Uk Disposable Income Plunges Most In 25 Years

[interestrateripoff]

http://www.zerohedge.com/news/2013-06-27/uk-disposable-income-plunges-most-25-years

Having miraculously avoided the triple-dip recession and amid a bubbling housing (and stock) market, the average household in the UK is not doing so great. While this may not come as a surprise to many that these two things can be so disconnected, it is simply stunning that UK Disposable Income collapsed in Q1 by its fastest rate in 25 years to its lowest level in almost 8 years.

Still at least the govt is being austere by spending more money each year to cut the deficit.

[Executive Sadman]

And no central bank has eased as much as the BoE. Go figure, low inflation. Sure.

[The Knimbies who say No]

It's not just disposable, the ONS pay index has been dropping in nominal terms from November through to the latest data (March). Back in nominal terms to Jan 2011, and by my reckoning that takes us back to the nineties in RPI-adjusted terms (although Feb 2000 was slightly lower)

Pay index:

Jan 2000: 98.0

Feb 2000: 96.5

Mar 2013: 145.7

----------------------

RPI index:

Jan 2000: 166.6

Feb 2000: 167.5

Mar 2013: 248.7

-----------------------

RPI-adjusted earnings index (to Mar 2013 Sterling):

Jan 2000: 146.3

Feb 2000: 143.2

Mar 2013: 145.7

Where's Prince when you need him?

edit:

http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/may-2013/dataset--earnings.html

http://www.ons.gov.uk/ons/datasets-and-tables/data-selector.html?cdid=CHAW&dataset=mm23&table-id=2.1

Edited June 27, 2013 by cheeznbreed

[wonderpup]

Any moment now trickledown will kick in and a burst of prosperity will arrive.

Any moment now.....

[19 year mortgage 8itch]

It's not just disposable, the ONS pay index has been dropping in nominal terms from November through to the latest data (March). Back in nominal terms to Jan 2011, and by my reckoning that takes us back to the nineties in RPI-adjusted terms (although Feb 2000 was slightly lower)

Pay index:

Jan 2000: 98.0

Feb 2000: 96.5

Mar 2013: 145.7

----------------------

RPI index:

Jan 2000: 166.6

Feb 2000: 167.5

Mar 2013: 248.7

-----------------------

RPI-adjusted earnings index (to Mar 2013 Sterling):

Jan 2000: 146.3

Feb 2000: 143.2

Mar 2013: 145.7

Where's Prince when you need him?

edit:

http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/may-2013/dataset--earnings.html

http://www.ons.gov.uk/ons/datasets-and-tables/data-selector.html?cdid=CHAW&dataset=mm23&table-id=2.1

Let's all meet up in the year 2000.

Won't it be strange when we're completely broke.

Edited June 27, 2013 by SeeYouNextTuesday

[South Lorne]

http://www.zerohedge.com/news/2013-06-27/uk-disposable-income-plunges-most-25-years

Still at least the govt is being austere by spending more money each year to cut the deficit.

..because we had Gordo's boom which was mighty big ...we are still coming down to earth....with a bump ..and faced with the lack of 'real' money we will be adrift for sometime...in fact the effects of his almighty boom and big time lack of thrift makes the desolation,possibly, impossible to resolve....and we may not survive ....especially as this lot attempt little whiffs of emulation (the house buying 'help' get us trapped programme) ...and the healing process stalls...and falters ....this is not the way forward...

[cybernoid]

Any moment now trickledown will kick in and a burst of prosperity will arrive.

Any moment now.....

Who buys your paintings?

[durhamborn]

In the 80s I got pay rises every year of inflation +1%ish and a good pension and shares etc.The government told us though if we didn't embrace globalism etc wed end up very poor.If I had to go and work for someone else now at 41 in inflation terms I wouldn't get anywhere near what I earned at 20.Not withing 60% of it.Houses that were £25k then are £80k now here as well.

It really is incredible how much ordinary people have been shafted.The amount of wealth is there and has grown,but none of the workers see any of it now.

[doomed]

Our whole economy was based on re-selling the same houses to each other at ever increasing prices. Who would of thought it was unsustainable, if only we had not got rid of all our manufacturing.

[South Lorne]

.....The amount of wealth is there and has grown,but none of the workers see any of it now.

...not wealth..it's debt...

[Imminent_plunge]

Let's all meet up in the year 2000.

Won't it be strange when we're completely broke.

Let's meet up again at the food bank down the road

[RentingForever]

Let's face it, the connection between working hard and material success has broken down. The only thing that matters now is the ownership of property and the ability to extract rent.

[The Knimbies who say No]

Let's meet up again at the food bank down the road

I never knew that you'd get mortgaged.

[Bland Unsight]

Let's face it, the connection between working hard and material success has broken down. The only thing that matters now is the ownership of property and the ability to extract rent.

My hpc journey has been, 2003: "Well, that's an asset bubble and a half!" [Move on]. 2006: "Really, higher still?" [Move on]. 2008: "Bank failures, well that's new, presumably it's all over." 2010: "Prices are going up again! Time to read and think." 2011-2013: "Government apparently determined to defend present asset bubble prices...not good for Joe Bloggs..."

It remains my conviction that we have a set of connected "problems" and a set of connected vested interests trying to find a way home from here.

You have a government that is done with bailing out banks - they no longer see it as a road back to a productive economy, they finally understand the meaning of moral hazard when applied to bankers with a 3-5 year (at best!) time horizon on extracting wealth from their current employer.

Unfortunately, once you break your banks, (or rather, allow them to break themselves through the provision of easy credit to those ill-suited to assessing accurately their own creditworthiness), you need a lot of balance sheet in order to tolerate the welfare spending that would follow from allowing the actually insolvency of the banks to work out through the system in some kind of Schumpterian creative destruction.

So that's problem number one: You have broken banks but your pockets are too shallow to acknowledge the fact. Everyone was poking fun at the Japanese when they ran into this problem decades ago. Who is laughing now?

Problem number two is that if you allow the market to speak plainly about which jobs are wanted, and where, but fail to allow the market to answer the demand that the market makes for shelter for the employees that it both locates and allocates with spending power, rent seeking opportunities will prevail. If coupled to this you allow debt-financed speculation (See Problem 1) to participate in the market for shelter, you couple two nasty problems to make a monster.

My main thought at this stage of the game is that what happens next will be the same as it ever was - politicians responding to the prevailing winds. The boy George Osborne made a wisecrack on the Today programme this morning about using the "i" word, as in ideology. What I take from this is that if he is talking openly about ideology, then it is the very last thing on his mind. Politicians from 2007 onwards are in the business of trying to manage our insolvency. They are trying to walk out of the woods without being eaten by wolves. There is no place for ideology, except as a means of telling a stories about things they were actually forced to do for pragmatic reasons, regardless of any ideology that they profess.

That is why incomes will remain under attack for decades, because the decades when our houses made us rich were really just decades when we racked up debts by pretending that our houses were making us rich, and now that fantasy is dead and the reality that we need to pay off those debts is manifest. Everyone who can pay will be made to pay, to the extent that the state can make them pay. And it will work, the politicians, in their quiet behind the scenes meetings, have an attention span and a plan that the media can't match, so whilst the clowns who edit the papers chatter about Byron burgers, the debts are coming home.

[The Knimbies who say No]

My hpc journey has been, 2003: "Well, that's an asset bubble and a half!" [Move on]. 2006: "Really, higher still?" [Move on]. 2008: "Bank failures, well that's new, presumably it's all over." 2010: "Prices are going up again! Time to read and think." 2011-2013: "Government apparently determined to defend present asset bubble prices...not good for Joe Bloggs..."

It remains my conviction that we have a set of connected "problems" and a set of connected vested interests trying to find a way home from here.

You have a government that is done with bailing out banks - they no longer see it as a road back to a productive economy, they finally understand the meaning of moral hazard when applied to bankers with a 3-5 year (at best!) time horizon on extracting wealth from their current employer.

Unfortunately, once you break your banks, (or rather, allow them to break themselves through the provision of easy credit to those ill-suited to assessing accurately their own creditworthiness), you need a lot of balance sheet in order to tolerate the welfare spending that would follow from allowing the actually insolvency of the banks to work out through the system in some kind of Schumpterian creative destruction.

So that's problem number one: You have broken banks but your pockets are too shallow to acknowledge the fact. Everyone was poking fun at the Japanese when they ran into this problem decades ago. Who is laughing now?

Problem number two is that if you allow the market to speak plainly about which jobs are wanted, and where, but fail to allow the market to answer the demand that the market makes for shelter for the employees that it both locates and allocates with spending power, rent seeking opportunities will prevail. If coupled to this you allow debt-financed speculation (See Problem 1) to participate in the market for shelter, you couple two nasty problems to make a monster.

My main thought at this stage of the game is that what happens next will be the same as it ever was - politicians responding to the prevailing winds. The boy George Osborne made a wisecrack on the Today programme this morning about using the "i" word, as in ideology. What I take from this is that if he is talking openly about ideology, then it is the very last thing on his mind. Politicians from 2007 onwards are in the business of trying to manage our insolvency. They are trying to walk out of the woods without being eaten by wolves. There is no place for ideology, except as a means of telling a stories about things they were actually forced to do for pragmatic reasons, regardless of any ideology that they profess.

That is why incomes will remain under attack for decades, because the decades when our houses made us rich were really just decades when we racked up debts by pretending that our houses were making us rich, and now that fantasy is dead and the reality that we need to pay off those debts is manifest. Everyone who can pay will be made to pay, to the extent that the state can make them pay. And it will work, the politicians, in their quiet behind the scenes meetings, have an attention span and a plan that the media can't match, so whilst the clowns who edit the papers chatter about Byron burgers, the debts are coming home.

Great stuff, and welcome back.

[rantnrave]

Great stuff, and welcome back.

Aye, welcome back COTB

[ZeroSumGame]

And it will work, the politicians, in their quiet behind the scenes meetings, have an attention span and a plan that the media can't match, so whilst the clowns who edit the papers chatter about Byron burgers, the debts are coming home.

Good post until that point. P-u-u-uu-lease . Politicians having an attention span? Gimme strength !!!!

[Venger]

That is why incomes will remain under attack for decades, because the decades when our houses made us rich were really just decades when we racked up debts by pretending that our houses were making us rich, and now that fantasy is dead and the reality that we need to pay off those debts is manifest. Everyone who can pay will be made to pay, to the extent that the state can make them pay. And it will work, the politicians, in their quiet behind the scenes meetings, have an attention span and a plan that the media can't match, so whilst the clowns who edit the papers chatter about Byron burgers, the debts are coming home.

Cuts and taxes. Attacks on both sides of the equation. You don't post enough CoTB. The end of the fantasy needs to come with some HPC in there as well.

To be fair Osborne was pictured getting a McDonalds a few weeks ago, but even that had some controversy. Last time I read it though I didn't notice the picture at the bottom. Looks badly photoshopped; 'for hardworking people'.

http://www.dailymail.co.uk/news/article-2304493/George-Osbornes-driver-parks-Land-Rover-disabled-bay-Chancellor-grabs-Big-Mac.html

[Bland Unsight]

Good post until that point. P-u-u-uu-lease . Politicians having an attention span? Gimme strength !!!!

To be fair, my claim is that the political class has a longer attention span than the journalists and editors, (which is damning them with faint praise, in my book).

[Bloo Loo]

In the 80s I got pay rises every year of inflation +1%ish and a good pension and shares etc.The government told us though if we didn't embrace globalism etc wed end up very poor.If I had to go and work for someone else now at 41 in inflation terms I wouldn't get anywhere near what I earned at 20.Not withing 60% of it.Houses that were £25k then are £80k now here as well.

It really is incredible how much ordinary people have been shafted.The amount of wealth is there and has grown,but none of the workers see any of it now.

yep...ofcourse, there is NOONE else to pay for it all.

PS, if actual wealth had grown, we wouldnt be in this mess...ANY of it.

[easy2012]

Let's face it, the connection between working hard and material success has broken down. The only thing that matters now is the ownership of property and the ability to extract rent.

Hard working at intercepting BoE / Government largess still leads to good material wealth though.. (not sure about the soul...)

[R K]

In the 80s I got pay rises every year of inflation +1%ish and a good pension and shares etc.The government told us though if we didn't embrace globalism etc wed end up very poor.If I had to go and work for someone else now at 41 in inflation terms I wouldn't get anywhere near what I earned at 20.Not withing 60% of it.Houses that were £25k then are £80k now here as well.

It really is incredible how much ordinary people have been shafted.The amount of wealth is there and has grown,but none of the workers see any of it now.

Agreed. What a load of cr4p Thatcher/Reagan's vision turned out to be. Just piled up a load of household debt on a diminishing income and transferred wealth on a massive scale to the wealthiest.

This will likely be the next major secular shift.

[easy2012]

That is why incomes will remain under attack for decades, because the decades when our houses made us rich were really just decades when we racked up debts by pretending that our houses were making us rich, and now that fantasy is dead and the reality that we need to pay off those debts is manifest. Everyone who can pay will be made to pay, to the extent that the state can make them pay. And it will work, the politicians, in their quiet behind the scenes meetings, have an attention span and a plan that the media can't match, so whilst the clowns who edit the papers chatter about Byron burgers, the debts are coming home.

Yap.. logically, debt is just the spending of tomorrow's money today. When the music stops having to pay for today's expenses and to repay the money borrowed will be excessively painful - as it has now been found out.

Looking at this from intergenerational and resources level, this simply demand that the present working population consume less in order to statisfy the needs of the previous generation (generalised of course, the debtor are working to meet the creditor's demand so they can get hold of the £ to repay the debt).

[easy2012]

Agreed. What a load of cr4p Thatcher/Reagan's vision turned out to be. Just piled up a load of household debt on a diminishing income and transferred wealth on a massive scale to the wealthiest.

This will likely be the next major secular shift.

I really don't think the world under Labour would have been any rosier to those who live through the 80/90s. There is a chance the collapsed would have happened in the 80s, and perhaps things are recovering now - so it was just a different group of people who will be badly hurt.

Also, note that the credit boom really only went hyper post 2000, under Brown and Tony (and Bush and Greenspan).

You got to think about the alternatives available, not the the perfect alternative you wanted.

Edited June 28, 2013 by easy2012

[wonderpup]

Who buys your paintings?

Sadly not the 1%- my market was primarily the retired middle classes whose savings interest funded their purchases- but as we know that interest has been donated to the 'save the 1%' campaign via zirp.

What we have is trickle up- which works well for a while-until it doesn't.

In any case I was only ever cultural froth on the economic ocean- nobody actually needs a painting to hang on their walls. But the same is true of a surprising number of us- even many people who may not realise it.

If even a significant fraction of the population switch from meeting their desires to simply meeting their needs it would lead to mass unemployment amongst what I think of as the court jesters of capitalism- those of us whose 'work' involves providing some form of transient entertainment or distraction for the masses- or servicing those who do.

How many people could genuinely claim that their job role is indispensable- that it meets a genuine need rather than just a desire? Probably not that many I suspect.