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"The goal of this post is for you to have a place to turn to take politics out of personal finance."
A Harris poll conducted for the Guardian revealed a terrifying disconnect between what people believe to be true about the economy's overall state and what is actually happening. I was aghast by what I saw, so this post is my attempt to remove politics from personal finance.
Politics can create a distorted view of your own financial circumstances, triggering irrational financial decisions.
For example, partisans who share the president's party have more positive views of economic conditions than those who support the opposing party. This has been the case for a long time. The difference in partisan opinions is striking, and the divorce from reality is a bit scary.
You'll soon see that allowing your politics to determine your opinion of the economy and personal finances can backfire when allocating your investment portfolio.
Bookmark this post.
"Share this post with friends who need to see the straight and unfiltered facts about the state of personal finance in America."
This post is actively changing as the data changes. There is no spin, just the data depicting the state of personal finances in America.
Table of Contents
Dow Jones Industrial Average -Stock Market
About the Data: No Spin Zone
COVID hit in the spring of 2020. Beginning then and in the 18 months following, you will see whacky data points.
GDP plummeted during Covid. Thousands of people were dying a day, and many of us were quarantined in our homes and unable to work.
Unemployment at 15%. Savings rates skyrocketed, and credit card delinquencies plummeted because of stimulus checks. Gas prices hit record lows because there was no demand.
Inflation skyrocketed after Covid because of pent-up demand and the global supply chain crisis.
The economic and financial data derived from that time did not accurately reflect the preceding President, yet some like to spin it as it was.
On the flip side, much of the inflation experienced following Covid derives from the pandemic and not necessarily the policies of the current President. Yet, others like to spin it like it was. Most economists were actually convinced that we would experience a recession in 2023 and 2024, a recession that never came.
Evaluating Current Reality
"When evaluating the current state of American personal finances, focus on current reality, and if you need context to current reality, use pre-pandemic data points."
Unless otherwise noted, the data illustrated moving forward is embedded from the St. Louis Federal Reserve. The information updates regularly and automatically, so you can check back at any time for the most up-to-date information.
What is shown is the period from 2010-06-01 to the last value available, unless otherwise stated.
I chose to show data from the last fourteen years because it omitted much of what transpired during the housing collapse in 2008, giving you a normalized view of key recent historical personal finance benchmarks.
Unemployment Rate
The number of unemployed as a percentage of the labor force. Lower is better.
Normalized pre and post Covid years: pre-2020 and 2023/2024 (and beyond)
Labor Force Participation Rate
The percentage of the population that is either working or actively looking for work. Higher is better.
"The number of people in the labor force as a percentage of the civilian noninstitutional population […] the participation rate is the percentage of the population that is either working or actively looking for work.”
Normalized pre and post Covid years: pre-2020 and 2023/2024 (and beyond)
Median Weekly Earnings
Median weekly earnings of employed full time wage and salary workers 16 years and over. Wage and salary workers are workers who receive wages, salaries, commissions, tips, payment in kind, or piece rates.
Normalized pre and post Covid years: pre-2020 and 2023/2024 (and beyond)
Dow Jones Industrial Average
Common reference point for the health of the US stock market.
I prefer using the S&P 500 Index, but the St. Louis Fed Tool does not provide S&P 500 data prior to 2019. With that said, the two indexes perform relatively close to one another, and it is not uncommon to use the DOW as the primary index for stock market performance.
Data prior to 2014 is unavailable using this tool. This graphic will always chart from 2014-06-06 to the last value available.
S&P 500 Index and U.S. Presidents
The Personal Finance Club shared the two graphics below to provide political context.
This is important to remember because the data shows that if the party in power is the opposite of your political leanings, you are more likely to reduce your stock investments.
According to this Morningstar report, Democrats currently have significantly higher average equity exposure levels and invest in riskier stocks than Republicans. The opposite was the case when Donald Trump was president.
This would explain why Trump supporters feel their portfolios performed better under President Trump than President Obama because that wasn't the case with the stock market.
The lesson: don't let politics determine your investment portfolio.
Median Consumer Price Index (CPI)
Inflation
The common measurement used to illustrate inflation rates. Economists and financial professionals commonly agree that an inflation rate of 2-3% is good for the economy. Higher inflation rates make living too expensive, deflation leads to recessions, and can lead to a depression.
Normalized pre and post Covid years: pre-2020 and 2023/2024 (and beyond)
Related: Subscribe to receive gifts that empower couples to manage money and the home as a team. Expect our winning ideas in your inbox every couple of weeks.
Median Price of Gasoline
All unleaded regular gasoline
Normalized pre and post Covid years: pre-2020 and 2023/2024 (and beyond)
Related: Buying a car with your spouse
Median Price of Groceries
Retail Sales: Grocery Stores
Normalized pre and post Covid years: pre-2020 and 2023/2024 (and beyond)
Median Home Prices
Case-Shiller U.S. National Home Price Index
The S&P CoreLogic Case-Shiller U.S. National Home Price Index (“the U.S. national index”) measures the value of single-family housing within the United States.
The indices are calculated monthly and cover 20 major metropolitan areas (Metropolitan Statistical Areas or MSAs). They are also aggregated to form two composites—one comprising 10 of the metro areas and the other comprising all 20.
Normalized pre and post Covid years: pre-2020 and 2023/2024 (and beyond)
Related: Check out our Home Buying & Renting page: Money tips and resources for spouses to choose a home to buy or rent.
Median Rent Inflation
Rent of Primary Residence in U.S. City Average
Normalized pre and post Covid years: pre-2020 and 2023/2024 (and beyond)
Related: Should I Buy or Rent a House?
Personal Savings Rate
A percentage of disposable personal income (DPI)
Economists like to see lower savings rates because people are spending. It can signal a strong economy. Spending is good for the economy. Many of those same economists are likely saving a much higher percentage of their income than the ordinary American.
Normalized pre and post Covid years: pre-2020 and 2023/2024 (and beyond)
Delinquency Rate on Credit Cards
Late by 30 days or more on making the minimum monthly credit card payment. Lower is better.
Normalized pre and post Covid years: pre-2020 and 2023/2024 (and beyond)
Survey of Household Economics and Decision making
This is a static image illustrating the most recent release of the Survey of Household Economics and Decision Making in May of 2024. The reports are released quarterly. I will update the image after each quarterly release.
Normalized pre and post Covid years: pre-2020 and 2023/2024 (and beyond)
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