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<span style=”color: #000080;”>https://www.yahoo.com/finance/news/vulnerability-americas-lower-income-brackets-poses-risk-economy-122920739.html</span>
There are lies, damn lies, and then there are statistics. This famous saying popularized by American humorist Mark Twain aptly describes the current use of economic statistics to paint an overly rosy picture of our economic health.
Too often, we rely on aggregate numbers or averages which camouflage the uneven distribution of economic progress (or lack thereof) among lower income families. For instance, the use of aggregates in calculating GDP masks the fact that those economic gains remain heavily skewed toward the rich. Similarly, the use of averages in reporting wage gains conceals distortions caused by booming wages among higher paid workers and the fact that by traditional measures, hourly real wages for most middle-class workers have slightly declined.
Lower-income groups have more trouble paying off debt
It is true that household debt in nominal dollars doesn’t tell you whether American households are over-extended without comparing that debt to the income available to repay it. However, to use the go-go years leading up to the crisis as the benchmark for sustainable rates of household borrowing is questionable, to say the least. In fact, household DTI’s were substantially lower than today’s levels throughout the post-war years. It wasn’t until the early 2000s that they started to escalate with the subprime lending craze. So by historical norms, even at 86%, household DTIs are quite high.
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