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Comment by seydor | Hacker News Reader

Do Americans feel like they re in the best economy? (Here in yurop it's doom and gloom nothing like the 90s)

Public perception frequently doesn't match reality. Crime is a similar situation; nightly and 24/7 cable news highlight lurid cases six states away, so large swaths of the population feel unsafe despite living (statistically) in one of the safest societies ever to exist.

A handful of our cities have the worst crime in years, places like Seattle in a generation. It’s more that statistics don’t match up with people’s experiences because they are skewed by combining entirely unrelated places together. Similarly, you can claim it’s the best economy but lots of people are not working the kind of jobs they normally would (and not just in tech) and/or are working multiple crappy jobs so unemployment rates can be deceptive when trying to understand sentiment.

Public perception matches people's experiences. That may or not match the measures that economists and rich people care about, like GDP or stock market gains.

Down on main street, people are cutting back because they can no longer afford the lifestyle they used to afford.

Edit: This has been discussed many times here, so I can only assume the downvoters don't care how "the other half" lives.

Homes [for sale] “unaffordable” in 99% of nation for average American

https://news.ycombinator.com/item?id=37708109

Housing is now unaffordable for a record half of all U.S. renters

https://news.ycombinator.com/item?id=39128859

US inflation means families are spending $709 more per month than two years ago

https://news.ycombinator.com/item?id=37112604

But sure, there's another perspective that sees "the Best U.S. Economy Since the 1990s".

> Public perception matches people's experiences.

It really doesn't; confirmation bias, recency bias, propaganda, etc. all play significant roles. Eyewitness testimony is remarkably inaccurate.

You don't give people enough credit. Yes, there's a lot of gaslighting and propaganda, like cherry picking favorable economic statistics (as here), but people generally see through it.

Interestingly, we also see both recency bias and confirmation bias here as well. This very recent statistic confirms what some people would like to believe.

> That may or not match the measures that economists and rich people care about, like GDP or stock market gains.

If you don't think that positive GDP growth is good, wait until you experience negative GDP growth. :)

As someone who has a few more decades until retirement, I could personally go with cheaper stocks so I could buy more know for future use, but I'm sure my older (some-retired) relatives feel differently about market downturns.

> Down on main street, people are cutting back because they can no longer afford the lifestyle they used to afford.

Depending on the lifestyle (or parts thereof) in question, this may not be a bad thing. Certain lifestyle (aspects) may be imprudent, e.g., "How Much is That $70,000 Truck Costing You?":

* https://awealthofcommonsense.com/2024/02/how-much-is-that-70...

GDP is a monetary measure, it measures market value. So most of regular infrastructure does not add anything to GDP, public schools for example. Positive GDP is an important measure on Capitalist system but it does not reflect fully in the life of most poor people.

> Depending on the lifestyle (or parts thereof) in question, this may not be a bad thing. Certain lifestyle (aspects) may be imprudent,

I guess he was talking about people that cant afford a 70000 truck at first place. Some people on rich countries like Brasil, 11th GDP in 2022, were just not able to afford food.

> So most of regular infrastructure does not add anything to GDP, public schools for example.

But building a new school, or bridge, or factory, or repaving a road to fix potholes, does add to GDP.

GDP is a measure of economic activity, and having positive activity is generally a good thing. (Though some is not: if there's an oil spill, that will increase economic activity due to having to spend money on the clean-up measures.)

> Positive GDP is an important measure on Capitalist system but it does not reflect fully in the life of most poor people.

If you think poor people have a hard time with positive GDP, do you think they'll have a better time when it's negative?

The problem is that GDP doesn't measure the distribution of economic activity.

And reducing economic inequality might reduce GDP even as it improves the lives of poor people. Forcing people to work harder is good for GDP even if it isn't the best thing for the workers.

Can GDP be gamed and overemphasized? Yes.

Is America gaming and overemphasizing GDP? I don't think so. We have all kinds of economic measurements, and the one most people seem to be discussing today is inflation.

As long as we don't go stupid and braindead, and consider the overall economic picture, we'll do fine. We also can't ignore the best data that's collected or consider it conspiracy-laden fakes. But we also need to have enough skepticism to make sure our numbers are legitimate.

There's certainly people who fail on both sides. Overly trusting one number (ignoring all others) for the sake of their arguments. Or alternatively, ignoring inconvenient numbers (well, inconvenient for their side of the argument).

> Positive GDP is an important measure on Capitalist system but it does not reflect fully in the life of most poor people.

You can also measure GDP in less-than-capitalist systems.

You are right that GDP is a proxy for stuff we actually care about. But it tends to correlate really well with all the things we do care about.

>Public perception matches people's experiences.

Going back to the crime example, was this true? People's perceptions contradicted crime statistics. Are you claiming that the crime statistics were wrong and people were somehow getting increasingly victimized?

The FBI crime reports indicate that crime went down in 2022. The National Crime Victimization Survey indicates that crime went up in 2022.

For example, the FBI reports state that total violent crime went down by 2% in 2022. The victimization survey states that it went up by 75%.

The victimization survey also indicates that people are reporting a smaller percentage of crime to the police.

See, this is a great example of how carefully selected data causes a false perception. The increase you cite is charted on https://ncvs.bjs.ojp.gov/quick-graphics. It looks like this: https://imgur.com/a/6dgFRrp

That chart gives me the perception that crime went up in 2022, which is the perception I get from the victimization survey data I mentioned, and which is opposite of the perception I get from the FBI crime report data that says that violent crime went down in 2022.

What is the false perception you think people get from "the FBI reports state that total violent crime went down by 2% in 2022. The victimization survey states that it went up by 75%"?

The chart reveals that the "violent crime victimization 'went up by 75%'" statistic reflects a level that is still historically among the lowest in decades. The same data also could be described as "back to 2018's already-low level" or "nearly 1/4th the amount of crime as the early 1990s".

Many urban areas saw an increase in crime starting around 2020. When it comes to crime (especially violent), it doesn’t take much to change your perception. 1 incident you’re personally involved in is usually 1 too many. Seeing near misses doesn’t help.

The economy is similar - unnecessary stuff is still accessible, but major necessities (food, housing) are worse than ever.

Trends are what influence perception - and rightly so. We’re the most technically advanced we’ve ever been and we’re regressing on the important things. Negative public reaction is (unfortunately) necessary to continue our overall positive trend.

>Many urban areas saw an increase in crime starting around 2020

AFAIK crime statistics do show a small uptick during the pandemic, but people thinking crime is on the rise predates that (ie. during the 2000s and 2010s, despite statistics showing otherwise).

Ime, it's doom and gloom for people in tech and other white collar industries, but people in other industries (especially skilled ones) have become fairly positive.

The loudest people on social media, especially forums like Reddit and HN, tend to skew towards people in the tech industry.

A lot of tech is probably colored by what was truly an exceptional decade or so in roughly the 2010s. Now, layoffs at larger tech companies are not an exceptional event, many companies have tightened up on expenses and hiring, and (even if not necessarily salaries) total compensation has probably taken a nosedive in many cases. (While housing prices are still very high in certain high profile areas.)

Yep. Even though I myself am in tech, my family background wasn't as affluent as other people in the industry.

As such, I feel a bit of Schadenfreude from people who lived with a golden spoon hyperventilating about what is by most standards a fairly normal tech market (or at least, used to be the norm before 2015-16)

I'd even say it's basically equivalent to the tech hiring market in ~2019 and 2018 when I was looking for jobs. Except offers are better (though no bidding wars like 2021)

I can see that. Idk when the unrealistic expectations started kicking off on HN and Reddit - maybe COVID?

But the market seems fairly normal scale of things outside of a couple large employers who tended to hire juniors at the expense of more experienced engineers (Google, Meta comes to mind, and some teams at Amazon), so this might be their first time in a market like this in their careers

Even tech is doing mostly fine. Layoff chatter is going to continue for Q1 but it'll settle down.

The real problem is that the haute precariat who work in the media are being battered by attention spans and ad blockers and ineffective paywalls and bad-news-burnout from the last few years. They're the ones that are most loudly dooming because they're mad that they are overwhelmingly children of the affluent who are doing worse than their parents. It's not like that for almost the entire rest of the country, but these people set the tone by setting the assumption. "Of course the economy is bad, my friend from Yale got laid off from her legal job at Google! Of course the economy is bad, my comedian friend from Choate has to move back in with their parents!" etc etc.

I feel a bit doom-and-gloomy, mainly because I'd like to move into a bigger house as my family grew over the past few years.

The problem being, I bought my current townhouse almost a decade ago and refinanced during the pandemic to an incredibly low rate. Since I would need a new mortgage to buy a new house and rates are significantly higher now, I feel like I'd end up paying twice as much per month for a marginally better house. I'd always heard that housing prices have an inverse relationship with interest rates, so if rates go up, actual housing prices should go down. In reality (so far), prices seem to be much stickier, and people just aren't listing many houses at all.

So essentially I'm whining that I'm paying a shockingly low amount of interest, almost borrowing money for free, and if I take out another loan I'll actually have to pay a (historically) normal amount of interest. But it would still really hurt to make that jump, and it does feel like weird/unhealthy stuff is going on in the housing market.

This is mildly amusing because I feel like I'm a great economy for effectively the same reason. I bought a downtown townhouse seven years ago at roughly half the price this neighborhood is currently going for and I'm paying 1.9% interest, on track to have the house paid off completely in another seven years despite housing expense being well under 10% of my income. I'm also expecting a kid but purchased bigger than I needed on purpose in anticipation of that.

I'm sure a lot of this has to do with who you know as well. Someone further down asked if it "feels" like unemployment is really 3.7%, which seems like a silly question in a lot of ways. How something feels to you is not representative of an entire country. Personally, it "feels" like 0% unemployment to me because nobody I keep in regular contact with is unemployed, my family is mostly in skilled trades and business is booming, and my younger nieces/nephews who recently graduated college all found jobs pretty much instantly, higher paying than I'd have expected, with random ass humanities degrees and no special skills. My own company is still growing and hiring, though our parent company had layoffs. I don't know any of those people, though.

But if your entire peer group is senior engineers expecting $500k salaries who worked for web companies that overhired during Covid and live in places where a family-sized house goes for at least $2 million, it probably feels more dire. Probably similar for media companies given the streaming wars are ending and they have to operate like real businesses now and actually make money. All the creatives I know have been struggling their entire lives, though, so that is nothing new.

You have a (smallish) subset of people in tech, many living in an area of the country which has tended to be more expensive--often much more expensive--than just about any metro other than NYC for decades, which came to regard totally compensation that was totally out of line with what engineers traditionally earned as normal. And presumably the flood of people who went into computer science and programming because that's obviously where the money was will tend to bring the market into equilibrium.

Why pay your house off early? I stopped a while back and save the money instead. My wife and I both “pay” the full mortgage each but we save the other half for investments at the moment.

We could pay off 80% of our house this year but I feel like it should just invest all the cash.

Any thoughts beside being free from a mortgage? I would love to live rent free but I’d make more investing it.

There's definitely psychology involved but it's mostly about the numbers.

I paid off my ~5% mortgage quite a few years ago when I had some spare cash. In retrospect, I would have been better putting it into an index fund, but who knows adjusting for risk?

Today, if I had a 1-2% mortgage, I'd be putting the money in my brokerage money market account. If I were buying today, I'd probably pay cash if I could.

I would not suggest paying off a mortgage at that interest rate. Keep enough cash on hand to ensure you can service the debt, but that rate is a gift, a unicorn likely never to be seen again. Ride it to maturity.

I've long felt like doom & gloom is somewhat key to a strong economy. By tempering that "irrational exuberance" that leads to the development of bubbles that eventually cause recessions.

To answer your question: yes, in the USA at least, consumer confidence in the economy was low through the early to mid 90s. The country had a recession in the early 90s with oil prices rising and real estate prices remained quite low throughout much of the decade.

The Consumer Confidence Index throughout the 90s maps almost exactly to the CCI from 2008-2020. With lows of about 60 in 1990 & 2009 to peaks of about 140 in 1998 and 2018.

Not sure about Europe though. But seeing as oil prices are global, I image y'all didn't much like the early 90s either.

Bubbles don't cause recessions.

However I agree that doom and gloom isn't necessarily bad. And I would also say that short sellers perform one of the most vital functions in finance. (And that's why we should encourage their activity, instead of curtailing them with ever more rules or casting them as the bad guys.)

> Not sure about Europe though. But seeing as oil prices are global, I image y'all didn't much like the early 90s either.

Depending on where you were in Europe at the time, you would have had much bigger fish to fry: the end of the Cold War and dissolution of the Communist Block. You would have to look at individual countries to judge the impact (eg just a quick look at real GDP per capita reveals vast differences between eg Germany, Poland and Russia during the 90s.

(I grew up in (East) Germany and was aware that Russia did really badly in the 1990s. So I was a bit surprised to see that Poland's GDP per capita was on an upward trajectory almost immediately. I naively assumed they also had a painfully long and protracted transition phase. But it looks like their 'shock therapy' might have worked.) See https://en.wikipedia.org/wiki/Balcerowicz_Plan

The vibes are definitely off, but mostly “things are good around here but they MUST be bad over there.”

The data continues to be pretty unambiguously strong.

I think the “vibes” being off is a factor of lower perceived upward social mobility, and simultaneously higher perceived downward mobility (in the future).

And it could be due to how easy it is to see and experience people who are better off than you, and “knowing” you will likely never get there, or that the rising tide will lift their boat higher than yours.

And it could also be due to changing demographics, which are obviously drastic, especially due to lower fertility rates. Everyone knows changes must be coming, but exactly what changes and in what capacity are unknown.

It feels pretty good to me, locally, but to the extent Americans don't feel that way, the months of reporting on nightmare inflation followed by months of reporting on the "100% certain impending recession" now followed by more scare pieces on grocery and fast food prices even as inflation rapidly declines hasn't helped.

I'm personally seeing grocery prices actually come back down to pre-pandemic levels for some items as stores and manufacturers realize they milked the "record inflation" story too much. There were some supply constraints, but once the "inflation" story took off, lots of places raised prices way too much, thinking they could just blame inflation. But when they do it so fast that even folks in the top 10% of income start becoming price-conscious and bargain hunting, they've gone too far.

I get the sense that many Americans feel like they are personally doing well, but are convinced that on average, Americans are not doing well. It’s hard to tell when many numbers are used to spin/promote an ideology or attract eyeballs with sensationalist viewpoint.

> It’s hard to tell when many numbers are used to spin/promote an ideology or attract eyeballs with sensationalist viewpoint.

Lies, damned lies, and statistics.

It's hard to find data about how your peers are doing. Anecdotally, I know a lot of tech employees who are out of work right now and/or have been out of work for 6-12 months. I know more tech workers than I ever have before in my life, that's obviously going to come with 20 years of experience, but I've never seen such a large share of them struggling to find income -- to the point that a small number of them are moving out of the industry against their wishes.

>a small number of them are moving out of the industry against their wishes

And a larger number of which did so in the wake of dot-bomb. At least the meme that you could walk out of a job by Friday, and have 3 offers by the end of the following week just wasn't/isn't the norm in any other skilled labor profession.

The university of Michigan sentiment survey has recently seen huge increases in positivity. Some of these metrics are still pretty low, but going up. http://www.sca.isr.umich.edu/

From my point of view, it's a booming economy for the top 10%-20%. The middle are mostly holding ground, but the bottom 10%-20% are in, or close to, a depression. Homelessness and food bank utilization are at a record high by some measures.

The data indicates the lowest quintile is gaining the most:

https://www.epi.org/publication/swa-wages-2022/

If anything, the middle and upper middle is experiencing decreased quality of life, for example not eating out as often, because the lowest wage workers in restaurants/hotels/farms/etc are seeing wage growth.

That report shows an income increase of 9% from 2019 to 2022. There was a 40% currency devaluation during this time that led to the doubling of rents in most places.

The article indicates that inflation is accounted for: "Even in the face of rising prices, low-wage workers have experienced historically fast real wage growth."

The people who gain are the ones willing to change jobs; which is primarily the top and bottom 10%. Those two demographics are the ones experiencing wage gains that have outplaced inflation. The middle class who feel loyalty to their employers (like me) are the ones who aren't getting raises in line with inflation.

I really don’t know what weird shit is going on there because all the indicators are looking great. Even in Europe the situation isn’t all that dire … even though notably Germany was much harder hit by the Ukraine war (cutting itself loose of its gas dependency on Russia afterwards) than e.g. the US.

It‘s just weird feelings based hyper cynical doom and gloom. I get that very recent inflation does feel like shit (if you actively remember paying substantially less for something just a couple months, years ago) but at some point that effect has to disappear, right? Especially given real wage growth in the US.

So, yeah, people in the US. Explain yourselves. And people in Europe, explain yourselves, too. (For Germany my hypothesis is horrid political communication by the governing parties. They are doing many of the right things and lots of great things are being implemented after years of standstill but they do not manage to communicate all of that competently.)

Yurop is getting kind of screwed over by a couple of wars on its periphery that are interrupting things like natural gas and shipping.

Europe also largely adopted the bullshit austerity policies that everyone screamed for Biden to adopt, and their economies are languishing for it.

I thought we were done with the "expansionary austerity" malarkey:

* https://en.wikipedia.org/wiki/Expansionary_fiscal_contractio...

It's generally a bad idea:

* https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Da...

Certainly all-spending, all-the time isn't what one necessarily should do, as an already working economy should be left to its own devices so that government spending and fiscal room is around as a form of 'dry powder' to have when the private sector (inevitably) has a downturn.

You don't need government spending and fiscal room 'dry powder':

Fiscal policy is a really bad lever to pull to get the economy out of a slump. It's very wasteful, and doesn't have much of an influence.

(For an example: do you remember the 'fiscal cliff' in 2013 or so? Because of some debt ceiling shenanigans the US federal government dropped spending by a lot, and virtually all pundits were predicting recession. See eg https://www.reuters.com/article/usa-fiscal-marketdeal-idCNL1... I can dig up more, if you need a reminder. It was all over the news.

The fiscal cliff came, and despite the fiscal austerity economic growth actually accelerated.)

If you have a competent central bank that's targeting inflation or nominal GDP, they will counteract whatever the fiscal side is doing. The Fed can add or remove money from the economy as they please, and thus bring total spending up or down.

The best thing: they can undo mistakes. If they inject too much money, they can subsequently remove that money by selling assets off their balance sheet. That's much easier than 'unspending' on the fiscal side, which is basically impossible.

No, because it's left-wing shibboleth to say everything is terrible and it's right-wing shibboleth to say everything is terrible when a Democrat is president.

But, this is slowly changing and sentiment has risen for the last few months.

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