What basket of goods does your source use for determining income in real terms? The ratio of money on essentials versus luxuries has changed over the past few decades, and it's done so unevenly across the population. For example, a young person looking to find a place to live today is going to face astronomically higher rents while someone who bought 30 years ago in a place like California that caps property tax growth may find that their monthly (or total over a long time) housing cost is vastly lower.

Whether real wages have gone down depends on what you use as a benchmark for said wages.

The federal reserve even has an article about this topic: https://www.federalreserve.gov/econres/notes/feds-notes/diff...

Perhaps your definition of 'household income' does not account for loans? Certainly loan issuers are accounting for active loan balances when evaluating income, and I see no reason to deviate from their standard. It's a sensible approach and one I wish was better incorporated into Fed reporting. While I won't try to persuade you to adopt my definition, I do owe an in-depth explanation of my reasoning for others.

Considering the % change year-over-year in revolving debt per household versus the % change in household income, it seems like growth in debt (CAGD) has been compounding more rapidly than wages for a majority of the past fifty years: https://fred.stlouisfed.org/graph/?g=1XTi9

There are two clear points that runs counter to that trend: in 2009 with subprime, and in 2020 with Covid. In both cases, revolving debt collapsed much faster than wages; but, subprime took years for the financial industry to unwind in order to be comfortable resuming positive CAGD, and it shows.

So if growth in debt has compounded more rapidly than growth in wages, even after accounting for inflation and number of households, for over 80% of the past five decades — then my understanding of compounding rates suggests that consumers are experiencing wage deflation over that period, which they are compensating for through debt inflation. While one could argue that the debt is an unknown mix of necessary and optional spending, the article we’re discussing is not unclear at all. This directly ties to my original point: if BNPL lenders are openly targeting advertising at the lowest-grade tranche of ‘pay rent and utilities with debt’ — aka subprime and largely the territory of loan sharks, payday loans, and other such usury over time — then they must have completely exhausted all other growth opportunities. A customer who is paying their rent and utilities with BNPL is much more likely to default, and if there aren't any higher-grade tranches of spending categories left to target, then the BNPL industry must be facing market saturation in all higher-grade tranches.

This is why I'm treating this as a macroeconomic warning signal: if the debt market is rather saturated from an advertising perspective, then debt per household is rather likely to stop growing. Inflation is not likely to stop growing with the levers of regulation available to The Fed. And in 2024, the last year for which data is available for all data sources, we do see household revolving debt crashing to -0.14% while household income increases by 1.25%. If that trend persists, corporations would face households demanding actual wage increases once household debt has no further room to grow; it’s no wonder they’re so desperate for AI to replace workers.

Also, I bet there are some lovely black swan options on Affirm, Klarna, et al. right now; 'no one could have predicted' their CAGR going negative when households hit their debt ceiling, etc. (I have no conflicts of interest to declare.)