Why data on the economy doesn't match our feelings(marketplace.org)
marketplace.org
Why data on the economy doesn't match our feelings
https://www.marketplace.org/2025/03/10/economic-data-feelings-disconnect/
21 comments
>If you look at the linked “functional unemployment” chart (https://www.lisep.org/tru) the numbers in the past three years are the lowest on record. It has been on a consistent downward trajectory, minus 2008 crash plus COVID, so that does not seem worth highlighting.
Agreed. It's dishonest to take one headline metric (ie. U3 unemployment), redefine it to mean something entirely different (ie. U6 unemployment or whatever), and then conclude things are much worse than initially thought because the redefined metric is much worse than the original
Suppose that there was a "sickness" metric that measured how many people are in hospital. Then someone comes along and claims the country is much sicker than people thought, citing a "functional sickness" metric that measured anyone who called in sick, and that's "horrifying". They'd be laughed out of the room.
Agreed. It's dishonest to take one headline metric (ie. U3 unemployment), redefine it to mean something entirely different (ie. U6 unemployment or whatever), and then conclude things are much worse than initially thought because the redefined metric is much worse than the original
Suppose that there was a "sickness" metric that measured how many people are in hospital. Then someone comes along and claims the country is much sicker than people thought, citing a "functional sickness" metric that measured anyone who called in sick, and that's "horrifying". They'd be laughed out of the room.
Thats basically 99% of political discourse at this point. Not a lot of laughing these days.
>And if you look at the basic things that they can afford to buy, they have inflated over the last 20 years more rapidly than the CPI. So they’re worse off.
This is an unsatisfying explanation. By his own admission these factors has been happening for the past two decades, but the divergence between consumer expectations and "fundamentals" only really happened post pandemic:
https://archive.is/ry4YC
https://archive.is/yiT52
This is an unsatisfying explanation. By his own admission these factors has been happening for the past two decades, but the divergence between consumer expectations and "fundamentals" only really happened post pandemic:
https://archive.is/ry4YC
https://archive.is/yiT52
In my adult life, the only time I can ever remember the consensus that the economy was good was Christmas 1999.
The internet gave people hope about the future in 1999 but now with the internet our desires can never match the reality that follows.
Instead people live in either a post-bubble crash that is about to crash further or if things are going well that just means we are in a super bubble that will have a historic crash. Repeat.
The internet gave people hope about the future in 1999 but now with the internet our desires can never match the reality that follows.
Instead people live in either a post-bubble crash that is about to crash further or if things are going well that just means we are in a super bubble that will have a historic crash. Repeat.
Maybe because real estate prices are not captured by CPI, only rental prices. People are taking longer and longer to save up for a house[1].
https://www.crews.bank/blog/real-estate-prices-vs.-income
https://www.crews.bank/blog/real-estate-prices-vs.-income
https://www.pewresearch.org/short-reads/2024/10/25/a-look-at...
> One commonly used (though also criticized) benchmark for housing affordability is that no more than 30% of household income should go toward housing costs. Households that spend more than that are considered “cost burdened” by the U.S. Department of Housing and Urban Development.
> By that standard, 31.3% of American households were cost burdened in 2023, including 27.1% of households with a mortgage and 49.7% of households that rent, according to 1-year estimates from the Census Bureau’s American Community Survey (ACS). (Many more people own than rent: In the second quarter of 2024, 65.6% of occupied housing units were owned while 34.4% were rented, according to the most recent estimates from the Census Bureau’s Current Population Survey/Housing Vacancy Survey.)
> One commonly used (though also criticized) benchmark for housing affordability is that no more than 30% of household income should go toward housing costs. Households that spend more than that are considered “cost burdened” by the U.S. Department of Housing and Urban Development.
> By that standard, 31.3% of American households were cost burdened in 2023, including 27.1% of households with a mortgage and 49.7% of households that rent, according to 1-year estimates from the Census Bureau’s American Community Survey (ACS). (Many more people own than rent: In the second quarter of 2024, 65.6% of occupied housing units were owned while 34.4% were rented, according to the most recent estimates from the Census Bureau’s Current Population Survey/Housing Vacancy Survey.)
Only looking at home prices compared to salary is very misleading because it doesn't account for changes in interest rates. Mortgages were almost 20% interest in the 80s. Cheaper doesn't mean much if you still can't afford the monthly payment.
Also looking at average price doesn't account for the rising quality of housing. In the 1980s the average home was around 1,700 square feet. Today, it is nearly 2,700.
https://fred.stlouisfed.org/series/MORTGAGE30US
https://www.newser.com/story/225645/average-size-of-us-homes...
Also looking at average price doesn't account for the rising quality of housing. In the 1980s the average home was around 1,700 square feet. Today, it is nearly 2,700.
https://fred.stlouisfed.org/series/MORTGAGE30US
https://www.newser.com/story/225645/average-size-of-us-homes...
Forget comparing old builds to new builds
If you look at the pricing trend of a single house, it tells quite a story
In my city, A house that would have been 80k in the 80s is listed between 500-600k today, depending on the neighborhood and how updated it is
In the 80s you could get a 15-20 year mortgage at 20%
Now you get a 30 year mortgage at 5%
If your monthly payment today is less than it would be at 20%, it is only because you are expected to be paying for it at least an extra 10 years compared to the past
There is absolutely no question that houses are less affordable today than they used to be
And that's before even thinking about how salaries haven't grown anywhere near as quickly as real estate prices
If you look at the pricing trend of a single house, it tells quite a story
In my city, A house that would have been 80k in the 80s is listed between 500-600k today, depending on the neighborhood and how updated it is
In the 80s you could get a 15-20 year mortgage at 20%
Now you get a 30 year mortgage at 5%
If your monthly payment today is less than it would be at 20%, it is only because you are expected to be paying for it at least an extra 10 years compared to the past
There is absolutely no question that houses are less affordable today than they used to be
And that's before even thinking about how salaries haven't grown anywhere near as quickly as real estate prices
An 80k house in the 80’s means inflation alone accounts for ~$300k of the current sale price of the house. If the general area has built up at all in the last 40 years, that could account for a bunch more of that cost. Absolutely some areas and places are climbing way faster than their market wages are keeping up, but I also think a lot of housing discussion compares a house 1 hour outside of the nearest big city with that same house now in the middle of that expanded big city. Location matters a lot, and what is a great location now might well have been out in the sticks 40 years ago.
> Forget comparing old builds to new builds
Why? It's extremely relevant.
> In the 80s you could get a 15-20 year mortgage at 20%
20% was the rate for 30 year mortgage in the 1980s. My source is specifically for 30 year mortgages.
> If your monthly payment today is less than it would be at 20%, it is only because you are expected to be paying for it at least an extra 10 years compared to the past
That's a gross overgeneralization. Interest rates are lower across the board today.
> If your monthly payment today is less than it would be at 20%, it is only because you are expected to be paying for it at least an extra 10 years compared to the past
I never said they weren't but you also haven't provided any evidence that arent.
> And that's before even thinking about how salaries haven't grown anywhere near as quickly as real estate prices
You're literally just repeating your original claim with no new evidence.
Why? It's extremely relevant.
> In the 80s you could get a 15-20 year mortgage at 20%
20% was the rate for 30 year mortgage in the 1980s. My source is specifically for 30 year mortgages.
> If your monthly payment today is less than it would be at 20%, it is only because you are expected to be paying for it at least an extra 10 years compared to the past
That's a gross overgeneralization. Interest rates are lower across the board today.
> If your monthly payment today is less than it would be at 20%, it is only because you are expected to be paying for it at least an extra 10 years compared to the past
I never said they weren't but you also haven't provided any evidence that arent.
> And that's before even thinking about how salaries haven't grown anywhere near as quickly as real estate prices
You're literally just repeating your original claim with no new evidence.
It really isn't relevant in the way that you think.
The fiscal cycle is a ponzi cycle following a ponzi curve this mirrors many areas including business growth S-curves.
In general that characteristically means benefits start front-loaded, they have a period of diminishment, and then at a point outflows exceed inflows where you have to pay back and keep paying more than you spent. The overall plan being by the third stage, you are dead and don't have to pay it back, or have been bought out and its someone else's problem.
Even with normalization of the price level it doesn't accurately reflect purchasing power well, and so you cannot really measure opportunity cost or make an accurate objective comparison.
This is the nature of fiat money distortions and why Mises was so against Socialism. In his works he defines the Economic Calculation Problem, or the Socialist Calculation Problem whichever you rather prefer. Sustaining chaotic distortions are ECP/SCP.
The nature of fiat/ponzi is that money printing in an economy debases exchange, extracting cost and forcing failures broadly to non-market socialism when that third stage happens.
This is reflected in a lack of employment, and no or gradually fewer businesses entering the market/industry. It acts like a sieve, with the money printer continuing even after no profit can be made (where regular business exits the market). It is a parasite that kills its host every time, but that is a problem for next quarter.
Distortions take many forms and they are chaotic and by that nature they unknowable in detail specifically and unpredictable. Artificial Supply Constraint to raise price level is one such form.
Often there are whipsaw dynamics between opposing constraints, with diminishing returns required to remain stable. A cliffside with drop-offs on either side as you approach, and you can only march forward into the ocean. At first there is a minor safe path, but eventually it converges. Hysteresis can be an impossible to solve problem without being able to change the underlying system.
Price levels being suppressed (such as Gold/Silver/Food). Price discovery being manipulated (dark pool transactions exceeding exchange volume). These are signs of chaotic distortions caused by money printing.
Economic calculation requires price discovery, which requires adversarial decision-making. Cooperative behaviors naturally occur when there are few participants. The distortions injected through the money supply have knowable (in general) dynamics and outcomes.
Its important to remember that Price != Purchasing Power. Wage suppression is also a real thing and its fueled by the same.
The fiscal cycle is a ponzi cycle following a ponzi curve this mirrors many areas including business growth S-curves.
In general that characteristically means benefits start front-loaded, they have a period of diminishment, and then at a point outflows exceed inflows where you have to pay back and keep paying more than you spent. The overall plan being by the third stage, you are dead and don't have to pay it back, or have been bought out and its someone else's problem.
Even with normalization of the price level it doesn't accurately reflect purchasing power well, and so you cannot really measure opportunity cost or make an accurate objective comparison.
This is the nature of fiat money distortions and why Mises was so against Socialism. In his works he defines the Economic Calculation Problem, or the Socialist Calculation Problem whichever you rather prefer. Sustaining chaotic distortions are ECP/SCP.
The nature of fiat/ponzi is that money printing in an economy debases exchange, extracting cost and forcing failures broadly to non-market socialism when that third stage happens.
This is reflected in a lack of employment, and no or gradually fewer businesses entering the market/industry. It acts like a sieve, with the money printer continuing even after no profit can be made (where regular business exits the market). It is a parasite that kills its host every time, but that is a problem for next quarter.
Distortions take many forms and they are chaotic and by that nature they unknowable in detail specifically and unpredictable. Artificial Supply Constraint to raise price level is one such form.
Often there are whipsaw dynamics between opposing constraints, with diminishing returns required to remain stable. A cliffside with drop-offs on either side as you approach, and you can only march forward into the ocean. At first there is a minor safe path, but eventually it converges. Hysteresis can be an impossible to solve problem without being able to change the underlying system.
Price levels being suppressed (such as Gold/Silver/Food). Price discovery being manipulated (dark pool transactions exceeding exchange volume). These are signs of chaotic distortions caused by money printing.
Economic calculation requires price discovery, which requires adversarial decision-making. Cooperative behaviors naturally occur when there are few participants. The distortions injected through the money supply have knowable (in general) dynamics and outcomes.
Its important to remember that Price != Purchasing Power. Wage suppression is also a real thing and its fueled by the same.
On the bright side, at least it's not as big of a ponzi scheme as crypto.
When I was laid off, HR strategically did it so it wouldn't be reflected in the unemployment numbers. I don't trust any of these macro economic numbers.
How did they do that? And why does HR at your former company care about unemployment numbers? Were they committing employment insurance fraud?
I don't know where GP is, but in Canada there are certain corporate obligations that come with doing a layoff which companies try to skirt around by staggering their layoffs over some period of time rather than letting everyone go at once.
Because modern 'economy' is just holistic economics jargon to rationalize the system of inequality that extracts economic value from the bottom and gives it to the top...
[deleted]
Honestly, this is a completely bogus interview that is at best, misleading, and at worst, outright lies.
> Well, all that is absolutely true, but sadly it’s even worse than that. What it doesn’t account for is people who have a piece of a job — they work an hour or two here and there, but they want a full-time job. It doesn’t account for that.
The BLS does track that as part of the U-6 unemployment rate which is near a 20 year low. The U-6 unemployment rate counts people that work less than 35 hours per week, but want to work more hours, as unemployed.
https://fred.stlouisfed.org/series/U6RATE
> Well, all that is absolutely true, but sadly it’s even worse than that. What it doesn’t account for is people who have a piece of a job — they work an hour or two here and there, but they want a full-time job. It doesn’t account for that.
The BLS does track that as part of the U-6 unemployment rate which is near a 20 year low. The U-6 unemployment rate counts people that work less than 35 hours per week, but want to work more hours, as unemployed.
https://fred.stlouisfed.org/series/U6RATE
That quote is not in the context of U-6. From the preceding paragraph:
> ... we do the monthly unemployment rate. It is a crucial piece of data, but the headline one does not account for ...
FRED explains:
> U-3 is the traditionally reported unemployment rate ...
https://fredblog.stlouisfed.org/2015/05/the-many-flavors-of-...
> ... we do the monthly unemployment rate. It is a crucial piece of data, but the headline one does not account for ...
FRED explains:
> U-3 is the traditionally reported unemployment rate ...
https://fredblog.stlouisfed.org/2015/05/the-many-flavors-of-...
Correct but theyre saying the headlines are wrong because the statistic that they use is not accounting for people that are reluctantly part time, but they're not mentioning that there is a statistic that does track that and that statistic also reports that unemployment is low.
It is a lie by omission.
This interview was about how the data and our feelings about the economy don't match. The crux of their argument is that we're looking at the wrong data and the right data shows the true state of the economy, but the true data exists and doesn't align with our feelings either.
It is a lie by omission.
This interview was about how the data and our feelings about the economy don't match. The crux of their argument is that we're looking at the wrong data and the right data shows the true state of the economy, but the true data exists and doesn't align with our feelings either.
If you look at the linked “functional unemployment” chart (https://www.lisep.org/tru) the numbers in the past three years are the lowest on record. It has been on a consistent downward trajectory, minus 2008 crash plus COVID, so that does not seem worth highlighting. The basket of goods argument (the representative purchases for a household is unrepresentative) is more compelling.