Collapse Coming?

I ran those numbers too. However, I can assure you that my $19,500 salary did NOT spend like $60K! When I finally did earn $60K, something like 1990, I saw a considerable difference in my standard of living. My point regarding auto loans was only to illustrate that, at the time, we had a negative net worth BEFORE taking on an $80k mortgage. We did NOT buy an average home (quite a bit less than the $142k using the inflation adjusted numbers you cite.)

Young people starting out today shouldn’t expect to either. They call them starter homes for a reason. Same for cars. We did NOT buy average priced cars. We made do with solid, but well used, pre owned cars. Much of the analysis I’m seeing recently assumes that one should immediately be “average.” Many of us had to work awhile to get to “average.”

Lastly, I wonder how much the average person had in savings in 1984?
 
The pending wealth transfer of the boomer generation is a curious thing.

Price discovery can be a real bitch and if old age and capital has a very limited buyers pool when it's time to move on, it likely will cause a drastic drop in value of overall assets.
 
We have a very angry couple of generations (Millenials/Y, Zoomers/Zs) that have tremendous debt loads for jobs that don't exist or do not pay back their debts. Their COL and ability to buy a home is an impossible hurdle. Lastly, they lack the gumption and discipline to humble themselves to do with less than they were raised to expect. These generations aren't going to let things flow back to a normal equilibrium, they are demanding socialism at the ballot boxes to get the stuff acquired by others...especially boomers. The unruly mob that possesses nothing will outvote the "haves" that are a declining population over the next 20 years

As a millennial, as based on my millennial friends, rest assured we are all going to be ok. Please don't worry about our lack of gumption.

Just a note, most millennials remember the dotcom bubble, the housing crisis and had COVID shutdown. I'm pretty sure we have learned to be humble.

Now Gen Z, those guys are great, they dont give a F&@$ about work, it is truly amazing!
 
Doug, your comparison is pretty flawed but I’m not sure you appreciate it. Let me give you some comparisons.

First, your 1984 salary of $19,500 is CPI adjusted to a $60,000 salary today.

Your $6000 in savings is CPI adjusted to $18,500 in savings today.

Your combined $10,000 in car loans is CPI adjusted to $31,000 today.

I’m not sure where you lived at that time, but lets for the sake of argument take a large, rural/suburban county next door to me that is only 45 mins from the Twin Cities.

Average income: $58,000 (LESS than your fresh-from-college income in 1984)
Average home price: $440,000 (Reverse adjusted to 1984 dollars, that’s $142,544)
Average new car loan size: $45,000 ($14,500 in 1984 dollars)
Average used car loan size: $26,000 ($8,400 in 1984 dollars)
Average starting salary for a business undergraduate: $65,000
Average student loan debt for a four year degree: $30,000

So what do the numbers show? Starting salaries are about the same. Cost of a modest home was way cheaper relative to income in 1984. Average auto loans were far less in 1984. Student loan debt has soared from 1984 where most people paid-as-they-went versus today’s meteoric costs.

Oh, and only 45% of Americans have $1000 in cash to cover an emergency today without resorting to a loan or credit card.

Today’s circumstances are not the same as 1984.
The only reason for education price increases is due to government intervention. Apparently those voters in the 80s and 90s didn’t have the intelligence to let the free-market work. Voting in politicians promising entitlements has now led to the current economy in the U.S.
 
The pending wealth transfer of the boomer generation is a curious thing.

Price discovery can be a real bitch and if old age and capital has a very limited buyers pool when it's time to move on, it likely will cause a drastic drop in value of overall assets.
Yes, the best part for millennials is to sit by patiently and wait. Assets will drop like a rock and then be discounted. I eagerly sit on the sideline.
 
The brave new world is out there, just over the horizon, AI and UBI. Who will buy all those McMansions?
 
I ran those numbers too. However, I can assure you that my $19,500 salary did NOT spend like $60K! When I finally did earn $60K, something like 1990, I saw a considerable difference in my standard of living. My point regarding auto loans was only to illustrate that, at the time, we had a negative net worth BEFORE taking on an $80k mortgage. We did NOT buy an average home (quite a bit less than the $142k using the inflation adjusted numbers you cite.)

Young people starting out today shouldn’t expect to either. They call them starter homes for a reason. Same for cars. We did NOT buy average priced cars. We made do with solid, but well used, pre owned cars. Much of the analysis I’m seeing recently assumes that one should immediately be “average.” Many of us had to work awhile to get to “average.”

Lastly, I wonder how much the average person had in savings in 1984?
I was fairly sure you were wrong, so I thought I'd dig into this, at least casually.

My methodology was simple; pick a random selection of 'every day' items that were available in 1980 and 2024, get an average price for them.

I then divided the price of these items by the minimum hourly wage in both periods, plus the median hourly wage in both periods to convert the prices into 'hours worked to buy them'.

The results and conclusion are below. I haven't checked all the sources for these as I can't be bothered, but the conclusions are certainly interesting!

1724115135421.png


Effectively, wages have lagged inflation in basically every category. Minimum wage more so than median.

To achieve the same level of lifestyle as median wage got you in the 80's, you need to be a top 10% earner in 2024. By contrast, working a minimum wage job flipping burgers in 1980 gave you a better quality of life than the median wage offers in 2024...

I'm sorry, but things are harder for those starting out now, no question about it.
 
The pending wealth transfer of the boomer generation is a curious thing.

Price discovery can be a real bitch and if old age and capital has a very limited buyers pool when it's time to move on, it likely will cause a drastic drop in value of overall assets.
There are going to be a lot of folks trying to cash out stuff soon only to find the millennials they seem to despise either can’t afford it or are unwilling to pay their inflated prices. Going to be some good buys out there for the right person.
 
I ran those numbers too. However, I can assure you that my $19,500 salary did NOT spend like $60K! When I finally did earn $60K, something like 1990, I saw a considerable difference in my standard of living. My point regarding auto loans was only to illustrate that, at the time, we had a negative net worth BEFORE taking on an $80k mortgage. We did NOT buy an average home (quite a bit less than the $142k using the inflation adjusted numbers you cite.)

Young people starting out today shouldn’t expect to either. They call them starter homes for a reason. Same for cars. We did NOT buy average priced cars. We made do with solid, but well used, pre owned cars. Much of the analysis I’m seeing recently assumes that one should immediately be “average.” Many of us had to work awhile to get to “average.”

Lastly, I wonder how much the average person had in savings in 1984?


I'm sure you didn't buy a $142,000 home as a first home in 1984. Even though it was the average home price if adjusting for current home prices backwards using reverse CPI, that would have been a palatial estate. That's sort of my point.

When my family lost the family farm around 1984, it was foreclosure of $114,000. That was a 7 or 8 bedroom farm manor on 100+ acres of land. Today, that home sits on only 4 acres and is worth between $3m and $3.5m USD. Point being, you didn't need much to buy something quite substantial in 1984.

An $80,000 mortgage going against a $20,000 income in 1984 is 4x a year's salary, albeit a starting salary. That is akin to a starting salary today of $60,000 buying a starter home or condo for $240,000. That just isn't happening anywhere I know of in America that pays starting wages to 22 year olds of $60,000. Basic one bedroom condos are pushing mid-300s and of course HOA is substantial as well. There's a rural home with 3 bedrooms and 2 baths with a bad location on a major highway about 50' from the front door in this poor redneck county of mine...they are asking $725,000. If you move into the small towns in this area of the world and want a 15 year old track home ranch with a 1.5 car garage, you're going to be over $450,000 minimum, and 45 mins drive to jobs.

That's the biggest difference between 1984 and today: cost of living differential.

Another quick anecdote that is different than 1984. I needed a new (steel) roof for my house and garage. Five years ago, they would have cost $30,000. Last year, it was $100,000 and they didn't do a particularly grand job. I don't remember roofing jobs in the 1980s because I didn't track the costs, but in the early 1990s that would have been a $5000 job. To afford a $100k roof someone is likely at the 2nd highest tax bracket, and even then they had to earn $200k pre-tax of discretionary income to cover that single needed repair on top of basic living expenses.

We can reverse CPI calculate a lot of these things back to 1984, but the math never seems to work backwards. Do I care deeply on a personal level? No, because I'm a GenX and have tangible assets that insulate me from potential inflationary and fiat currency shockwaves. But the younger generations than ours are hopping mad because the math does not work and their collective answer has been a preference for socialism.

Socialism will accelerate when full recession hits, resulting in fewer jobs, economic stagflation, and inability for younger people to service their debts that are unsecured. (credit card, student loan, etc.)
 
my dad taught me early on to live with in my means and not like the jones across the street and make what i had last by taking good care of it. and now at 80 i still drive a 15 year old car and i downsized to a smaller house i paid 64K for 24 years ago. i still spend my money wisely.
 
A lot of market turbulence is due to demographics. Real estate is inflated and will crash eventually. This is the same with stock prices and commodities. Everything is based on the fact that boomers are now moving into retirement. The transition will be a significant transition of capital from boomers to millennials.
Yep, it’s all going to come crashing down eventually and probably sooner than later. Way overpriced stocks including 55 percent of NASDAQ value based on FIVE or so companies. Credit cards and car loans maxed out and defaults rising. People living way beyond their means because they “have to have what they want NOW!” History will repeat itself as it always has. We don’t learn from the past because we don’t look at it and many of the younger generations haven’t lived through many of the recent economic downturns as adults. Pay off what debt you can NOW because the reaper is coming and he WANTS WHAT YOU OWE.
 
Yep, it’s all going to come crashing down eventually and probably sooner than later. Way overpriced stocks including 55 percent of NASDAQ value based on FIVE or so companies. Credit cards and car loans maxed out and defaults rising. People living way beyond their means because they “have to have what they want NOW!” History will repeat itself as it always has. We don’t learn from the past because we don’t look at it and many of the younger generations haven’t lived through many of the recent economic downturns as adults. Pay off what debt you can NOW because the reaper is coming and he WANTS WHAT YOU OWE.
I completely agree. Too many arrogant people that have been spoiled for decades. A correction will happen. Everyone lost their mind in 2008. That was a hilarious 2-3 months. Obviously politicians used the power of the government and fed to bail out “too big to fail” corporations.

I know a lot of boomers on the site love to denigrate millennials. I think it might be out of guilt. They know we (younger generations) will pay for their political preference in the next decade.
 
I ran those numbers too. However, I can assure you that my $19,500 salary did NOT spend like $60K! When I finally did earn $60K, something like 1990, I saw a considerable difference in my standard of living. My point regarding auto loans was only to illustrate that, at the time, we had a negative net worth BEFORE taking on an $80k mortgage. We did NOT buy an average home (quite a bit less than the $142k using the inflation adjusted numbers you cite.)

Young people starting out today shouldn’t expect to either. They call them starter homes for a reason. Same for cars. We did NOT buy average priced cars. We made do with solid, but well used, pre owned cars. Much of the analysis I’m seeing recently assumes that one should immediately be “average.” Many of us had to work awhile to get to “average.”

Lastly, I wonder how much the average person had in savings in 1984?
I have to agree and commend you for pointing out the obvious that probably gets missed by the average analyst. In order to have an average, there is going to be a bell curve both sides of that!

Sounds like you started out very sensibly. And tripled your earnings pretty quickly.

However I still don't think you know how to calculate a balance sheet, unless those cars were worthless. You say you started out with a negative balance sheet because you had $6000 cash and $10,000 debt. But surely you had other things of value. Your balance sheet should be assets (cash, cars, property, guns, anything of real value) minus debts.

Finally the chart compiled by @Alistair compares 1980 to 2024. Hardly comparable to 1990 as you referenced. And although great points made all around, 2024 may yet prove to be quite an outlier.
 
Yes sir! Closed my option positions today. Waiting for a down day to sell some puts and buy calls, I believe they are going to crush earnings and announce a massive buy back! Male lion hunt 2025 here we come!
Bought it in March of 2022. After today it’s up 372%. I don’t usually do puts and calls but probably should.
 
I have to agree and commend you for pointing out the obvious that probably gets missed by the average analyst. In order to have an average, there is going to be a bell curve both sides of that!

Sounds like you started out very sensibly. And tripled your earnings pretty quickly.

However I still don't think you know how to calculate a balance sheet, unless those cars were worthless. You say you started out with a negative balance sheet because you had $6000 cash and $10,000 debt. But surely you had other things of value. Your balance sheet should be assets (cash, cars, property, guns, anything of real value) minus debts.

Finally the chart compiled by @Alistair compares 1980 to 2024. Hardly comparable to 1990 as you referenced. And although great points made all around, 2024 may yet prove to be quite an outlier.
Again, we had next to nothing. The cars were worth about what we paid for them. So, deducting the $10K auto loans, they were essentially a wash. Six grand in savings. An $80K mortgage against a home that had zero equity because my dad loaned me the down payment. We were, as Dave Ramsey says, broke. But that was OK. We knew how to work and save. God took care of the rest.
 
4AB9DA8A-785D-4EBF-8593-2E51D2BE61C8.jpeg
 
Powell says time to cut rates. Market up. Collapse put on the back burner. Now contemplating a brontosaurus hunt in darkest Africa after I get back from my mammoth hunt in Siberia.
Old saying "Don't fight the Fed".
 
Another old saying:

"When it's time to buy, you won't want to."
 

Forum statistics

Threads
57,182
Messages
1,224,116
Members
100,329
Latest member
Rodlovetohunt
 

 

 

Latest posts

Latest profile posts

TAG SAFARI wrote on mvalden's profile.
Wishing you a Happy Birthday!
TAG SAFARI wrote on K31's profile.
Wishing you a Happy Birthday!
TAG SAFARI wrote on davidg8480's profile.
Wishing you a Happy Birthday!
TAG SAFARI wrote on Daven22s's profile.
Wishing you a Happy Birthday!
 
Top