Things are getting better yet sentiment is falling. Does that mean things aren’t getting better or does it mean expectations are rising? Only the second of those two is brought up in this brief article.
This causes issues, since any mild gradual improvements to the world get drowned out. The amount of actual yearly improvement needed to give the impression that things are improving ends up being dramatically more than the small incremental improvements which are normally seen.
The paper discusses this and the ft article quotes it:
> particularly if one adheres to the view that traditional media fulfills a watchdog/surveillance function. Although this argument could explain the average level of negativity in news reporting, it does not address its increasingly downward trend. … Fighting the media negativity bias, the local Russian newspaper City Reporter decided in 2014 to report only positive news for a day and lost two-thirds of its readers.
Have they? By what measures?
Real wages have stagnated or fallen. Workforce participation is at a low. We can't compete on costs with much of the world. Population is mostly stagnate. It's hard to see how a system built on consumerism is not in trouble when our products must be subsidized to compete on exports (ag), the population is mostly stagnate, and a large portion of the population is either not working or is making just enough to survive. Looks pretty bleak to me. I suppose it looks better if you wrap assets in multiple layers of derivatives.
The average person has always been working.
The cost of living has risen faster than wages, which have have stagnated except for those who are either in the C-suite or making their money primarily through capital.
My father made half of what I make at the same age. But his mortgage was 1/8th of the size of mine for the same basic home.
https://www.bls.gov/charts/employment-situation/civilian-lab...
> https://www.nytimes.com/2024/01/09/opinion/economy-survey-re...
i'm not sure the two can actually be decoupled. why do people work? as a means to fulfill their needs and desires. how do you measure if a person's needs and desires are being fulfilled?
you can try to ground economic measurements in something like Maslow's hierarchy, but you can't escape that a person's sentiment is real. give a person shelter, but in such a way that they feel it could be taken away from them at any moment (e.g. "living paycheck-to-paycheck"), and you've only sort of fulfilled their base needs. give a person the exact same shelter but in such a way that they feel secure in it, and it's hard to argue that's not meaningfully better.
so whatever macro measurements you're using, if your goal is for them to reflect anything real to the individual, they ought to have some correlation to sentiment. "household savings" and "job openings" often do proxy the difference between being secure v.s. insecure in your housing. but, speaking to the article, worries you'll see captured and reinforced by the news such as "the other half of the country wants to take away my healthcare" or "the other half of the country wants to obsolete my coal/oil/manufacturing job" proxy these same feelings of in/security, but are likely not captured by any formal measurement... except "sentiment". so if these sentiments aren't proxied by your "things are getting better" measurement, then yes, it would mean that things aren't getting as better as your measurement claims.
If I expect $500 and get $600, I am satisfied, but if I am expecting $1000 and get $900, I am not, despite objectively being better off.
But is this actually true, or just something that declining economic sentiment in the newspapers has led us to believe? People are consuming more food, more education, more square feet of house, more travel. My sense is that is surprisingly hard to find a quantitative signal that purchasing power has collapsed.
Maybe it is just that positional goods (access to the best neighborhood in the best city) get harder to obtain as the population grows?
Sure, we're eating more food, but it's increasingly garbage. Yes, we have more education, but the quality has gone down and is really only a response to the barriers to entry that have increased for most professions. It does seem travel has increased and new houses are bigger, but these seemed to be aligned to a particular class of person. I doubt the middle class is doing much of that. Perhaps the increase in income in equality is reflected by a larger upper class skewing those metrics.
If you want to argue that real wages have stagnated, you need to argue that real GDP has stagnated.
> Yes, we have more education, but the quality has gone down and is really only a response to the barriers to entry that have increased for most professions.
Yes, that is a problem. See 'The Case against Education' by Bryan Caplan.
> I doubt the middle class is doing much of that.
What's your definition of the middle class in this context? Have you checked any statistics?
> Perhaps the increase in income in equality is reflected by a larger upper class skewing those metrics.
The first few decades after the second world war were really rough. But fortunately, global equality has massively improved in the last few decades.
Numerically, that's mostly due to China (but also India and recently Africa) first falling behind and then starting to catch up.
There was probably never a time since at least the Industrial Revolution when global consumption was as equal as today, and the situation is set to keep improving.
What I can argue is that median real wage has stagnated. Distribution matters, unless you truly believe in strict trickle down economics. The vast majority of the increase has gone to high earners.
"Have you checked any statistics?"
Plenty of stats out there if you want to look. One easy one is that median home income requirements exceed that of median household income by more that 25%. Most new houses are significantly above the median in cost and size, pricing out the middle class even farther.
"There was probably never a time since at least the Industrial Revolution when global consumption was as equal as today, and the situation is set to keep improving."
I'm talking about the US domestically, as were most of your comments. There's still massive per capita consumption differences between the US and most other countries (fuel, food, etc).
Nice straw man!
> Most new houses are significantly above the median in cost and size [...]
New houses have almost always been better than existing houses, and have predominately bought by rich people. That's how come the housing stock of 2024 is better and more luxurious than the hovels people used to live in around eg 1800.
When someone build some new luxury homes, a rich person doesn't just magically pop into existence to move in. That rich person used to live somewhere else before, and that other house is now available for someone slightly less rich to move into. There's a whole chain of moves happening.
It's the overall quantity of new housing being build that's important. Even poor people benefit from more housing for rich people. See https://en.wikipedia.org/wiki/Filtering_(housing)
And I do agree that the US is not building enough for various reasons.
> I'm talking about the US domestically, as were most of your comments. There's still massive per capita consumption differences between the US and most other countries (fuel, food, etc).
Yes, the US is still one of the richer countries. But the gap has started to narrow. And not in the bad way, ie the US falling behind, but in a good way, other people catching up.
Not strawmanning, some people actually belive this. In some limited scenarios or with a limited differences, it can work. Providing there are controls in place to correct any runaway effects.
" and have predominately bought by rich people."
I wouldn't say predominantly. There were times in the recent past when middle class people were the primary builders/buyers of new homes.
"It's the overall quantity of new housing being build that's important."
I understand filtering, but it does have limits. If you have too many rich people building houses that they don't need to sell, or want to keep as investments or vacations homes, them you can end up with problems. Likewise, if the percentage of rich people goes down significantly, many of the larger homes may not be economical for middle class people to live in depending on things like tax or utility costs.
"And I do agree that the US is not building enough for various reasons."
It's not just that they aren't building enough. Population distribution and vacancies are huge problems. Who or what type of entities owns properties, especially in higher percentages in a given area is a problem. But even when they do build, there is still a problem of the new single family housing being almost exclusively larger. There are very few affordable units in most markets for starter or empty nester homes.
Maybe, but they don't call it 'trickle down' economics. That's only ever used as a slur.
> I understand filtering, but it does have limits. If you have too many rich people building houses that they don't need to sell, or want to keep as investments or vacations homes, them you can end up with problems.
Land value tax would be your friend here. Though I don't see the problems: as long as they are building enough, that's great. If rich people want to have a few extra houses, that's fine. Just keep building more, as long as they want to pay for it.
Houses are (or should be) a manufactured product. We can make more of them.
> Likewise, if the percentage of rich people goes down significantly, many of the larger homes may not be economical for middle class people to live in depending on things like tax or utility costs.
Most taxes on houses should drop, if their value drops. Eg that's the case for property taxes.
Utilities don't drop automatically, yes. But you can eg not run the heated pool, or you can retrofit insulation etc.
In any case, capital costs are often the major source of housing costs. Ie that's either what you (or your landlord) pay for the mortgage, or otherwise the opportunity cost of the equity you have in your house.
But those costs can drop a lot just by virtue of the market value of the house dropping. If necessary, they can drop all the way to zero, if the price of the house drops to zero.
So there's an enormous buffer before utility costs by themselves become a limiting factor.
You can also subdivide homes.
> It's not just that they aren't building enough.
No, that is exactly the problem. Another related problem is that it is hard to get approval for anything but a single family home in large parts of the US. So density is illegal.
Vacancies aren't much of a problem.
I don't know what you mean by 'affordable units'? I mentioned already that quantity of units on the market is what matters. If you add a new unit at the top of the market, filtering will make sure that we get another affordable unit at the bottom automatically. Building explicitly shitty (sorry, affordable) housing for poor is a bad move. Requiring developers to do so by law is worse.
Have a look at https://kevinerdmann.substack.com/p/the-housing-shortage-is-... and the other work by Kevin Erdmann.
I do agree that a land value tax would be an excellent way to raise revenue (without impacting the economy), and then those pesky rich people, and especially rich foreigners, bidding up home prices would just be straight up tax revenue, instead of an ideological war.
Not really. You can't have them taking up land and services for houses rather sit empty. If they aren't used, they aren't helping to alleviate the constraints. Just like all the vacant rental units.
"Most taxes on houses should drop, if their value drops. Eg that's the case for property taxes."
Yes and no. The municipality and schools have costs they need to cover. They can only drop so much, especially when we're talking about the top 10-20% houses.
"Utilities don't drop automatically, yes. But you can eg not run the heated pool, or you can retrofit insulation etc."
The retrofits are major capital expenses that my mention later on. They get more expensive the bigger the house is. You still have larger costs on things like a new roof or flooring since there's simply more of it. Yes, they themselves generally wouldn't become a limiting cost. But neither would the property cost nothing.
There are multiple problems - corporate owned vacancy, building sizes, and even distribution are factors. The root problem is not lack of building new homes, as you claim. It is a distribution and utilization problem at its core. About 10% of the housing stock in the nation is vacant. If you more evenly distributed population and didn't hold units off the market, you'd fix the issue. It would be better for the nation to increase investment (jobs and infrastructure) in moderate or smaller sized cities in depressed areas with higher vacancies. Otherwise you end up with a vicious cycle consolidating people in a dozen or so major cities with people paying exorbitant amounts of money. One often overlooked aspect is that people have preferences towards single family homes. Simply allowing more density isn't going to fix that preference.
They wouldn't be paying exorbitant amounts of money to stay in NYC or SF. They haven't in the past, before America stopped building. The distribution of rents used to be fairly 'flat', without the crazy spikes in productive cities we see today. See eg https://kevinerdmann.substack.com/p/the-consumption-basket-w...
Yes, many people have a preference for single family homes. If the people who are ok with density were legally allowed to enjoy that density, then there would be more space (even relatively close to city centres), left over for the people who prefer single family homes on large plots.
That also applies for your concerns about rich people taking up land: legalise density and building taller.
> The retrofits are major capital expenses that my mention later on. They get more expensive the bigger the house is. You still have larger costs on things like a new roof or flooring since there's simply more of it. Yes, they themselves generally wouldn't become a limiting cost. But neither would the property cost nothing.
Maybe, but you'd expect homes meant for rich people to have nicer than average roofs and flooring already. So your concern is a bit weird.
The vacancy rate doesn't seem particularly outside of historic norms: https://tradingeconomics.com/united-states/rental-vacancy-ra... So I'm not quite sure what you are on about?
In any case, even with your much higher estimate of 10% it's not a big deal. Even if you magically went from 10% to 0% vacancies overnight, you'd still only increased the effective housing supply by about 11%. The shortfall in building is much larger than that.
Again, please have a look at https://kevinerdmann.substack.com/p/the-housing-shortage-is-... and perhaps https://kevinerdmann.substack.com/p/random-notes or https://www.amazon.com/Shut-Out-Shortage-Recession-Universit... for a book length treatment.
In the US, calorie consumption/person peaked around the year 2000 and has been falling since.
50 years ago was 1974. Wasn’t USA just coming out of the Vietnam fiasco at the time? Were economic things really that good? I think there was an oil crisis and people at least in Yugoslavia (where my parents were kids at the time) could only fuel up at gas stations on alternative days based on license plate.
Oh and if I’m not mistaken that was when Japanese cars started flooding the US market and US car manufacturing began its downward spiral into oblivion. The beginning of the end for places like Detroit.
My kids talk about how this is the worst the US has ever been, but I point out that there was a whole civil war and things were abysmal before that (overt genocide and slavery, child labor, political violence). And when the Baby Boomers were the “gen z” of the time, it was pretty selfish and shitty.
Over the long term, though, the percentage of wealth going to the top 1% has dramatically increased, which is a root issue that is not improving. (The vast majority of us would be far-better off if there were higher taxes on the richest Americans.)
There is no evidence for this in the USA except among the poorest, for whom support is being withdrawn by the federal and many state governments.
Pay packets are rising faster than costs have been (and costs are dropping). Now those are statistical measures, but the actual data show that consumers are spending as if the are doing better.
It is true that a secular increase in pricing is quite visible — I suffer from this myself even though I can afford it: a bag of groceries simply costs 30% more than it did a few years ago and that bugs me at the check out. It costs me a smaller percentage of my paycheck, but that feels more abstract.
This is like the perennial crime issue: “Crime is out of control — not where I live, but in all those other places.” Today’s NYT interviewed a bunch of caucus voters for whom they support and why. One guy literally said, “the economy is a disaster. I’m doing fine, but I understand it’s actually terrible.”
Doesn't that depend on what you look at? E.g. if you look at gdp then things are getting better but if you look at growth rate then things are getting worse?
(If you look at growth as the ratio between years, instead of as a difference, then yes, growth has slowed down.)