1970 to 2017. According to the Bureau of Labor Statistics consumer price index, prices in 2017 are 531.75% higher than prices in 1970. The dollar experienced an average inflation rate of 4.00% per year during this period.

    Inflation hurts everyone, but it hurts the lower income folks way more than the top 50%.
    My standard of living is lower today than it was in 1987, even though my income has doubled.
    I only qualified for food stamps from 1996 to 2000 when I had 4 children living at home, each time a child graduated from high school and entered the workforce, benefits were cut. When we were down to one child it went to zero. So much for all the great help the welfare system provides to families with children that make less than $15,000 per year.
    Many do not get the transfers that the chart shows.

    Liked by 1 person

  2. Thanks for the charts. Other interesting charts would show the increases in various living costs. For example, in some high cost urban areas, housing has increased in inflation adjusted dollars far above the increases in incomes.

    Is the broad middle class better off than in say 1980? I would say yes. But probably not by a whole lot. But when you look at where people spend their money, it is kind of bewildering. Mega giant stores dedicated to pet animal supplies? Absurdly priced coffee shops? Tattoo parlors? Exercise gyms? Nail parlors? Cable tv monthly charges over $200? If we all lived the lifestyle of those who went through the Depression, we would have gigantic savings.


    1. The additional charts also showed that the bottom 40% had a negative tax rate and the lowest quintile paid a tax rate of -11.6% or should I say got more money than they earned in various tax credits and or refunds.

      The top 96 to 99% had a rate of 26.7% with the top 1%, you know, those people that are going to pay for everything, had a tax rate of 33.3% after all their deduction or credits. And this is just the federal government taxing the rich. How much are the states or cities taxing the 1% on top of this?


  3. Hola! Can someone please explain what is meant by “Income Before” and “Income After” Transfers and Taxes? I have no idea what that means…Thanks,

    Liked by 1 person

    1. Income after transfers and taxes is after people receive food stamps and other government benefits plus tax credits such as child credits where a person may get a tax refund even when they owe no taxes.


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