This sounds like bullshit to me, but perhaps I’m biased. Asides from myself, my entire family is what one might call “working poor” and just this week three people have called asking for help because they’re struggling. Two of them got promotions during the pandemic and one of them works as a train mechanic by day for Amtrak and had to pick up a second job in the evenings 3 nights a week to stay afloat. None of them have recreational drug habits, gambling addictions, or a penchant for spending money they don’t have aka crippling credit card debt. Sadly, not one of them can afford to purchase a modest home because every bit of their down payment savings dried up during the pandemic. My three person sample size is statistically irrelevant but I do have 43 cousins on my mom’s side alone nearly all of which have expressed similar misgivings in the family group chat.
43 cousins is also a pretty insignificant number in comparison to the 159 million working Americans.
I’m sorry that you and your family are having a tough time financially, but the whole point of the economic survey done by the fed is to get as best representation of the entire US. Of course there will be people who are at the ends of the both spectrum; the median is not everyone.
Sir, I understand the definition of median. And I also understand that 159 million is 3,456,521 times larger than my total anecdotal sample size of 46 people. The SCF's non-response rates for both unit and item level data are considerable, not to mention the asset and liability data. In the absence of this data, the report relies on MI to enrich the data set.
Ronald Regan once said, "When your neighbor loses his job, it's a recession. When you lost your job, it's a depression."
I highly respect Noah's posts. They are incredibly well thought out and researched. Still, when you just feel the pulse of the body politic, it is very weak. The scientist in me has great respect for data and statistical analysis. But you will not find all the answers there, and perhaps not even the most important ones.
The "body politic" is weak mostly because virtually all Republicans refuse to believe the economy under Biden can be good even if their own personal finances are fine:
Stated differently the only people who think the economy is doing well are Democrats who have a vested interest in painting the economy in a positive light and have repeatedly demonstrated their willingness to believe in nonsense.
I well remember that, during the trump administration, democrats kept talking about how horrible the economy was. What we wouldn't give to have that "horrible" economy back again!
The 2022 midterms happened…I watched a Fox News show in the summer 2022 before football season and one would have thought we were in the midst of the apocalypse…and the next show started off repeating the exact same talking points of the show I watched and the anchors were clearly invested in the narrative they were pushing.
One step forward, two steps back. I read an OK Doomer piece on insurance after a house-destroying fire and it underscored that every industry wants to do the worst job it can get away with for the highest price it can charge. Of course the individual person/family loses in that scenario.
I think this is right. “How you are doing” is in no small part tied to one’s age and profession or job. A new teacher vs. a newly trained tech in advanced manufacturing. A college graduate with social support and one without. A 50 or 60 yo in the job market. Yikes! And yes. Insurance, especially, are really premium collectors and until they are required to operate in all 50 states or can’t just drop one when they actually have to pay, it isn’t gonna get better in that department. And insurance (all of it) is a major drain on family income. As is childcare.
It is total bullshit whether you were biased or not this is just the Democrats trying to convince us that eggs that used to cost a dollar for a dozen that cost five dollars today doesn't mean anything. Who are they kidding? Not us. We used to be middle-class people and now we are barely scraping by and most of us have a negative bank balance every month. Our credit cards are maxed out and half the time we are late on our bill payments. Joe Biden the Democrats are a bunch of chronic psychopathic liars and they are not going to be reelected. Trump is the next president unless the Democrats assassinate him or find someway to keep him off the ballot. We had the best economy in 50 years of Trump with no wars. Now we've got wars all over the globe because of Biden in the stupid insane psychopathic Democrats. They are not kidding anybody in this article about becoming richer is a fraud.
Trump supporters are brainwashed…it’s pretty crazy the things they believe. And they believe China unleashed a bioweapon into America but they give Trump a pass on that. And these same people gave Bush a pass on 9/11…and now they hate him but are still angry at Gore and Kerry for daring to run against Bush who they hate?!! Wtf??
Wtf are you talking about? Who do you think relatives DIED in 9/11 ain’t nobody but the military industrial complex giving Bush a pass for that one. Nice try! Also I’m a registered democrat but am related to a few trump voters, and multiple veterans.
🤣 “stupid and psychopathic” thanks to Judy for helpfully illustrating how you can count on republicans to exhibit the exact behavior of which they accuse others
Sir, where in my post did I mention the president or politics? Are you just assuming that I’m taking a shot at Biden, whom I voted for, by the way, because I don’t believe the economy is as rosy as you seem to think it is? I previously mentioned my rationale for my skepticism in a prior comment, but I'll paste it here for your convenience: The SCF's non-response rates for both unit and item level data are considerable, not to mention the asset and liability data. In the absence of this data, the report relies on MI to enrich the data set.
The relief package and other deficit did not cause inflation. The Fed caused the (excess) inflation -- some inflation good to let relative prices adjust -- by being too slow in starting to raise interest rates. You can blame the interest rates on the deficits (Trump's and Biden's) and in the long run deficits depress private investment and growth, but inflation is the Fed's business,
I'm sorry your anecdotal experience doesn't match the numbers we have for the experience of the entire economy.
If it makes you feel any better - everyone I know is doing pretty damn good. If they want a job, they have it, and it pays pretty well even though shit is def more expensive these days
Reposting my prior response to another commenter: “Sir, I understand the definition of median. And I also understand that 159 million is 3,456,521 times larger than my total anecdotal sample size of 46 people. The SCF's non-response rates for both unit and item level data are considerable, not to mention the asset and liability data. In the absence of this data, the report relies on MI to enrich the data set”
I can only reiterate that our anecdotal experiences disagree. If you have better broad data, do share, but till then we must rely on what is available, taking into account of course all the necessary caveats and precautions.
> If you manage nationwide housing prices and supply over time like Singapore does, then it can be OK, but that’s very tough to do.
Worth noting in Singapore the rent's gone up enormously (40-80%) for many over the past couple years or so too. Marginal supply-demand imbalance and influx of new money can have disproportionate impacts that reverberate through the system.
The rents are just for the expats, though. Singapore has a 90%+ homeownership rate for the locals. And it's a super managed housing market - prices are different for different buyers.
These kind of price bumps can be a real problem. Once demand passes a certain threshold, the increasing scarcity cost of the land begins to look like a tempting investment for asset speculators assured of guaranteed capital returns. Unfortunately, in these circumstances the land costs can accelerate faster than the overall increase in the value of property, squeezing the profits of the virtuous value creating part of the cycle, the provision of new homes. Once this process goes critical it leads to the systemic undersupply, as the lack of profits in building shrinks the supply-side to the point that, structurally, it can no longer fill demand.
This is the UK housing crisis in a nutshell, and it seems to be happening sporadically everywhere else with relatively stable economies. Nobody has come up with a solution yet, although the Swedes seem to be coping better than most. It’s the economic Gordian Knot. It also doesn’t help that there is an ‘Iron Triangle of Interest’ which actually wants homes to become increasingly unaffordable.
The US is experiencing this as we speak. Between Airbnb's being created by middle & upper class inheritors, and Wall Street buying in many favorable real estate markets, our US housing market is sky high.
One of the more interesting potential solutions I've seen to this is to do to the housing market what we did to insurance--your company cannot stretch across state lines and must create branches in each state. (Then you make the paperwork for it all enough of an annoyance that it's suddenly worth a lot less to Wall Street to play landlord.)
Because of the mismanagement of the economy, foreign policy and wars and also having to buy foreign oil at a 30% higher premium, the US economy affects the global economy so prices have gone up all over the world of the rest of the world is unhappy about it. Joe Biden and the Democrats are reviled and the laughingstockon the nightly news and every country that's got a TV station.
The government numbers for inflation have always been an underestimate (by design) and the increases in “wealth” are 100% due to home prices rising unsustainably. That “wealth” is inaccessible and meaningless. This is clearly propaganda for the Biden administration to point to during next year’s election.
Even median, not mean, obscures the reality that people who are persistently in the bottom deciles of income earners have been destroyed by inflation. Particularly those who are unmarried and cannot pool resources. There are good reasons to use the median value but that doesn't mean it doesn't obscure aspects of the picture.
I don't know. We have been very fortunate to have housing prices locked in and our costs have still gone up more than the published inflation rate. I know CPI and PCE are based on a basket of goods and nobody really purchases exactly that basket of goods, but I don't think we have abnormal spending patterns? I haven't done a deep dive to figure out why our personal inflation is so much higher than CPI or PCE. I have our spending tracked and broken out pretty well but I'm not sure how closely my categories would match the categories broken out in the CPI or PCE data. Maybe we are not making substitutions that CPI or PCE is assuming we would make? Still, we are north 20% inflation from 2020 to now and that's without housing going up. That just seems like a big enough discrepancy for spending patterns that I think are reasonably typical that I wonder how many other people are in the same boat as us.
Conditions in US work places have devolved over 40 years. WE used to have many different benefits, retirement in addition to social security, more folks had access to healthcare... The US has been degraded over 45 years by Richy Rich and the Corporations rewriting all rules, regulations, court cases, buying politicians. Watch the HANDMAID TALE, if you want to see what is coming. Pay attention to the little things. The House elected Nutjob is just like the main character who is Leader in this tale. Nutjob has 4 kids, a radio show announcing his continual plan of oppression for anyone he can put under his thumb. May Goodness destroy his thumb./
Housing is a weird one, isn't it. Average house prices in the UK, having reached a ratio to average income in excess of 10 (though not on the same basis as the ratio in Noah's article, I don't think) have been 'undergoing a readjustment' that is expected to last until at least 2025 - absolutely no one is calling it a 'crash' as that would be sacrilege.
I read somewhere that in 1985, at the peak of the Japanese economic boom, the grounds of the Royal Palace in Tokyo were valued at more than all the real estate in California! At that time the average house price in Tokyo was $500k. It is now about $100k.
Japan has experienced significant population decline, so there is less demand for housing than existing supply.
Your political class is not going to allow negative population growth. They are importing millions of immigrants to replace you, instead. Tokyo real estate cannot be extrapolated to the UK.
Nah. They always lie about population numbers. It's not that Japan is in decline, it's that they never had those numbers in the first place. But when you're trying to attract investment and borrow money, the lender always needs to know how much they can make and how much you can pay back. Population size is critical here. They will inflate the numbers. Then, eventually, financial crisis when they don't receive the yields and incomes they expected.... Afterwards, we're fed rubbish about 'population declines' to cover it all up.
"But I’m not so worried this time around. First of all, young people who do buy in today stand to gain a lot — their wealth will soar if and when interest rates fall, and they’ll also be able to refinance their mortgages."
I wish I was not as worried about this as you are. I am worried that many young people are getting stuck with lemons. Are new houses getting bigger and nicer? Probably. Are these houses being built anywhere near job centers and are young people buying them? Absolutely not. Young people are mostly trying to buy houses near job centers where the housing market usually does behave more like a cartel. In addition, many of these older homes near the city can have 5-6 figure amounts of deferred maintenance that probably goes unrecognized by green home buyers (Canceling out all the equity you made when interest rates drop). There is also the fact that many of these older homes are not heated properly and will need to be retrofitted if the US is ever able to make the transition to a carbon neutral economy.
The houses they are building are crap, built like cardboard boxes. Cheap and ugly. Kids don't even wanna work anymore. Why should they? They can't afford anything anymore either. Then they are settled with $100,000 in school and college loan debt that follows them around like a ton of concrete attached to their leg for almost the rest of their lives. Corporations are hiring foreign workers for lower salaries and benefits. The whole idea of the socialist Democrat party is to make "everybody equal." This means that no matter if you're a doctor, or a ditch your due to taxation and regulations we will all be making the same amount of money regardless of income.maybe you haven't noticed the tax structure in this country is punishing, and you were punished if you make more money.
What kind of happy talk are you babbling? 12% of the populace can't feed themselves, 38% can't pay their weekly bills and 60% don't have $400 for an emergency. How much do they pay you to be the cheerleader for the managerial class?
Made up numbers but made up numbers that are pretty similar to made up numbers you see posted in mainstream publications. The ones that convert "putting a $1k emergency on a credit card and paying it off" with "not having even $1k to cover emergencies". Food deserts, food insecure, Medical bankruptcies, etc. Lots of more or less fabricated or intentionally misleading statistics that get thrown around as if they are connected to reality as long as they support their current political hobby horse.
None of this is true, and you just need to use a little logic to realize it. If 12% of the American population could not feed themselves, it would lead to visible starvation, not only is this not happening in the US, but this is not even happening in countries significantly poorer than the US like Mexico. How do you people think the rest of the world exists? You know, the rest of the world, which is much poorer than Americans?
Food insecure is not the same as starving. I grew up food insecure but a lot of free food from schools, food pantries and handouts filled the gap. The closest thing I came to being hungry was when I ate beans and vegetables from the garden for the last three days of the month for dinner.
What the pic says is"Rum-make America great again". It's a joke. Like your insightful comment. And I wasn't expressing concern for the less fortunate. I was castigating fools like yourself and the author who ignore the significant problems this country faces while lying to yourselves about how everything is just swell.
Again, the Irony is palpable. I have a sneaking suspicion that your bubble consists of people attending protests where chants of “gas the Jews” and “from the river to the sea” are heard.
This is not to mention your frequent and apparently reflexive desire for authority figures to censor people you disagree with, even going so far as to call them slurs.
But why am I supposed to care about passing 1 trillion when, in real terms, that's less than the credit card debt in 2019?
As for default rates on credit cards, 2016 levels don't really sound that scary to me.
Auto loan delinquency is not good but, again, why am I supposed to care when overall debt loads are not especially high? Its bad that increased car prices are driving that, of course, but it doesn't erase the easing of other debt loads...
Sorry, Noah, you sound desperate in this article. Housing prices have shot up temporarily until they find a new equilibrium, and these gains won't put any food on the table.
I agree, this is some temporary asset inflation. This is not normal. Many homeowner have mortgage under 2 percent and will not sell while many buyers can’t afford to pay a higher mortgage rate and increased housing prices.
Why haven’t prices dropped? There no movement in the system I guess
Yes - e.g. from where I stand the economy looks pretty damn good despite the constant doom and gloom about the upcoming recession that's supposed to have happened the last X months.
But I'm not gonna rely on my personal anecdotal evidence against the real economy-wide numbers because I'm aware that just because the wind is blowing hard where I am doesn't mean that it's blowing hard everywhere across America.
You should get your economy wide numbers from someone who isn’t so obviously pushing a narrative, using data from organizations who are pushing the same narrative. Look at credit card debt, loan default rates, personal savings, etc. You may be doing fine, but the average American isn’t. Granted, “the economy” has nothing to do with average Americans, anyway.
Credit card debt hit the big 1 trillion dollar number but really, why am I supposed to care about that threshold? Credit card debt in Q4 2019 was 951 billion, today it is ~1031 billion. But each of those dollars today is worth only ~85% of what they were worth in 2019 - so it seems to me that in real value terms, American credit card debt has declined...
It's pretty standard for a 21st century USA that is not currently in the middle of an epic recession/economic disruption from pandemic measures. It's the same as 2005, for instance. And not too far from, say, 2015, especially when you remember that we recently saw pretty high savings rates during that pandemic-related economic disruption that happened recently.
Oh thank god. I thought the $2000 I pay for part time child care, racking up credit card debt, the rattling sound in my car that I can’t afford to check out, the third medical bill I need to put a payment plan on, and the return of student loans was causing all the stress and insecurity in my life. Glad to see data to show that it’s all good!
I view this article as pretty much exactly why I think economists need to learn humility and why the field in general just sucks.
Do economists serve the public and help bring about the public's idea of a good economy or does the public have to conform to what economists think is a good economy?
To put it another way, if there is a "market for economies" and you have an economy that you think is really good, but the "economy market" rates it poorly, is it actually a good economy? If everyone else is willing to trade what you perceive as being valuable for something else you view as having lesser value, then how can you say you are correct in your valuation while they are wrong?
People can be irrational, but is it the place of economists to simply yell at them to be rational, or to conform to that irrationality and produce things people actually like?
The fact that people don't like the economy is information that you need to incorporate into your understanding of what makes a good economy. Clearly if people still think the economy is bad, and are willing to trade for another one, then economy valuation just doesn't work the way you personally happen to think it does.
It's not really that simple - 'the public' is perfectly capable of being wrong. Or of paying more attention to lagging indicators, say.
Economists are not there to tell people what they want to hear. Economists are there to study the economy in as rigorous a manner as we can manage so that they can tell us to the best of their ability why we are where we are, where exactly we are, and what we should do to get where we want to be.
The whole reason the profession exists is because we learned a while ago that you can't just rely on people's intuition about any of those 3 things.
Now, people's feelings about the economy matters a ton! Consumer/business/etc. confidence is a real thing that economists spend a lot of effort trying to measure and understand. But it's not the only thing and it's not the last word.
Sure, public desires to some extent set the goals, but public perceptions shouldn't. The public is very inconsistent and likes everything that sounds good until you explain the tradeoffs.
If everyone thinks your product sucks, and prefer another product, that you think sucks, then is the market wrong, or are you wrong? It is totally possible for people to prefer an objectively inferior product for silly reasons (brand loyalty, color, .etc). So should we just foist such products on people then? I hope you enjoy drinking Pepsi.
I'm not saying the job of economists is just to tell people what they want to hear, but that it is their job to produce value for *other* people. If your consumer doesn't value your product, then it is a shitty product.
People's subjective assessment of their opinion about their lives is not just "intuition", nor does catering to it mean "just interview people". Rather it is more that you need to manage to deliver satisfaction as an end state. That requires understanding how human determination of economic state works, and optimizing along those lines. This is distinct from consumer confidence, which is more about "will the line go up?", the question here is more "does this feel good to live with?"
For example, with immigration, in extreme brief, one particular view from economists is that otherwise comparable native born Americans specialize for their proficiency on English, thus even for uneducated Americans they end up being at least as valuable on the job market as before so immigration is great all around with no harmful effects.
This, of course, entirely misses that losing significant control over what type of work you do is in and of itself a major negative effect. Are these workers being deeply irrational or self-contradictory? Not at all. Would you really be just as satisfied with your life if you were fired tomorrow and the only positions open that you could get that paid the same were in the English department? How would you feel if suddenly it became impossible for any of your children to ever have a career in economics?
This isn't saying you should just ask people "do you like immigration?" And use the majority response to drive policy, but that the discussion of their situation needs to include the fact that they now view themselves as being in a shitty situation. How are you going to get them back on board with your product? How much of a wage premium do they need to compensate for the fact that they think that this sucks? Even if you don't think that sucks, it is a material fact that they will, so you need to deal with that. The fact that economists don't care simply doesn't matter.
I like your stuff! I think there's a few massive holes in this piece though...
What about the feds not actually reporting inflation correctly? Topping out at 7-8% over COVID was them hedging imo, it gets much much worse when you look at individual markets.
What about the US printing trillions of dollars out of thin air? This erodes the value of the dollar.
What about US consumer credit card debt topping $1 trillions, it's highest ever? As reported by Reuters in August.
People may have more dollars right now, but those dollars are worth FAR LESS than they ever have been worth, consumers are leveraging debt more than ever, and the feds aren't giving us the whole picture. 🤔
Of course there are individual markets that had higher inflation, just like there were individual markets that had lower. It doesn't explain why you think the overall inflation was reported incorrectly - can you elaborate on that?
Credit card debt was 951B in 2019, it is 1031B today. But with dollars today worth 85% of what they were in 2019, that means that today's debt in real terms is lower than it was in 2019. So why should I care that the dollar number passed an arbitrary threshold?
The only way that printing the dollar devalues the dollar is if it causes inflation, and yes, there was a period of inflation, not just in the US, but in much of the world, it had to do with supply chains and what not. Now though, inflation It is clearly under control in the US, and people have seen income rise above inflation.
Zhou Enlai is reported to have replied “It’s too soon to tell” when asked what he thought was the significance of the French Revolution. Yes Americans grew wealthier, but that is because the federal government ran up its debt from $23 trillion in 2020 to $32 trillion. Any banana republic can run up the wealth of its people by running up public debt. Perhaps it is also too soon for us to take a victory lap over the pandemic wealth creation while the bill is only starting to come due. By the Fed’s own admission, the higher interest rates are yet to take a bite. Our budget deficit is 8% of gdp: an unprecedented level in peacetime, and our interest costs are already approaching $1 trillion per year. It does not make sense to celebrate our “increased wealth” while ignoring the simultaneous increase in future tax liabilities.
I would like an analysis on this survey cross-checked with several other indicators. It seems cheery, I believe things are positive, but not as good as the picture painted here.
Because the wealth numbers are bullshit. An increase in wealth in housing and car ownership is meaningless because you would have to acquire a new, equally or more, expensive one if you wanted to realize that wealth.
Same with the financial markets. This economy is great for everyone but the speculators who don’t realize that higher interest rates are actually good for normal people. People just feel better if they can bitch about being poor as they drive their new Tesla from their large house to the airport to go on another vacation.
Sorry, this is the one I wanted to share.. the other is airplane related and also true. This is zombies, for you Halloween lovers....from an actual US economist....
This sounds like bullshit to me, but perhaps I’m biased. Asides from myself, my entire family is what one might call “working poor” and just this week three people have called asking for help because they’re struggling. Two of them got promotions during the pandemic and one of them works as a train mechanic by day for Amtrak and had to pick up a second job in the evenings 3 nights a week to stay afloat. None of them have recreational drug habits, gambling addictions, or a penchant for spending money they don’t have aka crippling credit card debt. Sadly, not one of them can afford to purchase a modest home because every bit of their down payment savings dried up during the pandemic. My three person sample size is statistically irrelevant but I do have 43 cousins on my mom’s side alone nearly all of which have expressed similar misgivings in the family group chat.
43 cousins is also a pretty insignificant number in comparison to the 159 million working Americans.
I’m sorry that you and your family are having a tough time financially, but the whole point of the economic survey done by the fed is to get as best representation of the entire US. Of course there will be people who are at the ends of the both spectrum; the median is not everyone.
Sir, I understand the definition of median. And I also understand that 159 million is 3,456,521 times larger than my total anecdotal sample size of 46 people. The SCF's non-response rates for both unit and item level data are considerable, not to mention the asset and liability data. In the absence of this data, the report relies on MI to enrich the data set.
Ronald Regan once said, "When your neighbor loses his job, it's a recession. When you lost your job, it's a depression."
I highly respect Noah's posts. They are incredibly well thought out and researched. Still, when you just feel the pulse of the body politic, it is very weak. The scientist in me has great respect for data and statistical analysis. But you will not find all the answers there, and perhaps not even the most important ones.
The "body politic" is weak mostly because virtually all Republicans refuse to believe the economy under Biden can be good even if their own personal finances are fine:
https://jabberwocking.com/americans-dont-think-the-economy-is-bad-republicans-do/
Stated differently the only people who think the economy is doing well are Democrats who have a vested interest in painting the economy in a positive light and have repeatedly demonstrated their willingness to believe in nonsense.
I well remember that, during the trump administration, democrats kept talking about how horrible the economy was. What we wouldn't give to have that "horrible" economy back again!
and like, the data man
The 2022 midterms happened…I watched a Fox News show in the summer 2022 before football season and one would have thought we were in the midst of the apocalypse…and the next show started off repeating the exact same talking points of the show I watched and the anchors were clearly invested in the narrative they were pushing.
Almost everything he puts out is comically biased and detached from reality. This post is case and point. It’s propaganda plain and simple.
It means that exactly half of the respondents did worse!
and exactly half did better! woah
One step forward, two steps back. I read an OK Doomer piece on insurance after a house-destroying fire and it underscored that every industry wants to do the worst job it can get away with for the highest price it can charge. Of course the individual person/family loses in that scenario.
https://www.okdoomer.io/the-system-isnt-designed-to-help-you/
I think this is right. “How you are doing” is in no small part tied to one’s age and profession or job. A new teacher vs. a newly trained tech in advanced manufacturing. A college graduate with social support and one without. A 50 or 60 yo in the job market. Yikes! And yes. Insurance, especially, are really premium collectors and until they are required to operate in all 50 states or can’t just drop one when they actually have to pay, it isn’t gonna get better in that department. And insurance (all of it) is a major drain on family income. As is childcare.
It is total bullshit whether you were biased or not this is just the Democrats trying to convince us that eggs that used to cost a dollar for a dozen that cost five dollars today doesn't mean anything. Who are they kidding? Not us. We used to be middle-class people and now we are barely scraping by and most of us have a negative bank balance every month. Our credit cards are maxed out and half the time we are late on our bill payments. Joe Biden the Democrats are a bunch of chronic psychopathic liars and they are not going to be reelected. Trump is the next president unless the Democrats assassinate him or find someway to keep him off the ballot. We had the best economy in 50 years of Trump with no wars. Now we've got wars all over the globe because of Biden in the stupid insane psychopathic Democrats. They are not kidding anybody in this article about becoming richer is a fraud.
A dozen eggs are $1.49 at my local Kroger.
Trump supporters are brainwashed…it’s pretty crazy the things they believe. And they believe China unleashed a bioweapon into America but they give Trump a pass on that. And these same people gave Bush a pass on 9/11…and now they hate him but are still angry at Gore and Kerry for daring to run against Bush who they hate?!! Wtf??
Wtf are you talking about? Who do you think relatives DIED in 9/11 ain’t nobody but the military industrial complex giving Bush a pass for that one. Nice try! Also I’m a registered democrat but am related to a few trump voters, and multiple veterans.
🤣 “stupid and psychopathic” thanks to Judy for helpfully illustrating how you can count on republicans to exhibit the exact behavior of which they accuse others
Sir, where in my post did I mention the president or politics? Are you just assuming that I’m taking a shot at Biden, whom I voted for, by the way, because I don’t believe the economy is as rosy as you seem to think it is? I previously mentioned my rationale for my skepticism in a prior comment, but I'll paste it here for your convenience: The SCF's non-response rates for both unit and item level data are considerable, not to mention the asset and liability data. In the absence of this data, the report relies on MI to enrich the data set.
The relief package and other deficit did not cause inflation. The Fed caused the (excess) inflation -- some inflation good to let relative prices adjust -- by being too slow in starting to raise interest rates. You can blame the interest rates on the deficits (Trump's and Biden's) and in the long run deficits depress private investment and growth, but inflation is the Fed's business,
Agree. The Fed had let inflation get out of control and. so, because it has an inflation target, had the raise rates.
And 100 other people warned that he is not doing enough. Economy is not a hard science where you can just calculate the right answer.
I'm sorry your anecdotal experience doesn't match the numbers we have for the experience of the entire economy.
If it makes you feel any better - everyone I know is doing pretty damn good. If they want a job, they have it, and it pays pretty well even though shit is def more expensive these days
Reposting my prior response to another commenter: “Sir, I understand the definition of median. And I also understand that 159 million is 3,456,521 times larger than my total anecdotal sample size of 46 people. The SCF's non-response rates for both unit and item level data are considerable, not to mention the asset and liability data. In the absence of this data, the report relies on MI to enrich the data set”
I can only reiterate that our anecdotal experiences disagree. If you have better broad data, do share, but till then we must rely on what is available, taking into account of course all the necessary caveats and precautions.
> If you manage nationwide housing prices and supply over time like Singapore does, then it can be OK, but that’s very tough to do.
Worth noting in Singapore the rent's gone up enormously (40-80%) for many over the past couple years or so too. Marginal supply-demand imbalance and influx of new money can have disproportionate impacts that reverberate through the system.
The rents are just for the expats, though. Singapore has a 90%+ homeownership rate for the locals. And it's a super managed housing market - prices are different for different buyers.
Not quite, though yes the mortgages are also floating rate with max 2/3 year fixed. It's not managed in a price setting sense.
I found this interesting article from the FT on the subject:
https://www.ft.com/content/ec0f0ddf-d6b0-40b4-80f9-8287df941db2
These kind of price bumps can be a real problem. Once demand passes a certain threshold, the increasing scarcity cost of the land begins to look like a tempting investment for asset speculators assured of guaranteed capital returns. Unfortunately, in these circumstances the land costs can accelerate faster than the overall increase in the value of property, squeezing the profits of the virtuous value creating part of the cycle, the provision of new homes. Once this process goes critical it leads to the systemic undersupply, as the lack of profits in building shrinks the supply-side to the point that, structurally, it can no longer fill demand.
This is the UK housing crisis in a nutshell, and it seems to be happening sporadically everywhere else with relatively stable economies. Nobody has come up with a solution yet, although the Swedes seem to be coping better than most. It’s the economic Gordian Knot. It also doesn’t help that there is an ‘Iron Triangle of Interest’ which actually wants homes to become increasingly unaffordable.
The US is experiencing this as we speak. Between Airbnb's being created by middle & upper class inheritors, and Wall Street buying in many favorable real estate markets, our US housing market is sky high.
One of the more interesting potential solutions I've seen to this is to do to the housing market what we did to insurance--your company cannot stretch across state lines and must create branches in each state. (Then you make the paperwork for it all enough of an annoyance that it's suddenly worth a lot less to Wall Street to play landlord.)
Because of the mismanagement of the economy, foreign policy and wars and also having to buy foreign oil at a 30% higher premium, the US economy affects the global economy so prices have gone up all over the world of the rest of the world is unhappy about it. Joe Biden and the Democrats are reviled and the laughingstockon the nightly news and every country that's got a TV station.
Given all this what’s your take on this? https://open.substack.com/pub/thebulwark/p/we-are-caught-in-a-mass-economic?r=2lcp6&utm_medium=ios&utm_campaign=post
The numbers in the post are inflation-adjusted, though?
The government numbers for inflation have always been an underestimate (by design) and the increases in “wealth” are 100% due to home prices rising unsustainably. That “wealth” is inaccessible and meaningless. This is clearly propaganda for the Biden administration to point to during next year’s election.
Average wages have kept up with inflation:
https://jabberwocking.com/raw-data-inflation-hasnt-hurt-most-people/
Even median, not mean, obscures the reality that people who are persistently in the bottom deciles of income earners have been destroyed by inflation. Particularly those who are unmarried and cannot pool resources. There are good reasons to use the median value but that doesn't mean it doesn't obscure aspects of the picture.
I don't know. We have been very fortunate to have housing prices locked in and our costs have still gone up more than the published inflation rate. I know CPI and PCE are based on a basket of goods and nobody really purchases exactly that basket of goods, but I don't think we have abnormal spending patterns? I haven't done a deep dive to figure out why our personal inflation is so much higher than CPI or PCE. I have our spending tracked and broken out pretty well but I'm not sure how closely my categories would match the categories broken out in the CPI or PCE data. Maybe we are not making substitutions that CPI or PCE is assuming we would make? Still, we are north 20% inflation from 2020 to now and that's without housing going up. That just seems like a big enough discrepancy for spending patterns that I think are reasonably typical that I wonder how many other people are in the same boat as us.
Conditions in US work places have devolved over 40 years. WE used to have many different benefits, retirement in addition to social security, more folks had access to healthcare... The US has been degraded over 45 years by Richy Rich and the Corporations rewriting all rules, regulations, court cases, buying politicians. Watch the HANDMAID TALE, if you want to see what is coming. Pay attention to the little things. The House elected Nutjob is just like the main character who is Leader in this tale. Nutjob has 4 kids, a radio show announcing his continual plan of oppression for anyone he can put under his thumb. May Goodness destroy his thumb./
Very interesting analysis.
Housing is a weird one, isn't it. Average house prices in the UK, having reached a ratio to average income in excess of 10 (though not on the same basis as the ratio in Noah's article, I don't think) have been 'undergoing a readjustment' that is expected to last until at least 2025 - absolutely no one is calling it a 'crash' as that would be sacrilege.
I read somewhere that in 1985, at the peak of the Japanese economic boom, the grounds of the Royal Palace in Tokyo were valued at more than all the real estate in California! At that time the average house price in Tokyo was $500k. It is now about $100k.
Is this true and should we in the UK be worried?
Yours
Concerned of Kent
Japan has experienced significant population decline, so there is less demand for housing than existing supply.
Your political class is not going to allow negative population growth. They are importing millions of immigrants to replace you, instead. Tokyo real estate cannot be extrapolated to the UK.
Nah. They always lie about population numbers. It's not that Japan is in decline, it's that they never had those numbers in the first place. But when you're trying to attract investment and borrow money, the lender always needs to know how much they can make and how much you can pay back. Population size is critical here. They will inflate the numbers. Then, eventually, financial crisis when they don't receive the yields and incomes they expected.... Afterwards, we're fed rubbish about 'population declines' to cover it all up.
The tells are everywhere.
Rinse and repeat.
"But I’m not so worried this time around. First of all, young people who do buy in today stand to gain a lot — their wealth will soar if and when interest rates fall, and they’ll also be able to refinance their mortgages."
I wish I was not as worried about this as you are. I am worried that many young people are getting stuck with lemons. Are new houses getting bigger and nicer? Probably. Are these houses being built anywhere near job centers and are young people buying them? Absolutely not. Young people are mostly trying to buy houses near job centers where the housing market usually does behave more like a cartel. In addition, many of these older homes near the city can have 5-6 figure amounts of deferred maintenance that probably goes unrecognized by green home buyers (Canceling out all the equity you made when interest rates drop). There is also the fact that many of these older homes are not heated properly and will need to be retrofitted if the US is ever able to make the transition to a carbon neutral economy.
The houses they are building are crap, built like cardboard boxes. Cheap and ugly. Kids don't even wanna work anymore. Why should they? They can't afford anything anymore either. Then they are settled with $100,000 in school and college loan debt that follows them around like a ton of concrete attached to their leg for almost the rest of their lives. Corporations are hiring foreign workers for lower salaries and benefits. The whole idea of the socialist Democrat party is to make "everybody equal." This means that no matter if you're a doctor, or a ditch your due to taxation and regulations we will all be making the same amount of money regardless of income.maybe you haven't noticed the tax structure in this country is punishing, and you were punished if you make more money.
no, no, no regarding social democracy. This is not how the Northern European countries function. this is a misconception.
🤣
Do you even have a job?
Republicans punish people for being female, black, brown, gay, children or not rich.
What kind of happy talk are you babbling? 12% of the populace can't feed themselves, 38% can't pay their weekly bills and 60% don't have $400 for an emergency. How much do they pay you to be the cheerleader for the managerial class?
These are made-up numbers.
Made up numbers but made up numbers that are pretty similar to made up numbers you see posted in mainstream publications. The ones that convert "putting a $1k emergency on a credit card and paying it off" with "not having even $1k to cover emergencies". Food deserts, food insecure, Medical bankruptcies, etc. Lots of more or less fabricated or intentionally misleading statistics that get thrown around as if they are connected to reality as long as they support their current political hobby horse.
None of this is true, and you just need to use a little logic to realize it. If 12% of the American population could not feed themselves, it would lead to visible starvation, not only is this not happening in the US, but this is not even happening in countries significantly poorer than the US like Mexico. How do you people think the rest of the world exists? You know, the rest of the world, which is much poorer than Americans?
https://www.usdairy.com/community/hunger?gad_source=5&gclid=EAIaIQobChMIqsT1rbCWggMVSfLICh1LUw-AEAAYASAAEgL5k_D_BwE
38 million are food insecure per this piece
Food insecure is not the same as starving. I grew up food insecure but a lot of free food from schools, food pantries and handouts filled the gap. The closest thing I came to being hungry was when I ate beans and vegetables from the garden for the last three days of the month for dinner.
That’s a perfect way of describing what this blog is.
Stop faking your concern for those who are less fortunate. You have a pro-Trump profile pic. Enough said
What the pic says is"Rum-make America great again". It's a joke. Like your insightful comment. And I wasn't expressing concern for the less fortunate. I was castigating fools like yourself and the author who ignore the significant problems this country faces while lying to yourselves about how everything is just swell.
That’s nice but you might want to change that buddy
Here you are again wishing for someone to remain the sanctity of your bubble. The lack of awareness is difficult to believe.
Again, the Irony is palpable. I have a sneaking suspicion that your bubble consists of people attending protests where chants of “gas the Jews” and “from the river to the sea” are heard.
This is not to mention your frequent and apparently reflexive desire for authority figures to censor people you disagree with, even going so far as to call them slurs.
This is the behavior of Nazis.
Maybe show us that reality - where do your numbers come from?
Well thanks for the links!
But why am I supposed to care about passing 1 trillion when, in real terms, that's less than the credit card debt in 2019?
As for default rates on credit cards, 2016 levels don't really sound that scary to me.
Auto loan delinquency is not good but, again, why am I supposed to care when overall debt loads are not especially high? Its bad that increased car prices are driving that, of course, but it doesn't erase the easing of other debt loads...
Sorry, Noah, you sound desperate in this article. Housing prices have shot up temporarily until they find a new equilibrium, and these gains won't put any food on the table.
I agree, this is some temporary asset inflation. This is not normal. Many homeowner have mortgage under 2 percent and will not sell while many buyers can’t afford to pay a higher mortgage rate and increased housing prices.
Why haven’t prices dropped? There no movement in the system I guess
There are reasons why some people simply will not believe good news of any sort.
You ever heard the line “Don’t need a weatherman to tell which way the wind blows”?
Yes - e.g. from where I stand the economy looks pretty damn good despite the constant doom and gloom about the upcoming recession that's supposed to have happened the last X months.
But I'm not gonna rely on my personal anecdotal evidence against the real economy-wide numbers because I'm aware that just because the wind is blowing hard where I am doesn't mean that it's blowing hard everywhere across America.
You should get your economy wide numbers from someone who isn’t so obviously pushing a narrative, using data from organizations who are pushing the same narrative. Look at credit card debt, loan default rates, personal savings, etc. You may be doing fine, but the average American isn’t. Granted, “the economy” has nothing to do with average Americans, anyway.
Show me!
Personal savings rate seems much in line with standard levels.
https://fred.stlouisfed.org/series/PSAVERT
Delinquency rates too
https://fred.stlouisfed.org/series/DRALACBN
Credit card debt hit the big 1 trillion dollar number but really, why am I supposed to care about that threshold? Credit card debt in Q4 2019 was 951 billion, today it is ~1031 billion. But each of those dollars today is worth only ~85% of what they were worth in 2019 - so it seems to me that in real value terms, American credit card debt has declined...
Wait, did you even click on your first link? The savings rate is incredibly low compared to historical averages.
It's pretty standard for a 21st century USA that is not currently in the middle of an epic recession/economic disruption from pandemic measures. It's the same as 2005, for instance. And not too far from, say, 2015, especially when you remember that we recently saw pretty high savings rates during that pandemic-related economic disruption that happened recently.
Do you disagree?
Now, maybe you don't believe the feds numbers - show me the ones you do then!
Oh thank god. I thought the $2000 I pay for part time child care, racking up credit card debt, the rattling sound in my car that I can’t afford to check out, the third medical bill I need to put a payment plan on, and the return of student loans was causing all the stress and insecurity in my life. Glad to see data to show that it’s all good!
I view this article as pretty much exactly why I think economists need to learn humility and why the field in general just sucks.
Do economists serve the public and help bring about the public's idea of a good economy or does the public have to conform to what economists think is a good economy?
To put it another way, if there is a "market for economies" and you have an economy that you think is really good, but the "economy market" rates it poorly, is it actually a good economy? If everyone else is willing to trade what you perceive as being valuable for something else you view as having lesser value, then how can you say you are correct in your valuation while they are wrong?
People can be irrational, but is it the place of economists to simply yell at them to be rational, or to conform to that irrationality and produce things people actually like?
The fact that people don't like the economy is information that you need to incorporate into your understanding of what makes a good economy. Clearly if people still think the economy is bad, and are willing to trade for another one, then economy valuation just doesn't work the way you personally happen to think it does.
It's not really that simple - 'the public' is perfectly capable of being wrong. Or of paying more attention to lagging indicators, say.
Economists are not there to tell people what they want to hear. Economists are there to study the economy in as rigorous a manner as we can manage so that they can tell us to the best of their ability why we are where we are, where exactly we are, and what we should do to get where we want to be.
The whole reason the profession exists is because we learned a while ago that you can't just rely on people's intuition about any of those 3 things.
Now, people's feelings about the economy matters a ton! Consumer/business/etc. confidence is a real thing that economists spend a lot of effort trying to measure and understand. But it's not the only thing and it's not the last word.
Sure, public desires to some extent set the goals, but public perceptions shouldn't. The public is very inconsistent and likes everything that sounds good until you explain the tradeoffs.
If everyone thinks your product sucks, and prefer another product, that you think sucks, then is the market wrong, or are you wrong? It is totally possible for people to prefer an objectively inferior product for silly reasons (brand loyalty, color, .etc). So should we just foist such products on people then? I hope you enjoy drinking Pepsi.
I'm not saying the job of economists is just to tell people what they want to hear, but that it is their job to produce value for *other* people. If your consumer doesn't value your product, then it is a shitty product.
People's subjective assessment of their opinion about their lives is not just "intuition", nor does catering to it mean "just interview people". Rather it is more that you need to manage to deliver satisfaction as an end state. That requires understanding how human determination of economic state works, and optimizing along those lines. This is distinct from consumer confidence, which is more about "will the line go up?", the question here is more "does this feel good to live with?"
For example, with immigration, in extreme brief, one particular view from economists is that otherwise comparable native born Americans specialize for their proficiency on English, thus even for uneducated Americans they end up being at least as valuable on the job market as before so immigration is great all around with no harmful effects.
This, of course, entirely misses that losing significant control over what type of work you do is in and of itself a major negative effect. Are these workers being deeply irrational or self-contradictory? Not at all. Would you really be just as satisfied with your life if you were fired tomorrow and the only positions open that you could get that paid the same were in the English department? How would you feel if suddenly it became impossible for any of your children to ever have a career in economics?
This isn't saying you should just ask people "do you like immigration?" And use the majority response to drive policy, but that the discussion of their situation needs to include the fact that they now view themselves as being in a shitty situation. How are you going to get them back on board with your product? How much of a wage premium do they need to compensate for the fact that they think that this sucks? Even if you don't think that sucks, it is a material fact that they will, so you need to deal with that. The fact that economists don't care simply doesn't matter.
I like your stuff! I think there's a few massive holes in this piece though...
What about the feds not actually reporting inflation correctly? Topping out at 7-8% over COVID was them hedging imo, it gets much much worse when you look at individual markets.
What about the US printing trillions of dollars out of thin air? This erodes the value of the dollar.
What about US consumer credit card debt topping $1 trillions, it's highest ever? As reported by Reuters in August.
Hedged inflation, devalued dollar, rampant consumer debt...
People may have more dollars right now, but those dollars are worth FAR LESS than they ever have been worth, consumers are leveraging debt more than ever, and the feds aren't giving us the whole picture. 🤔
Of course there are individual markets that had higher inflation, just like there were individual markets that had lower. It doesn't explain why you think the overall inflation was reported incorrectly - can you elaborate on that?
Credit card debt was 951B in 2019, it is 1031B today. But with dollars today worth 85% of what they were in 2019, that means that today's debt in real terms is lower than it was in 2019. So why should I care that the dollar number passed an arbitrary threshold?
The only way that printing the dollar devalues the dollar is if it causes inflation, and yes, there was a period of inflation, not just in the US, but in much of the world, it had to do with supply chains and what not. Now though, inflation It is clearly under control in the US, and people have seen income rise above inflation.
Printing dollars always devalues them, just as creating more of anything reduces its value.
Do you have a source on average/median wages increasing above inflation?
Feds said that inflation topped out at 8-9%, I call BS.
Zhou Enlai is reported to have replied “It’s too soon to tell” when asked what he thought was the significance of the French Revolution. Yes Americans grew wealthier, but that is because the federal government ran up its debt from $23 trillion in 2020 to $32 trillion. Any banana republic can run up the wealth of its people by running up public debt. Perhaps it is also too soon for us to take a victory lap over the pandemic wealth creation while the bill is only starting to come due. By the Fed’s own admission, the higher interest rates are yet to take a bite. Our budget deficit is 8% of gdp: an unprecedented level in peacetime, and our interest costs are already approaching $1 trillion per year. It does not make sense to celebrate our “increased wealth” while ignoring the simultaneous increase in future tax liabilities.
I would like an analysis on this survey cross-checked with several other indicators. It seems cheery, I believe things are positive, but not as good as the picture painted here.
Wow. People REALLY do not like good news. The comment stream is as bad as Tyler Cowen's :)
Because the wealth numbers are bullshit. An increase in wealth in housing and car ownership is meaningless because you would have to acquire a new, equally or more, expensive one if you wanted to realize that wealth.
Same with the financial markets. This economy is great for everyone but the speculators who don’t realize that higher interest rates are actually good for normal people. People just feel better if they can bitch about being poor as they drive their new Tesla from their large house to the airport to go on another vacation.
https://youtu.be/j3vbYwZecFU?si=WQnBOMcZ8zyi8Egh
Sorry, this is the one I wanted to share.. the other is airplane related and also true. This is zombies, for you Halloween lovers....from an actual US economist....
https://youtu.be/eTzaMXXelew?si=u3Xkmn-e9c8z-_-2
Have a look at this for a real look at the US economic reality.. a real economist.