lol, love this subhead/dek

ICYMI – debt-to-GDP has passed 100% and reached WW2 levels, but debt-to-wealth in the US is 20% and ~half WW2 levels. @dsmitch28.bsky.social and I argue the most cited debt statistic doesn't account for all our resources.

Maybe I'm naive but I think he's wrong here and that Ds really do care about Democracy. There's virtually no disagreement on this issue among Ds.

I think Yglesias is actually right in his column today that it's not a bad idea to have a national ID voting standard (if it's reasonable) and that we should get rid of the filibuster. But if you offered this bargain to Rs (reasonableness for support ending the filibuster), Rs would reject it.

Wealth has grown much faster than GDP. And because of rising wealth inequality, more and more of it is held by the very wealthiest households. Debt-to-top 0.01% wealth (about 13,000 households) is lower now than it was for the entirety of 1940-2000.

It's worth dwelling on this first figure. While debt-to-GDP has risen rapidly, debt-to-wealth has been pretty level. The levels we're at now are slightly elevated compared to the latter half of the 20th century, but are about half of the level we hit during WW2.

Gross.

From Yglesias today and I have to ask - do any Ds do this stuff? I would have said no but I can't honestly claim to know.

Fourth, there is one place you can see falling income impacting inflation. That's savings, where the rate has dipped to 3%, down from recent averages around 5%. Consumers are simply spending more of their paychecks.

Second, I see arguments for increased credit usage. This is not evident in the data. Households still have credit to use. Delinquency rates are low as are debt service payments as % of income (see FRED attached)

Today's big business income reading makes it the largest gainer of the past 3 months, while wages, transfers, and interest/dividend income all fall

I use BEA's distribution of personal income data for 2024 to create a distribution now. I estimate that bottom 90 households are seeing the biggest drops over past 6 months and bottom 50 households over past 3 months. (My method assumes no change in inequality since 2024.)

Re today's Personal Income release. It was interpreted pretty favorably by some (I saw Axios), but the underlying details really aren't that great. Income is still down for all households year-over-year.

Income shares swung around during pandemic, but settled near 2019 levels. That's because transfer programs were temp. and wage growth for low-wage workers (though better than high income households, per @arindube.bsky.social), was washed out by other income components

Since the top 10% has been gaining income share, the bottom 90 is losing, but that loss is pretty much all in the middle- to upper-middle class, the 50th to 90th percentiles, who have seen their income share by 2.4 percentage points since 2000.

The tracker has a 5-year minimum for charts but that means we can now look at just pre-pandemic (2019) to 2024. Here's top 10% incomes over that time - buoyed by interest and dividend income as well as strong business income

I've got lots of new stuff on income inequality today. First, I've updated @equitablegrowth.bsky.social's U.S. Inequality Tracker with new BEA data for 2024. That data shows the top 10% share of income tying its previous record in the life of the data (2000-2024)

tbf, they may be thinking of this. One is any days delinquent and one is 90+ days. Maybe indicates that there is some unusual distress in certain pockets of the population.

Here's a component graph showing why bottom 50% incomes are declining. It is a little bit declining real wages and mostly declining transfer payments, which is largely about OBBBA.

Month-over-month households have now seen real income declines for three consecutive months. For bottom 50% households, income has fallen in 5 of the last 6 months.

Important milestone today - inflation-adjusted Personal Income for households is now lower, year-over-year, than it was last April. Households have 0.4% less income now. It's starker for my estimate of bottom 50% households - 1.6% less income.

The volume of coverage story is an interesting additional tidbit here that people haven't paid as much attention to. Here's 25 years of inflation coverage across several outlets + only articles that mention an election. Volume of coverage was both abnormal and horserace tied.

All the K-shaped recovery punditry seems kinda pointless to me. Every modern US economic expansion is k-shaped. That's just how our economy works – business income and asset income expand faster than wages do in expansions.

What's driving the drops for the bottom 50%? It's a little bit slowing wage growth, but mostly declining transfers. Again, the Medicaid/SNAP provisions of OBBBA are still in the future. Unless wages really pick up, the future is not looking especially bright for incomes below the median.

Something experimental: Using BEA's distribution of personal income data, I extrapolated bottom 50% household income forward, under the assumption that the composition of their income has not changed. That implies that bottom 50 income is falling faster: -4.5% this month (annualized)

What's causing this weakness? A bunch of it is declining transfers, largely caused by the expiration of ACA subsidies. Transfers have seen large annualized declines in the last two months. Wages are also down.

GDP came in solid, at 2%, but real Personal Income is down 0.5% on the quarter. PI growth has been sliding since Q1 of 2025! More charts below!