Friday, May 28, 2010

Not Sustainable - Part II

My Not Sustainable post from last month involved the same inputs; compensation (not to be confused with total income) and consumption. Noted back then was that real compensation has declined ~$400 billion, while consumption has jumped ~$150 billion since March 2007.

This month's 'Not Sustainable' goes back further... the recent period of over-consumption started as much as 30 years ago.

People now consume ~135% of compensation earned before taxes and ~155% of compensation earned after taxes paid. For some people, this may make sense (depends where you are in your life cycle / if you have other sources of wealth). But the ~135% and ~155% is the AVERAGE for every American at every age group and as we learned in 2007-2008, wealth can be fleeting.

Source: BEA