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A deep and enduring “vibecession” – Partisan differences are increasingly dominating perceptions of the economy.
By almost every metric, the US economy is doing quite well at the moment. There are many ways to evaluate economic vitality. The most obvious is the headline unemployment rate, which was used throughout the Great Recession to monitor the (slow) recovery. Today, though, unemployment is hovering near record lows at <4%.
Beyond this, there are somewhat nerdier, more technical measurements that still capture important aspects of the economy. Things like inflation, GDP growth, and the stock market. All of these indicators are somewhere between “good” and “great”. Inflation has come way down and is now around 3.7%. Core inflation, a better measurement of long-term inflation that excludes volatile commodities like gas prices, is even lower at around 2.5%, essentially hitting the Fed’s 2% target. GDP growth is surprisingly high for Q3 at 4.9%. The stock market is also doing fairly well, with the S&P500 being less than 10% off its all-time high at the end of 2021 and being well-above the pre-COVID high in Jan 2020.
Drilling even deeper, at this point you start to get the indicators people and the media can “fish” for in order to find bad news. Things like median wage growth, wealth inequality, and prime-age labor participation rate. The thinking with these metrics is that even if the more commonly cited stats are doing well, they might not paint a full picture. For instance, if the economy is growing but the rich are eating all the gains, then things like wage growth and inequality can show how most people aren’t benefitting. Likewise, if the unemployment rate has fallen because people have become discouraged and just don’t bother looking for work any more, then labor participation can show what’s really going on. The steelman of these metrics is that they can be helpful in painting a fuller picture, although in practice I’ve often only seen them used when people are willing to use motivated reasoning to paint the economy as underperforming (e.g. politicians, doomers, or the media just trying to create a story). That said, even by these metrics the US economy is doing well. Median wage growth is very high and is well-above inflation. Regular Americans are getting richer, and wealth inequality has fallen.. The prime age employment rate is also near record highs.
In spite of all of this though, many peoples’ opinions of the economy remain in the dumps. The consumer sentiment index has recovered only slightly from its record low a few months ago, but is still barely better than during the worst parts of the Great Recession. What gives? Well, there’s quite a bit of evidence that it’s just partisan emotional expression, i.e. “vibes”. There’s plenty of data showing that Americans tend to rate the national economy as being much worse than their own personal financial circumstances. Kevin Drum has some evidence that this national-personal split is mostly being driven by Republicans. 71% of Democrats and 57% of Republicans say the economy is doing well in terms of their personal situation. But in terms of the nation as whole, 58% of Democrats and just 5% (!!!) of Republicans say the economy is doing well on a national scale. So you have this goofy scenario where Republicans across the country say things are going well for them individually, but as a collective things must simply disastrous. Where is this “disaster” occurring? “Well, not here, but it’s surely happening somewhere”. The 5% mark is particularly interesting because it perfectly matches Republican’s approval rating of Biden. In other words, it seems like asking people how well the economy is doing is just a proxy for “what do you think of the current sitting president”. I’d doubt the numbers would correlate this perfectly all the time, but there’d still be a significant relationship. Whichever party doesn’t control the White House will see the economy in much more pessimistic terms.
Currently this is just applied to Republicans being pessimistic, but it’s almost certainly symmetrical. When Republicans eventually take back control of the presidency, it’s not hard to predict that Democrats will suddenly think the sky is falling in economic terms.
The S&P500 is at the same level it was in early 2021. Inflation has increased prices significantly since then. The real value of my life savings has decreased by that amount. What part of this is partisan blindness on my part?
Oh, and if my capital gains ever do make up for the inflation, I'll be taxed on the purely nominal increase, further reducing the real value of my life savings.
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I'm going to rephrase the linked stats to present another hypothesis:
57% of Republicans say that the economy is doing well in terms of their personal situation. 27% of Republicans say that their personal situation is "Not so Good", and 14% (double the Democrats 7%) say that their personal situation is "Poor."
Assuming that Democrats tend to be closer friends with other Democrats, and Republicans with other Republicans, a Republican is more likely to be close friends with someone who describes their personal financial situation as "Poor." So even a Republican who might state that they themselves are well off might believe that the economy is doing badly in good faith.
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I think citing the “lived experience” as false in this economy is a vast simplification. It depends who you are in this economy.
For retirees living off investments this is full-stop a terrible economy for them. All their asset prices have crashed due to high rates especially if they weren’t loaded in magnificent 7 stocks.
If you are in family formation mode this is a terrible economy for you. Housing costs are thru the roof because of Bidenomics. Both because the infrastructure bill raised the costs of building by pulling workers to government projects and because high interest rates (and high real rates) has crushed home affordability.
I think you are looking at net stats. A lot like the stock market this year. If you owned big cap tech your feeling great. If you don’t own that stuff it’s a depression. If you average them all up it’s ok. But the typical person isn’t the average of results. Hence this economy really is bad for a lot of people.
You are consuming averages (economy ok in a lot of ways) with a lot of variance in personal situations.
Agreed, and this is a point that I've been trying to make by repeatedly posting excerpts from that one article about the wage/salary/investment/welfare classes.
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This is an excellent point
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Thanks for this post. It made me stop and think about why I'm so pessimistic on the economy, and I think that my pessimism is, at best, only partially warranted. Here are my thoughts on why I think pessimism is still warranted, though not as doomy as previously.
Trust in elite institutions is deservedly low. The pandemic blew up any notion that global institutions were remotely concerned about the public weal when the well-being of PMC/Blue Tribe is at stake. The media and public watchdog groups are all-in on team Blue, so my expectation is that any information that looks bad for Blue will be suppressed if possible, excused if not possible. Any information that trends well for team Blue will be given more weight than it is actually due. If there are black swans out there right now, we're intentionally trying not to notice them.
The pandemic flipped the switch on remote work being preferable for many jobs. For the industries I'm privy to, this largely meant divesting from expensive investments in blue cities and seeking out qualified employees in lower cost markets. This was a substantial increase in the earning potential in more depressed parts of the country at the cost of eliminating a lot of jobs in more expensive cities. So, it's a net increase in wages across the country, but still incredibly disruptive to the workforce left behind in the big cities.
This is less analytical, but still real. The housing crisis took place in 2006-2007 when a wave of ARMs kicked in defaults went through the roof. The smartest banks, with the help of the rating agencies, did everything they could to delay the crash in order to divest from the toxic assets before the crash landed, which ended up putting off the crash until mid-2008.
We blew up the economy from 2020-2021, deficit financing massively distortionary unemployment benefits for almost 18 months, losing track of hundreds of billions of dollars in fraudulent loans, and, thus far, we haven't really paid much of a price. Sure, the inflation figures and supply chain disruptions in the aftermath are annoying, but my gut says that the piper is yet to be paid, and the longer we put it off, the worse it will be.
Consider the current residential real estate market. The high interest rates are keeping people from selling their current homes due to being unable to afford to afford a new 8.7% mortgage payment under current market rates. That means there is a constantly increasing backlog of inventory that is just waiting for a drop in interest rates in order to sell. Once that rate drop comes, a glut of new inventory will drive prices down. Much of the median increase in net worth is driven by the inflated real estate market, and that will suddenly evaporate while the current highs in consumer debt will remain, and people who are buying currently will be underwater. My cynical side expects to see this in early 2025.
I really hope that you're right and I'm wrong.
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I'm just going to stop you right there and say that I'm reasonably certain that the metrics are being gamed if not completely fabricated.
Actual inflation in terms of what a 100 bucks buys you today versus would have bought you in October of '22 is easily in the double digits and I have the receipts. That thread is from a year ago (almost to the day) and looking back on it I'm feeling pretty well vindicated.
Can you summarize what your receipts say for those who don't want to read a 20 comment long discussion?
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Dude, I don't want to hear it.
I didn't bring it up, someone else did, and the crux of the disagreement was never about "the data" it was about the predictions being made.
No, i argued that observed trends contradicted the official forcasts, when asked to elaborate i did, and then you replied by insinuating that i was an idiot for privileging "low-iq heuristics" over the rigorous analysis experts such as yourself.
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I have receipts, too (well, I have credit card statements). Here is what they show:
Morning coffee and bagel in Oct 2022: $7.27 Morning coffee and bagel at same place this morning: $7.54. So, up 3.7%, almost exactly what the CPI says
Movie ticket in Oct 2022: $18 Movie ticket last week: $18
Tandoori chicken and rice at my local Indian restaurant in Oct 2022: $15 Tandoori chicken and rice at my local Indian restaurant last week $15
Monthly subway pass in Oct 2022: $127 Monthly subway pass this month: 132. So. up 3.9 percent
Groceries are hard to compare using credit card statements because I don't know that I buy the exact same things, but I know that I have paid $14.99/lb for farmed salmon at my local store for as long as I remember.
So, once again, this shows that individual anecdotes are not useful.
The problem is people have memories longer than 1 year, and it really wasn't that long ago when the coffee and bagel were $5. The pace of change may have slowed recently, but it's still not long enough ago that people aren't still pissed off about it.
That is no doubt true. but that s not the point. OP was arguing that the actual pace of inflation over the last year has been higher than that stated in official inflation statistics, and I was simply pointing out that his personal expenditures are not particularly valid data points upon which to base that claim. Whether people are still pissed off is a completely different issue.
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I'll be the first in line to tell you that CPI is fake and gay, but if you have receipts let's do a little audit...
National Gas prices are $3.478 as of today, though I should note that my state has gas prices of about $3.70 by AAA numbers and I paid $3.29 at the grocery store this morning, so your mileage may vary.
Target Brand Boneless and Skinless Chicken Breast is $2.99 at my local Target; though I suppose price may vary somewhat by region so I checked and it is also $2.99 in Brooklyn. Here is frozen, which is a little pricier online at a little over $3 a pound, which surprises me as I normally figure frozen is cheaper per pound.
As for the "hardwood 2x4x12" I'm not quite sure what to price that at. What hardwood are we talking about exactly? I've never in my life bought a maple or cherry or oak 2x4 longer than 6ft, since I'd be using it for furniture or cabinets. Prime Fir 2x4x12, the typical item for framing and construction, is a whopping $7.07 at Lowes, less than half the price it was at its peak a couple years back. I will note that for rarer woods (I recently needed some Cedar for window sills), the problem isn't so much price as availability, I have to waste time calling around until I find someone who has something that maybe might work. And the quality at a lot of lumber yards has gone down, I'm rejecting more boards than I used to, and finding clear 1x6 is tougher than it used to be. But the price jumps have mostly come down to normal on commodity lumber that most people use for construction and home improvement.
It almost seems like the inflation you're talking about was, in fact...transitory?
Now Romex wire prices are still destructively high, to the point where they lock up the wire at Home Depot and I have to spend twenty minutes finding an employee with the key. Which points to the one area where inflation is still destructively high in my area: wages. Starting salaries at local big box stores and warehouses have doubled, and they aren't coming down fast. Construction companies are reduced to putting up billboards for labor jobs. Even union manufacturers, once a tough ticket to get, are advertising job fairs.
But even the classic cigar smoking mustache twirling capitalist can't possibly sit here and complain that the price of semi-skilled labor is too high and that's a national tragedy.
Unless you're living in Alaska or whatever and prices are uber weird there, I'm going to have to contest your claim that inflation on Chicken, Gasoline, and staple construction lumber has been >10% in the past year.
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It's relevant to note that even how inflation in the US calculates inflation is subject to regular change- and thus regular selection bias opportunities- as what is being compared changes over time.
Also relevant is how the selection of categories can be used to include- or exclude- relevant data to make certain category measurements more or less impressive for administration political purposes. Unemployment is a classic one, as the unemployment rate that gets fielded by political actors isn't actually the rate of unemployed adults in the population.
What's the alternative to changing the basket of goods as consumer's change their behaviour. Or should we still have a Marconi Wireless and pipe tobacco in the basket?
The unemployment thing doesn't matter as long as you compare like with like. The various unemployment numbers tend to track each other very closely.
https://fred.stlouisfed.org/graph/?g=1aPBr
Why do you think the answer to your question matters to the point the question is meant to rebut?
The lack of superior alternatives doesn't mean that current items are good. The answer can simply be 'they're both compromised.' There is no obligation- or even reason to expect- valid and bias-free data. It can all be unreliable.
(The alternative, by the way, is to execute but-for tracking so that people can see what the difference metrics would be but-for the substitutions. This means maintaining all models in parallel, with clearly delineated divergence points from old models and new models, such that models can be clearly monitored for divergence to catch points where substitution effects account for obvious differences in ratings. If you want to demonstrate that products are not simply being selected for more favorable comparisons, you must be able to compare it to what they diverged from.)
The point of the unemployment thing is that like isn't being compared to like.
Hence why the motte-claim is 'social unemployment is low!', and the bailey-caveat is 'if we ignore a lot of society.' Society, and society-bar-much-of-society, are not like things, even when they are purposely portrayed as such.
And this goes without various period changes to categorization counting that comes and go with administrations, at which point categorical definition differences are conflated with smuggled insinuations of continuity, which is a not-uncommon way for political actors to imply systemic changes when the primary change in a system is the measurment.
It is across time. If u-2 unemployment decreases, even if you think u-4 or u-6 should be the more relevant number, that still reflects an improvement in the economy.
Any specific evidence for this happening?
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Maybe this has already been thought up, and maybe it's already done but there should be multiple baskets of goods, and they get updated on a lag. With all baskets needing to be reconciled.
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Four years ago, on the old subreddit, someone under the name 'phoneosaur' made the argument that the similarity of the current US political landscape to the Soviet post-Brezhnev gerontocracy is unmistakable. It seems to apply to the economic landscape as well.
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I know so little about economics that I probably shouldn't even bother replying. But I guess from what I see "on the ground", the thing that bothers me is that prices shot up at a rate that I'm pretty sure I've never before seen cumulatively in all of my prior life experience, and it did this all just in about 2 years. And meanwhile, I haven't seen wages of anyone I know grow to match it. In fact, I (someone who's moderately high up in big tech, who under most circumstances should probably expect to be doing better than most people both in and out of my industry) am actually making less now than I was before the inflation, not even factoring in the fact that my money's worth less. I find that really unsettling.
Why would you expect to have your wages grow faster than others just because you're in big tech or just because you're high up? If anything I would expect the opposite, because of reversion to the mean and because big tech specifically has had a massive reduction in demand, totally unlike most other industries, in particular those than employ low skilled workers, which have seen the largest increase in wages.
Well, if that's the case, that industries that employee low skilled workers have seen the largest growth in wages, while highly skilled workers haven't seen it, then that's enough to cause significant confusion, at least. The kind of confusion that could cause many many people to think something is terribly wrong, regardless of whether or not it actually is. When have we ever seen that before? I wouldn't have expected that under most circumstances, and I'm still not sure I understand why that would be the case in this situation. In just about all previous situations for the past 3 decades, big tech has been at the forefront of wage growth.
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I bought my house in 2018 and refinanced in 2021. If I were working the same job I was then - today - I could not afford to buy the house I now occupy. Wouldn't even be close to qualifying.
My fellow line workers are in far more precarious financial situations than I am. It is not their fault. If the wage-to-property-value ratios were restored to pre-pandemic levels, I'd be inclined to agree with you. But they are not, so I cannot.
Isn't this largely a regional thing, though, since housing markets in different areas go through regular bubble-and-burst cycles?
I couldn't have bought the house I have now 4 years after or 4 years before I bought it, because the only way I was able to buy it was sitting on a down payment for years until the local market went bust for a 16-month period.
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I smell statistical bullshit.
My normal standard of living has taken a noticeable if not disastrous turn. My pay is roughly the same, my costs are a third higher to double on most normal expenses (energy, groceries etc.). My rent is up 30%, the value of my savings is down 20%, and the cost of buying a house is up 50%.
Three years ago I had a lot more disposable income. Now, all that might fit fine within the "economy is doing fine" narrative, but it doesn't feel fine to me. What I hear from posts like this is "economic metrics are bullshit statistical lies". I am noticeably poorer today than I was in 2020. All the statistics in the world aren't going to change that.
Most people have gotten raises, so if your pay is the same, of course your standard of living will have declined compared to most people. Also, most people's savings have gone up, not down. So of course your bad luck is making you worse off compared to most people. These facts just show that you've been unlucky. They don't say anything about how the average person is doing.
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If you are doing worse, then you seem to be in the minority. And see here
Perhaps your personal situation is not representative of the norm, and that the cited data, rather than being "statistical bullshit," more accurately describes the norm than does your anecdote.
Your sources are a yougov poll which says that people are financially coping... slightly less well as they were at the the worst point of covid disruption, and a low effort piece of blogspam with no data.
The same writer also has a piece with the exact opposite sentiment, because in that one she was pushing "struggling women need another 16 billion in government funding" rather than "dumb republicans are blinded to how amazing the economy is doing"
It is ridiculously and deliberately obnoxious.
OP was claiming that his personal finances are far worse than three years ago,. The poll indeed indicates that that is a minority view, as I said.
And, isn’t "slightly worse" exactly how you would expect people would feel if inflation were precisely what the govt says it is?
There is a link to a press release by the pollster in the blog.
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I take it you are earning more than you were three years ago?
I think perhaps you are missing the point.
Why didn't you say "Yes, but I think perhaps you are missing the point."? Is it because you are not earning more than you were three years ago?
No, it is because the point is that one person's income is not valid evidence, be it him, me, you, or someone else. Like I said, you are missing the point. As it happens, I quit the full time job I had three years ago because it was boring, and I am now working freelance, with fewer hours but at a higher hourly rate. Do you see how it is difficult to draw inferences about the norm from my personal experience?
Perhaps I am not trying to draw inferences about the norm. Perhaps the only thing that interests me about this topic is how perception of the economy is affected by personal circumstances.
Great! But the comment I was referring to was specifically about the accuracy of the official statistics
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Perhaps. That's one option.
Another is that economics is staffed by the same sort of experts who run our health care systems, legal systems and educational systems. They went to the same schools, drank the same koolaid, attend the same parties and conferences, belong to the same socioeconomic strata. Maybe Gell-Mann Amnesia is creeping up on you.
Anecdote is small data, but it's the only data I can be sure isn't horseshit.
But the problem is that no one else can know that.
Yeah, it sucks when your sense-making institutions don't have any more credibility than Reddit randos. An appeal to authority would go down really well about now.
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except people in JTarrou situation, which I assume is a bigger crowd than the one composed of economic experts.
?? Surely you don’t believe that the government income data is based on an analysis of the income of economic experts.
considering how they calculate the cost of shelter, it wouldn't surprise me.
"Hey Gates! How much would you say would you increase the rent in your mansion if you were to rent it out"
"Dunno, a three fiddly?"
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A lens I've found extremely useful for understanding this conflict is the one John Michael Greer proposes in this article from 2016 https://www.resilience.org/stories/2016-01-21/donald-trump-and-the-politics-of-resentment/
This isn't true though. In 1966, the average person earned less than what is today minimum wage. You could support a family on that income today too, but you'd have to accept a big hit to your quality of life.
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And as such, are overwhelmingly to blame for the current situation in the first place.
Why anyone would trust their numbers, especially those that say "actually, we didn't fuck up, and you're just imagining it", is a mystery.
Because even small deviations of the official inflation or growth rates would become obvious over the long run, considering they are exponential. They would also show up in things like the exchange rate and interest rates. People who doubt the official statistics never sanity check themselves and consider what the world would look like if their skepticism was correct.
Yeah, that happened. It's incredibly obvious, many people say it's incredibly obvious, and the experts just insist that's wrong anyway. People that say that they have personally experienced much sharper increases in prices than the official figures capture in the Covid Helicopter Money era are told that they just have to check the official figures to see that they're wrong. If you say it should be obvious if they're cooking the books, other people say that it is obvious, and you reply that this isn't what the books say, we're at an impasse.
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Over the long run. They can hide the ball until someone they don't like can take the blame for it.
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This is not only a non-falsifiable claim to dispute claims of skepticism with no limiting factors (it applies to all disputes over government claims if you do/cann not calculate alternatives), but it rests on the foundation being actualized- that the deviations between the official inflation or growth rate and reality is what is being claimed to be increasingly obvious by appearance.
Functionally, you've just said 'if they were lying, people would be noticing and saying something' to people who are saying 'I've noticed things that make me think they're lying.'
Seconded and endorsed.
Furthermore, this is happening in the context of multiple instances where in the expert class has been caught lying or otherwise trying to manipulate the information flow for "the public good" regarding a great many things. Off the top of my head; Hilary's Emails, "Russian Collusion", Jeoffrey Epstein, all the shit during the pandemic about the effectiveness vs non-effectiveness of masks, Fauci's blatantly partisan flip-flopping on public gatherings, the lab leak theory, the effectiveness/non-effectiveness of covid vaccines vs natural immunity, Hunter Biden's Laptop, Musk's revelation of Twitter's incestuous relationship with the CIA and DHS, Transwomen in sports... you get the picture.
As I argued in a response to Scott's essay on "bounded distrust", I believe he's got the issue exactly backwards. The moral onus is not on the plebs/normies class to trust the experts. The moral onus is on the experts to be trustworthy, and what we are looking at is mounting evidence that most of them aren't.
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You may well be poorer than you were three years ago. Most people are not - incidentally, much, certainly more than normal, of the wage growth of the recent period has gone to lower income workers, which perhaps indicates why this discourse of a bad economy is tolerated despite the evidence to the contrary. Not sure what else to tell you is that, surprisingly, number continue to the best means of measuring things.
There is no way anyone on this forum would tolerate for a second this kind of 'lived experience' rhetoric if it was about, say, racism.
Go ahead and not tolerate it, Harold.
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Actually, there's a decent bit of evidence behind the claim that statistics aren't accurately measuring what's happening to people in their actual lives. What are family formation rates looking like? Education costs and student debt? Property/housing costs? Food quality/price shifts? Giant tent-cities full of homeless people? I mean, I'm not a trained economist, but the presence of hordes of homeless drug addicts in such huge numbers that famous cities have problems with street lamps collapsing due to so many homeless people urinating on them don't seem to me like an indication of a healthy economy. Hell, the most straightforward measure of economic activity, energy usage per capita, hasn't recovered either.
Would you be willing to stand behind the claim that official measures of inflation, cost-of-living etc accurately reflect what's happening in the economy as opposed to being massaged and shaped for political messaging purposes? My personal contention is that while costs in a lot of areas have been reduced, many of the things people consider essential for a satisfying life have been pulled out of reach for vast numbers of people, and various statistical shell-games have been played to obscure this.
How are homeless drug addicts evidence that the government is lying about inflation? How is a lack of family formation evidence of that?
Successful economies generally don't have large populations of homeless drug users terrorising major cities and rendering vast swathes of infrastructure/real-estate effectively worthless. At the same time, family formation is an extremely important life-goal for most people and one that's heavily tied to economic success (i.e. being able to support a home and raise children). It isn't necessarily a sign that the government is directly lying about inflation, but if the government is saying that the economy is in an extremely healthy state, these phenomena make the case that the government is being deceptive in some way. Maybe they're telling the truth about inflation but hiding the shortfalls elsewhere - I'd need to make this a full-time job to really get to the bottom of it from here.
Successful economies often have large populations of homeless drug users in their major cities. In fact, the wealth of these countries probably why so many people can afford to be homeless drug users. If we were poorer, there wouldn't be enough charity or social welfare to support them.
There is a very strong negative correlation between wealth and fertility on a societal level. In developed countries, the fertility rate has steadily fallen as we've gotten richer over the last 150 years. In Africa, people clearly living in extreme poverty have several times the number of children as we do. The problem is not that people cannot afford to have children.
Often? I was unaware that the presence of giant groups of homeless indigents was a positive sign for an economy. I'm not going to try and argue on this point, but I'd like to see some more evidence that this is a good thing as opposed to a social problem, because I imagine that in an actually functioning economy these people would have jobs/homes/better things to do. If the economy generating large numbers of crazy hobos with knives who randomly assault passers-by in major cities is a sign that it is functioning well I think there are some problems with how we define "functioning well".
African economies and countries are so incredibly different to the west that I don't think this is a good comparison. In extremely terrible economies having large numbers of children is heavily incentivised for a variety of other reasons - that's your replacement for medical technology, retirement savings, childcare, extra labour etc. In the modern west, most of the childless members of my cohort explicitly tell me that there are financial reasons behind their childlessness, and a lot of them tell me that they would prefer to have more children if they weren't limited by the costs of doing so. That seems to be borne out by the statistics I look at as well.
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Why would we use other statistics which are not the thing we are trying to measure to get an approximation of something we can, in fact, measure? To paraphrase Sir Humphrey, why are your family formation statistics facts but my real wage facts merely statistics?
Source?
Yes. Or rather, I have not yet seen any evidence of the latter, so I have no reason to believe it.
Because I think that in terms of life satisfaction and happiness, those items listed are far more important and meaningful to people's actual lives than the cost of a replacement flat-screen TV. Real wages are important so far as they let people lead satisfying and meaningful lives, but they're not what actually make people happy or give them meaning in their lives. Family formation, getting onto the property ladder - these are much better indicators of human thriving than real wage numbers. You're totally right when you say that we should be measuring what we actually want to measure, which is why I look at the statistics I do.
Energy usage is the basis of almost all economic activity - and that number is DOWN. Technically if you go by energy usage rates the USA didn't actually recover entirely from the 2007 economic collapse. I find that fairly plausible, given that there weren't armies of fentanyl zombies and giant homeless tent cities before then.
Why aren't people having children anymore? Why is there a giant fentanyl crisis? Why are people so miserable(women especially)? Why is political extremism and polarisation increasing at such a rapid clip? Why is there a massive illegal immigrant population and what are they doing to wages? Why is domestic infrastructure falling apart? Why are politics so hopelessly corrupt? There are giant blinking warning lights and sirens sounding all over society, and these things simply would not be happening if society was economically successful and doing well in the way that your real wage statistics are claiming. This is why I'm distrustful of statistics that claim that everything is hunky dory - because if I look at US society as a whole I see a society in crisis/collapse, and yet the statistics you're talking about are claiming that everything is better than fine.
This article is from 2016 and is more about Donald Trump than anything else, but the lens it uses to look at American society throws some of these issues into stark relief. I think it held up rather well, given the predictions made, but I'm just going to quote the relevant portions if you don't want to go read it. https://www.resilience.org/stories/2016-01-21/donald-trump-and-the-politics-of-resentment/
This is perfectly reasonable, but then you are straying considerably from the question of 'is this a good economy' as most Americans would conceive it. On the basis of home ownership and family formation, 1982 was better year than 1995, yet surely only a madman would suggest that the former year represented a 'better economy' than the latter year. Claiming that the economy is doing well at the moment doesn't mean one is claiming 'society', broadly construed, in improving, though I would argue that the latter is indeed true.
Well when I said source I meant a source for the fact that energy consumption is down, but doesn't matter now, I've found one. However, not only, it transpires, has energy consumption been flat since 2008, it was also flat (not even accounting for population) between 2000 and 2007/8, which is impossible to account for unless we accept that energy consumption is not a reliable indicator of prosperity from year to year. Over the long run of course more prosperity is usually accompanied by more energy consumption, but on a short-term basis it is evidently less than ideal as a measure.
There are two things to add here. The first is the same point as above. It may indeed be that economic growth is no longer the best way to improve human happiness. However that is no reason to deny the fact that these are relatively good economic times now. The second is that I find this roundabout question-asking method of argumentation less than convincing; if you are going make a charge as serious as you do about economic statistics, I expect you to be able to point to where and how the statistics are being manipulated, or how they are wrong and misleading. Look at this way, how are your beliefs falsifiable? What evidence or statistics could I present that would make you change your mind? If the answer is nothing, then why shouldn't everyone just dismiss you as a hack?
If you want to live like a 1960s American, with a 1960s standard of living, you absolutely can still do this with much greater ease. Go to a regional mid/small-sized city and you can live a lot better on one income than the vast majority in the 1960s could. The grain of truth in this characterisation is the rapid increase in housing costs, but if that's the problem, your quarrel is with NIMBY local and state politicians and the people to whom they pander, not Biden.
Terribly sorry for the late reply - I fell ill and have been spending the last few days away from the internet. I totally understand if you don't want to continue this here and start a new topic, but I feel bad about leaving a substantive reply unanswered so I'm going to respond late anyway.
I think that the problem here comes when "the economy" gets increasingly decoupled from what's actually happening in the lives of the people involved. From the perspective of the individual person, I think that their ability to form a family and sustain themselves is one of the main reasons that they actually go and participate in the economy, and one of the main desired outputs they have of the system. As for 1982, wasn't that the ending of a minor recession and a significant year in financial policy? I don't know how much value there is in comparing individual years when what matters is the trendline as a whole, as this kind of data can be noisy on a year to year basis.
Oh, my apologies. My mistake!
I think there are two big countervailing factors here governing that period. The first is that a significant portion of energy was spent somewhere else during those years - something fairly important happened in 2001 and a lot of US energy consumption shifted overseas to places like Afghanistan and Iraq. I don't think overseas military activity is counted in a measure of domestic energy consumption, even though it obviously represents a significant investment of energy and fossil fuels. The second is that you're talking about the period largely recognised as the formation of the housing bubble. Speculative bubbles may indeed make economic numbers look a lot higher, but I don't think they're real productive activity in any way.
To use some statistics from April (I find no reason to believe that things have changed since)... https://www.pewresearch.org/politics/2023/04/07/evaluations-of-the-economy-and-the-state-of-the-nation/
19% of Americans think that these are "good economic times". 46% of Americans think that the economy is getting worse not better, and 77% of them believe that the economy is unfairly arranged in order to benefit powerful interests. A majority of the population is concerned with the price of basic staple items and the cost of housing. If these are good economic times, why are they only perceived as such by a slim minority of people? My answer is that they're accurately perceiving the shifts in costs/income/value available to them - if you're in the 20 percent these are great times, if you're not then they really aren't.
Sure, but there's a big list. First of all - measures of inflation are altered and massaged in ways that make it less than accurate. This is done both for political messaging purposes and to keep inflation-indexed payments at a lower value. The second is that there's a lot of economic activity in the financial sector that doesn't actually relate to or account for any real tangible wealth creation - and in fact usually leads to wealth destruction and misallocation of capital. Third is that a lot of "economic activity" actually consists less of productive work and wealth generation than it does consumption - outsourcing and off-shoring included here. Someone who sells a productive asset (like a manufacturing base) to someone else (like China) would make economic indicators go up in several big ways in the short-term, but actually do so in ways that are negative for the economy from a longer-term outlook. Flooding the labour force with illegal immigrants saves costs in some ways and again artificially juices economic numbers, but a lot of the costs associated with them don't show up in easily measurable economic statistics.
There are absolutely statistics and evidence that would change my mind here, but they're going to be exceedingly annoying to find and generate. For my contention that inflation is understated, you'd have to go back over decades of economic data and re-calculate inflation measures using more accurate metrics. With regards to family formation, that's also falsifiable - if you can present a compelling and rigorous explanation for why people are no longer having children or forming families that doesn't involve economic concerns I'd absolutely admit to being wrong(but good luck making that case). For some of these claims I'm not sure exactly how you'd falsify them because the data you'd have to present is just totally at odds with the world we're living in - I will be extremely impressed if you can somehow demonstrate that selling the productive manufacturing base to China hasn't caused substantial problems for the US while the entire US government considers China to be their greatest current danger in no small part due to their incredible manufacturing capacity.
I don't think that's necessarily true. Take an American worker with no college degree and wage-based employment living in a mid-sized city and I think they're going to have a much harder time finding a job that pays enough to support a family in the same way that people in 1960s America could. I also think the phrase "1960s standard of living" also requires some interrogation, because while something like an internet connection very clearly isn't in the 1960s standard of living, it is also effectively a requirement to participate in polite society in the modern day given how closely tied it is to employment and government services etc. Somebody in the 1960s didn't have a smartphone but if you don't have even a shitty smartphone in the modern day you are just not employable in the wage economy.
As for Biden, I don't really have any problems with him per se - he's little more than an empty suit who is barely cognitively there at this point. He played a part in the economic reconfigurations which have caused so many issues, but I don't think he really makes any important decisions himself now. Sure he's nakedly corrupt and made vast amounts of money through influence-selling and corruption, but I don't think he had a particularly prominent or influential role during the time when the economy got hollowed out. I'm not sure you can even point to the direct decision-makers involved in a lot of these changes and I'm not suggesting a giant conspiracy either - a lot of the people involved in the process were taking steps which were exceedingly rational for them at the time. I don't blame a factory owner for outsourcing manufacturing when he faced with a choice between getting outcompeted by someone who did (and then going bankrupt) or making a gigantic temporary profit.
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Whether people are happy is a different question than whether their purchasing power has gone up. It doesn't make sense to say that people's purchasing power has actually gone down because, even though it's gone up, they're actually less happy.
It's fine to say that there are more important things than the economy and that people's lives can be getting worse even if the economy is doing well, but that is not an argument that the economy is actually doing badly.
My perspective on this matter is that the purpose of the economy is to serve humans and make human life better, not the other way around. Assisting with family formation and human reproduction/flourishing is in fact one of the primary purposes of the economy, which is why the fact that it isn't actually doing that is important. To use a car metaphor, this would be a situation where the car's dashboard is reporting a speed of 80km\h while getting lapped by someone riding a skateboard - the car is very clearly not doing what it is supposed to even though the indicators say that everything is fine.
That's a great argument for saying that there is more to human happiness than the economy. It's not an argument that the economy is doing badly.
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I think the answer would be something like 'during that time you moved from being one of the people doing well to being one of the people doing poorly, but the total number of people doing well is the same/higher'.
Which of course gets to the fundamental issue with all standard economic indicators being aggregate snapshots in time that don't tell you much about individual's life trajectories and experiences.
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Excellent post, and in the tradition of the other replies engaging in my own reasoning for why the economy might feel bad even though it is or looks good, here's my argument: sudden economic shifts over the past 5 years, radically out of line with past experiences, have people feeling increasingly precarious in their economic situation regardless of the broader numbers.
To @Walterodim 's point about housing costs: I am lucky enough to be locked into a 2% mortgage on a house I love and have no intention of moving out of under any circumstances for the foreseeable future regardless of financing issues. A house mostly similar to the one I live in now, 10% larger and with some extra useless land attached to it, is up for sale for 50% more than I paid for our house. Add on that I got a 2% mortgage and rates now are closer to 8%. One has the distinct feeling that one dodged a bullet, for all saint's day I placed a wreath on grave of the widow whose family sold us the house, she picked a very propitious time to die for my finances. I'm at the age where most of my friends are purchasing first homes, similarly situated friends who happened not to purchase a home until now for whatever reason are facing a very different market. Similar markets impact cars, I own outright a used car that drives well and has been reliable so for a long time I was insulated from the car market; others were not so lucky. I have needed to buy appliances, and found myself on 6-8 month backorders to get anything. That I face or don't face those markets at any given moment is pure luck. Precarious.
I have work. Business is good. Sales are good. Revenue is good. But I remember 2020, when business disappeared. It could happen again. Covidiots and truthers of all stripes fear that it will. The quintuple vaxmaxxed people who think Covid is still super serious worry that the virus will recur in a new and yet more deadly strain; those who think that it was always just a cold and no one actually died presumably fear that government will shut society down over a particularly bad season of pollen allergies. I am not looking for work and don't foresee myself doing so, but businesses moving changing downsizing left and rightsizing makes me wonder if I'd find a job if I needed one. Precarious.
What all this cashes out to, I don't know. Much of it can be thought of as people having unrealistic expectations: when were people ever more secure than they are now? What does security even mean? But the lack of it haunts people.
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I hate the discourse around inflation - when people say "inflation is down" they are talking about a decrease in the rate of change, not a decrease of an absolute number. This is unlike many other things we talk about in economic life; when the unemployment rate goes down, more people have jobs; when there is a decrease in the mortgage rate, houses cost less, etc. This condition people to think that an economic indicator "going down" means that things are getting better.
This is not the case with inflation. When inflation "goes down," it does not mean that prices are actually decreasing back to the levels that existed prior to the inflation. Deflation is a separate phenomenon that almost never actually happens (and maybe shouldn't be allowed to happen - I'm not smart enough to parse the monetary theory of it all). When inflation "goes down," it means "you're still paying way more for stuff than you were a year ago, but at least the prices aren't skyrocketing up quite as fast anymore; you have some time to rebudget and get used to these new, permanently higher prices."
That statement isn't actually a "good sign" for the economy; at best it means "things aren't actively getting worse." Unless there is some significant increase in productivity to drive prices back down, people are still having to pay more for goods and services than they did previously; their money is worth less and they are poorer now than they were previously. The damage has already been done.
It does mean that things are getting better. We want low and stable inflation. If prices were falling, that would be corrected by the central bank printing more money, which results in an equal increase in wages. It doesn't reduce your purchasing power, but it does help avoid a recession.
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This is actually intended by the Federal Reserve — the typical inflation target is 2%. The reasoning behind this is that money is only useful if it is spent for goods and services — people who make the goods and perform the services will only do so if there is demand for it, and the inflation gives a little nudge to spend money rather than hoard it. Put differently, spending money is equivalent to soliciting work from other people. No spending, no working.
As a counterpoint, the creators of cryptocurrencies typically think that this is a terrible line of reasoning, and therefore created their own money.
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You seem to be confused by the terminology. "Inflation" is the rate-of-change. "Price levels" are the absolute number. Inflation increases price levels, such that price levels can remain elevated even though inflation has decreased.
High inflation really is the enemy more than price levels. High inflation skews lots of things and eats into purchasing power if wages don't keep pace. Price levels are arbitrary, and all that really matters is how much stuff people can buy relative to what they could purchase yesterday (or 10 years ago). This more important phenomenon usually gets shortened to the term "real income", i.e. income adjusted for inflation. As per the sources in the OP and stuff like this, real income is up.
If we had 1000% inflation for a year, and then suddenly returned to stability at ~2% or whatever the target is, would you think that this was a sign of a smoothly running economy?
No because hyperinflation is typically devastating for an economy and can have impacts that take years to resolve. 1000% is Zimbabwe tier.
After several years of regular 2% inflation though, things would mostly get back to normal, minus societal trust issues that 1000% inflation was ever possible in the first place of course. This is assuming that people's incomes mostly kept track with inflation, which usually happens unless there are other economic shocks.
Like funding a bunch of wars or something?
Of course it's a matter of degree, but I don't think "well inflation is back to 2% now, everything's fine" is a good general principle; it might be true, but it might not.
Hardly a new phenomenon. The US was in Afghanistan for 20 years. Ukraine aid is ~6% of the Pentagon's budget.
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The reason the feel of this economy is off is because people can still remember how things were going Pre-Covid, and they have a keen recollection of how much was 'lost' during the Covid period, and one can easily argue that we have not yet 're-established' the baseline from before, and with the current interest rates, we might not be able to anytime soon.
What is absolutely fair to say is that we avoided a serious recession resulting from Covid and the attendant restrictions.
But if you're an average American, you've likely depleted most of your personal savings., you've got a high car payment ("affordable" used cars aren't a thing anymore), and may be in default on the loan, your rent has increased around 30% since 2019.
Of course with savings depleted, more people will start financing purchases/using credit cards. In a rising-interest-rate environment.
Oh, and Student Loan payments just resumed after a LONG hiatus.. It's hard to feel good about higher wages if you can directly observe that most of the extra money is going to service debt and you can't actually put much of it away for later. It feels even worse if your overall debt continues to rise so you're treading water rather than making actual headway towards reducing your indebtedness.
So if you were motivated to convince people they were doing well, economically speaking, you could isolate the variable declaring that wages are up so you can say "stop complaining things have reverted to the pre-covid norm!"
But if you were to ask a simple-ish question: "Are you materially better or worse off today than you were in 2019?" I would hazard a guess that most people are 'struggling' to maintain their standard of living more than before, and this feeling comes through.
Now, my own personal concern is that we've already used up a bunch of economic 'slack' during Covid times, Putin started further troubles, and oh golly gee the Middle East is now acting up again. So at some point we have to start rebuilding our reserves for some possible future shock, and few seem interested in doing that. Nowhere is this more apparent than the Strategic Petroleum Reserve, which was depleted to historic lows and, as of yet, has not begun to be refilled.
It is nowhere near empty, mind, I just find this illustrative of the situation. We burned a lot of spare capacity and we still seem to be teetering on a precipice, what else can we deploy if we actually tip over the edge?
Not sure what you mean by affordable, but they very much are. Just go on the internet and you can find used cars in working order which do good MPG for pretty damn cheap. Sure, most of them might be on the older side and a bit scratched, but that's hardly that important.
About 8 years ago I bought a '98 Honda Accord with 65k miles on it for a hair over $4k.
1.5 years ago I purchased a 2012 Honda Civic with 80k miles on it for a hair over $15k.
It is almost literally impossible these days to find a vehicle with <100k miles for <$10k.
If you find an 'affordable' car (read: could be purchased by a college student working part time) then it is going to be in rough shape, probably been in an accident, with >100k miles, which is to say it's going to come with a hefty maintenance/repair bill built in.
Car repairs are more expensive now, too.
https://www.cnbc.com/2023/07/25/car-repair-costs-are-up-almost-20percent-over-the-past-year-heres-why.html
I would hardly deny that buying cars is more expensive now that several years ago, but the increase has been nothing like on the scale you're implying. Again, numbers are your friend. Since Biden took office average used car prices have gone up somewhere around 25%. That's bad, not even close to the over 2x increase you are suggesting.
And if you to any online second hand car website you can find stacks upon stacks of car with under 100k miles for well under 10k.
Edit: wrong link, correct one here https://fred.stlouisfed.org/series/CUSR0000SETA02
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It's not quite as bad in the midwest, though there's a lot of cruft, crappy manufacturers and (not always bad, but high-risk) salvage titles for more reputable builders.
But yeah, prices have absolutely skyrocketed. Most of these would have been advertised at about half of their current prices, and most dealers would be far more willing to negotiate, even as recently at 2015; if you go back to pre-cash4clunkers the difference is even more staggering.
Coastals might be able to hit that at 9k (though prices are before fees!), but if you don't want a used police car (don't do it) or lease car, you're probably more screwed.
I saw the 2014 Nissan Versa with 85k miles for about $7k and I click in and it says on there "1 or more accidents reported."
Anytime you see something that seems like a deal, there's gonna be some catch or other.
I'm seeing that the prices on those cars have come down over the past couple months, so I do wonder if there's signs of easing of prices in the near future.
I just distinctly remember when I was buying my Civic that I overheard the buyer in the next booth over talking with the salesperson about a $500+/mo payment on a 72 month note, for a used truck, and just wondered if it was me or everybody else that was losing their mind.
Also heavily annoyed that I've already had to dump $2000 worth of repairs into the Civic to keep it roadworthy, but I'm at least confident I can get another 100k miles out the engine w/maintenance if I were forced to.
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It's not really that they're older, it's that they're worn out; local asking price is 7000 dollars for cars with 140,000 miles on the clock (it is unusual to see anything under 100,000 at that price). 10 years ago, 7000 dollars was the basic asking price, for a "normal" compact car, with a third to half of that mileage.
Of course, the supply of new cars dried up in around 2016 since the American manufacturers stopped making them entirely for a variety of reasons (a negative real interest rate encourages you to buy a massive truck instead), but the other automakers didn't suddenly start making more cars and just raised their prices for a slightly more complicated (but not necessarily better) car.
And then there's the "it will be illegal to make a normal car in 2035, affecting ~95% of cars sold new today" thing (to say nothing of the environmental regulations that are inherently harder for small cars to pass) that means that, unless you're a Japanese or maybe South Korean company, you aren't putting any new R&D or spinning up manufacturing capacity for compact or subcompact cars (electric cars have to be as large as SUVs, because if they aren't they only have 160 miles of reliable range, and probably aren't passing the crash tests either).
Of course, I'm sure you could just move closer to work, but conveniently there's also a housing shortage, brought to you by the same people who manufactured the car shortage. The streetcar conspiracy, but in reverse.
That seems very, very high, you can go online and find cars with fewer miles than that in reasonable working order for a quarter the price.
Which people do you suspect of manufacturing both of these things?
No, you can't. The cheapest online offering for anything that can reasonably be expected to last 10 years is running 11,000-12,500. For reference, those exact same kinds of cars sold new in 2012 for 16,000 (and would last 20 years if bought new).
As such, inflation with respect to reliable personal transport is roughly 100%. Carmakers literally just decided to stop making compact cars and I don't think "lack of demand" is telling the whole story; SUVs and megatrucks get breaks on emissions since US regulations get laxer as the vehicle gets larger (so it's impossible to beat European and Japanese carmakers on price, since US carmakers have never been able to compete on quality and EU/JP cars are already making a profit since development on their small cars are justified as they're the only thing they're even allowed to sell domestically).
"Much like what happens if we tax the absolute shit out of/entirely prohibit outwards development, if we make cars more expensive by making sure it's impossible to make a cheap car through safety/environmental regulations (even though doing so objectively makes the roads less safe and results in a net emissions increase in the near-term; SUVs are worse than cars at both), this makes it less likely the average citizen will be able to afford property, so they'll have to rent from us. This pushes rents higher and
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I think the heart of the complaints is best shown with this graph. CPI is up about 15% in the last roughly 2 years (Jan 2021 to the present) while Employment Cost Index for all workers is only up about 10% in the last two years. I think ECI is a better measure of most peoples actual wages, as it adjusts for changes in the composition of the labor force so it's a better measure of wages real households are getting from period to period without retraining.
Why would we want to adjust for that with ECI? Is workers retraining into better roles not part of an improving economy?
It looks more like what most people's finances currently are, not could be next year. A measure that tracks change is better for a short forward time horizon.
How is it different in this respect than just ordinary real wages?
Let's say we have a village economy with three workers. At the beginning:
A year later Dan enters and times have gotten a little tight (in beginning year dollars):
The average real wage remains $10 but the ECI would be $9. I think ECI better reflects what more people are experiencing in the economy (3 of the 4 people's wages aligns with the change in the ECI).
It's not that one measure is always better than another, but they have different purposes.
Longer term, especially if Alice or Bob retrains into Dan's industry a measure that follows the shifts from industry to industry makes sense. For a short term comparison it's tough to respond to shifts in the market that require training fast enough to see their benefits and a measure that controls for that is going to show what more household budgets look like.
Ok but a situation resembling the one you show seems unlikely. The American economy is a sufficiently closed system (plenty of immigration, but how much of that is high skill, enough to make a difference?) that any change in composition is principally not a question of movement by new people into the statistics, one would imagine. Which is to say that compositional changes are helping mostly incumbents rather than new arrivals as in your example.
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Because it provides relevant, if less flattering, data that provides a another framework for understanding views besides 'public discontent over the economy is a result of Republican lies.'
Given the failures of 'learn to code' neoliberalism that simultaneously had oversights in critical areas like regional disparate impacts, the emerging implications of AI technologies in many service/digital economic areas which might be more resilient to distance dynamics, American economic categorization that systemically ignores unemployed persons not actively seeking jobs, and the state of the American (re)education system given it's advancing degrees of political capture that have already affected various fields, whether American workers as a collective are actually retraining into better roles is entirely up for dispute.
It's not irrelevant, but if we want to assess how people are doing why would we ever use it instead of real wages?
We can avoid this whole question though if we just look at real wages. Which are currently rising.
Because there are many, many more things that are used to assess how people are doing besides real wages, particularly in the context of not-terribly-distant economic history which considerably disrupted things like savings, regional economic systems, physical and mental health, and that's not even touching ongoing macroeconomic challenges.
We could avoid a whole lot of questions if we ignored most things to focus on the favored economic statistics of the people who want to push a particular point.
This is not a particularly compelling reason to avoid questions, even if it would be much simpler to do so.
I was never suggesting that real wages are the only measure of a healthy society and contended citizenry. Only that it's superior than ECI is making the general assessment of whether Americans are doing better or worse than they were X months/years ago.
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This is the perfect example of why many people just flatly disbelieve the economists in favor of their lying eyes. For most Americans, housing is a huge percentage of their outlays. In the time from February 2020 to now, the increase in housing prices coupled with the increase in interest rates has approximately doubled the monthly outlay to finance the same houses. People see this, they feel trapped and frustrated by it, and no amount of telling them that if they just ignore the cost of food and energy, inflation is actually low will convince them that their actual cost of living isn't an enormous issue.
If a typical American believes their eyes over the economists and focuses on housing, they will view inflation as being close to zero.
Typical situation: not moving this year.
If you aren't moving, rent increases for lease renewals are generally much smaller than rent increases for new tenants. (See Zillow Rent index = asking rent for stuff on the market, vs CPI Rent which is what people who take a survey actually pay.) If you are a homeowner and have a mortgage the only thing that is going up is either home insurance or property tax (which often gets rolled in, i.e. my mortgage bill is actually principal + interest + escrow to cover property tax/home insurance), which is at most 1/3 of the total.
The illiquidity of the market is unfortunate. People made an interest rate bet and won a lot of money. Consider a mortgage with 25 years of $2000/month payments (principal+interest) - this was worth $446k to the bank at a 2.5% discount rate (i.e. 0% interest + 2.5% to cover default probability) but if the bank sold it today they'll get $284k (assuming 4.5% interest + 2.5% to cover default = 7%). The homeowner is richer by $162k in NPV!
But it is unfortunate that this $162k comes with a lot of hassle - namely they can only realize it slowly over time by holding onto a specific piece of real estate. A regulatory fix I'd propose: if a mortgage holder sells the loan the debtor gets a 30 day call option at the sale price + $1k.
CPI Rent looks pretty high. The Zillow Rent index is actually lower at 3.2% YoY.
Nope.
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Pretty much any measure of inflation is coming down at the moment, and is approaching normal levels. And most importantly, wages are rising even faster.
Cole_Phelps_Doubt.png
https://fred.stlouisfed.org/series/CPIAUCSL#0
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This is a weird thing to say because most people already own houses and they're financed through long-term fixed rate mortgages so when house prices go up they're happy and when interest rates increase it doesn't affect them. There is the so called mortgage lock-in effect but this is quantitatively small when compared to the former things (most people don't move that much anyway).
Anyway people who think house prices are too high should be complaining about local zoning laws that restrict supply, not Joe Biden.
One of the real problems with the US' inflation calculation is the largest factor is housing costs and the main input on them is a survey of homeowners asked to estimate what their home would cost if rented. As you may imagine homeowners are generally very poorly informed about the pricing of rentals because they are very far removed from the market.
The last time I rented was was more than a decade ago, and I rented a small apartment, I have no idea what it would cost to rent my home.
If you asked me that, I'd look for comps. As it happens, I looked up rental houses in my town recently. There are two for rent, and neither is similar to mine. So yeah, how the heck should I know?
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How much of the market is first-time homebuyers? I figured demand might be up given
But when I check total sales it looks like we’re at 2010 lows, so maybe you’re onto something.
It certainly doesn’t feel like a tight market here in Texas. My coworkers are reporting chaos, a dozen offers on the first day, racing to outbid each other with starting offers. It sounds like hell.
The housing market is currently irrational with median home prices outpacing median income for the first time since, well, ever. Certain markets are more insane than others. The median home price in Idaho is now $469,000 while median income in a dual-income family is just under $70,000 before taxes. Assuming a 20% down-payment of ~$100,000, the monthly mortgage payment would be $3,538, roughly 60% of the take-home for the median household. Arizona, Utah, Wyoming, Colorado are all fairly similar in terms of median home price outstripping the ability of the locals to purchase. Meanwhile, the southeastern US is pretty stable with low prices and reasonable overturn in inventory.
Texas is somewhere in the middle from what I've seen. Houston and DFW area both have lower home prices compared to some of the really inflated markets in the west, but not as low as the rest of the southeast. It wouldn't surprise me to know that many of the Cali/NE corridor transplants are currently driving up the market in Texas like they did in the mountain west during COVID.
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Thing is even if you're locked in on your mortgage, if the cost of repairs and maintenance, insurance, utilities, and possibly taxes get bumped up you're still on the hook.
So yes, happy you can keep paying a relatively low payment on an asset that appreciates, but keeping that asset in good repair is still becoming more burdensome.
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Yes, I understand that the claim is that the cost of financing a house doubling actually doesn't matter much. My claim is that people actually do notice such things and it causes them to downgrade their opinion of the state of the economy, even if the experts tell them otherwise.
Though real, it's hard to credit this effect for the entire partisan gap. 95% of Republicans aren't young urbanites being drained by high rental costs.
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I see. I 100% agree with you then. This is a good example where experts are right and there's a big disconnect for people. Interesting why it breaks down so strongly on partisan lines though.
To be clear, we do not agree on the object level, we only agree that the experts think one thing and the consensus is the other. I think the experts are lying through their teeth and it's very obvious, but I acknowledge that I understand what they're saying.
Well, experts think people’s situations are good, the consensus people have is that their own situation is good, and there’s a partisan split on whether they think others’ situations are good. There’s a little logic 101 game we can play here in identifying who is wrong about what.
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I could be because people are poorer in real terms than they used to be.
The inflation that already happened is still here and inflation remains elevated. More than that interest rates are way up which vastly increases people's housing cost (which usually amounts to their primary expense). People have gotten raises but they don't compensate for inflation or the consequences of interest rate hikes.
All taken together people are poorer, more uncertain about the future and a lot of things just feel scary.
Real incomes have gone up, not down. Inflation was high but there was also a corresponding increase in wages. Total wealth is also up.
Which doesn't compensate? Wage increases were some 6% 2022 compared to about 9.5% inflation, in 2023 were looking at 5% wage increases and 4% inflation.
Maybe people are so used to increasing wages and stagnant prices that even mild decreases or wages and prices keeping track feels like a decline?
Both average real incomes and real disposable incomes have beat inflation.
Perhaps, although the second point of the post was that the noticing is inexplicably much, much more severe by the party not occupying the White House.
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From the post:
Man, I'm really enjoying the increase in wealth that comes from a spiked monetary supply that added a hundred grand to the estimated price of my house. With all that extra net worth, I can do really cool things, like have basically zero opportunity to move in the near future because houses cost twice as much to finance as they did a couple years ago!
Seriously though, this stuff just comes across as incredibly tone deaf. Listing "wealth" in nominal dollars when the value of dollars is down substantially is silly. Treating an increase in the price of houses as wealth-building is the kind of thing only a dishonest economist could love. Ignoring that this extra $52K in net worth is offset by an enormous runup in government debt is short-sighted.
You don't need to buy a house to move. You are actually richer if your house increases in value.
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My house increasing substantially in value actually makes me slightly poorer. My city decided they needed to perform an off cycle property tax evaluation, so my taxes have now gone up by a noticeable amount.
You can sell your house and have more wealth than before your house increased in value.
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Equity in your house is only barely wealth. Sure, when you die or laughs retire, you might cash out. Or you could actually pay off the mortgage in 30 years, right before you retire. Maybe you can pay a variable rate starting at ~9% to access that "wealth". But for most people, all that extra "wealth" does for them is increase their property taxes.
HELOCs are a thing that let you turn home equity into actual cash.
Nobody reads anymore do they?
why read when you can dunk on the outgroup and cover yourself in glory.
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This is a great example of the above post because in fact people are much wealthier (adjusting for inflation) and have higher incomes (adjusting for inflation) all across the income distribution.
https://twitter.com/bencasselman/status/1714673518229549380
And yet the personal savings rate is down, to a historical low. Consumer debt is up.
https://tradingeconomics.com/united-states/personal-savings
https://www.newyorkfed.org/microeconomics/hhdc.html
This would seem contradictory. If people are wealthier why are they saving less and financing more?
Look at your own damn graph! The precipitous fall in debt shown on the second graph comes in... 2008. Does this not perhaps tell us that taking rising debt as a measure of a bad economy is not a good idea?
Different question. Nobody contests that 2008-2010 was a 'bad economy' (we can also look an unemployment rates to get an inkling).
The issue here is that many metrics are currently showing a 'good' economy and yet, for individuals with bills to pay and debts to service, they might not have a positive outlook based on their actual material circumstances.
Do you note how debt rates were rising as we headed into 2008. That is to say, could we interpret rising debt as sign of a pending recession/correction?
Or, more precisely, what do you think happens when millions of people are overleveraged and then many of them default on debt and/or go bankrupt (or literal banks go out of business) at the same time?
Why isn't that happening currently?
I wouldn't say so, but either way this is irrelevant, because it's a completely different question to whether the economy is 'good' or not. Unless you think people (i.e. Republicans) are rating the economy as poor because they've looked at the FRED charts and decided we're headed for another 2008.
Look at it this way. Even retrospectively, most people would describe the early 2000s as good economic times, no?
I don't think it's irrelevant. The economy isn't just a snapshot, it's a trendline with predictive value. We've got an uptick in the trendline right now, but is it a dead cat bounce or actually indicative of healthy and sustainable economic growth.
Here's the fed in July 2007, after the fuse on the bomb was lit.
https://www.federalreserve.gov/monetarypolicy/mpr_20070718_part1.htm#:~:text=The%20U.S.%20economy%20generally%20performed,4%2D1%2F2%20percent.
Well if you look at the graph from up the thread, it shows that debt is levelling off.
In any case, would you disagree that the early 2000s were a 'good economy'.
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One reason for the discrepancy is there was some gaslighting on the inflation. First they said it wasn’t happening, then that it was transitory. They were dragged kicking and screaming into raising rates, which they swore would strangle growth and reduce employment. Now they bring these low-ball inflation numbers , which mathematically result in higher real growth, and people have trouble believing it. Understandable, as no one understands what’s happening, but some are still pretending. Mainstream economists are using this baffling economic situation to argue they were right the whole time, as if being wrong twice makes you right.
Then there's also that thing where 'inflation' -CPI typically reported doesn't include food, energy, housing because they're "volatile".
So when people are told - hey, what are you panicking about, inflation is low, and then they remember what food cost last year...
I suspect their memory is exaggerated. As a share of disposable personal income, food spending went from about 10% of income to 11% income from 2018 to 2022. Less if you don't eat out a lot.
https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=76967
How did 'disposable personal income' change when adjusted for inflation, and for some measure that's less 'cooked' than inflation?
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My dismay at the statistical illiteracy of the average person only continues to grow.
America is one of the few countries in the world that is doing well after COVID, sure prices are sticky and have coalesced at a higher level than they were pre-pandemic, but wages have grown too. The labor market is red hot.
Nothing blackpills me more than realizing it's not possible to simply educate people into seeing anything but what they're primed to do by others, and claiming the US is going downhill has become fashionable at the least.
I'm honestly curious, where have wages grown to match the price increases over the past year? What labor markets are red hot? I don't see this in my industry, and I'm in an industry that generally has been at the forefront of all such changes for decades. That's not to say it always will be and has to be, but I'm surprised if it's not.
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I think there’s the real world issue that people always see the economy in personal terms, as whether they themselves are better or worse off. And to the degree that an individual has higher costs without getting raises to match (keep in mind that raises aren’t evenly distributed and those in high-demand jobs are getting more raises than the rest of the people) they’re going to react to that. And they aren’t wrong. How the economy works for you is heavily dependent on where you live, what you do, and where you sit on the dominance hierarchy. So while they’re not right about the general United States economic health stats, they’re also not wrong about how that economy is working for them.
A thousand times this. It seems like every person I talk to who thinks the economy is doing well is because they're doing well, and every person who thinks it sucks is looking at moths fly out of their wallet, and hearing the economy makes them feel like they are losing their minds.
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You're ironically demonstrating your own illiteracy. There's a word for what you're describing: innumeracy.My apologies. Mea culpa.
Dude, if I ever get a second language on par with @self_made_human 's handling of English, I will be incredibly pleased with myself.
I'm chuffed at the high praise!
I will point out, that English is far and foremost my best language, while I'm fluent in my mother tongue and conversational in another, it's certainly not to this extent. My brain just turned out hyperoptimized/fixated on English over all else, and I speak and think in it so exclusively since I was old enough to remember my internal monologue that the usual connotations of first or second language seems suspect haha
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I would rather @self_made_human not call you a pain-in-the-ass pedant, but you are being a pain-in-the-ass pedant for no evident purpose other than to insult him. You keep doing this.
@naraburns and I have both repeatedly told you to chill out, and that your accumulation of crappy comments (in which no one comment is really bad) paint a picture of someone uninterested in civil discourse and unable to refrain from low-effort shitting on people.
Banned for two weeks. Don't bother DMing me with griping and resentment like last time - you've been warned, multiple times, and frankly I'm pretty sure I'm just delaying the inevitable by not permabanning you this time.
For what it's worth he sincerely apologized to me via DM, and while I was modestly annoyed by his initial comment, I'd rather not see him banned for it. Then again, it's not like this one seems to be the only reason, given your statement about his pattern of behavior, but I personally won't hold a grudge against anyone who can acknowledge their error.
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If you're going to be a pain-in-the-ass pedant, then please do me the courtesy of being right about perceived "errors":
https://en.wikipedia.org/wiki/Statistical_literacy
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One of my personal betes noires is people confusing Inflation, a rate of change, with price levels, a numeric value. "The inflation that happened is still around." No, the price changes are still around, the Inflation is the rate of change in prices over time. Yes, after a period of inflation, prices will remain permanently elevated relative to their prior levels, unless we hit a period of sustained deflation (which will have all kinds of other, likely worse for most people, negative effects). It really grinds my gears.
Well when inflation is always positive and never negative, I don't blame anyone for confusing speed and location. When people complain about inflation, they're really complaining about price, so until we get deflation their complaints are never addressed.
As someone who wants to be paid in silver quarters, because that lays bare the debasement of our currency, this is missing the point. You need to address the ratchet that only allows prices to move in one direction.
And a good thing too that they never will be, deflation is bad.
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One obvious problem is that no one can see a derivative function on the price at the grocery store. Everyone can easily remember that things were 20% cheaper a couple years ago, but seeing whether they're currently continuing to change is inherently more difficult. It would be nice if there was a way to sharpen people's thinking about this, but convincing someone that the rate of inflation is low isn't going to change their desire to punish whoever was in charge of causing the price change in the first place.
This doesn't really address the original arguments in the post. If this is the explanation, then why are ratings of 'am I personally doing well economically' high? The puzzling thing is the discrepancy, this explanation does not address.
I don't think it's puzzling, I think people think they're being lied to when American Pravda insists that the economy is doing great. They look at pricing of the goods that they have the most exposure to (food, energy, housing), they look at debt, they look at Covid policies, and they conclude that it's actually not great. If you ask them how they're doing, they say that they're basically fine at the moment, but they're nervous about the signals they see. The response amounts to, "I'm fine at the moment, but the whole thing seems pretty shaky".
This is a ridiculous extrapolation to make beyond data which cannot be stretched that far. And the question's word was not 'fine' it was 'good'!
Well good thing we don't need to operate on these general anecdotes and vibes, we can in fact look at statistics.
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The metrics are gamed and don't really exist.
Inflation is "good" because it's not increasing as fast as it was -- it's still increasing after all. And the previous increases didn't go away. Not to mention that "core inflation" excludes housing and gas and food, as if home prices reaching unaffordable highs is some sort of triviality when The Economy Is Doing Great.
Unemployment is good because the numbers are gamed in a million ways. A typical pattern these last few years has been for employment figures to be "better than expected" when first announced, then quietly revised to much lower numbers a few months later. But it's always been a gamed figure, when people who stop looking for work are no longer counted as employed.
The economy is growing? Remember when they changed the definition of a recession because they didn't want to admit we were in one?
This latest media narrative is one if the most shameless I think I've ever seen. The economy must be doing well, because we've proclaimed it. And since no one believes us, we have to understand what's causing all this irrationality. Is this the dark undercurrent of the post-truth society Freud exposed by tapping into our deep inner pathologies? Are Republicans just that impervious to the truth? Sure, whatever you say I guess, your twelve inches are amazing President Biden, I must not be feeling it because I've been such a naughty boy.
Sometimes employment figures are later revised downward, and sometimes they are later revised upward, as was the case in October. Do you have any actual evidence that either is more common than the other? Because in 2022 most of the revisions were upward.
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No, inflation is actually decreasing. Peak inflation was in 2021.
They're still accounted for in LFPR.
You mean three years ago? Gdp has been growing every quarter since Q2'20 except for two.
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Yeah, it's literally impossible to square reported inflation numbers with the lived experience of watching housing costs explode 50-200% higher, rent explode 25-50% higher, or the prices of staple foods doubling. To whatever degree the CPI is or isn't a lie is besides the point. It's almost completely unrepresentative of how people are experiencing the cost of goods. I truthfully couldn't give a shit that flat screen TVs are cheaper. I'm not buying one every month.
The CPI measures the average price level of a representative basket of goods. It takes into account the fact that you buy food and pay rent more often than you buy TVs, so why would you take a small subset of the things it measures, notice that they've gone up more than the entire basket, and conclude prices have risen more than the CPI says?
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Well it's good that you said the term for me, because any 'lived experience' argument would get short shrift here if someone tried to use it on literally any other issue. But because this is an opportunity to shit on Democrats/the left nobody feels the need to have falsifiable beliefs anymore.
I think the real reason is because this lived experience is shared by a lot more folk than previous usage of the term and it is easily verifiable by a large amount of people.
It isn't verifiable though. It's anecdotes focusing on a tiny non-representative sample of the data. Who has actually collected the data in a proper way and is reporting much higher numbers than the government?
That is the issue in contention as I see it. And besides that I'm just explaining to you why the usage this time may be more valid than the claims of a few activists, if you think it isn't, well ok we agree to disagree.
Right from the bat I can tell you that's not the government, just the Rent/Shelter portion of the CPI is nonsense; so I don't really put much weight on the whole thing.
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"Housing costs" as defined in that link would be housing costs for someone becoming a homeowner for the first time. I agree that it's rough if you're a first-time homeowner but that's a pretty small slice of the population. Most people already have homes (so house price increases are good) and have fixed rate mortgages (so rate increases are irrelevant).
The rent chart you showed has rental prices increasing at about a 6-7% annual rate, which I agree is annoyingly high but doesn't seem catastrophic?
Staple foods are a pretty small share of people's consumption basket. (Food at home is about 4% of people's expenditures: https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending/)
Ultimately you're getting at something correct, but I don't think in the way you meant it to be. There's a huge disconnect between what people think the economy is (that people mostly consume lettuce and mayonnaise and half of the economy are coal miners) and what it actually is.
Lies, damned lies, and statistics.
For starters, even your own source says the total amount of "Food at home" is 6%, plus another 6% for "Food away from home", making "Total food" 12%. Three times higher. And yeah, 12% of your budget jumping between 50-100% over the course of a single presidency is a pretty serious strain on the average household.
Same thing goes for rent. We aren't just talking about the last year. We're talking about the entire era of "Bidenomics". Coming up on 4 years of "only 6-7% inflation" makes for over 25% inflation total. If it had just been 2% we'd be looking at 8% inflation. That statistica link I shared, which now expects me to become a member god damnit, showed average rent jumping from ~$1000 to over $1300. To say nothing of how highly regional rent can be. In my area I had a buddy's rent jump up 25% in one year when he renewed.
If you own you aren't out of the woods yet. God help you if you have to move. If your family grows. If you divorce. If you need to move for work. It's no fun knowing if you have to move for any reason you can expect to pay 2x or more your current mortgage on a comparable home. You basically just got knocked off the housing wealth ladder completely.
This hasn't actually happened though. Yes, there are stories about the prices of specific food items suddenly jumping, but no one points the hundreds of things that didn't go up in price or that even fell, nor does anyone make note of when those prices don't jump.
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This number is simply wrong.
https://fred.stlouisfed.org/series/CPIUFDNS
This is more accurate. However, two things to note. Firstly, your quarrel here is not with Joe Biden but American planning law. Secondly, I wonder what happens when we compare nominal wages to average nominal shelter prices - as you can see, they track together since Q1 2021, except for the past few quarters, in which admittedly shelter has outpaced wages. However, it's only one, admittedly large part of the basket, and this is urban rents which one imagines have risen faster than average. So all in all, not convinced.
https://fred.stlouisfed.org/series/CUSR0000SAS2RS#0
This number is an exaggeration, but aside from that look at this graph. The increase is clearly well underway pre-Biden. This has nothing to do with Bidenomics. Once again, if you want to blame someone blame NIMBYs.
Edit; just realised I put the wrong graph in and I've lost the right one. But the rent one proves enough I think. Unless this is a statement about interest rate increases, in which case ok but 'I think the government is running too contractionary a monetary policy' is sort of directly at odds with 'I think inflation is too high and it's the government's fault'.
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Throw whatever food categories you want, the point is people spend a tiny amount of their income on food.
Yeah I mean landlords are famously slow and chunky while adjusting. Sorry that happened to a guy you know.
The point is people are out here talking like there’s some conspiracy to hide the fact that prices 100% higher than they used to be when in fact they aren’t and wages have increased along with the modest price increases.
All that aside, the following facts:
Really kind of gives away what’s happening, right?
12% is not, in fact, tiny.
CPI: Food was 271.271 in January 2021, it is 324.374 now, a 19.5% increase. It was 248.065 in January 2017, a 9.35% increase over the entire Trump presidency. All items CPI increase was 7.8% from January 2017 to January 2021; it is 17.1% over the January 2021 value now. Real disposable personal income was up 10.7% from January 2021 to February 2020 (at which point it goes nuts); it is up 5.2% since then. Real median household income, on the other hand, actually peaked in 2019 at $78,250 in 2022 dollars and dropped to $74,580 in 2022.
So no, prices aren't up 100% except in a few specific cases. But they're up a lot, and while real personal income has gone up, real household income has gone down.
You would have thought that, "besides, people don't really spend that much money on food, housing, and energy" was just dunking on dishonest economists, but alas...
To be fair the plurality of my spending is actually on taxes. But they want to raise those too.
The full CPI breakdown is here; it includes the weights. Food is weighted at 13.380%, which seems quite significant. Energy is 7.162%, which isn't nothing. Shelter is 34.749% which is large -- note that core inflation DOES include shelter, "supercore" is like "fetch", it's not happening. Flat screen TVs are 0.130%, so really don't figure much into it.
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Why are you so stuck on being wrong? 12% is not a tiny amount! It's trades for second or third place in spending categories behind housing and, often times, transportation.
The rhetorical dynamic is the following:
economists have thought really hard about how to measure inflation and have sophisticated data and tools to do it. They do their thing and say that year over year inflation is 4% or whatever.
weird zerohedge people notice that mayonnaise prices at target are higher by 75% and from this conclude that the federal reserve is lying about inflation.
I think people in #2 get confused because food is so important to live while flat screen tvs are not. So when food prices go up they think a lot of people must be about to starve. It’s useful to point out to these confused people that food, while necessary to live, is so cheap relative to Americans’ income that food prices can increase a lot and it doesn’t really matter. Hence headline inflation can be low even though mayonnaise at target seems expensive, and nevertheless headline inflation is the thing we should care about.
Not only do people not spend a very large portion of their incomes on food, but they spend an even tinier amount on mayonaise, and it isn't even necessary to live. My point being that people fixate on a few specific things whose prices have risen by a lot and ignore the many things whose prices have not risen by as much or at all.
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How is any of that a rebuttal to you being point of fact wrong about how much people spend on food, and how impactful food inflation is to them?
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There are a lot of economic data conspiracy theories out there but they can never point us to what data we're actually supposed to be looking at. What do you want us to consider aside from vibes and anecdotes? Anyway for your specific points:
There's a lot to discuss on why it makes sense to think about non-core or core for the purposes of various policy decisions and evaluations. Nevertheless they are both calculated and easy for people to look up, and they are usually pretty close. Incidentally non-core inflation was lower in September than core inflation. https://www.bls.gov/news.release/pdf/cpi.pdf
Since most people own homes this is in fact a good thing
Propose an alternate measure and defend it. The most obvious alternative that gets at what you're worried about is the labor force participation rate, which is also high and increasing. https://fred.stlouisfed.org/series/CIVPART. There are good reasons that this isn't the default measure but obviously the data is out there.
Yes, real output increased 4.9% year over year.
They did not, but anyway whether we're technically in a recession or not is an even coarser economic measure than GDP growth (which is doing very well) so it's not clear why people harp on this so much.
They went out and measured it, and the found out that unemployment is low, GDP growth is high, and inflation, however you measure it, is coming down. As I said you are free to come up with and defend your own measures but you should come to the table with more than vibes and anecdotes.
Republicans are doing a weird thing where they say their own situation is good but think that other people's situations are bad. It would be helpful to understand this phenomenon.
My understanding is that there's a similar effect under all governments, sometimes stronger and sometimes weaker. Dems criticized Trump for his economic policies, even though the economy was buoyant during his term.
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What do you want me to trust, gamed statistics? I put no faith in the officials who are knowingly conning me. Why do you?
I think it's a tremendous self-own if you have to reduce your personal experience in the world to "vibes and anecdotes". Do you need to read about your life in the papers before you know if it's good or not? The cost of everything has gone up tremendously in a few years, that doesn't stop being true just because two years have passed and high prices are the new normal so that the year-over-year statistic is "good".
Well yes that's just it -- inflation is still going up, it's just not going up as fast as it was before. We broke things, and then we fixed it halfway -- this is the glass-half-full economics success.
I wouldn’t mind finding some not-gamed ones.
Clearly, there are at least two camps of people in this thread. @Tomato’s situation looks pretty different from yours, which looks pretty different from mine. How else are we supposed to figure out which is more generally applicable, if not looking for stats?
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My economic life and the lives of everyone around me is incredibly good, so it’s useful for me to look at statistics to see how far-off people in different areas with different professions and backgrounds are doing. And when I look at the data it turns out they’re doing great too!
I don't know anybody who voted for Nixon!
You understand this is literally the argument you yourself are making when you suggest we operate off anecdotes and not statistics.
The statistics are all made-up, they are gamed for political purposes, believing them is worse than ignorance. Why would you put your trust in numbers that are lying to you?
In what manner? Please read this and tell me which specific elements of their methodology you question. Be specific.
https://www.bls.gov/opub/hom/pdf/cpihom.pdf
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"Statistics show things are not bad" -> "believe the anecdotes around you!"
"People are doing well around me" -> "no, not those anecdotes!"
Chadyes.jpg
I believe in the things happening to me way more than the things happening to you
Likewise!
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I genuinely don’t know what you’re looking for. People say they’re doing good. Dems think other people are doing good. Republicans, who also think they’re doing good, think other people are doing bad. I’m not sure who these other people republicans are worried about are but I hope things get better for them (in the minds of republicans!)
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The thing is though, if you ask people most say that they themselves are in the eye of the hurricane. At which point we have to ask how significant the hurricane really is.
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I think this is completely consistent with the stats above. Your economic situation is good, you think other people's economic situation is bad, and the few homeless people (who are understandably very anecdotally salient) you see notwithstanding, almost everyone's economic situation is similar to yours.
I also think people are over-sensitive to anecdotes of what's going on in their own sector. Some tech people getting laid off is a nearly negligible part of the economy but if you're a tech person it obviously looms much much larger. A few days ago on twitter everyone was dunking on some VC guy who claimed we had a "rolling recession" because some industries were doing well and some not so well (this is a nonsensical concept to be clear).
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I'd love to see a survey where they ask people
Wage growth and unemployment across sectors
What share of the aggregate economy they think that sector is
and see if it's possible to attribute the disconnect to mainly (1) or (2), (and also whether people's implicit aggregation is way off). My guess would be that people are pretty good at (1) but very bad at (2) in a way that's correlated with political affiliation. If republicans think coal mining is 25% of the economy then maybe it makes sense that you think the overall economy sucks.
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No. Unemployment is good. Inflation remains high, though not to the disastrous levels earlier in the Biden administration. That's the more familiar CPI inflation which is why the numbers don't match your PCE inflation numbers. PCE inflation remains elevated, though not by as much.
Nominal. Inflation gets into almost everything.(Sorry, got that wrong. Though I suspect it will be adjusted downward, it will likely still be pretty decent)
Also nominal.
4.9 is inflation adjusted. https://www.bea.gov/news/2023/gross-domestic-product-third-quarter-2023-advance-estimate.
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The GDP number is real, not nominal.
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