Hi Steve, fascinating topic! Am I reading this right- assuming this bottom 20 (or 10) group doesn't have much asset based income, they are borrowing more than half of their after-tax income?
Bottom 20% net new borrowing (net of loan payoffs): $542B
So borrowing only explains 7% of the deficit.
Bottom-20 holding gains: $2.1T. 28% of the spending deficit.
Two notes: the bottom-20% measures are by far the most dicey in this whole thing, with big discrepancies vs measured (changes in) balance sheets.
I haven't nailed this yet at all, but I think bottom-20 includes lots of young people who are getting unmeasured subsidies from family. These are intra-sectoral, cross-quintile transfers that this accounting doesn't consider. All the accounted flows are household sector to/from other sectors.
Hi Steve, fascinating topic! Am I reading this right- assuming this bottom 20 (or 10) group doesn't have much asset based income, they are borrowing more than half of their after-tax income?
Good Q, with complicated answers.
2000 through 2021 summed:
Bottom 20% spending deficit: $7.6T
Bottom 20% net new borrowing (net of loan payoffs): $542B
So borrowing only explains 7% of the deficit.
Bottom-20 holding gains: $2.1T. 28% of the spending deficit.
Two notes: the bottom-20% measures are by far the most dicey in this whole thing, with big discrepancies vs measured (changes in) balance sheets.
I haven't nailed this yet at all, but I think bottom-20 includes lots of young people who are getting unmeasured subsidies from family. These are intra-sectoral, cross-quintile transfers that this accounting doesn't consider. All the accounted flows are household sector to/from other sectors.