I'm reminded of this excerpt from 1984:
But actually, he thought as he re-adjusted the Ministry of Plenty's figures, it was not even forgery. It was merely the substitution of one piece of nonsense for another. Most of the material that you were dealing with had no connexion with anything in the real world, not even the kind of connexion that is contained in a direct lie. Statistics were just as much a fantasy in their original version as in their rectified version. A great deal of the time you were expected to make them up out of your head. For example, the Ministry of Plenty's forecast had estimated the output of boots for the quarter at 145 million pairs. The actual output was given as sixty-two millions. Winston, however, in rewriting the forecast, marked the figure down to fifty-seven millions, so as to allow for the usual claim that the quota had been overfulfilled. In any case, sixty-two millions was no nearer the truth than fifty-seven millions, or than 145 millions. Very likely no boots had been produced at all. Likelier still, nobody knew how many had been produced, much less cared. All one knew was that every quarter astronomical numbers of boots were produced on paper, while perhaps half the population of Oceania went barefoot. And so it was with every class of recorded fact, great or small. Everything faded away into a shadow-world in which, finally, even the date of the year had become uncertain.
---
Of course, I'm sure none of that would ever apply to our numbers, only to those of our opponents.
Because it is hilariously wrong. You have been operating under the false understanding, for who knows how long, that the media are talking about job postings when they are talking about jobs numbers.
https://www.cnn.com/2024/10/29/economy/us-job-openings-jolts...
While it's a local biaised, as a Swiss resident, I feel the same about the evolution of the IT job market here.
Typically, right now I am relatively bearish but I feel I am 3-6m too early.
Trend is downward for both hiring and seeker, which I would interpret as employers are hesitant to invest in IT due to current US politic unknowns, typically, the tarifs and actual impacts on economy.
Nobody wants to believe they’re living in a peak, and it is hard to predicate. People claiming economic downturns are near are a dime a dozen.
That said, there are possible indicators. Yes, unemployment is low, but what form is employment taking? Is it generally trending toward fulfillment, growth and/or rewarding or is it trending toward mundane, unfulfilling and/or unrewarding?
Is everyone benefitting from the official economic growth? Or are the gains statistically lopsided?
Let’s take a common mentioned stat about wage growth. Yes since 2020 wages finally raised. But if you look at it overall since 1970[0], it still behind productivity gains. Wages are not keeping up with overall productivity growth and people are still going to notice that in some form. Everyone talks about since 2020, but that misses the broader story. (As an aside, I suspect by the end of 2025 wages will significantly stagnant again. Growth won’t continue on the best take of the current trajectory)
Then there’s inflation. Regardless of cause, an entire generation+ of people have never experienced such rapid prices rising, particularly with groceries. People aren’t going to forget this, no matter what the official line is. This also eats away at wage growth which as noted above, has not kept paced with productivity gains.
The official sources though say everything is great, or heading toward it. Maybe, especially if you’re seeing the benefits, but if you’re locked out of the majority of gains, what if any you do get will feel meaningless. This shouldn’t be discounted.
It is entirely possible that wealth inequality combined with the world political climate is starting to show more cracks in the system and this might be peak. We may be seeing the warning signs of a big changes, whether it manifests itself as mostly political or economic is anyways guess I suppose
[0]: https://www.cnbc.com/2022/07/19/heres-how-labor-dynamism-aff...
Because if you are able put money into savings or investments then you probably have the other stuff you listed.
Tricky to account for differences in consumer culture, no? Because the number of people who consume all they earn, no matter how much that is, is not staying equal over time or location.
In the theme of the day: "Your coverage has been denied, due to [insert nonsense]", while profiteering from record profits in the billions.
Immense economical value has been "produced", benefiting no-one but the very few.
From the New-York Times [1]:
The company’s profits rose on his watch, jumping to more than $16 billion last year from $12 billion in 2021. But amid the growth, the company and its parent also attracted scrutiny from lawmakers and regulators who accused them of systematically refusing to authorize health care procedures and treatments.
I also shop mostly at ethnic grocery stores (Superking, Ranch 99, H mart, etc) and IMO the problem isn’t inflation but general consolidation across many industries. I’m always shocked when I travel to less populated regions (even in California) and see their grocery availability, usually dominated by a single major chain like Albertsons or a local one like Publix. SoCal has competitive prices for groceries despite the high cost of living because there are so many people (and immigrants) to support many competitors, none of whom have real pricing power. My grocery budget hasn’t gone up significantly in the last five years despite switching to Costco for my meat rather than the cheaper halaal butcher.
Eggs are always more expensive at the ethnic stores here but cheap at TJs because they use it as a competitive loss leader. A lot of the country can’t support such competition so there’s zero incentive for suppliers to drive down costs.
So they were famously cheap for things that poor and blue collar families weren’t looking for anyway. UMC goods on a LMC budget, really.
Who wants low interest rates (return to ZIRP and funny money) and was willing to intervene on the fed to get it? Republicans.
Interest Rates and Quantitative Easing/Tightening are your tools to fight inflation. Republicans don't like high interest rates because it destroys inefficient big business and makes it harder for them to scam the rest of America.
Blaming inflation on democrats is FUD, and if you seriously do it, please don't ever vote again - society would be better off if you didn't!
You mean 10%? 10x is just not believable.
As houses get older, their value should decrease. Even large-scale renovations often should not push the value up quite as much as one would hope. Certainly the value of land can go up, based on housing/zoning policy, coupled with supply and demand in a particular area.
At any rate, most things are temporary. Interest rates are headed downward again, and the Fed expects to make more cuts. Presumably we won't get back down to zero, but that's probably a good thing.
Also let's consider history: interest rates are still objectively not all that high right now. They're on par with or lower than what rates were in much of the 90s, and even some of the 00s. It's only the 10s that saw zero rates. And hell, go back to the 80s and prior, and the current rate situation looks delightfully low.
> High interest rates have also helped crash the real estate market, so even if you just own a home, you've taken a bath since the high interest policy has been implemented.
A note on this: so what? What matters is the cost of comparable housing. If my house has lost 25% of its value, it stands to reason that similar houses in similarly-desirable locations will have lost a similar amount, and still be affordable for me if I wanted to sell my house and move.
But again we run into the problems caused by the 30-year fixed-rate mortgage! Anyone who has bought a house with a mortgage recently enough, at a price high enough, might be in a situation where they can't move because they won't be able to sell their current house at a high enough price in order to pay off their mortgage (and still have enough of a down payment for their next house). This is a problem we've created for ourselves, and it's super annoying.
I have to raise an eyebrow when someone says "truth" and/or "should", as if there's a hidden One True Way. I do think that David Ricardo's theory of rent holds.
> As houses get older, their value should decrease.
"Value should decrease" is doing a lot of lifting in oversimplifying, if not positioning itself counter to, reality. eg My area is growing by ~10k a year across 3 adjacent municipalities. Population growth (migration+births) contributes to a growing area in a way that's self-reinforcing (availability). So depreciation is often outpaced on that basis which has nothing to do with specific characteristics of structure.
Houses also have a multidimensional value. Proximity to specific locations (subjectively vary in value), safety, amenities, maintenance costs, etc all contribute. Home from 1950? https://www.zillow.com/homedetails/1826-3rd-St-N-Fargo-ND-58...
What about the multimillion dollar homes on cliffs? https://www.theguardian.com/us-news/2024/feb/14/dana-point-l... - with less than 2 mil, you can rehabilitate these places with some demo and rebuild.
How does this affect the calculations? Well, it doesn't seem to hurt as much as some might imagine. People are resilient and optimistic, long term, and happy to own the roof over their head in the short term to give themselves agency. These value motivate people to buy what's available and prices do not fall as if they exist in a vacuum.
I'm not the OP, but I notice that it's very strange that the other major expensive durable good the typical American household will own [0] is a steeply depreciating asset.
I also notice that "housing as both shelter and investment" is not universal policy. Japan does things totally differently and has historically done well by it.
[0] That is, the automobile.
It also sounds like you're basing your statement on your tax assessment, which implies that your tax assessor has correctly allocated the value increase to the appropriate category. That has not been the case very frequently in my personal experience.
There is a proclivity to wash over a lot of the difficulties, constraints, and "norms" of earlier generations and making the current economic times seem so much worse. Things like living with multiple roommates (2-4) in your 20's is MUCH rarer today, as is sharing a bedroom with a sibling. Vacationing frugally at a nearby lake, not some international expedition. Packing a box lunch. I agree that by many measures, times are tough, but also, the base expectation level has definitely increased dramatically.
https://www.statista.com/chart/32428/inflation-and-wage-grow...
https://www.brookings.edu/articles/has-pay-kept-up-with-infl...
Real wage growth surged post-pandemic, especially for lower-income workers.
Most economists have explained the vibes as: People blame inflation for increased prices but credit their own industriousness for wage gains, and are angry they don't get to basically double dip.
A 2% annualized increase in real wages is excellent? Compare it to real wage increases elsewhere and you'll see that "only" is not the correct modifier to use.
Real median earnings since Q4 2019 are only around 3% higher:
https://fred.stlouisfed.org/series/LES1252881600Q
Real median household income is still lower than 2019:
A 3% increase over 5 years is not bad at all. Go look at historical data or data from other places if you would like more information.
For a worker with credit card debt, or one who already struggles to afford public transit, the real wage growth is illusory.
Here’s [1] the wage graph from BLS during that time period, same source as the author. See that incredible, record setting spike at precisely the month in question, never seen before or after? Gee, what do you suppose did that?
The US had just poured 2 trillion into wages for free for pandemic recovery.
This is why you shouldn’t fill your head with nonsense from such crappy sources. Liars will lead you into your own echo chamber. Read proper economic journalists until you learn enough not to believe stuff like that article.
Given how arrogant you are, it is ironic that you're the one that interpreted the graph incorrectly. They didn't reference the spike "precisely the month in question". The figure they referenced at the start of the graph was Q4 2020. The spike in the FRED graph was in Q2. Perhaps you should think before you type next time, so you don't paint yourself the fool you claim others to be.
If they had referenced the spike in Q2, the decrease would have been >5%. If you want to start casting stones, you better be sure you're right.
Zoom in if you cannot read it. A spike is not a single month. It’s a spike with an upside and downside. You think the effects of a free few trillion poured into people’s hands only affected an infinitesimal width spike?
So no, I did not interpret this graph incorrectly, and the poster chose a point from an artificial spike to mislead.
Perhaps if you aggregated inflation, which is a lagging variable, it will turn out he chose precisely the quarter that made his point better than any other quarter, in which case he really went the extra mile to provide misleading claims.
If you’re going to attempt to discredit a correct argument, at least evaluate it correctly.
>If you’re going to attempt to discredit a correct argument, at least evaluate it correctly.
Sure, it is part of the downward slope of a multi-quarter spike, but that is not what you said. What you are doing now is attempting to re-frame prior inaccurate wording to claim that you were accurate all along. That first quote is what you said in your first comment. Q4 was the second quarter of decline following the spike. You said the spike was at "precisely the month in question", which it certainly was not. Q4 2020 was half a year after the peak of the spike. That hardly qualifies for even a very generous interpretation of the word "precise".
>Perhaps if you aggregated inflation, which is a lagging variable, it will turn out he chose precisely the quarter that made his point better than any other quarter, in which case he really went the extra mile to provide misleading claims.
Not only is this reaching, but you've just demonstrated that you don't understand what the graph you said was misleading refers to. Real wages does account for aggregate inflation.
That you confuse the word spike to mean only the tip is odd. The downward part of a spike is part of a spike, and the cause and use of this anomaly is not in question. Choosing an outlier high point as a basis to make general claims will always lead to misrepresentations.
Is a railroad spike only the tip? Is a volleyball spike only the highest (or lowest) part? Is a signal spike the zero width instant of maximum value?
I cannot think of a use of the word spike that means the tip and not the entirety. Looking at online dictionaries I cannot find the use you claim. I do find many definitions and examples including both the upside and downside. So I’m quite correct claiming the author choose the spike, and obtains the expected poorly reasoned claims as a result.
> Not only is this reaching, but you've just demonstrated that you don't understand what the graph you said was misleading refers to. Real wages does account for aggregate inflation.
If you dig through my posts, you’ll see I taught mathematical grad econ at a top 50 university. What you misread, then try to use Econ 101, is simply incorrect. As your other comprehension showed, you ignored the precise word “lagging” that I wrote, because real wages at a given date do not include inflation from the future.
Please read and think. You’re so bent on trying to argue you don’t read what I wrote, and instead argue your misreadings.
Let me simplify: it’s well known inflation as a result of cash transfer causes lagging inflation (pretty much all schools of economics agree on this, from Keynesian, neo, Austrians, Friedman, all the flavors of monetarists, pretty much everyone). Hence the precise Econ term lagging variable. Other ones are that wage growth usually lags inflation. This is all basic economics. It’s why I precisely put the word “lagging” in that sentence. It means future inflation above. Most definitely not a part of that spike.
Here, there was an economic shock causing the govt to expand the money supply without expanding production. This money, handed out in large part as cash, adds to real wages at that moment. This will lead to inflation, but that is not part of those real wages. Later, inflation will devalue money, making real wages decrease. Then later again, historically wages gain back purchasing power as people get salary increases. This is done (alert, another term so read carefully) because wages are called a “sticky variable” in Econ. Wages are easy to ratchet up but not down, due to psychology of humans. Wages are hard to move freely like many other variables. Ideally from a math model side, if wages were not sticky, then as the shock passed, prices could fall, and all values return to baseline. But people don’t see that, so it’s easier to ratchet up wages, which ratchets up prices, locking in inflation.
So to maximize the type of nonsense this post spreads, you can always fiddle with the chunks in these troughs to make things look much worse than they are.
So next time please learn the difference between aggregate inflation (current) and the phrase lagging variable. And don’t put claims into my writing so you can argue straw men.
I’m done. You’re trying to correct something that is simply your odd usage of a word.
I’d like to see that plotted against average consumer debt
The trend is basically back to where it would be if you just extrapolated 2019.
You can even see the origin of the "vibe-session" here, things got pretty good for a lot of people in the money shower of the pandemic stimulus combined with low "stay at home" spending. Its the return to normal that has people spun with "the economy sucks".
So crap going crappier, with a short reversal for a couple of years.
slightly below pre-pandemic levels, and significantly below 2005-2008 levels.
Continuing to yell at people about the numbers doesn't seem to be an effective strategy, maybe try a different approach?
https://www.nytimes.com/2024/01/23/briefing/economy-inflatio...
Therefore, it's important to find out why people believe things, despite being contrary to empirical evidence.
And -- this is certainly a bit of a gamble -- but I know people who have taken on higher rate mortgages now with the expectation they'll be able to refinance within a few years at a lower rate. That's certainly more expensive even in the meantime than having a lower-rate loan to start, and there's always the risk that rates don't actually come down, but it's an option for many (admittedly not all).
They imagine the amount of money they have today, but at yester-decade's interest rate.
You're just mad that you're poor! Admit it!
I feel that this is pretty well established as a misleading metric https://www.investopedia.com/financial-edge/0609/what-the-un...
> strong consumer spending
how does this track against consumer debt?
> average income increasing at a rate higher than inflation
but has it caught up? https://www.bankrate.com/banking/federal-reserve/wage-to-inf...
> I'd say the majority is doing better than most years
most years being the past 2 or 3? because I feel like we were all doing a lot better before 2020
I fail to see how it's "misleading". U3 doesn't include people who don't want a job. That seems... fine? If you don't want a job, and don't have a job, why should you be factored into the health of the labor market? Isn't it more misleading to lump people who want a job but can't find a job, with people who don't want a job and aren't working?
>but has it caught up? https://www.bankrate.com/banking/federal-reserve/wage-to-inf...
The linked article says:
>Source: Bankrate's Wage To Inflation Index using the Department of Labor's employment cost index (ECI) and consumer price index (CPI)
Using BLS's weekly wage data adjusted by CPI gets the opposite conclusion, so my guess is that there's something funky going on with the employment cost index. For one, it includes benefits, so if health insurance costs go down, then "average income" (as computed by bankrate's index) will go down, even if your take-home is the same. At best, the only thing you can conclude from that is "employers' spending on employees is rising slower than inflation", which is slightly different than "employees' incomes are rising slower than inflation".
Most of it comes down to politics:
https://www.fisherinvestments.com/en-us/insights/market-comm...
100k in 2020 is 120k today https://www.usinflationcalculator.com/
do I need to spell it out for you? you are delusional if you think there is not concrete evidence that everyone's making less and spending more
The data shows that far more people are in my situation than in your situation. Do I need to spell it out for you? People are acting like they are doing better in the numbers, responding on polls that they are doing better, but they all think everyone else is doing bad or the economy in general is doing bad.
Can you imagine how bad it would be if our actual economy did as poorly as the rest of the world? We went through a mismanaged global pandemic, and came out smelling roses when it comes to the US's economy. We are in a fantastic position for world domination. China and Europe shat the bed. India is up and coming and may be an economic rival, but they are not there yet.
If you think this economy is bad, try going back to 2008. To 1992.
So please, yes, spell it out for me. The facts do not care about your feelings, no matter how strongly you have your feelings, or who told you to have the feelings and to feel helpless.
I don't believe you
nobody gets a 30% adjustment without taking a new job or a promotion, and if you did that then it defeats the point of this discussion
It tracks pretty much as one would expect had the pandemic not happened, following a well-established longer-term trend: https://fred.stlouisfed.org/series/CCLACBW027SBOG
> I feel like we were all doing a lot better before 2020
There we go again, going by "feelings" rather than the data.
do you want to discuss the point or just be a snarky troll about it?
Which year is your baseline, and why?
Apartment in a moderate-cost area is about $70,000-$100,000/year.
Median salary in the US is $59,300
What considered poverty level in the US for: 1 person: $15,060 2 people: $20,440 3 people: $25,820 4 people: $31,200
According to recent data from the U.S. Census Bureau, around 50% of Americans make $70,000 or more annually.
That means about 50% of the US can not afford a place to live.
"Apartment in a moderate-cost area is about $70,000-$100,000/year."
Are we saying apartment rental is between 5 and 8 thousand dollars a month? What is the definition of this moderate cost area??
Back to the original post I think there are several statistics that apply to different geographical areas or demographics in the same post, leading us to conclusion that half the continent is out on the street, and demonstrating risk of back of the napkin calculations on policy decisions, even if we assume good will and honest effort :-/
He's arguing below that about 50% of the US population is homeless, which is not even close to accurate.
In the Netherlands, you aren’t taxed on your primary residence, but all other wealth has an approximately 2% annual wealth tax. This makes it challenging to accumulate wealth through any means other than a primary residence, which was many of my coworkers’ primary way of saving.
Granted, they also have mandatory pensions, which can give you a good income in retirement, but that’s different than wealth accumulation
Bullshit. American unemployment pays consdeirably more than UK unemployment. Throw on food stamps and housing assisitance on there, and the US might still be below the more generous European countries, but you definitely have a safety net.
> unlike in Europe... So owning your home is a big part of having something to retire on and pay bills
So what, like the UK? And Ireland? And argaubly all of Europe east of Germany and in Scandinaivia, all places where home ownership is comparable or greater than the US?
UK unemployment (called Jobseeker's Allowance) is up to £90.50/week. $115.30 in dollars.
Also your math is off: even at your $4200/mo estimate, that's $50,400/yr, nowhere near your "not too far off" $60k. And that puts it at 30%-50% below the $70k-$100k range, which makes that range laughably inaccurate.
That would mean you are paying $2k a month in tax and insurance?!
That doesn't even pass a minimum-effort sniff test. I live in one of the most expensive cities in the country, and I'm in your quoted range for a 4-bedroom condo.
My sibling lives in a more affordable, but desirable, area and spends a little less than half of what I spend a year, for a single-family home with a good-sized yard that's more than twice the size of my condo. (And they bought last year when interest rates were high.)
Your own stats don't even make sense. You claim it costs $70k-$100k/yr for housing, but that to afford a home, a family needs to make $107k/yr? That doesn't make sense. If housing costs that much, that family needs to make north of $200k/yr to afford it.
Where are you getting this information?
A big problem with renting is the capriciousness of the rental market in many places, which you can't solve with "basic math". That plus the availability of the 30-year fixed-rate mortgage in the US means that rental costs can be much more unpredictable than buying. Some people will -- very reasonably -- pay a bit more for peace of mind. And that's before we get into the topic of no-fault evictions, and how that can wreck a family's housing situation, sometimes with not too much notice.
Renter protections in the US are not great compared to in many other places, and that can make renting unpredictable and more "costly" in other ways.
(I still don't agree with GP's thinking or math, but I don't think you're arguing against what they actually said.)
No way that's correct.
- it invented numbers (they were erroneous) - it told me that given the nature of LLMs he cannot name his sources nor give me a link to it.
This make your statement quite unlikely. Can you link us to the stats directly?
Not sure if I would call all of those moderately priced areas, either. Some of those at least are the most expensive in the country.
So 50% of the US are homeless?
It happens. It's disgusting when it does. It IS a problem.
But it's not happening to half the country. That's nonsense. And when you say nonsense, it keeps others from taking the problem seriously.
I agree that homelessness is a problem, but you appear to be arguing in bad faith. If 50% of the US actually "can't afford housing", we'd have $170M people living in tents, and that is demonstrably not the case.
I would believe a claim that states that a large portion (maybe 50%, maybe more, maybe less) of the country are facing financial insecurity that makes them feel like their housing situation is precarious. But that wasn't the claim put forth upthread.
Can you clarify? Because I'd find it hard to believe that half of Americans are literally homeless. It might make more sense if you're referring to home-owners.
> around 50% of Americans make $70,000 or more annually.
Wait a second. "50% of Americans making X or more" means X is the median. Does that imply a ton of people are working more than one job?
I don't see how that computes. The internet suggests that, on the high end, a family will spend around $10,000 on home repairs, maintenance, and insurance, which is in line with my experience. So almost $100,000 in yearly property taxes for a typical family home? Not a chance.
I suspect you are thinking of buying a home rather than owning a home, but homes are bought with wealth, not income, so an income figure here doesn't make much sense if that is, in fact, what you are thinking of. If that is not what you are thinking of, I, for one, don't understand what you are trying to say. This figure doesn't seem to have any applicability.
Most people in the US will say they own their home even if they have a significant mortgage against it. You can be upset that people are not using the word correctly, but that's kinda pointless.
What do you mean by this? In the US, over 60% of people have a mortgage [1], which almost always means it's coming from some percentage of their income. When you get a home loan, the banks only real concern is your credit score and income. Anecdotal, but I don't know a single person that doesn't have their monthly mortgage scaled to their income, since I don't know a single person under 60 without a mortgage that's coming from their income.
[1] https://www.investopedia.com/percent-homeowners-have-mortgag....
A mortgage is the rental of wealth. It is independent of the home. But, even if we want to conflate them for the sake of discussion, it is still dependent on many variables that does not round to a single number. The rent on a $20,000 mortgage is quite different to the rent on a $200,000 mortgage. Two buyers buying identical homes for identical prices, but who come with different amounts of wealth, will have very different rental payments. A single number is meaningless, even if we assume 100% of people are paying mortgage rent.
But, as you point out, ~40% of the people don't have a mortgage, and therefore have no such cost to begin with. The idea that they also need $107K doesn't make any sense.
That still feels like a fair over-estimated amount to me, but I think that's what they were getting at. (It could also be a figure of the amount needed to qualify for a mortgage on a place with some amount of downpayment.)
HN love to look down on ChatGPT, yet are willing to hide behind it when it’s convenient.
> low unemployment
In an economy where you can easily deliver packages or drive uber, there will always be close to zero unemployment. This number stopped making sense a few years ago.
> strong consumer spending
In a high inflation environment, one has to consume "strongly" just to maintain the same standards of living.
> average income increasing at a rate higher than inflation
If you underreport inflation, then the average income will increase faster. But even if not, average is not what you and I receive, and it is determined by some people making lots of money while others have stagnating salaries.
> majority is doing better than most years
You cannot prove this from the above points. Average income doesn't mean that the majority is doing better. Something called inequality will not allow that to happen.
> They might not feel that way though
That is pop psychology at its worst. Nobody cares about feelings, you just need to look at the numbers in a critical way.
Part time employment is roughly where it was in absolute numbers (not even per capita) in 2009. https://fred.stlouisfed.org/series/LNS12600000
> In a high inflation environment, one has to consume "strongly" just to maintain the same standards of living.
You're wrong here too. Here's a chart that's inflation-adjusted: https://fred.stlouisfed.org/series/PCEC96
> If you underreport inflation
Ah I see... your entire worldview is predicated on just assuming different facts than what your interlocutors are. Feel free to substantiate this rather fundamental claim.
> That is pop psychology at its worst. Nobody cares about feelings, you just need to look at the numbers in a critical way.
"Look at the numbers in a critical way" is an interesting framing of "make shit up."
Strong disagree: you can't spend what you don't have (or can't borrow), so spending is a vital signal.
There's a natural experiment that just happened that refutes your argument: after Covid, most of the world had high inflation (with some actual recessions), but the US did better than everyone else, with stronger American consumer spending helping the recovery (leading to more jobs to service the strong demand). Your argument falls apart when you consider why UK or French consumers consume as "strongly" to maintain their lifestyles.
> If you underreport inflation, then the average income will increase faster.
There's no one way to calculate inflation (since this depends on how you choose your 'basket'). But like I said, based on vibes, everything is awful.
Yes you can, just borrow more [1]:
[1] https://washingtonstatestandard.com/2024/08/26/us-credit-car...
> Your argument falls apart when you consider why UK or French consumers consume as "strongly" to maintain their lifestyles
They don't have access to cheap credit as the US consumer has, and being smarter than Americans they refrain from going into more debt.
> There's no one way to calculate inflation
Yes, there is, it is just different for lower income earners. Economists just don't want to measure the impact on people who have to spend large part of their salaries on rents, health care, cars, all things with prices that increase higher than official inflation.
Did you purposely leave out my parenthetical to use it as a dunk? Borrowers are not dumb (and the amount of debt is also a useful signal on economic health by the way, and right now it's not terrible; definitely not in recession territory)
> Yes, there is, it is just different for lower income earners
Well, don't leave me hanging - what's the one way to calculate inflation then? Which specific mix of goods and services (and locations) should be used as a national benchmark in THE inflation equation?
I don't disagree with your overall point, but I do think pre-2008-crash mortgage lending could be a counterexample. Certainly there were a lot of shenanigans going on, but ultimately borrowers made the -- IMO dumb -- choice to stretch themselves far too thin, and buy bigger and more expensive houses than they truly could afford.
Perhaps everyone today has learned from history, though. (But I wouldn't bet on it.)
The market can be irrational far longer than they can be solvent, however, and not being ‘dumb’ can make that worse.
Pre’08, you had to be dumb as a borrower in 90% of markets, or you’d be flat out unable to buy anything. As to if continuing to buy in those conditions was dumb or not, is mostly something that can only be judged retroactively.
Certainly these are just two metrics among many that people could look at, but if we're talking about consumer spending being strong, it does not appear to be because people are borrowing more today than long-established trends would expect. (I do think it's concerning that consumer debt has more or less only gone up over time, but that's a separate discussion.)
Looking at the numbers: low unemployment, strong consumer spending, average income increasing at a rate higher than inflation, I'd say the majority is doing better than most years. They might not feel that way though, and we've been in a continuous vibes-cession since COVID.