Declining Incomes?
I read an article in this morning’s Chicago Tribune that discussed Illinois median incomes. The article was citing a recent study of median income in the United States. The study found that the median income in Illinois is declining. In fact, incomes once adjusted for inflation are at a 1989 level! Illinois had the biggest drop in median income with Michigan second.
Unfortunately, we all have heard plenty of stories about the housing market and the “bubble.” Housing prices continue to increase rapidly all over the country. There are differences from place to place, but generally the cost of owning a house has increased exponentionally over the last 10 years.
Things like housing, fuel, vehicles, utilities, groceries continue to increase in price, yet this report points out that incomes are falling! We hear talk about rising inflation and about the Federal Reserve considering policies to reduce inflation. I heard a report on NPR Radio pointing out challenges of the new Federal Reserve Chairman. One of the challenges was trying to set targets for inflation.
Unless my math is wrong, I don’t know how it is possible for people to continue to pay higher prices for basic necessities while their incomes fall. Aside from using retirement assets early or being one of the fortunate few who can live off of inheritances or other family support, the only way society can maintain this situation is for banks to lend more money either in mortgages, refinancings, HELOCs, credit cards or other types of credit. The bottom line is that consumers are borrowing more and more with less and less ability to pay the debt back.
The good news is that the bankruptcy law helps consumers who get in over their head. Much has been made about bankruptcy reform and there have been significant changes to the laws, but bankruptcy, either Chapter 7 or Chapter 13, remains an effective way to help someone get out of debt. Give us a call, you might be pleasantly surprised!
