It seems to me the economic downturn is helping the poor, is this true?

All I hear on the news is crisis this and economic disaster that. But what I see on the streets of the little impoverished city I live in(top 100 worst places to live in America) is half priced gas, inexpensive new and used cars, and houses that poor people can actually afford. A general deflation all around. So I ask, are we not better off (the working poor that is) having watched all of the artificial wealth of the rich evaporate.

Public Comments

1. How can poor afford to buy a devaluing home if banks are not lending money any more? How can a poor afford to buy "inexpensive" cars or spend half priced gas, if they have lost their jobs and they have no place where to commute? Deflation is affecting people's jobs. Big companies can't afford to keep up with payroll and more massive layoffs are to come if the economy doesn't turn around. The economy is in crisis and this is a disaster. No, this is not better to anyone.
2. The poor are being forced further down on the economic ladder. And what is really going to hurt the poor even further is having a bad credit rating. Those of us in the middle class have survived through trimming back on expenses and keeping up with our bills. The poor on the other hand that have been trying to establish good credit history are going to feel the real impact when they fall behind on their bills. In this day and age, having a good credit history goes a long way in landing that well paying job.
3. I can see how one could conclude that a deflationary cycle, by making end goods and services less expensive, would help low income earners. However, the reason this doesn't happen is the same deflation that depresses prices also depresses wages. Since working people are earning less income, consumer end goods and services while less expensive, do not become more affordable. Another wealth diminishing effect of a deflation is that it makes debts harder to pay off; the nominal value of the debt remains the same but the borrower's ability to pay is decreased by his falling wages. This is why you hear about so many people "underwater" in their mortgages; because they value of the mortgage is higher than what the property is currently worth.