I think GDP may not be the best representation to how well people are doing, but debt as a % of personal income seems to tell the same story: https://fred.stlouisfed.org/series/TDSP

Its a bit surprising given observational evidence. right now people seem to be spending at any cost and have run dry. now we are to the point every other weekend the bars/pubs are empty because people already spent their money, and the next week its packed because they got paid.

That looks to me like personal debt is almost where it was before the pandemic? Slightly lower, but will it last?

But that nearly straight line at 10% after 2008 is interesting. It seems like there must have been a big change in behavior?

It's not really meant to correlate tightly to personal wealth, but it's a proxy for inflation and at least loosely correlated with personal wealth.

Now that prices are up and salaries are somehow up, but (income) tax rates stay the same. Does that mean the government are taxing more for all of us?

Hmm.

Seems like if everything costs more, and you get paid more, the things the government purchases probably cost more too, so the tax rate should be the same right?

Tax brackets and standard deductions are indexed to inflation.

Wow that's surprising given that new cars and houses are so much more pricey these days. I guess the average person is earning a lot more than in 2008.

Or homeownership is being consolidated away from the average person, thus not being included in debt.

Isn’t GDP heavily correlated with the average person’s earnings?

My guess is that that post-financial crises the banks made it harder to give out loans which would decrease the amount of household debt over time as more households get declined on loans.

Real wages adjusted for inflation are up since 2008, but sharply down since 2020.

https://fred.stlouisfed.org/series/LEU0252881600A

We are now in a world where UPS drivers have to make $170k a year to live.

That's 3x median income in one of the highest earning countries on earth. UPS drivers are paid well, but I don't think that's the minimum needed "to live".

Lots of people refinanced at a low rate in 2021 (at pre-2021 prices) and are not buying new cars... those people are doing just fine. Given the fact that the housing market is frozen, there's a lot more of them than there are people who bought in the last couple of years. This drags the average down.

There's a bifurcation, with some people (mostly homeowners who owned pre-2020) getting a giant handout from the government (record low interest rates, ability to refinance, etc - due to the FED buying mortgage backed securities en masse), and the rest of the people getting shafted.

Currently it’s affected a lot by interest rates. It’s very difficult to pay back a credit card that jumped up to a 29.99% APR.

Does that debt include buy now pay laters like affirm / klarna?

Those probably have a tiny percentage of total debt. The biggest will be credit cards, mortgages, auto loans, home equity. I'm not really sure how it's calculated, but maybe based on the value of the secondary markets like how much investable consumer debt is being issued by major lenders. Assuming that pay-laters have a real financial institution behind them, they'd probably be part of the calculation.

Great point.

Here are two even better charts relevant to the subject:

[Consumer Loans: Credit Cards and Other Revolving Plans, All Commercial Banks]/GDP https://fred.stlouisfed.org/graph/?g=17Hsu

[Consumer Loans: Credit Cards and Other Revolving Plans, All Commercial Banks]/ ([Total Households] * [Real Median Household Income in the United States]) https://fred.stlouisfed.org/graph/?g=17Hsf (units adjusted)

Consumer loans jumped after financial crisis and peaked 2018.