Every guy is just out to dinner saying “Wow look at the price of steak! I mean I can afford it thanks to my last raise, but how is everyone else managing?” Meanwhile the restaurant is full because everyone got a raise.
People like to think their raises are the result of their own hard work. They don't like to think that they're average workers just benefitting from a broad inflation adjustment like everyone else. So they don't assume everyone else is being similarly lifted.
Yeah think it really breaks people’s brain when prices and wages both are rising quickly. My other plausible theory is that a lot of people got a raise to match inflation so they are accurately reporting doing fine.
But they are still upset that the raise doesn’t allow them to improve their standard of living so they report the overall economy being bad.
How to communicate this to voters though? If you tell people "your hard work wasn't why you got a raise", they will hear "you're lazy" or "you don't deserve your raise".
Also, if you change jobs and get a better salary, you won't count that as a raise for the same work, because it is indeed a different job and probably hard to compare directly. But the fact that you could do that is a good sign.
Personally my wages have not grown as fast as the cost of dining out over the last several years, and I'm not sure my experience is uncommon. Real median wages are still slightly below where they we're pre-covid ( https://fred.stlouisfed.org/series/LES1252881600Q ).
As far as the restaurants being packed, again that has not been my experience. A lot of the places I used to go to before the pandemic have since closed, and it looks like restaurant employment is below pre-covid https://fred.stlouisfed.org/series/LEU0254493800A
Also, while my 401k has had a nice run this last year, it still not much better than it was at the peak in December 2021, despite the fact that I have been maxing out my contributions. The S & P 500 is still below the 2021 peak and the bond market has been pretty rough https://www.morningstar.com/funds/xnas/vbmfx/performance. Yes the recent trend has been positive and I hope it continues, but I don't think we should expect people to start dancing in the street until they feel they are safely out of the hole they've been in for the last couple years.
You're not wrong. But the problem is that many people griping about the market being below its 2021 peak were the ones screaming most about the risk of inflation - which was the result of the ZIRP fiscal policy and COVID stimulus that drove the market to those frothy highs in the first place! The fact that the markets have recovered as quickly as they have in a more historically normal interest rate environment is actually a good sign that the economy is more resilient than many thought.
I think this phenomenon is plausible, but it doesn't explain why this didn't happen before and isn't happening in Europe. So at least it seems incomplete (though I wouldn't be surprised if it was part of the answer).
Interest rates are clearly reducing housing affordability for new buyers. Rent is higher than a few years ago. Gas is higher. Groceries in general. There’s some slowdown in the inflation rate but that’s just a slowdown in the rate of increase.
So there’s a few things to note here. One is, even if wages have outpaced inflation this year, this does not mean that people are better off than they were four years ago.
The other is this: the CPI doesn’t seem to measure what the median guy is buying all that accurately. I’m not sure what else they put in to reduce the prices given the obvious increases in groceries, rent, and gas.
However, if rent is up, mortgages are up, the price of food staples has gone crazy, it’s not that fair to blame the little guy for not understanding macroeconomics
Food and gas are good examples there of why the average or lower than average Joe might be feeling the pressure more than the commentators on this thread. Food is a higher percentage of poorer people’s income. 13% is higher as a percentage of their income than what the top percentile spend on food, and lower than what the bottom spend. Shelter seems ok. Gas is a major cost in areas for people who can’t take public transport, cycle or walk to work. It’s surely higher than 4% of the cost of living for many at the median and before who have to have a car.
It looks like high end goods are not increasing anymore and maybe be falling but those are limited purchases and we know because of the savings having increased that people are spending on these items, but that probably doesn’t mean that the average shopping cart hasn’t significantly increased.
But none of those things is true. I live and work in the heart of one of the nation's most expensive cities; my daily lived experience is that none of those things is true.
Noah is too polite to say it but the honest explanation for all this is, adult Americans today are not functioning adults. We've become a nation of whining infants. It's dueling tantrums all the way down now.
You don't have data, you just made an assertion that doesn't ring true to anyone, because it's not true. I live in one of the most expensive cities in the country, and here's the price of a burger at one of the fanciest gastropubs: https://www.easternstandardboston.com/menus/#dinner
And here's the price at a "burger shop" (still relatively fancy):
...when reading this comment i had a sudden shock of dread and fear, that perhaps what's going on here is realtime price discrimination
Maybe if you pull up to the drive-through in a rolls-royce they charge you $25 but if you show up in a 1999 accord they charge you $11
when i clicked on the links, i was genuinely bracing myself to see prices other than what you listed, and i was fully expecting to run the experiment using safari on a mac vs edge on a windows 10 laptop with fully-transparent user-agent strings and see wildly different prices
Luckily it didn't happen! It appears we are not doing price discrimination on such a granular level yet. Prices are as reported in the parent comment.
If you get a fancy steakhouse burger, maybe it's $25? But you could also get a #1 combo at In-n-Out - a really good double burger, fries, and a soft drink - for about $11. Even in San Francisco.
Sorry, I have worked frequently in San Francisco and live in a semi-rural area - neither of which had prices like that. Maybe there is a fancy place somewhere in SF or LA or NY that has that kind of price, but not where most of us mortals eat/live (and yes, I worked in the SF financial district which tends to higher prices that some other parts of SF).
less and less so, with birthrates and mortality down, as well as economies of scale and transport energy supply beyond short-term, I would guess - localization, skill retention increasing
If there had been no stimulus we still would have had ~5.5% YOY inflation AND we would have had to deal with the second and third order effects of letting everyone who actually needed the money fall through the cracks.
15 pct of US GDP (3 pct of global GDP) in fiscal handouts in a few months near the start of 2021 combined with zero/negative rates and trillions in QE globally lead to excess demand and price increases. Wages, nearly three years on, are just starting to catch up to the inflation genie.
The only good news is that inflation needs to be sustained via more reckless policy errors or exogenous shocks, Biden and Janet certainly aren’t helping the Fed with their 6 pct deficit at full employment, but thanks to the Fed’s abandonment of “transitory”, Chinese dumping after the end of their Biden-fed 2021-22 export boom, and a divided Congress inflation isn’t being artificially fed and has at least fallen to a level only 50 pct above the target rate (a “victory” per Noah).
If wage increases were the cause of inflation, then inflation would be increasing now as wages are finally catching up, but this is not the case.
Wage demands can only drive inflation if policymakers accommodate them with loose policies. Biden/Yellen are certainly trying their best (as did the “run the economy hot” types like Brainard when she was at the Fed) but most of the Fed has returned to their senses and aren’t making it easy for companies to increase wages above inflation plus productivity
I worked for Walmart corporate in the early 2000s…most of their shoppers at that time were extremely price sensitive because they lived paycheck to paycheck. So are saying for a few months their shoppers stopped living paycheck to paycheck and destroyed the economy??
Who says the economy is destroyed? We are in much worse shape now than in 2019 but certainly better than 2008 or 2001. Eventually we will get a serious president, treasury sec, Fed chair and Congress who will address debt- maybe in 5-10 years
The “doom loop” without accommodation from policy makers is theoretically possible but is not probable (almost always inflation is a result of monetary and fiscal policy looseness and/or an exogenous shock). Also hard for the “doom loop” to be sustained in open economies - rather than higher wages staying in the system to be used to pay more for employers’ products, imports increase and exports become less competitive.
Yes they did. They just had lagging shelter data and took too long to raise rates. So most of the inflation is transitory but the shelter inflation is real.
The striking thing about that graph of public sentiment vs. economic indicators is that American public sentiment is almost perfectly in line with European public sentiment; the difference is that the US is doing well (at least according to the indicators) and Europe is not. That suggests to me that negativity bias might be a good explanation: Europeans and Americans are equally biased towards negative views, and those views just happen to be true there and false here.
You mean that Americans are worried about the economy in France and Singapore?
How would they know about the global economy? From Karen on Facebook?
The media may be globalized, but very few viewers are interested beyond a few seconds of seeing someone somewhere in front of a camera in an exotic location.
Yeah, this seems relatively implausible to me. But if there really is a better fit between American and international attitudes about the economy, and the performance of the international economy, than between American attitudes about the economy and the performance of the US economy, then we probably should consider whether social media might be having this effect. (It would have to be more through things like Reddit and TikTok than Facebook, where people's networks just aren't that international.)
Maybe the universal negative sentiment is due to all countries experiencing inflation and people are still adjusting to the higher price levels. While the US has stronger economic growth and employment levels, that could simply be insufficient to mitigate these negative feelings.
Maybe check some stats. Isn’t EU unemployment at record low levels? Isn’t inflation still falling in the EU? Yes, EU growth has been hit by dropping export demand and Chinese competition, and Europe can’t be as reckless as the US is fiscally to offset this, but the consumer in the EU is doing fine.
To me it is the same reality as in the US- things are almost as good as they were pre Covid but we’ve moved through all of these shocks and policy mistakes (in Europe, over reliance on Russian energy especially) and the future looks a little scarier. No surprise people aren’t overjoyed
The other possibility is that the western economy is highly correlated and that the USA is actually doing more like Europe, but the US data has gone bad in some undetected way.
Interestingly in Australia unemployment is quite severely under-reported. Real unemployment (which includes those who do not receive any unemployment related govt payments or have a long term or temporary medical exemption) combined with under-employment sometimes reaches the high teens while it is being reported by economists as being low. Certain NGOs here tend to keep track of the real figure. The fudged figure, however, will never undergo any form of useful re-evaluation as no government wants to inherit this ‘correcting’ of the figure as such as the opposition party not in power will of course claim that real unemployment suddenly rose rather than this correcting.
It would be very rare if this phenomena were only extant in Australia.
Perhaps the lack of congruence of ‘vibes’ in the US with median figures states more about a certain generosity as such (sic) that has been permitted to crawl into the measurements. This would also explain why sentiment and figures are congruent in Europe but not in the US, despite the US sentiment being similar to Europe.
Seems like the obvious government move is to institute the correction factor on a delay at the end of a term and drop the PR problem into the lap of the opposite party.
Let's not forget that 85 - 89% of the stock market is held by the top 10% of Americans though. So in that sense the stock market is a very flawed metric for gauging the general prosperity of the country, and it's also overindexed into "financial innovations" and rent seeking and less about actual productivity and value growth at large.
And in a very real sense, the stock market's gains and enthusiasm almost always comes as a further redistribution of what w/should have been wage and benefit gains for workers into dividends and stock buybacks for the investor class.
You're right about housing. Though it's the same in Europe. When I bought my first property in 1995 it cost 2.5 times my salary. Now the average home costs 10 times the average salary - and I would guess the same goes for rentals as well. What would the inflation measures look like if they included housing costs? I'm not sure anyone dares to even check.
That sounds very plausible, yeah. Something big missing from the data is the usual kind of issue that causes divergence between people's overall impression and what they "should" be feeling.
Looking at the first graph, it's based on modelling by some rando journalist who states that the original work it's based on is by some guy on Twitter (@Quantian1). I looked up that account and it's mostly shitposting. Statistical modelling is hard at the best of times and bogus models are rife in our society.
So the other possibility here is that the FT's model of what people should be feeling is wrong.
Quantian largely posts about wine but he is in fact a quant and capable of doing financial models.
I think the upshot of his analysis was that Americans were upset about interest rates being high because they have fixed rate mortgages so it affects buying a house more than in other places.
1. Did Europeans' views of their personal financial situation track European macroeconomic indicators, unlike in the US?
2. Why would negativity bias increase so uniformly across the Western world in the past few years in spite of divergent macroeconomic outcomes? Covid overhang? Media narrative changes common to Europe and the US? Hatred of inflation? Something else?
I suppose if negativity bias explained everything then we'd expect everyone to be negative about the economy all the time. But this is only a phenomenon of the last year or two, before that there were periods when various economies went through good periods and that was reflected in public confidence.
I work in the tech industry. Many years ago I was a part of the operations team for a well known website. We had many automated metrics and graphs. We were proud of them, as we'd put a lot of work into them. Of the many people on this team, I was the only one who chose to read the user support forums. Usually this was a waste of time: our systems caught most problems before they got bad enough for people to complain. But occasionally, I'd discover a problem that our systems had missed. Sometimes this would be a quite bad problem that was falling through the cracks in our systems.
I learned back then how hard it is to get smart people to understand that the map is not the territory. My colleagues just wanted to look at graphs. If users were unhappy but the graphs said everything was fine, they assumed the users were wrong.
When I read this post I'm getting very strong Jobsian "you're holding it wrong" vibes. If consumer sentiment has historically tracked economic indicators very accurately even through the military-scale operation by the US establishment to give people bad vibes during the Trump years, and still does in other countries, yet has now diverged in the USA, then my first instinct would be to debug the data not the users.
One problem I notice here is that many rebuttals to the claims made by DeusEx guy don't actually address those claims, whilst appearing on the surface as if they do. Take the last point about financial situation. You're arguing that if people say "the economy is bad but my finances are good" then this is a contradiction that can only be explained by bad vibes. But it's not a contradiction. We just went through a couple of years in which people were being dumped on by helicopter money whilst having virtually all the ways to spend that money taken away. Savings rates skyrocketed whilst the economy was trashed. Look at the 25 year view, for many people alive today what happened was just unprecedented:
If you still have a lot of savings (maybe in equity) but there are no jobs anywhere, then you're going to correctly assert that the economy is bad yet your personal financial situation is good. This would NOT be people being suddenly inexplicably stupid or argumentative for no obvious reason, it would be a loss of resolution over reality caused by dealing exclusively in extremely over-simplified models and graphs.
Are there jobs everywhere? The data says yes. The people seem to be saying no.
Noah didn't address this point, but towards the end of the thread Deus Ex points out that the US Gov measures quantity of available jobs by counting job listings. We might immediately suspect data quality problems exist there for at least two reasons:
1. A continuing trend towards companies advertising jobs that don't actually exist. There are lots of reasons for this trend to do with changing technology and culture, but it's an actual problem that can create a false appearance of abundance. He even cites a story in CBS News about this, so can't be accused of peddling Trumpskyian propaganda. A few reasons this can happen: unlike in the past where advertising jobs required constant expenditure, it now costs nothing to keep job ads live and have them surface in things like Google Jobs search. Big companies are always backfilling, so find it easier to just constantly advertise for jobs that experience any churn at all, as that way if someone does leave they have a pre-made candidate database with CVs available for free, which lowers their recruiter fees. Etc.
2. The sudden shift to mass scale remote work. I don't know the exact details of how the US counts jobs, but one can imagine that it involves counting jobs advertised in each state and then aggregating at the federal level. If a company that once advertised jobs only in its home city starts accepting remote work, then it now makes sense to advertise for that position in every state and city. Is the US Govt able to correctly de-duplicate these job ads, especially when posted on different forums and potentially with different wordings?
I think accurately tracking the true availability of job openings would be a very difficult task even for an advanced tech company. This makes me agree with Deus Ex Dude that the US Gov is probably not doing it properly.
Note that the second problem in particular would not affect Europe because the EU Commission doesn't give a shit about economics or job creation, and internal labour mobility is much lower than in the USA. So nobody talks about the quantity of available jobs at the European level, labour statistics are all gathered at the national level, and "remote work" will often mean "remote within that one country" and not remote over the entire continent.
> Noah didn't address this point, but towards the end of the thread Deus Ex points out that the US Gov measures quantity of available jobs by counting job listings.
Noah didn't address that point, but it's wrong. That's not how the government measures things.
The economic data and economic sentiment both come from BLS surveys. The people saying they're doing well, but that they think the economy is bad, are the same people. It does not appear to be a data issue.
> I think accurately tracking the true availability of job openings would be a very difficult task even for an advanced tech company. This makes me agree with Deus Ex Dude that the US Gov is probably not doing it properly.
"I can't think of how I would do this, therefore it is impossible" is something very confident idiots say.
You could, you know, just look it up, instead of agreeing with a moron because you're being lazy.
I agree that in an absolute sense, the job market is strong. But you also have people desiring a remote/hybrid role and struggling to find that role as more corporates are asking for more time at the office. This can feel like a "bad" job market.
Additionally, on the contingent side, staffing companies having clearly seen a fall-off in their business in the past year or so. Normally, staffing companies are the "canary in the coal mine" and see decreases/increases before it is apparent in full-time employment. But the data is noisy and quick to change.
"A new Yahoo Finance/Ipsos poll on economic outlooks among registered voters finds that overall, voters feel the U.S. economy is faring worse than usual in a variety of areas including job growth and inflation rates"
"half of all registered voters say the unemployment rate is about average at the moment, while about one quarter say it is unusually low (25%) or high (24%). Similarly, about half of registered voters (48%) say job growth over the last two years has been about average, though nearly three in ten voters (31%) say job growth has been unusually weak."
Seems there's also a partisan split, with Republicans feeling a weaker job market than Democrats.
Sure, but then if you really look on apps like Indeed, ZipRecruiter, etc... you'll see a job posting has 500 applicants. Wait about two or three weeks and then the exact same post will be up AGAIN.
So does that mean they had 500+ candidates and not a single one of them was qualified or decent enough to hire? Or that the hiring process is so broken they'd rather ignore all 500 applicants they received two weeks ago and start fresh from scratch for some reason?
Or that the job role isn't actually one they are earnestly devoted to filling and have no urgency about the process? And that they may or may not hire someone, because it doesn't really matter and maybe someone is just making job postings as a matter of busywork to rationalize their own role at the company, or in hopes that a unicorn will come across the pile. They don't appear to urgently want a competent employee, they want a needle in a haystack, where no one is given an honest accounting of what that magic metric entails.
Or maybe some companies just like reinforcing the "no one wants to work for $12 an hour" rhetoric or use job postings as a form of brand advertising, even if they don't have job openings?
I don't know, but the conversation is about whether people's reports on polls matches reality or not, and the FT graph shows big changes in what people report since the start of the year. I agree with your general point that job quality is higher than 10 years ago, just thought I'd point out that if something changed this year then it won't show up in that survey even though it says it's for 2023. I found the title of the poll confusing and figured I'd point out when the data was collected.
OP said they are in the tech industry. There's been a LOT of rifs in that space, and jobs are definitely a lot harder to come by vs. pre-covid. I don't know whether that goes to "there are no jobs" level, but it's not great.
As another example of Noah claiming he's rebutted a point whilst not actually doing so, I just noticed that his chart of food stamp usage doesn't actually address the claim Deus Ex Moniker made.
In the Twitter thread, he is referring to COVID emergency food stamp benefits expiring in March 2023. It's highly partisan to call this "Biden kicking out kids", but look closely at the X axis in Noah's graph - it only goes up to March 2023! If food stamp usage had dropped after after March it wouldn't show up in this graph at all.
Given that this is supposedly a "random guy and his non-expert analysis", which we are told is just "vibes", it seems remarkably hard to successfully attack his points.
The twitter thread is confusing "enhanced benefits are ending" with "people are being kicked off the program". Noah didn't need to explicitly rebut that because it's based on a completely false premise. Your reading comprehension is remarkably poor.
> look closely at the X axis in Noah's graph - it only goes up to March 2023!
"my first instinct would be to debug the data not the users" laughed when I read this. Very much a tech industry person thought. When stuff doesn't work people always think first the machine / code is the problem, when 99% of the time it's the human at fault.
Unfortunately I don't think focusing on facts is going to help. Facts don't care about your feelings, but feelings don't seem to care about facts either.
Nah, that gives cable news too much credit. Fox reaches 2.1 million viewers at its absolute prime time peak. That’s almost nobody compared to users of TikTok (100 million or so) or Twitch (30 million or so).
The ship sailed on social media providing most news years ago. In 2019 Pew found that most people get their news from social media. Its only increased since then.
Fox News is for old, decrepit boomers and gym TVs. I do not think it has much influence at all.
So maybe it’s more that social media is polarizing and both polarized sides have an incentive to diverge from the moderate point of view (which is more in touch with the more objective economic news).
it depends on the demo. some people definitely get almost all their information from social media. I would guess same order of magnitude in number as people getting most of their info from Fox, but put a gun to my head and I wouldn't be willing to bet which is higher.
The people edit will determine the next election are probably not listening to Fox. The floating voters will have voted for Biden and may not vote for Biden again. They are genuine centrists.
Trying to convince them that they are doing well by ranting about right wing tv isn’t going to work.
That doesn't make sense. US and European "vibes" are the same, meaning Fox News is irrelevant. The difference is not in how people feel but that in the USA the government is telling people they're wrong to feel that way. Whereas in Europe governments are studiously avoiding even talking about the economy really, politics is dominated by immigration, energy security, etc.
My theory is that the American public is suffering from a severe case of PTSD, due to two difficult events that are unprecedented in the lifetimes of most Americans of adult age today. They are the COVID pandemic and the 9% inflation surge— the first not seen since 1918, and the second since the early 1980s. Either one would be sufficient to scare the living daylights out of anybody, especially those in the lower 60% of the American economic spectrum.
It takes the average soldier about five years to get over experiencing combat (for many it is far longer). The American public, like those soldiers, expects all hell to break out again at any moment.
Only, our rich pundits seem surprised. I'd like to give them a year in the bottom 20% of the income spectrum to give them a tiny taste of the real world.
Regarding this double whammy Covid/inflation PSTD among Americans, I admit they are reacting in a way different from Europeans.
Another reason for Biden's poor polling is that the opposing party never gives the current president high marks on the economy.
I think there is some truth to this. In 2021 Americans were hoping for some kind of ecstatic return to pre-2020 economy and society and inflation was the biggest and most obvious way that never materialized.
All the corporations-INSCOS, the financial world, energy corporations- are the dirty hands.
They successfully lobby for free market capitalism, but it’s not a free market.
Other developed countries don’t try to wrest profit out of parts of life that really are things we all have to pay for. Illness, birth, age and education are on the debit side of the balance sheet.
As for inflation and debt- read more because there is a wealth of information on the topics.
We pay premiums and tuition at outrageous rates plus we pay taxes. Other countries- say Germany- pay taxes and cover everyone.
We’re going to pay for these things one way or the other.
The problem with the way we do it is we got nothing if we can’t pay our premiums, and remain uneducated of we can’t afford tuition.
Just dare you to explore German health care, longterm care and education. Just Wikipedia it.
So Biden has clean hands? Which corporations do you think are responsible for the inadequate health insurance, university education, elder care or child care? Not to mention inflation and rising government debt.
The rate of inflation may be down, but prices are not. Many people may be making more money, but I am personally making less than I was before the pandemic. In Los Angeles, there are lots of people who had a rough year for work with the strikes. Gas has been between $5-$6 per gallon. I know people who are looking for work who are not in entertainment.
Tipping culture now pressures consumers to tip between 18% - 25% on a lot of services, where ten years ago 15% was expected only by waitstaff -- and those folks didn't make minimum wage, while they all do now. I guess those service workers are making more money. And I wouldn't mind it if I were, too.
And I say all this as someone who is glad the economy is doing better for lots of folks and doesn't blame Biden for inflation. I am focused on pressuring my representatives to speed up permitting for housing; mandating landlords install electric appliances and 220V outlets for charging EVs; and taking advantage of the IRA to replace all municipal vehicles with electrics. I want clean air! I want to decouple our economy from fossil fuels, so we can stop subsidizing them and making autocracies rich. I want the predicted cheaper vehicles and fuel. Trucking should get cheaper, too, then, right? Will we get some deflation by 2035..?
That's given the Fed's targeting. I don't necessarily think it's true otherwise. And if the fed takes it's targeting seriously we should never have deflation as it can (and should) just magic money into being until there is no deflation.
You think the fed should allow actual deflation?!? Plenty of room to disagree about the right target but wage stickiness makes outright deflation almost a guarantee of a recession or even depression outside of some extremely extremely weird circumstance like a a huge unexpected leap in productivity.
Tipping is a problem! It's rarely used to incentivize service. Fuck, it makes my service worse on Uber bc drivers want to chat to get a big tip and even if I want quite I reward them for it bc I feel bad they made the effort.
It doesn't increase service wages because the employers just reduce wages to target the competitive wage with tipping (you can even evade the minimum wage in tipped jobs).
It's become just a way to lie to the customer about the price and then guilt them into not incentivizing increased productivity.
For instance, almost all the cost of Instacart is the tip because it's 15% of my purchase. As a result I often will just order a few items because I don't save any money by waiting for a big order which generates pure economic waste since a big chunk of the actual costs are delivery.
I fucking hate hate hate tips in the service industry but I can do nothing because not tipping just screws the worker.
In California, even tipped workers get minimum wage now, which is $15.50/hr and rising every year. This article manages to complain about it, despite conceding the progress, by pointing out problems remain and the history is mean:
It’s worth pointing out that historically tipped workers would not report much of their cash earnings for taxes, because it’s almost impossible to track, which made their earnings go farther. Now that we are living in a digital age, a lot more tips are given on cards and traceable.
Tipping is good for haircuts but mostly I don't WANT local services. I don't particularly want to support the overhead imposed by taxi licensing when it no longer serves a purpose and I STILL have to tip the taxi drivers so I'm just losing money to help avoid amatuer competition.
I want less stores wasting space and money just to pay kids to pointlessly restock shelves. My friends and I did that for long enough that I know I'm not getting better service just authoritative bullshit about what I should buy. I much prefer comparing reviews online and having robots pull my order out of giant warehouses located on cheap land without me feeling any pressure or awkwardness in shopping.
When I go into a physical store I pay more, get worse products and end up buying stuff I don't need.
Interesting counter argument to what people often say. I like local restaurants, cafes and hardware stores, because I like personality and expertise. There are times I need to go to Home Depot, because they have more stuff, but their staff often know a lot less than those at local hardware stores.
Deflation is a very bad thing. Please do not ask for it. It is also decidedly NOT the same thing as "things getting cheaper".
Deflation is what happens in economies like Japan in the 90s and aughts. If you think the job market looks bad in the US, trying living in an economy where people are desperate to be accepted for unpaid internships because that might lead to an eventual job, and they are happy to work 12 hour days to keep their shitty jobs (not counting the mandatory-but-unpaid "socializing" after the job).
"Things getting cheaper" is what happens when economies of scale kick in, or when supply and demand change. Noah has posted endless graphs of things getting cheaper (most commonly solar power). Yeah, we should push to make a lot of things cheaper. That is not at all the same thing as deflation, which we definitely should not want.
Electric vehicles don’t provide clean air. Where does the electricity come from? The batteries? The infrastructure? There is no magic solution. Electric cars are not environmentally “clean” and are much more expensive.
During most of my life the electricity to charge my EV came from 100% hydropower or 100% solar. Oil had a great 100-year run, now it's fading fast.
Especially now that EVs don't cost more to buy than the average car bought in the U.S. at least. And the maintenance costs are way lower. "Check wiper fluid level every 500,000 miles." That's about it. No leaky radiators, water pumps, transmissions, spark plugs, oil changes, ... And for long distance driving, you arrive refreshed by the silence and effortless power going up hills and mountains (and getting your battery recharged for free on the way down).
Electric vehicles cost more than the average car in the United States even with the tax credit. You haven’t been reading the news lately, Hertz is getting rid of their Teslas because the repair and maintenance costs are much higher than their other cars. EVs are more expensive to repair and have a higher percentage of defects according to consumer reports.
"Hertz Chief Executive Stephen Scherr also said he expects repair costs to come down as replacement parts become more readily available, and as Hertz purchases more vehicles from traditional carmakers with a broader network of suppliers.
Meanwhile, Scherr said the rental-car company is attempting to lower the price of spare parts and planning to perform more repair work in-house to bring down costs.
Ford Motor also expects that repair costs will eventually come down as technicians are trained and components become more readily available.
“With any technology, the more it scales, the more the cost comes down and customer wait times go down,” said a Ford spokesperson.
It would be great if repair prices come down in the future, but not for someone buying a car now. The main issue is with minor accidents causing minor damage to the battery unit, which are now replaceable only as a whole, and account for more than half the price of the car. This also makes collision insurance expensive since a dent in the battery unit means the car is totaled. I considered Tesla (good performance, easy charging, no dealers, but barren unfriendly driving UX, poor fit quality and expensive repairs) and Kia/Hyundai (cool design, nice style and quality, better UX, lots of complaints from consumers: audio system breaks, and entire computer needs to be replaced, repair techs not familiar with the new EV models) but finally chose a Toyota Crown hybrid which had no downsides for me. Good gas mileage, quality product without reliability worries.
And here’s an alternative to the mainstream news, including this factual breakdown: “sales of purely electric vehicles have been steadily increasing at a roughly 60% annual growth rate for each of the last six quarters. That’s fast enough to double EV sales every 14 months!”
Where did he say it was magic? EVs provide a path to clean energy. You make all the cars EVs, then you make all the power plants Solar/Nuclear etc. There is nothing easy or magic about this, but it IS a path.
Alternatively, you whine and moan about where electricity comes from, do nothing, and later when all the power plants are nuclear and Solar, you have STILL got a bunch of gas guzzling vehicles pumping shit into the air. Well done, pessimists!
Or alternatively, nobody pushes for Solar or Nuclear, because after all, "even if you get to 100% solar or nuclear, there are still a bunch of gas cars on the road!"
Your objections, and those of similar minded folks, are just excuses y'all make to do nothing, because shit is hard.
Could it have to do with locus of control? Several thoughts here.
Background- I am a business person with interests in several small, basic manufacturers. My income is down substantially from 3-5 years ago, although I don’t translate that to the whole economy.
What causes my negative sentiments is the price and lead time for virtually any production equipment has gotten ridiculous. It costs millions and takes years to make improvements that used to be much more available, turning all of them into huge risks. Yet labor demands are constant pressure.
Second, the mid-size community that I live in struggles to make even nominal investments, unless tied to some federal program or some Fortune 500 sponsorship.
All this leaves a sense of powerlessness to affect our own outcomes. The economic benefits seem bifurcated. Grandiose towards large scale, fed-supported efforts; modest and much riskier to everyone else.
Yes, this sort of thing is heading in the right direction. The data Noah is quoting to claim the economy is good are very low resolution. Enormous amounts of detail are lost this way. Supply chain problems wouldn't even show up in the sort of analysis posted here.
They reduce his output relative to what it could have been, sans problems. But we don't track that, only QoQ change in abstracted global "output". Mr Lorentzen said equipment for _improvements_ was hard to come by, not equipment needed to sustain ongoing production. That's GDP growth that should have appeared but didn't.
Yep. I think vibes pick up something real before it becomes obvious. Time will tell, but all the signs say we’re headed for some bleak times. I hope I’m wrong.
Let me try to answer the actual question - just conjecture.
1). Housing is a huge deal. I’d like to see the data about affordability today vs 2019 - it strains credulity that it’s not much worse. In Europe they likely don’t have a supply shortage as they don’t generally have 30 year mortgages - everyone’s payments are up so the phenomenon of people hanging on to houses doesnt exist
2). Composition effects. Who’s answering these surveys? It seems that the aggregate improvement is a result of bottom and younger workers improving at the expense of the professional class who are paying the higher restaurant tab. Maybe this is what lowering inequality feels like.
3). Loss aversion. The “stinky” payments were much higher in the US and the hedonic adjustment kicked in. If I give you $5,000 and then take away $4,000 most people will be pissed however irrationally.
4). Societal volatility. European governments it seems have chosen to support employment vs workers. This probably is a worse choice in the long term as the US economy will innovate and better adjust as a result but the process is painful.
5). WFH. Not nearly as much of thing in Europe in Europe. As people are called back in, they don’t like it because they have optimized their life for WFH and are now rediscovering the sky high day care costs etc. again to point (2).
6). The old adage of “happiness = reality - expectations”. It seems that US expectations have skyrocketed during the pandemic (stimulus, WFH, wealth effects). Now people are extrapolating those. In Europe I don’t think we ever had the expectations surge.
7). General media fearmongering that has been eloquently discussed. If the world is ending in 2030 as AOC says (tongue in cheek), who cares what U6 number is.
8). The McDonalds theory of bad vibes - Nate Silver’s recent piece. Do read it. In Europe the companies’ ability to manipulate people into greater consumption may not be as high due to significant regulation on what they can and cannot do.
2 is interesting: less inequality, while it sounds good, really could mean the typical person is worse off.
6 is also interesting. High expectations can be a problem in two ways. One is the emotional one, where they create an endowment effect. The other is at the level of budget planning.
I'd add that one reason people are reverting to vibes is continuing fall out from the loss of trust in academic political neutrality. People really want to know whether a vote for Biden is a vote for a soft economy and that's a question that non-economists don't have a chance of reliably evaluating the evidence on their own.
However, since voters no longer feel they can disentangle expertise from the values held by the expert they might as well just go vibe. Not that vibes weren't always popular but the lack of expert guidance makes it worse.
Experts have been blatantly lying right in our faces to preserve whatever narrative they benefit from, true or not. Or course people will ask themselves whether what they see accords with what they are told. The gap lately is glaring. Good for people who trust themselves over experts.
What have experts blatantly lied about? Do you have any examples? I can only think of one significant one, and that one wasn't to benefit the experts, it was well-intentioned (though still a mistake, IMO).
There is an old axiom that still rings true: "Economists have always been right about the size of change in the economy or when, but never both at the same time."
Well that's not surprising since if you could reliabily predict when the economy will go into a recession or boom people will time their investments to profit from that prediction making sure it happens at a different time. As a theoretical matter economists shouldn't be able to predict those things too well. What they should be able to predict is what policies are pretty harmful.
I mean think of it like expertise about car crashes. If you could tell someone: you'll be in a crash at 5:35 they'd be sure to be super careful then and avoid it. But that doesn't mean you don't know that driving drunk is likely to get you into an accident or that it's riskier when your tired and highway hypnosis kicks in.
Both. Most people don't have a good grip on any relation between the two and fear both. Currently the more salient fear is inflation but im not sure I understand what you are asking.
I found this planet money episode helpful by suggesting a reverse halo effect: if climate change/racism/trump are so bad, how could the economy possibly be good? General doomerism seems like a good explanation of why there might be a "vibecession" and why the techo optimist bent of this blog is so positive.
Dude, I am a longtime fan of your work, but you're somehow missing what seems blatantly obvious to many regular people, which is that we're getting killed at the grocery store. This is not a narrative. I live and work among people who are suddenly struggling to cover routine expenses. Consumer debt is running amok. I know an HVAC sales guy who only eats what he kills, and he can't sell systems bc nobody is getting approved for financing. The tide has risen fast, and many of us are struggling to keep our breathing holes over the line.
Heard of Greedflation? Supermarkets/grocery stores have very small margins, so when people started TALKING about inflation, they saw a chance to increase those margins by raising prices and blaming it on Biden.
If you live near a Trader Joe's, get their house brands with twice the quality at half the price.
Trader Joe’s is great, but have a pretty limited selection. How do the greedy grocery stores who heard their customers talking about inflation unilaterally raise prices when they have to compete with, not only Trader Joe’s, but Costco, Target and Walmart and dollar stores? Is it a massive collusion conspiracy? May be some holes in that theory.
People have negative views on the economy because the string of 20+ months of negative real inflation was only just recently ended.
Low(er) inflation in the last couple of months still leaves everyone with a significantly lower income after net inflation adjustment for the last 2+ years.
My wife still works a corporate job - she got a 3% raise last year which was above average for her company. Social Security COLA increase in 2022 was 5.9%, 2023 increase was 8.7%. How many people got 15.1% salary increases over the past 2 years? Not too many, I think - I doubt anyone would consider SS COLA increases to be the top end of the income increase scale.
Equally, the "lower" inflation didn't mean prices went back to 2020 or even early 2022 prices - prices only increased at a lower rate vs. the worst of mid to late 2022 i.e. prices are still very high.
Nor is the unemployment rate truly an independent indicator. A huge number of Americans in both relative (percentage) and absolute terms are working 2 or more jobs - clearly the mere fact of having a job does not automatically equate to meeting the cost of living.
And finally: greedflation. It is the meme being pushed by defenders of the present administration but I think is overegged. My personal observation via my grocery shopping is that the "list" price of food has gone up a lot but the "base" price is up but relatively not so much. My proof is my Safeway statistics: I have been a customer for over 20 years. I am an inveterate bargain hunter. Although I am shopping only for 2, my lifetime savings is over $7000 - I averaged around $500/year for the last decade plus.
My savings for 2023 is nearly $1300. It is this high because the list prices of many things I buy on sale have exploded. Cans of soup used to be list price in the $2.x range - they are now $4.79. When I buy this soup on sale from $1.27 to $1.99 ((used to be $0.99), I am now "saving" literally 3 times or more what I used to.
The same can be said for a wide variety of other food of all varieties.
People who are not inveterate bargain hunters and who just buy food when they need it, are paying these exorbitant not-sale prices.
But Safeway shopping is mostly food "at home".
For food "not at home" - which is where the vast majority of food inflation has been coming from:
I went to Taco Bell because of the wife a couple weeks ago. 1 burrito supreme (hers) and 3 specialty burritos on sale (mine, of which I gave one to her) plus a large drink, in a small town in Central California, cost $18.49. While it has been 3 decades or more since $0.59 bean burritos and $0.99 beef burritos - this is simply egregious.
Even San Francisco minimum wage would require more than a full hour to pay for this "meal".
An appetizer at a local Thai restaurant - beef - used to be $12 in 2020 pre COVID. Now it is $23.
Overall - some things are getting back to pre-2022 inflation levels. Chicken breast: there was a period of at least 8 months where chicken breast never went on sale, not once. Typically there is a sale at least 3, 4 times a year where the price drops to $1.99/lb - these sales were missing for a long time but have now returned. Ironically, there are sales now because Safeway is clearly repackaging Deli chicken breast as opposed to the (presumably egg layer slaughter) previous seasonal sales.
My point is that these changes impact bank accounts.
Net net: pointing to year ago comparisons to try and say that people have inaccurate understanding of their actual economic/financial situation is literally saying that they should not believe their own bank accounts as opposed to the statistics you cite.
Three big biases that are often present, I assume here too:
(1) Loss aversion. A little has changed since the pandemic. Some things got better, some got worse (different goods' prices, opening hours of motel front desks, etc). When the better and the worse are equal, Kahnemann predicts you think you're worse off.
(2) Negativity bias
(3) political tribalism from the opposing party (clearly demonstrated in the partisan consumer sentiment jumps after a Presidential election changes the party), and from leftists against Democrats (seems obvious from anecdotal observation, but I don't know of evidence about it).
Also worth pointing out that the quick jolt of wage and price inflation makes some people a bit richer and some a bit poorer. The average person is better off, as the numbers indicate, but loss aversion and negativity bias should mean that those who are worse off will be more likely to talk about it.
This can suck for them obviously. At the same time it's equally great for the larger number of people who are better off, but they may be less likely to speak.
Noah, I'd like to get your take on something I heard in an interview Ezra Klein did on his NYTimes podcast with Michael Podhorzer a few weeks ago. Famously, I suppose, he predicted Trump's victory and has long been a skeptic of the way polling is conducted these days when it comes to the economy and politics. Frankly, I thought he made a ton of sense. In the discussion, he was talking about how one of the primary reasons why "normal" economic indicators, or at least, "traditional" ones that the media likes to focus on, like the stock market, the unemployment rate, and GDP numbers, no longer accurately reflect people's attitudes on the economy overall is because that stuff mattered a lot more in decades past when shares of economic prosperity were more evenly distributed.
Now, with things being as unequal as they are, the average American worker sees less and less personal prosperity from a booming economy, so "good" economic news, while better than bad news, sometimes leads people to be angry and resentful when they don't see those headlines translate to a stronger pocketbook. The recent bout of inflation only exacerbated this phenomena, which goes a long way towards explaining the "bad vibes" as well as anger at elites. Note that while the inflation rate has been arrested, prices are still higher and have not gone down. I know that we don't actually want deflation, but if his line of argument is correct, we not only need a boost in wages, we need a substantial reduction in inequality, or this problem is only going to continue to cause a political ruckus.
I see too many downtrodden folks on the streets who have not received raises and or cannot go to restaurants with their meager wages. No equality or equity here. Just tone deaf pseudo elitists pitching their data and their interpretation of the data they have concocted for their own self interest. The so called winners write history, come up with the data they want, and it all justifies their lives.
Every guy is just out to dinner saying “Wow look at the price of steak! I mean I can afford it thanks to my last raise, but how is everyone else managing?” Meanwhile the restaurant is full because everyone got a raise.
People like to think their raises are the result of their own hard work. They don't like to think that they're average workers just benefitting from a broad inflation adjustment like everyone else. So they don't assume everyone else is being similarly lifted.
Yeah think it really breaks people’s brain when prices and wages both are rising quickly. My other plausible theory is that a lot of people got a raise to match inflation so they are accurately reporting doing fine.
But they are still upset that the raise doesn’t allow them to improve their standard of living so they report the overall economy being bad.
Because people are accurately negative in Europe. Prices have increased more than the wages there but not here.
But why is this any different than Europe or other countries? That is the question that Noah is trying to raise here.
How to communicate this to voters though? If you tell people "your hard work wasn't why you got a raise", they will hear "you're lazy" or "you don't deserve your raise".
Also, if you change jobs and get a better salary, you won't count that as a raise for the same work, because it is indeed a different job and probably hard to compare directly. But the fact that you could do that is a good sign.
Yeah, that’s exactly what they’re saying at my local food bank distribution, where 200 cars are lined up😂
Personally my wages have not grown as fast as the cost of dining out over the last several years, and I'm not sure my experience is uncommon. Real median wages are still slightly below where they we're pre-covid ( https://fred.stlouisfed.org/series/LES1252881600Q ).
As far as the restaurants being packed, again that has not been my experience. A lot of the places I used to go to before the pandemic have since closed, and it looks like restaurant employment is below pre-covid https://fred.stlouisfed.org/series/LEU0254493800A
Also, while my 401k has had a nice run this last year, it still not much better than it was at the peak in December 2021, despite the fact that I have been maxing out my contributions. The S & P 500 is still below the 2021 peak and the bond market has been pretty rough https://www.morningstar.com/funds/xnas/vbmfx/performance. Yes the recent trend has been positive and I hope it continues, but I don't think we should expect people to start dancing in the street until they feel they are safely out of the hole they've been in for the last couple years.
You're not wrong. But the problem is that many people griping about the market being below its 2021 peak were the ones screaming most about the risk of inflation - which was the result of the ZIRP fiscal policy and COVID stimulus that drove the market to those frothy highs in the first place! The fact that the markets have recovered as quickly as they have in a more historically normal interest rate environment is actually a good sign that the economy is more resilient than many thought.
I think this phenomenon is plausible, but it doesn't explain why this didn't happen before and isn't happening in Europe. So at least it seems incomplete (though I wouldn't be surprised if it was part of the answer).
Look at chicken. A common staple. 3-4 times as expensive as it used to be.
https://fred.stlouisfed.org/series/APU0000FF1101
Interest rates are clearly reducing housing affordability for new buyers. Rent is higher than a few years ago. Gas is higher. Groceries in general. There’s some slowdown in the inflation rate but that’s just a slowdown in the rate of increase.
So there’s a few things to note here. One is, even if wages have outpaced inflation this year, this does not mean that people are better off than they were four years ago.
The other is this: the CPI doesn’t seem to measure what the median guy is buying all that accurately. I’m not sure what else they put in to reduce the prices given the obvious increases in groceries, rent, and gas.
However, if rent is up, mortgages are up, the price of food staples has gone crazy, it’s not that fair to blame the little guy for not understanding macroeconomics
He just has to understand his pay-check
> 3-4 times as expensive as it used to be.
Did you read the graph? It's up about $1/lb from the low point in 2020, making it 33% more expensive, not 300%. You're an order of magnitude off.
Vibes vs reality example substantiated.
Shelter is 34% of CPI-U, food is 13%, gas is 4%. Seems about right.
All of the examples I've seen of really expensive food have been faked or people getting DoorDash for everything.
Food and gas are good examples there of why the average or lower than average Joe might be feeling the pressure more than the commentators on this thread. Food is a higher percentage of poorer people’s income. 13% is higher as a percentage of their income than what the top percentile spend on food, and lower than what the bottom spend. Shelter seems ok. Gas is a major cost in areas for people who can’t take public transport, cycle or walk to work. It’s surely higher than 4% of the cost of living for many at the median and before who have to have a car.
It looks like high end goods are not increasing anymore and maybe be falling but those are limited purchases and we know because of the savings having increased that people are spending on these items, but that probably doesn’t mean that the average shopping cart hasn’t significantly increased.
You lied. You can take an index, relative to 2006 prices for chicken are 30% higher.
I didn’t lie. I got it wrong.
Also look at Tyson's profit margin and consolidation in the poultry industry.
But none of those things is true. I live and work in the heart of one of the nation's most expensive cities; my daily lived experience is that none of those things is true.
Noah is too polite to say it but the honest explanation for all this is, adult Americans today are not functioning adults. We've become a nation of whining infants. It's dueling tantrums all the way down now.
I laugh at people one reddit who complain about cost of living and spend half their money on UberEats.
Where do you live? Burgers $25 - not at my local fast food places and less than half that at the most organic, high-end places.....
You don't have data, you just made an assertion that doesn't ring true to anyone, because it's not true. I live in one of the most expensive cities in the country, and here's the price of a burger at one of the fanciest gastropubs: https://www.easternstandardboston.com/menus/#dinner
And here's the price at a "burger shop" (still relatively fancy):
https://order.toasttab.com/online/boston-burger-company-somerville-37-davis-square
And here's the price at a decent diner:
https://www.charlieskitchen.com/menus
If you don't want to click through, it's $20, $13, and $10.
So yeah, you're completely full of it.
...when reading this comment i had a sudden shock of dread and fear, that perhaps what's going on here is realtime price discrimination
Maybe if you pull up to the drive-through in a rolls-royce they charge you $25 but if you show up in a 1999 accord they charge you $11
when i clicked on the links, i was genuinely bracing myself to see prices other than what you listed, and i was fully expecting to run the experiment using safari on a mac vs edge on a windows 10 laptop with fully-transparent user-agent strings and see wildly different prices
Luckily it didn't happen! It appears we are not doing price discrimination on such a granular level yet. Prices are as reported in the parent comment.
If you get a fancy steakhouse burger, maybe it's $25? But you could also get a #1 combo at In-n-Out - a really good double burger, fries, and a soft drink - for about $11. Even in San Francisco.
Sorry, I have worked frequently in San Francisco and live in a semi-rural area - neither of which had prices like that. Maybe there is a fancy place somewhere in SF or LA or NY that has that kind of price, but not where most of us mortals eat/live (and yes, I worked in the SF financial district which tends to higher prices that some other parts of SF).
Nopa on Divisadero... Matty's Old Fashioned in Oakland...
Probably because Trump and Biden goosed the system with trillions of Fed-printed money.
Then why are prices up even more in Europe and other nations?
less and less so, with birthrates and mortality down, as well as economies of scale and transport energy supply beyond short-term, I would guess - localization, skill retention increasing
Boomers were very productive but now value taking care of spouses and grandchildren over a paycheck…selfish!
Even so, that ended over a year ago.
If there had been no stimulus we still would have had ~5.5% YOY inflation AND we would have had to deal with the second and third order effects of letting everyone who actually needed the money fall through the cracks.
Letting people "fall through the cracks" is deflationary (recessionary), no? They would have cancelled each other out.
But yes, we do have symptoms of entering an inflationary regime, pandemic aside (short labor pool, commodities in potentially short supply, etc.)
15 pct of US GDP (3 pct of global GDP) in fiscal handouts in a few months near the start of 2021 combined with zero/negative rates and trillions in QE globally lead to excess demand and price increases. Wages, nearly three years on, are just starting to catch up to the inflation genie.
The only good news is that inflation needs to be sustained via more reckless policy errors or exogenous shocks, Biden and Janet certainly aren’t helping the Fed with their 6 pct deficit at full employment, but thanks to the Fed’s abandonment of “transitory”, Chinese dumping after the end of their Biden-fed 2021-22 export boom, and a divided Congress inflation isn’t being artificially fed and has at least fallen to a level only 50 pct above the target rate (a “victory” per Noah).
If wage increases were the cause of inflation, then inflation would be increasing now as wages are finally catching up, but this is not the case.
Wage demands can only drive inflation if policymakers accommodate them with loose policies. Biden/Yellen are certainly trying their best (as did the “run the economy hot” types like Brainard when she was at the Fed) but most of the Fed has returned to their senses and aren’t making it easy for companies to increase wages above inflation plus productivity
I worked for Walmart corporate in the early 2000s…most of their shoppers at that time were extremely price sensitive because they lived paycheck to paycheck. So are saying for a few months their shoppers stopped living paycheck to paycheck and destroyed the economy??
Who says the economy is destroyed? We are in much worse shape now than in 2019 but certainly better than 2008 or 2001. Eventually we will get a serious president, treasury sec, Fed chair and Congress who will address debt- maybe in 5-10 years
The “doom loop” without accommodation from policy makers is theoretically possible but is not probable (almost always inflation is a result of monetary and fiscal policy looseness and/or an exogenous shock). Also hard for the “doom loop” to be sustained in open economies - rather than higher wages staying in the system to be used to pay more for employers’ products, imports increase and exports become less competitive.
Orthodoxy 😃
The Fed causes both wage and price increases. Some over-target inflation was good to re-allocate resources after the COVID shock and some too much.
You are describing a situation in which expectations are driving inflation and that is not the case. Look at TIPS.
Yes they did. They just had lagging shelter data and took too long to raise rates. So most of the inflation is transitory but the shelter inflation is real.
Trump Tax Cuts and lockdowns caused the persistent shelter inflation.
The striking thing about that graph of public sentiment vs. economic indicators is that American public sentiment is almost perfectly in line with European public sentiment; the difference is that the US is doing well (at least according to the indicators) and Europe is not. That suggests to me that negativity bias might be a good explanation: Europeans and Americans are equally biased towards negative views, and those views just happen to be true there and false here.
And perhaps the globalization of media means that everyone’s view about “the national economy” is partly actually about the global economy.
You mean that Americans are worried about the economy in France and Singapore?
How would they know about the global economy? From Karen on Facebook?
The media may be globalized, but very few viewers are interested beyond a few seconds of seeing someone somewhere in front of a camera in an exotic location.
Yeah, this seems relatively implausible to me. But if there really is a better fit between American and international attitudes about the economy, and the performance of the international economy, than between American attitudes about the economy and the performance of the US economy, then we probably should consider whether social media might be having this effect. (It would have to be more through things like Reddit and TikTok than Facebook, where people's networks just aren't that international.)
If it was globalization, I think that would cause other countries to align with America rather than the other way round.
Maybe the universal negative sentiment is due to all countries experiencing inflation and people are still adjusting to the higher price levels. While the US has stronger economic growth and employment levels, that could simply be insufficient to mitigate these negative feelings.
Maybe check some stats. Isn’t EU unemployment at record low levels? Isn’t inflation still falling in the EU? Yes, EU growth has been hit by dropping export demand and Chinese competition, and Europe can’t be as reckless as the US is fiscally to offset this, but the consumer in the EU is doing fine.
To me it is the same reality as in the US- things are almost as good as they were pre Covid but we’ve moved through all of these shocks and policy mistakes (in Europe, over reliance on Russian energy especially) and the future looks a little scarier. No surprise people aren’t overjoyed
The other possibility is that the western economy is highly correlated and that the USA is actually doing more like Europe, but the US data has gone bad in some undetected way.
Interestingly in Australia unemployment is quite severely under-reported. Real unemployment (which includes those who do not receive any unemployment related govt payments or have a long term or temporary medical exemption) combined with under-employment sometimes reaches the high teens while it is being reported by economists as being low. Certain NGOs here tend to keep track of the real figure. The fudged figure, however, will never undergo any form of useful re-evaluation as no government wants to inherit this ‘correcting’ of the figure as such as the opposition party not in power will of course claim that real unemployment suddenly rose rather than this correcting.
It would be very rare if this phenomena were only extant in Australia.
Perhaps the lack of congruence of ‘vibes’ in the US with median figures states more about a certain generosity as such (sic) that has been permitted to crawl into the measurements. This would also explain why sentiment and figures are congruent in Europe but not in the US, despite the US sentiment being similar to Europe.
Seems like the obvious government move is to institute the correction factor on a delay at the end of a term and drop the PR problem into the lap of the opposite party.
Let's not forget that 85 - 89% of the stock market is held by the top 10% of Americans though. So in that sense the stock market is a very flawed metric for gauging the general prosperity of the country, and it's also overindexed into "financial innovations" and rent seeking and less about actual productivity and value growth at large.
And in a very real sense, the stock market's gains and enthusiasm almost always comes as a further redistribution of what w/should have been wage and benefit gains for workers into dividends and stock buybacks for the investor class.
It is possible both for the US data to have problems and for it to be genuinely doing better than Europe as well.
The housing boom had more to do with Trump Tax Cuts and Fed keeping rates low and lockdowns leading to Zoom class excess savings.
You're right about housing. Though it's the same in Europe. When I bought my first property in 1995 it cost 2.5 times my salary. Now the average home costs 10 times the average salary - and I would guess the same goes for rentals as well. What would the inflation measures look like if they included housing costs? I'm not sure anyone dares to even check.
The primary measure of inflation in the US, the Consumer Price Index, *does* include housing costs. In fact at 34.4% of the index weighting, housing is the single largest component of the CPI. https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.htm
That sounds very plausible, yeah. Something big missing from the data is the usual kind of issue that causes divergence between people's overall impression and what they "should" be feeling.
Looking at the first graph, it's based on modelling by some rando journalist who states that the original work it's based on is by some guy on Twitter (@Quantian1). I looked up that account and it's mostly shitposting. Statistical modelling is hard at the best of times and bogus models are rife in our society.
So the other possibility here is that the FT's model of what people should be feeling is wrong.
Quantian largely posts about wine but he is in fact a quant and capable of doing financial models.
I think the upshot of his analysis was that Americans were upset about interest rates being high because they have fixed rate mortgages so it affects buying a house more than in other places.
This hypothesis suggests some followup questions.
1. Did Europeans' views of their personal financial situation track European macroeconomic indicators, unlike in the US?
2. Why would negativity bias increase so uniformly across the Western world in the past few years in spite of divergent macroeconomic outcomes? Covid overhang? Media narrative changes common to Europe and the US? Hatred of inflation? Something else?
I suppose if negativity bias explained everything then we'd expect everyone to be negative about the economy all the time. But this is only a phenomenon of the last year or two, before that there were periods when various economies went through good periods and that was reflected in public confidence.
I work in the tech industry. Many years ago I was a part of the operations team for a well known website. We had many automated metrics and graphs. We were proud of them, as we'd put a lot of work into them. Of the many people on this team, I was the only one who chose to read the user support forums. Usually this was a waste of time: our systems caught most problems before they got bad enough for people to complain. But occasionally, I'd discover a problem that our systems had missed. Sometimes this would be a quite bad problem that was falling through the cracks in our systems.
I learned back then how hard it is to get smart people to understand that the map is not the territory. My colleagues just wanted to look at graphs. If users were unhappy but the graphs said everything was fine, they assumed the users were wrong.
When I read this post I'm getting very strong Jobsian "you're holding it wrong" vibes. If consumer sentiment has historically tracked economic indicators very accurately even through the military-scale operation by the US establishment to give people bad vibes during the Trump years, and still does in other countries, yet has now diverged in the USA, then my first instinct would be to debug the data not the users.
One problem I notice here is that many rebuttals to the claims made by DeusEx guy don't actually address those claims, whilst appearing on the surface as if they do. Take the last point about financial situation. You're arguing that if people say "the economy is bad but my finances are good" then this is a contradiction that can only be explained by bad vibes. But it's not a contradiction. We just went through a couple of years in which people were being dumped on by helicopter money whilst having virtually all the ways to spend that money taken away. Savings rates skyrocketed whilst the economy was trashed. Look at the 25 year view, for many people alive today what happened was just unprecedented:
https://tradingeconomics.com/united-states/personal-savings
If you still have a lot of savings (maybe in equity) but there are no jobs anywhere, then you're going to correctly assert that the economy is bad yet your personal financial situation is good. This would NOT be people being suddenly inexplicably stupid or argumentative for no obvious reason, it would be a loss of resolution over reality caused by dealing exclusively in extremely over-simplified models and graphs.
True, but there ARE "jobs everywhere."
Are there jobs everywhere? The data says yes. The people seem to be saying no.
Noah didn't address this point, but towards the end of the thread Deus Ex points out that the US Gov measures quantity of available jobs by counting job listings. We might immediately suspect data quality problems exist there for at least two reasons:
1. A continuing trend towards companies advertising jobs that don't actually exist. There are lots of reasons for this trend to do with changing technology and culture, but it's an actual problem that can create a false appearance of abundance. He even cites a story in CBS News about this, so can't be accused of peddling Trumpskyian propaganda. A few reasons this can happen: unlike in the past where advertising jobs required constant expenditure, it now costs nothing to keep job ads live and have them surface in things like Google Jobs search. Big companies are always backfilling, so find it easier to just constantly advertise for jobs that experience any churn at all, as that way if someone does leave they have a pre-made candidate database with CVs available for free, which lowers their recruiter fees. Etc.
2. The sudden shift to mass scale remote work. I don't know the exact details of how the US counts jobs, but one can imagine that it involves counting jobs advertised in each state and then aggregating at the federal level. If a company that once advertised jobs only in its home city starts accepting remote work, then it now makes sense to advertise for that position in every state and city. Is the US Govt able to correctly de-duplicate these job ads, especially when posted on different forums and potentially with different wordings?
I think accurately tracking the true availability of job openings would be a very difficult task even for an advanced tech company. This makes me agree with Deus Ex Dude that the US Gov is probably not doing it properly.
Note that the second problem in particular would not affect Europe because the EU Commission doesn't give a shit about economics or job creation, and internal labour mobility is much lower than in the USA. So nobody talks about the quantity of available jobs at the European level, labour statistics are all gathered at the national level, and "remote work" will often mean "remote within that one country" and not remote over the entire continent.
> Noah didn't address this point, but towards the end of the thread Deus Ex points out that the US Gov measures quantity of available jobs by counting job listings.
Noah didn't address that point, but it's wrong. That's not how the government measures things.
The economic data and economic sentiment both come from BLS surveys. The people saying they're doing well, but that they think the economy is bad, are the same people. It does not appear to be a data issue.
> I think accurately tracking the true availability of job openings would be a very difficult task even for an advanced tech company. This makes me agree with Deus Ex Dude that the US Gov is probably not doing it properly.
"I can't think of how I would do this, therefore it is impossible" is something very confident idiots say.
You could, you know, just look it up, instead of agreeing with a moron because you're being lazy.
I agree that in an absolute sense, the job market is strong. But you also have people desiring a remote/hybrid role and struggling to find that role as more corporates are asking for more time at the office. This can feel like a "bad" job market.
Additionally, on the contingent side, staffing companies having clearly seen a fall-off in their business in the past year or so. Normally, staffing companies are the "canary in the coal mine" and see decreases/increases before it is apparent in full-time employment. But the data is noisy and quick to change.
Are you sure? Here's an up to date poll that suggests the opposite:
https://www.ipsos.com/en-us/registered-voters-are-feeling-pessimistic-about-state-us-economy
"A new Yahoo Finance/Ipsos poll on economic outlooks among registered voters finds that overall, voters feel the U.S. economy is faring worse than usual in a variety of areas including job growth and inflation rates"
"half of all registered voters say the unemployment rate is about average at the moment, while about one quarter say it is unusually low (25%) or high (24%). Similarly, about half of registered voters (48%) say job growth over the last two years has been about average, though nearly three in ten voters (31%) say job growth has been unusually weak."
Seems there's also a partisan split, with Republicans feeling a weaker job market than Democrats.
Agree that the numbers presented don't seem to back up the description at the top of the news story, where people seem evenly split.
The different ratings might indicate genuinely different experiences. I'd expect Democrats to be more in the public sector, for example.
Sure, but then if you really look on apps like Indeed, ZipRecruiter, etc... you'll see a job posting has 500 applicants. Wait about two or three weeks and then the exact same post will be up AGAIN.
So does that mean they had 500+ candidates and not a single one of them was qualified or decent enough to hire? Or that the hiring process is so broken they'd rather ignore all 500 applicants they received two weeks ago and start fresh from scratch for some reason?
Or that the job role isn't actually one they are earnestly devoted to filling and have no urgency about the process? And that they may or may not hire someone, because it doesn't really matter and maybe someone is just making job postings as a matter of busywork to rationalize their own role at the company, or in hopes that a unicorn will come across the pile. They don't appear to urgently want a competent employee, they want a needle in a haystack, where no one is given an honest accounting of what that magic metric entails.
Or maybe some companies just like reinforcing the "no one wants to work for $12 an hour" rhetoric or use job postings as a form of brand advertising, even if they don't have job openings?
Shitty jobs everywhere. Decent ones require your soul in the form of a DEI pledge of allegiance.
Exactly. If they're all low-paying, mind-numbing, soul-crushing job options, they don't count.
In 2008, people were desperately seeking mind-numbing, soul-crushing job options, and struggling to find them.
LOL I lived in a squat when I couldn't find one and am actually really, really happy that I ended up going that route. Zero regrets.
Despite the name of the survey, it is actually about the views of workers in 2022.
I don't know, but the conversation is about whether people's reports on polls matches reality or not, and the FT graph shows big changes in what people report since the start of the year. I agree with your general point that job quality is higher than 10 years ago, just thought I'd point out that if something changed this year then it won't show up in that survey even though it says it's for 2023. I found the title of the poll confusing and figured I'd point out when the data was collected.
Yeah, I was following the comment until then, but also couldn't make sense of that point. What did you mean, Ranger?
OP said they are in the tech industry. There's been a LOT of rifs in that space, and jobs are definitely a lot harder to come by vs. pre-covid. I don't know whether that goes to "there are no jobs" level, but it's not great.
As another example of Noah claiming he's rebutted a point whilst not actually doing so, I just noticed that his chart of food stamp usage doesn't actually address the claim Deus Ex Moniker made.
In the Twitter thread, he is referring to COVID emergency food stamp benefits expiring in March 2023. It's highly partisan to call this "Biden kicking out kids", but look closely at the X axis in Noah's graph - it only goes up to March 2023! If food stamp usage had dropped after after March it wouldn't show up in this graph at all.
Given that this is supposedly a "random guy and his non-expert analysis", which we are told is just "vibes", it seems remarkably hard to successfully attack his points.
The twitter thread is confusing "enhanced benefits are ending" with "people are being kicked off the program". Noah didn't need to explicitly rebut that because it's based on a completely false premise. Your reading comprehension is remarkably poor.
> look closely at the X axis in Noah's graph - it only goes up to March 2023!
It explicitly says April 2023, you doofus.
"my first instinct would be to debug the data not the users" laughed when I read this. Very much a tech industry person thought. When stuff doesn't work people always think first the machine / code is the problem, when 99% of the time it's the human at fault.
This is an insight so deep it might be... hexapodia!
Unfortunately I don't think focusing on facts is going to help. Facts don't care about your feelings, but feelings don't seem to care about facts either.
You know, I really hate that Ben Shapiro of all people said that. Truly a "Heartbreaking: the worst person you know just made a great point" moment.
I live in Europe. No Fox “News” here, (at least where I live). Remove them from the narrative and change a lot of vibes.
Nah, that gives cable news too much credit. Fox reaches 2.1 million viewers at its absolute prime time peak. That’s almost nobody compared to users of TikTok (100 million or so) or Twitch (30 million or so).
I was thinking of the Fox News idea too. Not just Fox News (which is quite influential on its own https://www.vox.com/policy-and-politics/2017/9/8/16263710/fox-news-presidential-vote-study), there’s a whole RW media ecosystem in the US that is very potent.
I discount your stats about TikTok and Twitch because people don’t really get their economic information from those sites. Is that fair?
The ship sailed on social media providing most news years ago. In 2019 Pew found that most people get their news from social media. Its only increased since then.
Fox News is for old, decrepit boomers and gym TVs. I do not think it has much influence at all.
https://en.m.wikipedia.org/wiki/Social_media_as_a_news_source#:~:text=In%202019%2C%20the%20Pew%20Research,American%20adults%20got%20their%20news.
So maybe it’s more that social media is polarizing and both polarized sides have an incentive to diverge from the moderate point of view (which is more in touch with the more objective economic news).
https://www.ft.com/content/5655ab7c-1152-414e-bd22-67acd06c5c51
it depends on the demo. some people definitely get almost all their information from social media. I would guess same order of magnitude in number as people getting most of their info from Fox, but put a gun to my head and I wouldn't be willing to bet which is higher.
Maybe it’s more like those sites don’t shift the equilibrium so they cancel out of the equation.
The people edit will determine the next election are probably not listening to Fox. The floating voters will have voted for Biden and may not vote for Biden again. They are genuine centrists.
Trying to convince them that they are doing well by ranting about right wing tv isn’t going to work.
Fox News reaches 2 million viewers directly, but viral Fox News clips shared online reach a lot more than that.
That doesn't make sense. US and European "vibes" are the same, meaning Fox News is irrelevant. The difference is not in how people feel but that in the USA the government is telling people they're wrong to feel that way. Whereas in Europe governments are studiously avoiding even talking about the economy really, politics is dominated by immigration, energy security, etc.
Found the wanna be censor. Can’t let the rubes make up their own minds
My theory is that the American public is suffering from a severe case of PTSD, due to two difficult events that are unprecedented in the lifetimes of most Americans of adult age today. They are the COVID pandemic and the 9% inflation surge— the first not seen since 1918, and the second since the early 1980s. Either one would be sufficient to scare the living daylights out of anybody, especially those in the lower 60% of the American economic spectrum.
It takes the average soldier about five years to get over experiencing combat (for many it is far longer). The American public, like those soldiers, expects all hell to break out again at any moment.
Only, our rich pundits seem surprised. I'd like to give them a year in the bottom 20% of the income spectrum to give them a tiny taste of the real world.
Regarding this double whammy Covid/inflation PSTD among Americans, I admit they are reacting in a way different from Europeans.
Another reason for Biden's poor polling is that the opposing party never gives the current president high marks on the economy.
Also, Americans seem to have a resilience deficit.
I think there is some truth to this. In 2021 Americans were hoping for some kind of ecstatic return to pre-2020 economy and society and inflation was the biggest and most obvious way that never materialized.
This, and many other comments don't address Noah's argument. Why is America the only country this is happening to?
Biden has clean hands.
All the corporations-INSCOS, the financial world, energy corporations- are the dirty hands.
They successfully lobby for free market capitalism, but it’s not a free market.
Other developed countries don’t try to wrest profit out of parts of life that really are things we all have to pay for. Illness, birth, age and education are on the debit side of the balance sheet.
As for inflation and debt- read more because there is a wealth of information on the topics.
We pay premiums and tuition at outrageous rates plus we pay taxes. Other countries- say Germany- pay taxes and cover everyone.
We’re going to pay for these things one way or the other.
The problem with the way we do it is we got nothing if we can’t pay our premiums, and remain uneducated of we can’t afford tuition.
Just dare you to explore German health care, longterm care and education. Just Wikipedia it.
So Biden has clean hands? Which corporations do you think are responsible for the inadequate health insurance, university education, elder care or child care? Not to mention inflation and rising government debt.
Americans didn't have those things in 2019 either.
But American consumer sentiment only stopped tracking other economic data in 2020.
The rate of inflation may be down, but prices are not. Many people may be making more money, but I am personally making less than I was before the pandemic. In Los Angeles, there are lots of people who had a rough year for work with the strikes. Gas has been between $5-$6 per gallon. I know people who are looking for work who are not in entertainment.
Tipping culture now pressures consumers to tip between 18% - 25% on a lot of services, where ten years ago 15% was expected only by waitstaff -- and those folks didn't make minimum wage, while they all do now. I guess those service workers are making more money. And I wouldn't mind it if I were, too.
And I say all this as someone who is glad the economy is doing better for lots of folks and doesn't blame Biden for inflation. I am focused on pressuring my representatives to speed up permitting for housing; mandating landlords install electric appliances and 220V outlets for charging EVs; and taking advantage of the IRA to replace all municipal vehicles with electrics. I want clean air! I want to decouple our economy from fossil fuels, so we can stop subsidizing them and making autocracies rich. I want the predicted cheaper vehicles and fuel. Trucking should get cheaper, too, then, right? Will we get some deflation by 2035..?
We won’t get deflation ever unless there is a significant recession. Even a decade or two of sub-2% inflation requires a pretty bad economy.
As the Bernanke-Yellen epoch demonstrated.
That's given the Fed's targeting. I don't necessarily think it's true otherwise. And if the fed takes it's targeting seriously we should never have deflation as it can (and should) just magic money into being until there is no deflation.
We SHOULDN'T but Bernanke-Yellen had generally below-target inflation for a decade.
You think the fed should allow actual deflation?!? Plenty of room to disagree about the right target but wage stickiness makes outright deflation almost a guarantee of a recession or even depression outside of some extremely extremely weird circumstance like a a huge unexpected leap in productivity.
Tipping is a problem! It's rarely used to incentivize service. Fuck, it makes my service worse on Uber bc drivers want to chat to get a big tip and even if I want quite I reward them for it bc I feel bad they made the effort.
It doesn't increase service wages because the employers just reduce wages to target the competitive wage with tipping (you can even evade the minimum wage in tipped jobs).
It's become just a way to lie to the customer about the price and then guilt them into not incentivizing increased productivity.
For instance, almost all the cost of Instacart is the tip because it's 15% of my purchase. As a result I often will just order a few items because I don't save any money by waiting for a big order which generates pure economic waste since a big chunk of the actual costs are delivery.
I fucking hate hate hate tips in the service industry but I can do nothing because not tipping just screws the worker.
In California, even tipped workers get minimum wage now, which is $15.50/hr and rising every year. This article manages to complain about it, despite conceding the progress, by pointing out problems remain and the history is mean:
https://www.desertsun.com/story/opinion/2023/04/25/california-restaurant-workers-struggle-for-increased-minimum-wage/70146579007/
It’s worth pointing out that historically tipped workers would not report much of their cash earnings for taxes, because it’s almost impossible to track, which made their earnings go farther. Now that we are living in a digital age, a lot more tips are given on cards and traceable.
Tipping is good for haircuts but mostly I don't WANT local services. I don't particularly want to support the overhead imposed by taxi licensing when it no longer serves a purpose and I STILL have to tip the taxi drivers so I'm just losing money to help avoid amatuer competition.
I want less stores wasting space and money just to pay kids to pointlessly restock shelves. My friends and I did that for long enough that I know I'm not getting better service just authoritative bullshit about what I should buy. I much prefer comparing reviews online and having robots pull my order out of giant warehouses located on cheap land without me feeling any pressure or awkwardness in shopping.
When I go into a physical store I pay more, get worse products and end up buying stuff I don't need.
Interesting counter argument to what people often say. I like local restaurants, cafes and hardware stores, because I like personality and expertise. There are times I need to go to Home Depot, because they have more stuff, but their staff often know a lot less than those at local hardware stores.
Deflation is a very bad thing. Please do not ask for it. It is also decidedly NOT the same thing as "things getting cheaper".
Deflation is what happens in economies like Japan in the 90s and aughts. If you think the job market looks bad in the US, trying living in an economy where people are desperate to be accepted for unpaid internships because that might lead to an eventual job, and they are happy to work 12 hour days to keep their shitty jobs (not counting the mandatory-but-unpaid "socializing" after the job).
"Things getting cheaper" is what happens when economies of scale kick in, or when supply and demand change. Noah has posted endless graphs of things getting cheaper (most commonly solar power). Yeah, we should push to make a lot of things cheaper. That is not at all the same thing as deflation, which we definitely should not want.
Electric vehicles don’t provide clean air. Where does the electricity come from? The batteries? The infrastructure? There is no magic solution. Electric cars are not environmentally “clean” and are much more expensive.
During most of my life the electricity to charge my EV came from 100% hydropower or 100% solar. Oil had a great 100-year run, now it's fading fast.
Especially now that EVs don't cost more to buy than the average car bought in the U.S. at least. And the maintenance costs are way lower. "Check wiper fluid level every 500,000 miles." That's about it. No leaky radiators, water pumps, transmissions, spark plugs, oil changes, ... And for long distance driving, you arrive refreshed by the silence and effortless power going up hills and mountains (and getting your battery recharged for free on the way down).
Electric vehicles cost more than the average car in the United States even with the tax credit. You haven’t been reading the news lately, Hertz is getting rid of their Teslas because the repair and maintenance costs are much higher than their other cars. EVs are more expensive to repair and have a higher percentage of defects according to consumer reports.
https://www.wsj.com/business/autos/ev-repair-expensive-eecf09fd
Did you read the article to the end?
"Hertz Chief Executive Stephen Scherr also said he expects repair costs to come down as replacement parts become more readily available, and as Hertz purchases more vehicles from traditional carmakers with a broader network of suppliers.
Meanwhile, Scherr said the rental-car company is attempting to lower the price of spare parts and planning to perform more repair work in-house to bring down costs.
Ford Motor also expects that repair costs will eventually come down as technicians are trained and components become more readily available.
“With any technology, the more it scales, the more the cost comes down and customer wait times go down,” said a Ford spokesperson.
It would be great if repair prices come down in the future, but not for someone buying a car now. The main issue is with minor accidents causing minor damage to the battery unit, which are now replaceable only as a whole, and account for more than half the price of the car. This also makes collision insurance expensive since a dent in the battery unit means the car is totaled. I considered Tesla (good performance, easy charging, no dealers, but barren unfriendly driving UX, poor fit quality and expensive repairs) and Kia/Hyundai (cool design, nice style and quality, better UX, lots of complaints from consumers: audio system breaks, and entire computer needs to be replaced, repair techs not familiar with the new EV models) but finally chose a Toyota Crown hybrid which had no downsides for me. Good gas mileage, quality product without reliability worries.
Yeah, this is mostly because it’s new for people.
There are some myths the article is perpetuating as well, because the reporter doesn’t know the facts yet.
For example, the sale of EVs isn’t really slowing down.
Here’s what Kia is saying:
https://www.reuters.com/business/autos-transportation/hyundai-kia-see-strong-demand-evs-despite-rivals-concerns-2023-11-17/
And here’s an alternative to the mainstream news, including this factual breakdown: “sales of purely electric vehicles have been steadily increasing at a roughly 60% annual growth rate for each of the last six quarters. That’s fast enough to double EV sales every 14 months!”
Check out the charts:
https://heatmap.news/electric-vehicles/are-ev-sales-really-slowing-data
And here’s China’s biggest EV seller, BYD:
https://electrek.co/2023/11/01/byd-announces-ev-deals-year-record-sales-sixth-consecutive-month/
And as far as fires in EVs go, we need to shut this hysteria down. Combustion vehicles catch fire way way more often:
https://www.motortrend.com/features/you-are-wrong-about-ev-fires/
"There is no magic solution"
Where did he say it was magic? EVs provide a path to clean energy. You make all the cars EVs, then you make all the power plants Solar/Nuclear etc. There is nothing easy or magic about this, but it IS a path.
Alternatively, you whine and moan about where electricity comes from, do nothing, and later when all the power plants are nuclear and Solar, you have STILL got a bunch of gas guzzling vehicles pumping shit into the air. Well done, pessimists!
Or alternatively, nobody pushes for Solar or Nuclear, because after all, "even if you get to 100% solar or nuclear, there are still a bunch of gas cars on the road!"
Your objections, and those of similar minded folks, are just excuses y'all make to do nothing, because shit is hard.
Could it have to do with locus of control? Several thoughts here.
Background- I am a business person with interests in several small, basic manufacturers. My income is down substantially from 3-5 years ago, although I don’t translate that to the whole economy.
What causes my negative sentiments is the price and lead time for virtually any production equipment has gotten ridiculous. It costs millions and takes years to make improvements that used to be much more available, turning all of them into huge risks. Yet labor demands are constant pressure.
Second, the mid-size community that I live in struggles to make even nominal investments, unless tied to some federal program or some Fortune 500 sponsorship.
All this leaves a sense of powerlessness to affect our own outcomes. The economic benefits seem bifurcated. Grandiose towards large scale, fed-supported efforts; modest and much riskier to everyone else.
Sorry no data. Just an impression.
Yes, this sort of thing is heading in the right direction. The data Noah is quoting to claim the economy is good are very low resolution. Enormous amounts of detail are lost this way. Supply chain problems wouldn't even show up in the sort of analysis posted here.
Of course they do. Supply chain problems reduce measured output and increase measured inflation.
They reduce his output relative to what it could have been, sans problems. But we don't track that, only QoQ change in abstracted global "output". Mr Lorentzen said equipment for _improvements_ was hard to come by, not equipment needed to sustain ongoing production. That's GDP growth that should have appeared but didn't.
Yep. I think vibes pick up something real before it becomes obvious. Time will tell, but all the signs say we’re headed for some bleak times. I hope I’m wrong.
Let me try to answer the actual question - just conjecture.
1). Housing is a huge deal. I’d like to see the data about affordability today vs 2019 - it strains credulity that it’s not much worse. In Europe they likely don’t have a supply shortage as they don’t generally have 30 year mortgages - everyone’s payments are up so the phenomenon of people hanging on to houses doesnt exist
2). Composition effects. Who’s answering these surveys? It seems that the aggregate improvement is a result of bottom and younger workers improving at the expense of the professional class who are paying the higher restaurant tab. Maybe this is what lowering inequality feels like.
3). Loss aversion. The “stinky” payments were much higher in the US and the hedonic adjustment kicked in. If I give you $5,000 and then take away $4,000 most people will be pissed however irrationally.
4). Societal volatility. European governments it seems have chosen to support employment vs workers. This probably is a worse choice in the long term as the US economy will innovate and better adjust as a result but the process is painful.
5). WFH. Not nearly as much of thing in Europe in Europe. As people are called back in, they don’t like it because they have optimized their life for WFH and are now rediscovering the sky high day care costs etc. again to point (2).
6). The old adage of “happiness = reality - expectations”. It seems that US expectations have skyrocketed during the pandemic (stimulus, WFH, wealth effects). Now people are extrapolating those. In Europe I don’t think we ever had the expectations surge.
7). General media fearmongering that has been eloquently discussed. If the world is ending in 2030 as AOC says (tongue in cheek), who cares what U6 number is.
8). The McDonalds theory of bad vibes - Nate Silver’s recent piece. Do read it. In Europe the companies’ ability to manipulate people into greater consumption may not be as high due to significant regulation on what they can and cannot do.
What say you Team Noahpinion?
2 through 7 all seem like great ideas.
2 is interesting: less inequality, while it sounds good, really could mean the typical person is worse off.
6 is also interesting. High expectations can be a problem in two ways. One is the emotional one, where they create an endowment effect. The other is at the level of budget planning.
I'd add that one reason people are reverting to vibes is continuing fall out from the loss of trust in academic political neutrality. People really want to know whether a vote for Biden is a vote for a soft economy and that's a question that non-economists don't have a chance of reliably evaluating the evidence on their own.
However, since voters no longer feel they can disentangle expertise from the values held by the expert they might as well just go vibe. Not that vibes weren't always popular but the lack of expert guidance makes it worse.
Experts have been blatantly lying right in our faces to preserve whatever narrative they benefit from, true or not. Or course people will ask themselves whether what they see accords with what they are told. The gap lately is glaring. Good for people who trust themselves over experts.
What have experts blatantly lied about? Do you have any examples? I can only think of one significant one, and that one wasn't to benefit the experts, it was well-intentioned (though still a mistake, IMO).
There is an old axiom that still rings true: "Economists have always been right about the size of change in the economy or when, but never both at the same time."
Well that's not surprising since if you could reliabily predict when the economy will go into a recession or boom people will time their investments to profit from that prediction making sure it happens at a different time. As a theoretical matter economists shouldn't be able to predict those things too well. What they should be able to predict is what policies are pretty harmful.
I mean think of it like expertise about car crashes. If you could tell someone: you'll be in a crash at 5:35 they'd be sure to be super careful then and avoid it. But that doesn't mean you don't know that driving drunk is likely to get you into an accident or that it's riskier when your tired and highway hypnosis kicks in.
But is the feared economy one of inflation or recession?
Both. Most people don't have a good grip on any relation between the two and fear both. Currently the more salient fear is inflation but im not sure I understand what you are asking.
I found this planet money episode helpful by suggesting a reverse halo effect: if climate change/racism/trump are so bad, how could the economy possibly be good? General doomerism seems like a good explanation of why there might be a "vibecession" and why the techo optimist bent of this blog is so positive.
https://www.npr.org/2023/12/01/1197955840/planet-money-consumer-sentiment
But why different in the US?
We could look at polling data around this, but my impression is the US is uniquely negative right now. Think of the high depression rates in the US: https://www.slowboring.com/p/why-are-young-liberals-so-depressed
My impression is this not the case in Europe, probably because social justice/wokeism and its catastrophizing tendencies haven't taken root yet.
Dude, I am a longtime fan of your work, but you're somehow missing what seems blatantly obvious to many regular people, which is that we're getting killed at the grocery store. This is not a narrative. I live and work among people who are suddenly struggling to cover routine expenses. Consumer debt is running amok. I know an HVAC sales guy who only eats what he kills, and he can't sell systems bc nobody is getting approved for financing. The tide has risen fast, and many of us are struggling to keep our breathing holes over the line.
Heard of Greedflation? Supermarkets/grocery stores have very small margins, so when people started TALKING about inflation, they saw a chance to increase those margins by raising prices and blaming it on Biden.
If you live near a Trader Joe's, get their house brands with twice the quality at half the price.
Trader Joe’s is great, but have a pretty limited selection. How do the greedy grocery stores who heard their customers talking about inflation unilaterally raise prices when they have to compete with, not only Trader Joe’s, but Costco, Target and Walmart and dollar stores? Is it a massive collusion conspiracy? May be some holes in that theory.
They just do. Read more. It’s all out there if you read. They’re getting away with it because they can. It’s a corporate strategy.
People have negative views on the economy because the string of 20+ months of negative real inflation was only just recently ended.
Low(er) inflation in the last couple of months still leaves everyone with a significantly lower income after net inflation adjustment for the last 2+ years.
My wife still works a corporate job - she got a 3% raise last year which was above average for her company. Social Security COLA increase in 2022 was 5.9%, 2023 increase was 8.7%. How many people got 15.1% salary increases over the past 2 years? Not too many, I think - I doubt anyone would consider SS COLA increases to be the top end of the income increase scale.
Equally, the "lower" inflation didn't mean prices went back to 2020 or even early 2022 prices - prices only increased at a lower rate vs. the worst of mid to late 2022 i.e. prices are still very high.
Nor is the unemployment rate truly an independent indicator. A huge number of Americans in both relative (percentage) and absolute terms are working 2 or more jobs - clearly the mere fact of having a job does not automatically equate to meeting the cost of living.
And finally: greedflation. It is the meme being pushed by defenders of the present administration but I think is overegged. My personal observation via my grocery shopping is that the "list" price of food has gone up a lot but the "base" price is up but relatively not so much. My proof is my Safeway statistics: I have been a customer for over 20 years. I am an inveterate bargain hunter. Although I am shopping only for 2, my lifetime savings is over $7000 - I averaged around $500/year for the last decade plus.
My savings for 2023 is nearly $1300. It is this high because the list prices of many things I buy on sale have exploded. Cans of soup used to be list price in the $2.x range - they are now $4.79. When I buy this soup on sale from $1.27 to $1.99 ((used to be $0.99), I am now "saving" literally 3 times or more what I used to.
The same can be said for a wide variety of other food of all varieties.
People who are not inveterate bargain hunters and who just buy food when they need it, are paying these exorbitant not-sale prices.
But Safeway shopping is mostly food "at home".
For food "not at home" - which is where the vast majority of food inflation has been coming from:
I went to Taco Bell because of the wife a couple weeks ago. 1 burrito supreme (hers) and 3 specialty burritos on sale (mine, of which I gave one to her) plus a large drink, in a small town in Central California, cost $18.49. While it has been 3 decades or more since $0.59 bean burritos and $0.99 beef burritos - this is simply egregious.
Even San Francisco minimum wage would require more than a full hour to pay for this "meal".
An appetizer at a local Thai restaurant - beef - used to be $12 in 2020 pre COVID. Now it is $23.
Overall - some things are getting back to pre-2022 inflation levels. Chicken breast: there was a period of at least 8 months where chicken breast never went on sale, not once. Typically there is a sale at least 3, 4 times a year where the price drops to $1.99/lb - these sales were missing for a long time but have now returned. Ironically, there are sales now because Safeway is clearly repackaging Deli chicken breast as opposed to the (presumably egg layer slaughter) previous seasonal sales.
My point is that these changes impact bank accounts.
Net net: pointing to year ago comparisons to try and say that people have inaccurate understanding of their actual economic/financial situation is literally saying that they should not believe their own bank accounts as opposed to the statistics you cite.
Good luck with that.
According to FRED, CPI food away from home 289 (Jan20) 359 (Oct23) a 24% increase. CPI food at home 243 (Jan20) 304 (Oct23) a 25% increase.
Three big biases that are often present, I assume here too:
(1) Loss aversion. A little has changed since the pandemic. Some things got better, some got worse (different goods' prices, opening hours of motel front desks, etc). When the better and the worse are equal, Kahnemann predicts you think you're worse off.
(2) Negativity bias
(3) political tribalism from the opposing party (clearly demonstrated in the partisan consumer sentiment jumps after a Presidential election changes the party), and from leftists against Democrats (seems obvious from anecdotal observation, but I don't know of evidence about it).
Also worth pointing out that the quick jolt of wage and price inflation makes some people a bit richer and some a bit poorer. The average person is better off, as the numbers indicate, but loss aversion and negativity bias should mean that those who are worse off will be more likely to talk about it.
This can suck for them obviously. At the same time it's equally great for the larger number of people who are better off, but they may be less likely to speak.
Noah, I'd like to get your take on something I heard in an interview Ezra Klein did on his NYTimes podcast with Michael Podhorzer a few weeks ago. Famously, I suppose, he predicted Trump's victory and has long been a skeptic of the way polling is conducted these days when it comes to the economy and politics. Frankly, I thought he made a ton of sense. In the discussion, he was talking about how one of the primary reasons why "normal" economic indicators, or at least, "traditional" ones that the media likes to focus on, like the stock market, the unemployment rate, and GDP numbers, no longer accurately reflect people's attitudes on the economy overall is because that stuff mattered a lot more in decades past when shares of economic prosperity were more evenly distributed.
Now, with things being as unequal as they are, the average American worker sees less and less personal prosperity from a booming economy, so "good" economic news, while better than bad news, sometimes leads people to be angry and resentful when they don't see those headlines translate to a stronger pocketbook. The recent bout of inflation only exacerbated this phenomena, which goes a long way towards explaining the "bad vibes" as well as anger at elites. Note that while the inflation rate has been arrested, prices are still higher and have not gone down. I know that we don't actually want deflation, but if his line of argument is correct, we not only need a boost in wages, we need a substantial reduction in inequality, or this problem is only going to continue to cause a political ruckus.
Do you think that is a fair observation?
I think it’s a great observation. We need to holler these points loudly.
Why has Trump consistently lost since his fluke win?? Elections are close—anything can happen.
I see too many downtrodden folks on the streets who have not received raises and or cannot go to restaurants with their meager wages. No equality or equity here. Just tone deaf pseudo elitists pitching their data and their interpretation of the data they have concocted for their own self interest. The so called winners write history, come up with the data they want, and it all justifies their lives.
DeSantis adjusts all data by age to make it look better. ;)