Looking at the numbers: low unemployment, strong consumer spending, average income increasing at a rate higher than inflation, I'd say the majority is doing better than most years. They might not feel that way though, and we've been in a continuous vibes-cession since COVID.
But actually, he thought as he re-adjusted the Ministry of Plenty's figures, it was not even forgery. It was merely the substitution of one piece of nonsense for another. Most of the material that you were dealing with had no connexion with anything in the real world, not even the kind of connexion that is contained in a direct lie. Statistics were just as much a fantasy in their original version as in their rectified version. A great deal of the time you were expected to make them up out of your head. For example, the Ministry of Plenty's forecast had estimated the output of boots for the quarter at 145 million pairs. The actual output was given as sixty-two millions. Winston, however, in rewriting the forecast, marked the figure down to fifty-seven millions, so as to allow for the usual claim that the quota had been overfulfilled. In any case, sixty-two millions was no nearer the truth than fifty-seven millions, or than 145 millions. Very likely no boots had been produced at all. Likelier still, nobody knew how many had been produced, much less cared. All one knew was that every quarter astronomical numbers of boots were produced on paper, while perhaps half the population of Oceania went barefoot. And so it was with every class of recorded fact, great or small. Everything faded away into a shadow-world in which, finally, even the date of the year had become uncertain.
---
Of course, I'm sure none of that would ever apply to our numbers, only to those of our opponents.
What are the actual numbers you think are fantasy? Most of the time when I see someone claiming economic statistics are fake, it's a misunderstanding or lack of context. For instance, people will say the US unemployment rate is fake because it doesn't include people who have given up on looking for work... but the U-4 unemployment metric, published by the Bureau of Labor Statistics alongside the main U-3 metric, does include these people.
Because it is hilariously wrong. You have been operating under the false understanding, for who knows how long, that the media are talking about job postings when they are talking about jobs numbers.
There are some that talk about jobs filled, others are talking about unfilled postings. I guess you can laugh at your hilariously wrong assumption while reading this article.
Many thanks, I was thinking to build something similar and try to predict stock market macro movement.
Typically, right now I am relatively bearish but I feel I am 3-6m too early.
Trend is downward for both hiring and seeker, which I would interpret as employers are hesitant to invest in IT due to current US politic unknowns, typically, the tarifs and actual impacts on economy.
Nobody wants to believe they’re living in a peak, and it is hard to predicate. People claiming economic downturns are near are a dime a dozen.
That said, there are possible indicators. Yes, unemployment is low, but what form is employment taking? Is it generally trending toward fulfillment, growth and/or rewarding or is it trending toward mundane, unfulfilling and/or unrewarding?
Is everyone benefitting from the official economic growth? Or are the gains statistically lopsided?
Let’s take a common mentioned stat about wage growth. Yes since 2020 wages finally raised. But if you look at it overall since 1970[0], it still behind productivity gains. Wages are not keeping up with overall productivity growth and people are still going to notice that in some form. Everyone talks about since 2020, but that misses the broader story. (As an aside, I suspect by the end of 2025 wages will significantly stagnant again. Growth won’t continue on the best take of the current trajectory)
Then there’s inflation. Regardless of cause, an entire generation+ of people have never experienced such rapid prices rising, particularly with groceries. People aren’t going to forget this, no matter what the official line is. This also eats away at wage growth which as noted above, has not kept paced with productivity gains.
The official sources though say everything is great, or heading toward it. Maybe, especially if you’re seeing the benefits, but if you’re locked out of the majority of gains, what if any you do get will feel meaningless. This shouldn’t be discounted.
It is entirely possible that wealth inequality combined with the world political climate is starting to show more cracks in the system and this might be peak. We may be seeing the warning signs of a big changes, whether it manifests itself as mostly political or economic is anyways guess I suppose
> All one knew was that every quarter astronomical numbers of boots were produced on paper, while perhaps half the population of Oceania went barefoot.
In the theme of the day: "Your coverage has been denied, due to [insert nonsense]", while profiteering from record profits in the billions.
Immense economical value has been "produced", benefiting no-one but the very few.
From the New-York Times [1]:
The company’s profits rose on his watch, jumping to more than $16 billion last year from $12 billion in 2021. But amid the growth, the company and its parent also attracted scrutiny from lawmakers and regulators who accused them of systematically refusing to authorize health care procedures and treatments.
In my case, it'd be growing numbers of people being easily able to afford housing and medical care, with most people putting more of their money into savings. Right now we have soaring numbers of homeless people and record amounts of household debt so I don't think we're doing very well.
Actually I think this could be distilled to a simpler metric. The economy is doing well when the net wealth (not including tax advantaged accounts) of individuals and families is positive and growing in real dollars.
Because if you are able put money into savings or investments then you probably have the other stuff you listed.
If your net worth is tied up in your home (house rich, cash poor), you can't put that money into savings or investments. My house is "worth" 2X what I paid for it 11 years ago, awesome. It's not helping to pay the increase in taxes, homeowners insurance, groceries, that have gone up, up & up.
> The economy is doing well when the net wealth (not including tax advantaged accounts) of individuals and families is positive and growing in real dollars.
Tricky to account for differences in consumer culture, no? Because the number of people who consume all they earn, no matter how much that is, is not staying equal over time or location.
I wouldn't account for it at all both because I think it will shake out in the aggregate but also because if people are spending all their money immediately I think it signals low confidence in their future economic situation.
We don't live inside a 1984 society. The closest to that currently would be North Korea. Brave New World was always more apt for modern western societies. But any such comparison is flawed, since those are just the writings of one author about a fictional dystopia were things were taken to the logical extreme for whatever critique the author is making.
HN in particular has a deflated view of the economy because our sector was going through such a big bubble from 2014 on, which got even bigger for a brief window around the pandemic. We in particular had a long way to fall back to reality, so our personal economic outlook is worse than it's been for a while, even if the rest of the economy is looking up.
Hn has a highly inflated view of the economy because we only see the top of the economic pie. I shop at cheap ethnic stores because I grew up with that food and the prices that poor people see are two to three times what they were 5 years ago. Telling this to someone who buys premium organic free range eggs is like trying to explain to a fish that a flood doesn't benefit everyone.
It’s funny you mention eggs because I live in one of the highest cost of living areas in the country with legally mandated cage free eggs and Trader Joes has them for $2.99 a dozen when people keep complaining about $6+ a dozen in the rest of the country (which is what I’d pay if I wanted the premium organic free range shit). When a famously expensive grocery store for yuppies has cheap eggs in Southern California, I figure the OP is right in their word choice: it’s a vibe-cession.
I also shop mostly at ethnic grocery stores (Superking, Ranch 99, H mart, etc) and IMO the problem isn’t inflation but general consolidation across many industries. I’m always shocked when I travel to less populated regions (even in California) and see their grocery availability, usually dominated by a single major chain like Albertsons or a local one like Publix. SoCal has competitive prices for groceries despite the high cost of living because there are so many people (and immigrants) to support many competitors, none of whom have real pricing power. My grocery budget hasn’t gone up significantly in the last five years despite switching to Costco for my meat rather than the cheaper halaal butcher.
Eggs are always more expensive at the ethnic stores here but cheap at TJs because they use it as a competitive loss leader. A lot of the country can’t support such competition so there’s zero incentive for suppliers to drive down costs.
It's not a vibe-session when the bottom 50% see inflation that five times the headline rate. It's class warfare and somehow the party of the people is the one defending it.
In the fight between labor and capital, the favored class is right there on the label of the economic system. Class warfare is a built-in feature of capitalism - no mainstream American political party is going to repudiate capitalism; the DSA is far from the mainstream and this is exactly its main bone of contention with center/center-right liberals. There hasn't been an unabashedly pro-labor major political party in the US anymore since Bill Clinton's "Third way".
Not where I come from. I grew up in the area, not far from the first Trader Joes and down the street from the second, and it’s always been considered an upscale store because it had so many cheaper competitors a few miles away. It was founded to supply the wealthy neighborhoods of Pasadena and South Pasadena.
I think you are kind of both right. When TJ’S started they intentionally wouldn’t sell things like milk and eggs because they couldn’t compete with big chains. The niche they were after were “over educated and under paid”.
So they were famously cheap for things that poor and blue collar families weren’t looking for anyway. UMC goods on a LMC budget, really.
Eggs are such a red herring. I pay $6 for eggs. You know how much I’d save with eggs at half price? A whopping $12 a month. Meanwhile my rent goes up by 10x that a year and thats with rent control. Everyone gets all bent out of shape about the price of gas and the price of food but that could realistically double and you’d only be out another what $200 a month or so. No its the rent that is the squeeze for most people not the eggs being $6 and the gas being $5. But of course that is the headlines and not the focus on the lack of housing supply due to restrictive zoning.
The interest rate is hurting everyone who can't buy houses with cash. High interest rates have also helped crash the real estate market, so even if you just own a home, you've taken a bath since the high interest policy has been implemented.
To be fair, the real estate market in the US has always been super distorted (mostly due to the existence and availability of the 30-year fixed-rate mortgage itself), and encourages people to do stupid things. People should not consider their primary residence to be an investment; in truth it should be an expense and a liability. But the expectation here (fueled by market-distorting policy) is that home values always go up, and that homeowners can expect to sell their house in some amount of years at a profit.
As houses get older, their value should decrease. Even large-scale renovations often should not push the value up quite as much as one would hope. Certainly the value of land can go up, based on housing/zoning policy, coupled with supply and demand in a particular area.
At any rate, most things are temporary. Interest rates are headed downward again, and the Fed expects to make more cuts. Presumably we won't get back down to zero, but that's probably a good thing.
Also let's consider history: interest rates are still objectively not all that high right now. They're on par with or lower than what rates were in much of the 90s, and even some of the 00s. It's only the 10s that saw zero rates. And hell, go back to the 80s and prior, and the current rate situation looks delightfully low.
> High interest rates have also helped crash the real estate market, so even if you just own a home, you've taken a bath since the high interest policy has been implemented.
A note on this: so what? What matters is the cost of comparable housing. If my house has lost 25% of its value, it stands to reason that similar houses in similarly-desirable locations will have lost a similar amount, and still be affordable for me if I wanted to sell my house and move.
But again we run into the problems caused by the 30-year fixed-rate mortgage! Anyone who has bought a house with a mortgage recently enough, at a price high enough, might be in a situation where they can't move because they won't be able to sell their current house at a high enough price in order to pay off their mortgage (and still have enough of a down payment for their next house). This is a problem we've created for ourselves, and it's super annoying.
> in truth it should be an expense and a liability
I have to raise an eyebrow when someone says "truth" and/or "should", as if there's a hidden One True Way. I do think that David Ricardo's theory of rent holds.
> As houses get older, their value should decrease.
"Value should decrease" is doing a lot of lifting in oversimplifying, if not positioning itself counter to, reality. eg My area is growing by ~10k a year across 3 adjacent municipalities. Population growth (migration+births) contributes to a growing area in a way that's self-reinforcing (availability). So depreciation is often outpaced on that basis which has nothing to do with specific characteristics of structure.
How does this affect the calculations? Well, it doesn't seem to hurt as much as some might imagine. People are resilient and optimistic, long term, and happy to own the roof over their head in the short term to give themselves agency. These value motivate people to buy what's available and prices do not fall as if they exist in a vacuum.
> I have to raise an eyebrow when someone says "truth" and/or "should", as if there's a hidden One True Way.
I'm not the OP, but I notice that it's very strange that the other major expensive durable good the typical American household will own [0] is a steeply depreciating asset.
I also notice that "housing as both shelter and investment" is not universal policy. Japan does things totally differently and has historically done well by it.
House values do decrease over time. It’s the land value that increases. For example my house has decreased $100k in value since I bought it (many years ago) but the land has increased around $700k in the same time.
A well-maintained structure will also increase in value because the cost of material to replace it increases over time. It should track inflation pretty closely, but that's not always the case.
It also sounds like you're basing your statement on your tax assessment, which implies that your tax assessor has correctly allocated the value increase to the appropriate category. That has not been the case very frequently in my personal experience.
No, I'm not doing that either. I watch lot prices pretty closely in the same areas I own property. Lot pricing (acreage) in this market didn't move much during or since the pandemic. Meanwhile 1000sq ft single family homes built in the 60s and in desperate need of restoration are currently selling in the 180k-250k range, whereas pre-pandemic I could buy as many as I could handle for less than a hundred grand a pop. Meanwhile the cost of a quarter acre building lot has nudged upwards maybe 10%. I'm guessing something about this strikes you as weird, thus the assumption that I don't know what I'm about? I don't have a cogent explanation to offer you for the vagaries of local real estate prices, I'm just reporting the facts on the ground.
...and yet, the currently "high" interest rates are lower than the average in the 2000's (2000-2009), 1990's, 1980's (much, much lower) and 1970's.
There is a proclivity to wash over a lot of the difficulties, constraints, and "norms" of earlier generations and making the current economic times seem so much worse. Things like living with multiple roommates (2-4) in your 20's is MUCH rarer today, as is sharing a bedroom with a sibling. Vacationing frugally at a nearby lake, not some international expedition. Packing a box lunch. I agree that by many measures, times are tough, but also, the base expectation level has definitely increased dramatically.
This rise since 2021 can be easily seen in the graph in the article I posted also, but the catch is that the increases have been relatively flat where they can been found, and that increase followed a lowering in real wages. Whichever way the data is looked at since 2020, it isn't very reassuring to the general public that wages have essentially stayed flat with inflation, when US productivity growth has been going up. I was actually surprised about the article I referenced in the comment above. The figure I'd read of previously was that real wages had cumulatively increased around 2% since 2020, which the Brookings article seems to reference. 2% real increases in wages is strikingly low considering US productivity growth. It was the figure I was originally looking up.
If you only want to see what you want to see, it's easy to find evidence. On the other hand, look at the commonly posted wages vs productivity graphs (productivity goes up pretty much unbroken, but wages flatline since roughly mid-70s), or compare the 'US is #1!!' GDP per capita numbers against the *median* income numbers. Bit of a difference when you remove Musk, Gates, Bezos et al income from the comparison.
Why would you expect wages to track productivity in an environment where automation increasingly drives productivity gains and the means of automation are provided by employers?
You can take your pick of any point since the pandemic. Wage growth has essentially stayed flat with inflation, whether that be a slight increase or decrease. Much of the nominal wage growth with white collar workers would have been tied to promotions, which inflation has eaten the real gains of. It is no wonder that many people have a poor view of their place in the economy and it is certainly not just "vibes", like it was arrogantly written off as by many.
You realize what you said contradicts the data that has been posted repeatedly in this topic?
Real wage growth surged post-pandemic, especially for lower-income workers.
Most economists have explained the vibes as: People blame inflation for increased prices but credit their own industriousness for wage gains, and are angry they don't get to basically double dip.
"Real" is a misnomer. Interest expenses aren't included in the CPI adjustment for real wage growth. Decreases in used/new vehicle prices wouldn't necessarily offset increases in food prices for someone taking public transit.
For a worker with credit card debt, or one who already struggles to afford public transit, the real wage growth is illusory.
Way to down vote my comment without posting that data you refer to. Nominal wages surged post-pandemic in Q2 2020, but cooled off after then. Someone already replied to my comment with a Brooking institute article which confirms the figures I had previously heard, in that real wages have only increased 2% annualized since 2019.
I didn't downvote anything, and I didn't re-post data because I assumed you already had it as a participant in this discussion.
A 2% annualized increase in real wages is excellent? Compare it to real wage increases elsewhere and you'll see that "only" is not the correct modifier to use.
Meanwhile the real cost of housing is still increasing. It is a bipolar world: the haves and the have nots. If you own land: the economy is great. If you don't own land: you're screwed. Whatever metrics that say wealth inequality is down are lying. It's a polarized world of haves and have nots and people are pissed off.
Wow, talk about a deceptive article. It’s so completely shady the writer surely did this on purpose to fool people like you.
Here’s [1] the wage graph from BLS during that time period, same source as the author. See that incredible, record setting spike at precisely the month in question, never seen before or after? Gee, what do you suppose did that?
The US had just poured 2 trillion into wages for free for pandemic recovery.
This is why you shouldn’t fill your head with nonsense from such crappy sources. Liars will lead you into your own echo chamber. Read proper economic journalists until you learn enough not to believe stuff like that article.
>Here’s [1] the wage graph from BLS during that time period, same source as the author. See that incredible, record setting spike at precisely the month in question, never seen before or after? Gee, what do you suppose did that?
Given how arrogant you are, it is ironic that you're the one that interpreted the graph incorrectly. They didn't reference the spike "precisely the month in question". The figure they referenced at the start of the graph was Q4 2020. The spike in the FRED graph was in Q2. Perhaps you should think before you type next time, so you don't paint yourself the fool you claim others to be.
If they had referenced the spike in Q2, the decrease would have been >5%. If you want to start casting stones, you better be sure you're right.
Read the graph. The nov, q4 value in the graph is 376, is part of the Covid spike, and no other points in all of history that are not part of that spike are as high as the q4 value.
Zoom in if you cannot read it. A spike is not a single month. It’s a spike with an upside and downside. You think the effects of a free few trillion poured into people’s hands only affected an infinitesimal width spike?
So no, I did not interpret this graph incorrectly, and the poster chose a point from an artificial spike to mislead.
Perhaps if you aggregated inflation, which is a lagging variable, it will turn out he chose precisely the quarter that made his point better than any other quarter, in which case he really went the extra mile to provide misleading claims.
If you’re going to attempt to discredit a correct argument, at least evaluate it correctly.
>See that incredible, record setting spike at precisely the month in question
>If you’re going to attempt to discredit a correct argument, at least evaluate it correctly.
Sure, it is part of the downward slope of a multi-quarter spike, but that is not what you said. What you are doing now is attempting to re-frame prior inaccurate wording to claim that you were accurate all along. That first quote is what you said in your first comment. Q4 was the second quarter of decline following the spike. You said the spike was at "precisely the month in question", which it certainly was not. Q4 2020 was half a year after the peak of the spike. That hardly qualifies for even a very generous interpretation of the word "precise".
>Perhaps if you aggregated inflation, which is a lagging variable, it will turn out he chose precisely the quarter that made his point better than any other quarter, in which case he really went the extra mile to provide misleading claims.
Not only is this reaching, but you've just demonstrated that you don't understand what the graph you said was misleading refers to. Real wages does account for aggregate inflation.
> Sure, it is part of the downward slope of a multi-quarter spike, but that is not what you said.
That you confuse the word spike to mean only the tip is odd. The downward part of a spike is part of a spike, and the cause and use of this anomaly is not in question. Choosing an outlier high point as a basis to make general claims will always lead to misrepresentations.
Is a railroad spike only the tip? Is a volleyball spike only the highest (or lowest) part? Is a signal spike the zero width instant of maximum value?
I cannot think of a use of the word spike that means the tip and not the entirety. Looking at online dictionaries I cannot find the use you claim. I do find many definitions and examples including both the upside and downside. So I’m quite correct claiming the author choose the spike, and obtains the expected poorly reasoned claims as a result.
> Not only is this reaching, but you've just demonstrated that you don't understand what the graph you said was misleading refers to. Real wages does account for aggregate inflation.
If you dig through my posts, you’ll see I taught mathematical grad econ at a top 50 university. What you misread, then try to use Econ 101, is simply incorrect. As your other comprehension showed, you ignored the precise word “lagging” that I wrote, because real wages at a given date do not include inflation from the future.
Please read and think. You’re so bent on trying to argue you don’t read what I wrote, and instead argue your misreadings.
Let me simplify: it’s well known inflation as a result of cash transfer causes lagging inflation (pretty much all schools of economics agree on this, from Keynesian, neo, Austrians, Friedman, all the flavors of monetarists, pretty much everyone). Hence the precise Econ term lagging variable. Other ones are that wage growth usually lags inflation. This is all basic economics. It’s why I precisely put the word “lagging” in that sentence. It means future inflation above. Most definitely not a part of that spike.
Here, there was an economic shock causing the govt to expand the money supply without expanding production. This money, handed out in large part as cash, adds to real wages at that moment. This will lead to inflation, but that is not part of those real wages. Later, inflation will devalue money, making real wages decrease. Then later again, historically wages gain back purchasing power as people get salary increases. This is done (alert, another term so read carefully) because wages are called a “sticky variable” in Econ. Wages are easy to ratchet up but not down, due to psychology of humans. Wages are hard to move freely like many other variables. Ideally from a math model side, if wages were not sticky, then as the shock passed, prices could fall, and all values return to baseline. But people don’t see that, so it’s easier to ratchet up wages, which ratchets up prices, locking in inflation.
So to maximize the type of nonsense this post spreads, you can always fiddle with the chunks in these troughs to make things look much worse than they are.
So next time please learn the difference between aggregate inflation (current) and the phrase lagging variable. And don’t put claims into my writing so you can argue straw men.
I’m done. You’re trying to correct something that is simply your odd usage of a word.
Looking at the numbers the interest rate is almost 7% making most things very unaffordable for people who can't buy things like houses and cars with cash. Until that number dramatically goes down, regular people will suffer.
This view is always super weird to me; aside from ~2008-2020, the current interest rates should still be considered pretty reasonable. And remember that rates were also on their way up pre-pandemic, but got slammed back down to 0% once the pandemic hit. (I mention this bit to counter the belief among many that our current rate situation is solely due to poor management of pandemic response.)
And -- this is certainly a bit of a gamble -- but I know people who have taken on higher rate mortgages now with the expectation they'll be able to refinance within a few years at a lower rate. That's certainly more expensive even in the meantime than having a lower-rate loan to start, and there's always the risk that rates don't actually come down, but it's an option for many (admittedly not all).
You obviously didn't live through it, or you wouldn't be spouting such offensive, naive nonsense. How many working class families do you know that can afford to buy economically significant amounts of T-bills, as opposed to, you know, eating, or paying for car repairs, or kid's back to school supplies. When is the last time you saw a bank paying anywhere close to the prime rate on savings accounts, which is all a working class family typically has access to. (as opposed to pocketing the difference as profit, thank you very much)
All of the online banks pay pretty close to 4 week T-bill rates, maybe 1% off. Chase/etc are only worth keeping a small amount in, everything else should be transferred to Ally/Marcus/Fidelity Cash Management/Vanguard/etc.
I absolutely did live through it. I also watched my grandfather who had a 7th grade education double his money twice through the insanely technical investment strategy of...wait for it...driving down to the bank to renew CDs. I'd entertain an explanation of what's either offensive or naive about that.
The trend is basically back to where it would be if you just extrapolated 2019.
You can even see the origin of the "vibe-session" here, things got pretty good for a lot of people in the money shower of the pandemic stimulus combined with low "stay at home" spending. Its the return to normal that has people spun with "the economy sucks".
It's always fun to see a graph like this and realize that (aside from the pandemic), that the last time people were significantly better off by this metric was 30 years ago, while many of us were children, or not even born yet. And yet everyone is complaining that things are so bad, and that this is a new phenomenon.
In an economy where you can easily deliver packages or drive uber, there will always be close to zero unemployment. This number stopped making sense a few years ago.
> strong consumer spending
In a high inflation environment, one has to consume "strongly" just to maintain the same standards of living.
> average income increasing at a rate higher than inflation
If you underreport inflation, then the average income will increase faster. But even if not, average is not what you and I receive, and it is determined by some people making lots of money while others have stagnating salaries.
> majority is doing better than most years
You cannot prove this from the above points. Average income doesn't mean that the majority is doing better. Something called inequality will not allow that to happen.
> They might not feel that way though
That is pop psychology at its worst. Nobody cares about feelings, you just need to look at the numbers in a critical way.
> In a high inflation environment, one has to consume "strongly" just to maintain the same standards of living.
Strong disagree: you can't spend what you don't have (or can't borrow), so spending is a vital signal.
There's a natural experiment that just happened that refutes your argument: after Covid, most of the world had high inflation (with some actual recessions), but the US did better than everyone else, with stronger American consumer spending helping the recovery (leading to more jobs to service the strong demand). Your argument falls apart when you consider why UK or French consumers consume as "strongly" to maintain their lifestyles.
> If you underreport inflation, then the average income will increase faster.
There's no one way to calculate inflation (since this depends on how you choose your 'basket'). But like I said, based on vibes, everything is awful.
> Your argument falls apart when you consider why UK or French consumers consume as "strongly" to maintain their lifestyles
They don't have access to cheap credit as the US consumer has, and being smarter than Americans they refrain from going into more debt.
> There's no one way to calculate inflation
Yes, there is, it is just different for lower income earners. Economists just don't want to measure the impact on people who have to spend large part of their salaries on rents, health care, cars, all things with prices that increase higher than official inflation.
Did you purposely leave out my parenthetical to use it as a dunk? Borrowers are not dumb (and the amount of debt is also a useful signal on economic health by the way, and right now it's not terrible; definitely not in recession territory)
> Yes, there is, it is just different for lower income earners
Well, don't leave me hanging - what's the one way to calculate inflation then? Which specific mix of goods and services (and locations) should be used as a national benchmark in THE inflation equation?
I don't disagree with your overall point, but I do think pre-2008-crash mortgage lending could be a counterexample. Certainly there were a lot of shenanigans going on, but ultimately borrowers made the -- IMO dumb -- choice to stretch themselves far too thin, and buy bigger and more expensive houses than they truly could afford.
Perhaps everyone today has learned from history, though. (But I wouldn't bet on it.)
Any given borrower, on their own, is unlikely to be dumb.
The market can be irrational far longer than they can be solvent, however, and not being ‘dumb’ can make that worse.
Pre’08, you had to be dumb as a borrower in 90% of markets, or you’d be flat out unable to buy anything. As to if continuing to buy in those conditions was dumb or not, is mostly something that can only be judged retroactively.
Sure, you can borrow more, but that doesn't seem to be what's happening, at least not contrary to long-term trends. Credit card debt is going up[0], but at a rate that looks exactly like (or perhaps slightly lower than) what it would be if you just extrapolated from 2019 and ignored the pandemic (and recent data in the last year shows that growth in that number may be slowing a little). Debt servicing as a percent of disposable income looks pretty good too[1]; much lower than the absurdity that was the 00s, and on par with or better than pre-pandemic 10s. You have to go back to the early 90s to get much better than that, but if you keep going back, it gets much worse.
Certainly these are just two metrics among many that people could look at, but if we're talking about consumer spending being strong, it does not appear to be because people are borrowing more today than long-established trends would expect. (I do think it's concerning that consumer debt has more or less only gone up over time, but that's a separate discussion.)
> In an economy where you can easily deliver packages or drive uber, there will always be close to zero unemployment. This number stopped making sense a few years ago.
Ah I see... your entire worldview is predicated on just assuming different facts than what your interlocutors are. Feel free to substantiate this rather fundamental claim.
> That is pop psychology at its worst. Nobody cares about feelings, you just need to look at the numbers in a critical way.
"Look at the numbers in a critical way" is an interesting framing of "make shit up."
People seemed to vote on how they felt not what these numbers said. So the vibes seem more valid than the stats at least on their real world impact in many ways.
Continuing to yell at people about the numbers doesn't seem to be an effective strategy, maybe try a different approach?
If this belief is strong enough, they would act on it. The fact that they act means the economy starts rolling, and produce the type of thriving that they come to believe! Ala, a self-fulfilling prophesy.
Therefore, it's important to find out why people believe things, despite being contrary to empirical evidence.
Right. I was born in Europe and am still struggling with North American cultural assumption that "place to live" == "own property".
Back to the original post I think there are several statistics that apply to different geographical areas or demographics in the same post, leading us to conclusion that half the continent is out on the street, and demonstrating risk of back of the napkin calculations on policy decisions, even if we assume good will and honest effort :-/
You have to understand unlike in Europe. We have no safety net. Most peoples whole savings is their home. So owning your home is a big part of having something to retire on and pay bills.
Actually, very common in some European countries as well.
In the Netherlands, you aren’t taxed on your primary residence, but all other wealth has an approximately 2% annual wealth tax. This makes it challenging to accumulate wealth through any means other than a primary residence, which was many of my coworkers’ primary way of saving.
Granted, they also have mandatory pensions, which can give you a good income in retirement, but that’s different than wealth accumulation
Oh I've lived in Canada for 25 years now and I see that around me... It just isn't something I've embraced though. There's a almost religious faith that houses can only go up, and I've lived through enough interesting times and places not to believe it for a moment (as has anybody over 60 on Canada as well).
Bullshit. American unemployment pays consdeirably more than UK unemployment. Throw on food stamps and housing assisitance on there, and the US might still be below the more generous European countries, but you definitely have a safety net.
> unlike in Europe... So owning your home is a big part of having something to retire on and pay bills
So what, like the UK? And Ireland? And argaubly all of Europe east of Germany and in Scandinaivia, all places where home ownership is comparable or greater than the US?
Unemployment is different in every state and is pretty short. I know in NJ its only for 26 weeks. Plus this isn't used for retirement. Have you ever tried getting food stamps or housing. Lets just say its not very easy. Also its setup so that as soon as you start getting a little ahead its taken away. So you end up right back where you started.
I think your number is a bit high. Looking at a few calculators, even if I push the property tax & insurance numbers quite a bit higher than I think is credible, I can't get the numbers past $3800/mo or so. More reasonable seems to be around $3400/mo. So that's $40k-$46k/yr, well below that overinflated $70k-$100k figure quoted upthread.
Also your math is off: even at your $4200/mo estimate, that's $50,400/yr, nowhere near your "not too far off" $60k. And that puts it at 30%-50% below the $70k-$100k range, which makes that range laughably inaccurate.
> Apartment in a moderate-cost area is about $70,000-$100,000/year.
That doesn't even pass a minimum-effort sniff test. I live in one of the most expensive cities in the country, and I'm in your quoted range for a 4-bedroom condo.
My sibling lives in a more affordable, but desirable, area and spends a little less than half of what I spend a year, for a single-family home with a good-sized yard that's more than twice the size of my condo. (And they bought last year when interest rates were high.)
Your own stats don't even make sense. You claim it costs $70k-$100k/yr for housing, but that to afford a home, a family needs to make $107k/yr? That doesn't make sense. If housing costs that much, that family needs to make north of $200k/yr to afford it.
You’re forgetting lots of people rent. Lots of people can’t afford to own, and almost all of them rent. The other factor is dual, or even 3+ incomes in families living together.
lots of people that can afford to buy many houses rent because it makes very little financial sense (for those who understand slightly-above-basic-math) to own a house in the US
I wish more people in the US believed that, it'd make my retirement planning so much easier. Incidentally if that statement were even vaguely accurate private equity would most likely not find residential real estate an attractive investment, which they most certainly do. All of my real estate has doubled in value over the last 5 years and through the magic of depreciation I'm on track to get back more in taxes over a 20 year span than the original purchase price of my investment property. Home ownership: shit makes perfect sense to me.
That thinking is very location-dependent. Cities and counties across the US vary wildly on the ratio of cost-to-rent to cost-to-own, and that number is sometimes less than and sometimes greater than 1, depending on where you are.
A big problem with renting is the capriciousness of the rental market in many places, which you can't solve with "basic math". That plus the availability of the 30-year fixed-rate mortgage in the US means that rental costs can be much more unpredictable than buying. Some people will -- very reasonably -- pay a bit more for peace of mind. And that's before we get into the topic of no-fault evictions, and how that can wreck a family's housing situation, sometimes with not too much notice.
Renter protections in the US are not great compared to in many other places, and that can make renting unpredictable and more "costly" in other ways.
That's not a measure of an economy though. Housing and especially dense affordable housing isn't widely built in the US and the supply is artificially constrained, usually by NIMBY politics.
In some form or fashion yes. Theres a reason why there are so many homeless tent camps everywhere. These people are not choosing to be homeless. They just can't afford a place. But remember a lot of them still have jobs. At Walmart, Amazon Warehouses, etc.
Can you clarify? Because I'd find it hard to believe that half of Americans are literally homeless. It might make more sense if you're referring to home-owners.
Pretty sure half the US isn't living in tents. I feel like I'd notice that, especially living in a city with a larger-than-average homeless population.
I agree that homelessness is a problem, but you appear to be arguing in bad faith. If 50% of the US actually "can't afford housing", we'd have $170M people living in tents, and that is demonstrably not the case.
I would believe a claim that states that a large portion (maybe 50%, maybe more, maybe less) of the country are facing financial insecurity that makes them feel like their housing situation is precarious. But that wasn't the claim put forth upthread.
What we can't see is the amount of people that are living with roommates and in toxic situations they'd love to exit but are unable to due to a lack of housing options and a lack of money.
Can you provide the question you asked ChatGPT? Because the number is wildly inaccurate. I own a home and I pay less than $15,000 a year. Tax and maintenance. In a high cost of living area.
HN love to look down on ChatGPT, yet are willing to hide behind it when it’s convenient.
> Family needs to make $107,700 a year to own a home.
I don't see how that computes. The internet suggests that, on the high end, a family will spend around $10,000 on home repairs, maintenance, and insurance, which is in line with my experience. So almost $100,000 in yearly property taxes for a typical family home? Not a chance.
I suspect you are thinking of buying a home rather than owning a home, but homes are bought with wealth, not income, so an income figure here doesn't make much sense if that is, in fact, what you are thinking of. If that is not what you are thinking of, I, for one, don't understand what you are trying to say. This figure doesn't seem to have any applicability.
I think you're being overly pedantic in your concern for the difference between "buy" and "own".
Most people in the US will say they own their home even if they have a significant mortgage against it. You can be upset that people are not using the word correctly, but that's kinda pointless.
If you keep posting unsubstantive and/or flamebait comments, we're going to have to ban you. We asked you this just recently (https://news.ycombinator.com/item?id=41604621), and you've unfortunately continued to break the site guidelines.
What do you mean by this? In the US, over 60% of people have a mortgage [1], which almost always means it's coming from some percentage of their income. When you get a home loan, the banks only real concern is your credit score and income. Anecdotal, but I don't know a single person that doesn't have their monthly mortgage scaled to their income, since I don't know a single person under 60 without a mortgage that's coming from their income.
> In the US, over 60% of people have a mortgage [1]
A mortgage is the rental of wealth. It is independent of the home. But, even if we want to conflate them for the sake of discussion, it is still dependent on many variables that does not round to a single number. The rent on a $20,000 mortgage is quite different to the rent on a $200,000 mortgage. Two buyers buying identical homes for identical prices, but who come with different amounts of wealth, will have very different rental payments. A single number is meaningless, even if we assume 100% of people are paying mortgage rent.
But, as you point out, ~40% of the people don't have a mortgage, and therefore have no such cost to begin with. The idea that they also need $107K doesn't make any sense.
They're presumably saying that's the income needed to service the mortgage (where what most people call the mortgage payment includes escrows for insurance and property taxes, on top of the literally mortgage principal and interest components).
That still feels like a fair over-estimated amount to me, but I think that's what they were getting at. (It could also be a figure of the amount needed to qualify for a mortgage on a place with some amount of downpayment.)
It could be an overestimate, it could be an underestimate, or for a specific family buying a specific home it may be spot on. It is kind of like saying that it costs $5,000 to build a software application. That statement is true, but meaningless.
I fail to see how it's "misleading". U3 doesn't include people who don't want a job. That seems... fine? If you don't want a job, and don't have a job, why should you be factored into the health of the labor market? Isn't it more misleading to lump people who want a job but can't find a job, with people who don't want a job and aren't working?
>Source: Bankrate's Wage To Inflation Index using the Department of Labor's employment cost index (ECI) and consumer price index (CPI)
Using BLS's weekly wage data adjusted by CPI gets the opposite conclusion, so my guess is that there's something funky going on with the employment cost index. For one, it includes benefits, so if health insurance costs go down, then "average income" (as computed by bankrate's index) will go down, even if your take-home is the same. At best, the only thing you can conclude from that is "employers' spending on employees is rising slower than inflation", which is slightly different than "employees' incomes are rising slower than inflation".
Well the facts don't care about your feelings. A lot of people seem to want to feel bad about the economy and are searching high and low for reasons to feel that way.
is your buying power the same as it was in 2020? did your wages increase since then to match what it was in 2020? because I know mine didn't and I've not heard of anyone, or seen any data, that says otherwise.
My wages have increased 30% since 2020, exceeding the 22% inflation I got from that calculator.
The data shows that far more people are in my situation than in your situation. Do I need to spell it out for you? People are acting like they are doing better in the numbers, responding on polls that they are doing better, but they all think everyone else is doing bad or the economy in general is doing bad.
Can you imagine how bad it would be if our actual economy did as poorly as the rest of the world? We went through a mismanaged global pandemic, and came out smelling roses when it comes to the US's economy. We are in a fantastic position for world domination. China and Europe shat the bed. India is up and coming and may be an economic rival, but they are not there yet.
If you think this economy is bad, try going back to 2008. To 1992.
So please, yes, spell it out for me. The facts do not care about your feelings, no matter how strongly you have your feelings, or who told you to have the feelings and to feel helpless.
Looking at the numbers: low unemployment, strong consumer spending, average income increasing at a rate higher than inflation, I'd say the majority is doing better than most years. They might not feel that way though, and we've been in a continuous vibes-cession since COVID.