America's economy has escaped a hard landing(economist.com)
economist.com
America's economy has escaped a hard landing
https://www.economist.com/briefing/2024/03/14/americas-economy-has-escaped-a-hard-landing
63 comments
Well, yes and no. The wealthy have not experienced a hard landing, and at the same time, the wealth inequality has never been greater. An entire generation now has no prospects of buying a house, even renting is hard, etc.
I don't know where you got this impression from, but that's not what the official data says. In relative terms, the bottom 50% hold a larger share of the total net worth than they have since 2003 (ignoring the obviously temporary Cantillon spike), which is over 5 times as much as they did in 2011, and finally comfortably above 50% of their record in 1993 (since 1990) [1]. In absolute terms, they hold twice as many real dollars as they did in 1990 [2], which they got to through the largest relative spike and smallest relative fall of all the tracked tranches. Meanwhile the relative wealth of the two rich segments of 99-100 and 90-99 have been flat for a decade and hardest-landed slightly above the all time low in 1996 [3].
It's truly remarkable to me that people don't remember just how bad things used to be. It's not even been eighteen years; what's the excuse for such short institutional memory? I even doubled the standard graph height and it still pretty much disappears both absolutely and relatively. Or perhaps the talking points are just a little under eighteen years out of date? In that case, there's some good news on the horizon: The yield curve has risen dangerously close to un-inverted [0], which has precipitated or tracked with every recession since the mid 50s, and will probably rise more soon as the market prices back out Powell's flinch in the face of thirty-five months of inflation over 3%; the poor usually take it on the chin the hardest during malinvestment blowups as they scramble to underbid each other for the remaining jobs that didn't fold under the weight of unprofitable compassion, so we can expect the reality of poverty to give wealth inequality rhetoric a comeback. Give it two good years and we can all join Alan Kay in complaining about "That [second] time the bankers stole all our money" once again when the data refresh our memories on just how bad they can get.
[1] https://fred.stlouisfed.org/graph/?graph_id=1317951
[2] https://fred.stlouisfed.org/graph/?graph_id=1317969
[3] https://fred.stlouisfed.org/graph/?graph_id=1317984
[0] https://fred.stlouisfed.org/series/T10Y2Y
It's truly remarkable to me that people don't remember just how bad things used to be. It's not even been eighteen years; what's the excuse for such short institutional memory? I even doubled the standard graph height and it still pretty much disappears both absolutely and relatively. Or perhaps the talking points are just a little under eighteen years out of date? In that case, there's some good news on the horizon: The yield curve has risen dangerously close to un-inverted [0], which has precipitated or tracked with every recession since the mid 50s, and will probably rise more soon as the market prices back out Powell's flinch in the face of thirty-five months of inflation over 3%; the poor usually take it on the chin the hardest during malinvestment blowups as they scramble to underbid each other for the remaining jobs that didn't fold under the weight of unprofitable compassion, so we can expect the reality of poverty to give wealth inequality rhetoric a comeback. Give it two good years and we can all join Alan Kay in complaining about "That [second] time the bankers stole all our money" once again when the data refresh our memories on just how bad they can get.
[1] https://fred.stlouisfed.org/graph/?graph_id=1317951
[2] https://fred.stlouisfed.org/graph/?graph_id=1317969
[3] https://fred.stlouisfed.org/graph/?graph_id=1317984
[0] https://fred.stlouisfed.org/series/T10Y2Y
Alan Kay????
Do you maybe mean Alan Greenspan?
Do you maybe mean Alan Greenspan?
And yet:
> 35% of Americans say they are better off now than they were a year ago, while 50% are worse off. Since Gallup first asked this question in 1976, it has been rare for half or more of Americans to say they are worse off. The only other times this occurred was during the Great Recession era in 2008 and 2009.
https://news.gallup.com/poll/469898/half-say-worse-off-highe...
I suspect cash flow and the price of expensive purchases like cars and homes matters a lot more to working people than total share of net worth.
> 35% of Americans say they are better off now than they were a year ago, while 50% are worse off. Since Gallup first asked this question in 1976, it has been rare for half or more of Americans to say they are worse off. The only other times this occurred was during the Great Recession era in 2008 and 2009.
https://news.gallup.com/poll/469898/half-say-worse-off-highe...
I suspect cash flow and the price of expensive purchases like cars and homes matters a lot more to working people than total share of net worth.
If you had read my graph before commenting, you would have noticed that the bottom 50% had 1.289 million millions in Q3 2022, and have 1.189 million millions in Q3 2023, which is indeed a smaller number.
You should also be aware that consumer sentiment surveys that drill down into concrete sentiments usually find consumers are very negative about the current price of durables, which are indeed quite high compared to historically [1]. They also tend to come down slowly without a inciting crash.
[1] https://fred.stlouisfed.org/series/CUUS0000SAD
You should also be aware that consumer sentiment surveys that drill down into concrete sentiments usually find consumers are very negative about the current price of durables, which are indeed quite high compared to historically [1]. They also tend to come down slowly without a inciting crash.
[1] https://fred.stlouisfed.org/series/CUUS0000SAD
I'm not commenting to dispute your numbers, which I trust are correct.
I'm considering the possibility that the measures you've chosen don't reflect the impact of the economy on people's lives. As GP said "entire generation now has no prospects of buying a house, even renting is hard, etc.".
You've convinced me that the phrase "wealth inequality" is a ghost of the past, a lingering rally cry from 2011, when wealth inequality truly was historically high.
We need a new term for the current situation. The data shows that the wealth of the bottom 50% has recovered - but their lifestyles and happiness have not.
I'm considering the possibility that the measures you've chosen don't reflect the impact of the economy on people's lives. As GP said "entire generation now has no prospects of buying a house, even renting is hard, etc.".
You've convinced me that the phrase "wealth inequality" is a ghost of the past, a lingering rally cry from 2011, when wealth inequality truly was historically high.
We need a new term for the current situation. The data shows that the wealth of the bottom 50% has recovered - but their lifestyles and happiness have not.
Shifting cultural norms is a really hard and takes a long time. Lifestyles and happiness are a reflection of culture in combination with environment. We've managed to shift cultural norms in a direction where it's fashionable to dwell on and complain about your current situation.
I think there is a balance to be struck between wishing to make forward progress and obsessing about how far behind you are as compared to someone else. Learning to live within your means while charting a course to a better life is not a core cultural value anymore. This results in more people complaining about their situation and asking their environment to change in some way to make it better.
I think there is a balance to be struck between wishing to make forward progress and obsessing about how far behind you are as compared to someone else. Learning to live within your means while charting a course to a better life is not a core cultural value anymore. This results in more people complaining about their situation and asking their environment to change in some way to make it better.
>We need a new term for the current situation. The data shows that the wealth of the bottom 50% has recovered - but their lifestyles and happiness have not.
"The thing I have noticed is when the anecdotes and the data disagree, the anecdotes are usually right. There's something wrong with the way you are measuring it". —Jeff Bezos <https://sports.yahoo.com/amazon-ceo-jeff-bezos-explains-2123...>
"The thing I have noticed is when the anecdotes and the data disagree, the anecdotes are usually right. There's something wrong with the way you are measuring it". —Jeff Bezos <https://sports.yahoo.com/amazon-ceo-jeff-bezos-explains-2123...>
>the bottom 50% hold a larger share of the total net worth than they have since 2003
>while 50% are worse off.
Well 2003 is a long time ago so these are not supposed to be exactly simultaneous.
But when you do the math, statistically there is very little chance of either of these statistics being 100% accurate ;)
But the numbers are right there in the most plausible ball park, why else would anyone ever lacking prosperity been envious of "how the other half lives"?
So might as well take the figures at face value anyway.
Well what it tells us is that the bottom 50% is getting a marginal amount more trickling down, which obviously isn't doing any good since it's far too little too late and the full amount they were getting wasn't even enough to give them the economic ballast to keep the ship from capsizing.
Maybe more accurately said to keep the ship from being able to capsize.
One could only hope.
>while 50% are worse off.
Well 2003 is a long time ago so these are not supposed to be exactly simultaneous.
But when you do the math, statistically there is very little chance of either of these statistics being 100% accurate ;)
But the numbers are right there in the most plausible ball park, why else would anyone ever lacking prosperity been envious of "how the other half lives"?
So might as well take the figures at face value anyway.
Well what it tells us is that the bottom 50% is getting a marginal amount more trickling down, which obviously isn't doing any good since it's far too little too late and the full amount they were getting wasn't even enough to give them the economic ballast to keep the ship from capsizing.
Maybe more accurately said to keep the ship from being able to capsize.
One could only hope.
"The economy" is solely a measure of how rich people are doing financially.
Any other concerns aren't captured there no matter how important we keep saying they are. I think we ought to track a "bloody revolution index" but that would probably just give people ideas.
Any other concerns aren't captured there no matter how important we keep saying they are. I think we ought to track a "bloody revolution index" but that would probably just give people ideas.
Which is exactly why the things that are tracked are the things that are.
To keep from giving people ideas.
I mentioned this not long ago, but by far most people don't know when GDP began to be calculated, plus how & why it got to be that way then, and the way it is now.
To keep from giving people ideas.
I mentioned this not long ago, but by far most people don't know when GDP began to be calculated, plus how & why it got to be that way then, and the way it is now.
I agree strongly with Biden when he characterized the recovered American economy as "the greatest story never told".
The reality is that the US economy is very strong, and has been for quite some time now. We all just don't like to admit it.
The reality is that the US economy is very strong, and has been for quite some time now. We all just don't like to admit it.
I think it’s both (great economy, poor sentiment). The economy is strong because unemployment is low. Unemployment is low because of a tight labor market due to structural demographics. But housing is expensive because of housing shortages, which will take years, if not decades, of building to resolve. Credit is expensive making buying durable goods expensive (autos, specifically). Healthcare is…you know.
We’re closer to “living within our means” (versus cheap credit inflating consumer and business spend) from an equilibrium perspective, but the ZIRP party is over, happiness is reality minus expectations, and everyone is disappointed in what reality looks like.
You might not lose your job, but you’re still chained to a treadmill with no relief in sight. Hence, sentiment.
We’re closer to “living within our means” (versus cheap credit inflating consumer and business spend) from an equilibrium perspective, but the ZIRP party is over, happiness is reality minus expectations, and everyone is disappointed in what reality looks like.
You might not lose your job, but you’re still chained to a treadmill with no relief in sight. Hence, sentiment.
>the US economy is very strong, and has been for quite some time now. We all just don't like to admit it.
What should "a strong US economy" mean to the common middle class worker? I think that's the issue. Unemployment is low, but several sectors are finding it harder to find work than ever, with companies slashing roles in real time.
Where are these roles, what kind of roles are they (part time, gig?), and can people actually live off of these roles? if unemployment is zero and everyone is flipping burgers, that doesn't seem to be an actual win for the working class.
What should "a strong US economy" mean to the common middle class worker? I think that's the issue. Unemployment is low, but several sectors are finding it harder to find work than ever, with companies slashing roles in real time.
Where are these roles, what kind of roles are they (part time, gig?), and can people actually live off of these roles? if unemployment is zero and everyone is flipping burgers, that doesn't seem to be an actual win for the working class.
> if unemployment is zero and everyone is flipping burgers, that doesn't seem to be an actual win for the working class.
That is nowhere near reality, so the supposition is a waste of time. Plenty of work is highly in demand, plumbing, electrical, HVAC, driving, etc.
That is nowhere near reality, so the supposition is a waste of time. Plenty of work is highly in demand, plumbing, electrical, HVAC, driving, etc.
I think that the question is whether the high demand work is available (e.g. most people aren't electricians) and whether it allows for a good quality of life.
>Plenty of work is highly in demand
Sure, so is tech. The point is more that are these "high demand" work hiring?
Also, nit: I don't recall "driving" ever particularly being in high demand. Rideshare gig's are the exact kinds of roles I fear the government is counting as "employed".
Sure, so is tech. The point is more that are these "high demand" work hiring?
Also, nit: I don't recall "driving" ever particularly being in high demand. Rideshare gig's are the exact kinds of roles I fear the government is counting as "employed".
You need to be looking at the U6 figures to get all marginally attached to workforce people such as those who are under employed who want more work. Someone working less than 35 hours a week for a ride share app but wanting more hours or even working more than 35 hours and wanting a better job would count in the U6 figure.
> or even working more than 35 hours [for a ride share app] and wanting a better job would count in the U6 figure
No, people working full time and wanting a better job are not included. Every worker wants a better job.
U6 is: "Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons...Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months."
No, people working full time and wanting a better job are not included. Every worker wants a better job.
U6 is: "Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons...Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months."
Someone working a gig economy job is still very likely underemployed. Someone working a gig economy job full time is in fact employed by all possible metrics.
The grandparent comment being concerned about counting these people is unrealistic as you say nearly everyone would desire better employment.
The grandparent comment being concerned about counting these people is unrealistic as you say nearly everyone would desire better employment.
The economy is strong but people aren't feeling it because wages haven't caught up to inflation. It's a soft landing, which is great news, but hard to get excited.
Absolutely, poor media coverage has lead to poor sentiment despite a consistently good economic recovery since gas prices went down in 2022.
Not sure why you're being downvoted.
If the economy is that strong, why are housing prices outrageously high on either coast, where the jobs are? To paraphrase Jesus, it's not about Man serving the Economy, it's about the Economy serving Man.
A strong economy tends to cause higher housing prices. When people have more money then they naturally tend to spend a lot of that on upgrading their living arrangements.
Immigration is also a factor. I'm not trying to start an argument about immigration but the de facto open borders policy has brought in millions more people. That must have an effect, particularly at the lower end of the market.
Immigration is also a factor. I'm not trying to start an argument about immigration but the de facto open borders policy has brought in millions more people. That must have an effect, particularly at the lower end of the market.
A strong economy tends to cause higher housing prices
A look at the data will tell you that housing construction does not meet demand since in the mid-1980's (!): https://fred.stlouisfed.org/series/HOUST. It's now obvious to anyone that the policy failure has caught up with the nation.
The problem is seriously compounded by the depopulation of rural areas and the fact that current new construction is not entry-level housing and never will be. You can't subdivide an exurban mansion into four apartments.
A look at the data will tell you that housing construction does not meet demand since in the mid-1980's (!): https://fred.stlouisfed.org/series/HOUST. It's now obvious to anyone that the policy failure has caught up with the nation.
The problem is seriously compounded by the depopulation of rural areas and the fact that current new construction is not entry-level housing and never will be. You can't subdivide an exurban mansion into four apartments.
Jobs are everywhere in this country, there's a reason why the unemployment rate is so low!
[deleted]
Care to elaborate on this line of thinking? What jobs and where?
Dude is saying that someone who is works for 1h in a week is not included in the U-3 statistics.
The wife is reviewing job applications for a teaching position at her institution. There are people applying who did decent work in the past and are now writing assignments for study.com. That's some serious underemployment visible there.
The wife is reviewing job applications for a teaching position at her institution. There are people applying who did decent work in the past and are now writing assignments for study.com. That's some serious underemployment visible there.
Underemployment historically low right now, your anecdotes are meaningless against the real data.
Is the issue underemployment or elite overproduction?
It's lack of industrial policy, really, the fact that these people did good science until outsourcing started proves it. It's not cases of "got useless PhD at university no one ever heard of".
These people are counted in the U6 figures. U3 is only people without a job who have been looking in the past 12 months and haven’t found a job.
Housing market is still a shitshow, and greedflation is still unchecked by the "invisible hand of the free market".
[deleted]
I am skeptical whether "greedflation" is a real phenomenon. Corporations were no less greedy a few years ago. Recent high inflation rates are more likely connected to monetary policy.
Corporations have record profits right now. When a handful raised prices, every other company raised prices in response, well above what they needed to pay for increased costs. https://finance.yahoo.com/news/greedflation-caused-more-half...
[deleted]
Costs have almost nothing to do with pricing. Companies will charge as much as they can. Always have, always will.
Not sure if you have insight to supply chain costs and how they inflated cost during the pandemic, but me and most I know who do understand the truth behind the greedflation dynamic
It's possible that the corporations are no more greedy, they are just more able to get away with charging higher markup.
Because of easy money.
No; prices went up fast but there is nothing to drive them back down (ie competiton) even with inputs costs having declined due to monetary policy. Ergo, inflation was used as cover to hold prices high long after their cause had subsided.
https://robertreich.substack.com/p/corporate-soaring-profits...
https://robertreich.substack.com/p/corporate-soaring-profits...
Even with no competition you can’t keep putting prices up unless your customers have the means to pay. Competition didn’t suddenly change, it was the means to pay that did.
Customers have the means to pay because of low unemployment. It is what is keeping consumer spending going.
[deleted]
> Forecast for US Recession Within Year Hits 100% in Blow to Biden
* Bloomberg Economics sees near certainty downturn will start Tightening conditions, inflation, hawkish Fed weigh on outlook
Oct 2022
https://www.bloomberg.com/news/articles/2022-10-17/forecast-...
I wish that the American media had a bit of accountability for their reporting.
* Bloomberg Economics sees near certainty downturn will start Tightening conditions, inflation, hawkish Fed weigh on outlook
Oct 2022
https://www.bloomberg.com/news/articles/2022-10-17/forecast-...
I wish that the American media had a bit of accountability for their reporting.
[deleted]
Inflation always feels amazing when it starts. The problem is that once it gets going it’s really hard to get it to stop
[deleted]
Phiwise_(1)
Standing by for the reckoning when the Treasury holds a T-Bill auction to a chorus of crickets.