This entire story is a perfect example of how economic reporting has missed the story. They interview one (1) working class woman who has been legitimately screwed by her employer ($1/hr raise in 5 years) and then note that wages for working people in the aggregate have outpaced inflation!
Again, the conceit of the piece is perfectly reasonable, as is some of the reporting, but if you scratch it, you see the actual data belies the thesis.
www.nytimes.com/2024/07/03/b...
There’s testable hypothesis here and I’m willing to make a prediction: choice an empirical metric to measure low and middle income people taking summer trips and I will bet they are up YoY when summer is over.
Again, none of this is to say American capitalism is awesome for working people, it manifestly is not! But we’re talking about change vs constants. And the *trends* have been more money in the pockets of lower wage earners, in real terms, over the past two years.
Part of what irks here is that "why do people consistently report that their experience of the economy is shitty when the data says that the economy is doing fine and people are experiencing wages rising faster than inflation?" is a /super/ important story.
This... is not that story.
I'd argue it is that story...the story being that the media keeps telling lower and middle income earners that they're not doing well as a whole, so even when most of them are doing better than they were, they assume others aren't. Wrongly.
There are 86 million homeowners. Rapid inflation, assuming your income keeps pace, absolutely helps reduce the mortgage burden, no wash about it. If money doubles, your mortgage halves. Renters do not get this benefit. This causes a disparity and could account for the vibecession.
This is anecdotal, but in my experience, homeowners aren’t the ones feeling down about the economy; it’s us renters who keep seeing the possibility of owning a home slip through our fingers.
I’m convinced it’s never going to happen. No way I can save faster than price increases. The game is fixed.
totally, and this is place where the aggregate data *does* show a grim scene, it's not just anecdotal. I'd say the cost of housing is probably the single biggest economic issue right now (along w high interest rates on credit card debt)
This is clearly an urban/coastal issue. My students, when they graduate college, are all buying homes in the Midwest within 5 years of graduating. I see their posts about all the time.
yes, exactly. this is a key point being missed in the vibecession debate.
rent control and tenant protections are a huge help, but most renters don't have that, and they're getting double-hit from inflation and a housing shortage.
Yeah, precisely. My rent is 40% of my income. A down payment for a house out here is $100k+. Wages outpacing inflation by a few % points (which mine didn’t, btw) would do diddly squat to improve my future prospects. I’ll be renting until I die, and probably never be able to retire 😕
“Assuming your income keeps pace” is the key to your point. Actually converting the upside on your home into “real” money you can use for other things means downsizing or moving to a lower cost of living area. HELOC doesn’t count in my mind because it is just access to more debt near term.
This is why I argue that the higher interest rates are actually INCREASING home values, because who wants to move from their home that has a 3% mortgage and buy into a more expensive home at 7%?
Cut interest rates, and more supply will come into the market. Why doesn't the Fed get this?
