But is the majority of the population thriving?
It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck.
A handful of companies are thriving, but barely any of its employees.
It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck.
A handful of companies are thriving, but barely any of its employees.
There is another 25-30% of households that spend all of their income on ordinary expenses beyond necessary expenses. This includes things like car payments on a new BMW or a mortgage on a big house; "ordinary" is determined by expense category, not expense necessity, so a lot of spending on luxury goods is classified as "ordinary". By implication, there is effectively no ceiling to ordinary expenses.
By contrast, the median US household has >$12,000/year in excess income after all ordinary expenses. Technically these households could have expanded their lifestyle to consume that income, but in many cases they are spending it on things that are not classified as "ordinary" and therefore not saving it. The categories of "non-ordinary" expenses (which have a sensible objective criteria) are almost entirely obvious lifestyle flex things, so not particularly controversial.
The implications of these statistics are pretty wild. The median household can easily accumulate a million dollars in inflation-adjusted net worth, not including their house, over a 40 year career. And they can do it without being particularly thrifty, since ordinary expenses covers a lot of luxury spending.
Americans have very high incomes, both in theory and practice, they just would rather spend it than save it.
Searches understandably are finding more 'ordinary/necessary' expenses for business than for families
And before someone chimes in “that’s because of the billionaires throwing off the average!” Look at the median disposable income chart. America is still at the top.
The median American is far wealthier than the median European person, even after accounting for things Americans normally complain about like healthcare, education costs, and retirement contributions.
This results in some crazy stats, like the fact the median Mississippi resident has more disposable income than the average UK resident (and that includes financial hub London). And again, this is AFTER accounting for healthcare, education, etc costs.
I don’t understand why Americans always have such a fetish about bragging about their disposable income. Once you allocate for payments into the welfare state, the difference becomes a lot smaller.
And that’s not even mentioning the stark difference in quality of life, beyond “quality of life” graphs. Those graphs don’t account for having to wait 25+ minutes for the store to unlock steaks or vitamins from a security case. Or for mass tent camps in cities. Or Mmss drug deaths. Uncertainty of potable water. Access to and education on safe sex, abortion, etc. Walkability of cities.
Whenever I meet Americans traveling Europe, they virtually always rave about how much better life seems over here.
> updating priors is hard
[Upthread commenter edited his comment removing some stuff]
It’s trivial to find complaints on the epidemic of security cases in American stores, and especially the fact that there’s not enough personnel in stores leading to long waiting times.
In a similar vein, are you really going to claim with a straight face that America isn’t extremely car-centric anymore?
> As someone who actually moved there, I can tell you the numbers are also anecdotally felt on the ground if you go outside of wealthy tourist capitals.
Then you should travel more. I got these remarks even in smaller Croatian towns. I live in The Netherlands myself, and I’ve heard similar things said in mid-sized cities in Ireland, Spain, Portugal, Gdansk, Poland, Denmark, Sweden Bulgaria, hell even in Italy in a place like Naples.
And if you’re gonna claim that wasn’t small town / countryside enough, do you really think quality of life is going to be higher in a hick town in Mississippi rather than a countryside town in Portugal?
Not to mention the sliver of vacation days Americans have.
Money isn’t life.
You are generalizing here for sure. I get almost 5 weeks vacation, 2 weeks sick, 11 holidays, and occasional personal and administrative leave. These also roll over. The people making 45k at my job get the same leave as the hire paid people.
You don't probably meet many Americans raving about the quality of life in rural Romania, and they may not be so enthralled with the European lifestyle once they saw their paycheck and the living situation it would provide.
https://www.axios.com/2024/08/11/retail-theft-cvs-walgreens-...
Literally locking up $9 worth of fruit juice.
As far as non-walkability goes, just watch the top three videos of the YouTube channel Not Just Bikes: https://youtube.com/@notjustbikes
As far as tent camps / drug streets go, I can post videos from San Francisco, Philadelphia, LA, Oakwood, etc. but you’ll bring up it’s “only a Pacific problem”, despite Californian (together with New England) cities often being brought up as the examples for well done cities that compare well to “European”-style cities.
So much for “wildly inaccurate caricature”.
> Yes, but: There is some debate about how deep the problem is and if retailers are using theft as a scapegoat for other challenges.
Things being locked up are very regional. Long Beach: seems like 50% of all things are locked up. Santa Barbara: hardly anything locked up.
I don’t think I’ve ever seen food items locked up in Europe, aside from genuine Parmesan, Iberico or expensive alcohol, and even then not consistently. Usually even the lower priced non-food stuff (think a $50 space heater) isn’t locked up.
Don’t get me wrong, we have smash and dash thieves here too, but usually they go for jewelry stores, fashion stores or Apple / electronic stores.
[edit]
Teenagers who shoplift also go for things that are embarrassing or illegal for them to buy (condoms and alcohol respectively). So those are likely to be locked up as well.
1: My understanding is that drug-dealers &c. would accept payment in Tide and then sell that to organized crime, that would wholesale it to mom+pop corner stores.
That Tide factoid is darkly humorous. The selling it back to stores part makes me think of The Wire, Omar stealing a heroin shipment from Prop Joe and then selling it back to him: https://youtu.be/-q2LWHZ6O_M
In America’s defense, I’ll say that certain things are done much better than Europe.
There’s is certainly a better awareness/acceptance that growth = good. The entrepreneurial spirit also runs much stronger in your culture.
National (well, global) security is taken much more seriously, which I feel like is a facet of American federalization and thus unity. You won’t see a combined (and certainly not unified) European army for at least another few decades, everything thinks their own interests, independence and pride are too important.
You're flaunting your ignorance (or naivety) of America for all to see, though.
Most stores, even in internet-stereotype "hellscapes" like San Francisco, don't lock up bottles of fruit juice among other sundries. Anyone who actually lives here would know that, like me.
>As far as tent camps / drug streets go
Only a problem in the real megalopolises like the cities you just named. The vast majority of cities (and there are countless many in this literally vast country) are generally fine (some level of crime and homelessness will always exist as a matter of nature). Again, anyone living here would know that.
Internet memes are fun, but if you're going to passionately argue about something you would be wise to actually do your homework first.
Yes, in a high crime area. It's article-worthy because it's an anomaly. The only thing locked up in stores in my area is drugs.
> As far as non-walkability goes, just watch the top three videos of the YouTube channel Not Just Bikes: https://youtube.com/@notjustbikes
lol ok, am I supposed to take this as an unbiased source?
> As far as tent camps / drug streets go, I can post videos from San Francisco, Philadelphia, LA, Oakwood, etc. but you’ll bring up it’s “only a Pacific problem”, despite Californian (together with New England) cities often being brought up as the examples for well done cities that compare well to “European”-style cities.
See above. You continue to cherry pick examples that no one is denying exist and pretend they are ubiquitous.
Maybe I should go take some videos of homeless in central London or Paris and claim that's representative of the entire EU?
> So much for “wildly inaccurate caricature”.
Thanks for proving my point.
Actually you probably do, but such raving is about as valuable as residents of NYC raving about the quality of life in upstate New York -- it's a case of stated preferences vs. revealed preferences.
To be fair, the largest news network in the US spends a lot of time doing the exact same thing
I’d love to learn, because I’ve mostly gotten the impression that the smaller an American city is, paradoxically the less walkable/bikable it gets due to lack of public transit, sidewalks, bike lanes etc.
*or your own city, but I understand the hesitation on geolocating yourself
Social mobility in the US has dropped from 90% to 50%, so good luck with the coin flip.
but many _parts_ of europe are really, really nice :)
Another personal example - my sister is highly educated, has two PhD and I consider her the smartest person I know. Years ago we were discussing something and I mentioned that one of my dear friends is seeing a psychiatrist. My sister scoffed... And I was taken aback to say the least. How can someone that smart and that educated dismiss someone who is basically a Doctor and spent years educating themselves in this field. After talking through it I realized that if you have robust social life, myriad of friends, different friends to talk to about different things (as well as family) you just might not need a psychiatrist to talk to... Just an entirely different kind of life/existence...
I work from home so no commute, but my wife does drive to work. However the grocery stores are less than a mile away and her work is a 5 minute drive (the nice thing about small cities / towns is that if you have to drive, it usually isn't very far).
That said, we do indeed walk or bike almost every day for exercise and to get outside. Myself I only use the car once or twice a week really when we go to stores or out to eat. But even if I lived in a "walkable" city I'd probably do that anyways because we'd want to try something new.
People are struggling in ways their parents and grandparents never had to, and they often feel they are unable to obtain the same standard of living. Healthcare spending has gone way up too as prices keep going up at a rate above inflation and more people having been getting sicker.
There's a very real reason for the disconnect between the "soaring economy" and how the majority are feeling about it.
Given that only two hundred million Americans would be more than half, I’d need to see some data that the majority of the US doesn’t have access to clean drinking water.
Are there parts that don’t or even a disturbingly high percentage, I could believe, but the majority of Americans not having clean drinking water is a high claim
For lead alone there's a lot of variation in how many homes are impacted. The white house recently said 10 million are connected to lead service lines (https://www.whitehouse.gov/briefing-room/statements-releases...)
Fear not, Europe has isolated incidents too
https://www.mirror.co.uk/news/uk-news/tesco-locking-steaks-a...
Yep, I think this stat adjusts for welfare payments: https://ourworldindata.org/grapher/daily-median-income?tab=t...
>And that’s not even mentioning the stark difference in quality of life, beyond “quality of life” graphs. Those graphs don’t account for having to wait 25+ minutes for the store to unlock steaks or vitamins from a security case. Or for mass tent camps in cities. Or Mmss drug deaths. Uncertainty of potable water. Access to and education on safe sex, abortion, etc. Walkability of cities.
As an American in an unremarkable medium-sized city, this sounds like a caricature based on unrepresentative viral anecdotes.
* I've never had to wait long for something to be unlocked. Most things are not locked. Maybe a bit more stuff is locked up post-BLM.
* I can't recall ever seeing a tent camp in my current city. I can't recall ever seeing more than, say, 10 homeless tents in the same place. Big camps probably exist somewhere, but not where I see them.
* I don't know anyone addicted to drugs, but that probably says more about my social network than anything.
* I've never lived somewhere without potable water. If you offered me $1000 to find you some non-potable tap water, I wouldn't know where to go. Flint maybe? Googling suggests that Flint's water was fixed years ago. EDIT: I did find this map; my guess would be that a violation is not equivalent to the water being 'non-potable': https://hdpulse.nimhd.nih.gov/data-portal/physical/map?age=0...
* Was taught about safe sex as a teen.
* In my 30s, I still have no driver's license (should really get one some time). Walkability is acceptable, could be better depending on the area.
>Whenever I meet Americans traveling Europe, they virtually always rave about how much better life seems over here.
There might be a selection effect, where Americans traveling in Europe tend to be dissatisfied. Europe did not seem notably better when I visited, but my visit was not extensive.
There is an easy sanity check: Swiss GDP per capita is higher than in the US, both in absolute terms and in PPP terms. Their Gini coefficient is lower, meaning that the income distribution is more equal than in the US. If a comparison shows that the average/median disposable income is substantially higher in the US than in Switzerland, it is measuring something weird.
Also, I’d imagine Swiss housing costs could easily account for the difference in disposable income.
I’m totally open to the idea the economists at the OECD are dumb and put out bad numbers, but I’d argue GDP per capita (GDP being a flawed measure to begin with due to only including consumption incl. government spending) is a far worse measure of on the ground reality than something that accounts for actual household income and expenses.
Depends whether the household is larger due to children, or due to more adults, no?
That is, if a bunch of single adults pair up into households, income divided by household size will go up.
Larger households lead to larger reported incomes, because the total household income is divided by the square root of household size. If income is $50k/person and household size is 2, the reported income is $71k/person. If household size increases to 3, reported income increases to $87k/person.
On the average, Americans move out of their parents' home in their mid-20s. Swiss people typically do it a couple of years earlier. When people in their 20s live with their parents, it often indicates the lack of affordable housing. But if you combine this with normalizing household incomes by dividing by the square root of household size, higher housing costs lead to higher reported disposable incomes.
International comparisons are difficult, because pretty much every way to do them is wrong in some sense. But in general, it's better to collect data that is consistently wrong in the same way than to try to correct the issues you encounter. If your data is consistently wrong, you can at least make reasonable comparisons between a country today and the same country 10 or 20 years ago.
Subsidized services such as education and healthcare are tricky. You could try to calculate the subsidies based on the actual costs of providing the services, or as the difference between the nominal price and the subsidized price. These can lead to very different amounts, and it's not always possible to use the same approach with every service.
If the degree of subsidies varies between countries, you could try to normalize the situation by either adding the subsidies to disposable incomes or subtracting the costs the individual has to pay. In a country where the services are more expensive to produce (and maybe also less efficient), the former leads to higher and the latter lower disposable incomes relative to other countries.
Retirement contributions are another tricky question. Voluntary savings are often included in disposable income, while mandatory pension contributions often count as taxes. But you can't always tell the difference between voluntary retirement savings and other savings. But if you then count retirement income based on voluntary contributions as disposable income, you have to be careful to avoid counting the same income twice.
This also includes car payments on a used honda, and a mortgage on a small condo no? Why the exaggeration?
$400000 will buy you 3 bedrooms in some areas and not even an EPA-condemned quarter acre in some others.
There are families which cram 3 generations and a dozen people into a few hundred square feet. There are people in Hong Kong living in spaces smaller than most American kitchens. By those metrics are we ALL in excessive lodging?
Is it excessive to be in a 1600 square foot house whose mortgage is lower than rent for a 500 square foot studio because you bought when interest rates were far lower?
I can't find precise data on retirement outflows and there are many possible ways to account for it (e.g. is Social Security contribution considered saving for retirement?) but what I can find seems to indicate that the majority of Americans do save for retirement, which would suggest it is an ordinary expense.
The only category of "non-ordinary" that I recall being surprising was eating out at restaurants. I should know better, almost no one ate out at restaurants when and where I grew up, but my perspective has clearly been skewed over time by my own lifestyle.
There is absolutely no way I believe those numbers unless they have defined necessary expenses to be unreasonably narrow.
My definition of paycheck to paycheck would be that if you lost your source of income you would not be able to afford living (housing, food, healthcare, insurance, etc.) within a certain window of time. The data can be easily manipulated depending on what you consider essential. I would be surprised if findings by the Federal Reserve include healthcare as a necessity or essential. It's easy to say it's not an essential if a family or individual never had it.
that's a big caveat.
Most people are not able to live without a source of income through working. And this _should_ be the norm - most people _should_ be working in their adult lifetime.
It should not be possible to live indefinitely without having to produce output that somebody in society needs (and thus is paying you to do so). The welfare state is to prevent the negative outcomes of someone in destitute, by preventing (or trying to prevent) crime, etc. It isn't there so that one can live free.
The point of measuring people living from paycheck to paycheck is to measure their ability to have financial security. You are financially unsecure if you cannot pay for essentials for days, weeks, or a month off of savings. Many people in the U.S. are completely unable to save up for more than that. That's literally the point of talking about people living paycheck to paycheck. And usually, people only refer to being able to pay for food and housing. It rarely accounts for saving for retirement, health care, home/renter/car insurance, etc., all things that should be considered essential for living but are typically not in these studies.
Costs of living (read: gas and eggs) are high, many would argue "unaffordable" even though most will still pay up. This means that: No, there is no "affordability crisis" in the literal sense. But there is an "unhappiness crisis", as in people aren't happy about how much money they have to spend. That crisis, the "unhappiness crisis" fueled Trump's upset landslide victory this election.
The Affordability Camel's back isn't broken, yet, but the camel is declaring quite angrily that the point is very close.
Rent/mortgage is just one part of the cost of living[1].
Even if you have a place to stay and sleep, you still need to clothe, bathe, and transport yourself and eat and drink to live. Cost of living is literally what it costs to live.
[1]: https://www.investopedia.com/terms/c/cost-of-living.asp
People can still afford cost of living, the American economy just chuggling along despite criticism is proof of that. The question is whether people are happy about spending the money they need to spend, the answer to which is a resounding NO as evidenced by the chief motivator behind Trump's victory.
Cost of living is still affordable (there is no "affordability crisis"), but it's too high for anyone to be happy with (there is an "unhappiness crisis").
Also, the people complained loudly and clearly that price of gas and eggs are their chief concerns. Housing is also expensive, but housing is usually a one-time lump and/or a fixed ongoing expense compared to food and gas which are ongoing small and variable expenses that quickly add up.
This is probably an artifact of how the media works.
People are concerned about prices but only some people are concerned about housing prices. The people who already own a house like high housing prices. Meanwhile everybody has to eat.
The media tries to maximize viewership so when they run the pricing story they're talking about high food prices (which everybody hates) instead of high housing prices (which only the people paying them hate but the people getting the money like). Which in turn causes people to be more concerned about food prices than housing prices because that's what the media is always talking about, even if the housing prices are what's taking the biggest chunk out of their wallet.
Here in Toronto, I can't think of a single food item that has done anything nearly that absurd price-wise. Eggs and dry pasta are currently at or approaching double what they were pre-pandemic (i.e. ~5 years) and that's the biggest increase I can think of over that time period. (Milk is up a bit over 50% when there isn't a sale; sugar perhaps 60%; ketchup perhaps 30%.) A lot of these increases noticeably started in 2021.
On the other hand, there are definitely things I can still get (at least sometimes) at the same prices I remember from years ago. And I've been improving my budgeting habits across this period of time, so my actual spend has been remarkably stable.
What you describe in LA is unfathomable. I'm accustomed to being taken aback by how cheap meat apparently is (was) in the US. Has the situation reversed?
Uncooked organic chicken breast is $10/lb [2] at the same store. Non-organic is $7/lb [3]. Since Mary’s air-cools their chicken instead of dunking it in frozen water, you’re not paying for an ounce of ice with each pound of chicken.
[1]: https://www.wholefoodsmarket.com/product/whole-foods-market-...
[2]: https://www.wholefoodsmarket.com/product/meat-organic-bonele...
[3]: https://www.wholefoodsmarket.com/product/marys-free-range-bo...
Which is the same reason that for a Republican a 1.6% popular vote margin is massive. California isn't even close to a swing state so a Republican could flip 2M more votes there over what Trump got in 2016 and still lose the state, even though that by itself would increase their national popular vote margin by more than 2%. Trump got 1.5M more votes in California in 2024 than in 2016 and still lost the state by more than 3M votes. So Republican candidates for President ignore the entire West Coast and the Northeast -- huge population areas -- because losing there by 48 to 52 gains them nothing over losing by 30 to 70.
Democrats do the same thing in Texas and most of the South, but the blue states are bluer than the red states are red, so Republicans come into the median Presidential election with a deficit in the national popular vote and often lose the popular vote even when they win the electoral college, e.g. when Trump won in 2016 he lost the popular vote by more than 2%.
Democrats often fancy the idea of switching from the electoral college to a national popular vote thinking they would win more often, but it would really just change how both parties campaign. Republicans would start campaigning in blue states and vice versa but the safe blue states have more prospective votes for Republicans to flip. And under the existing system, any national popular vote win for a Republican is a landslide.
The better argument that people don't really like Trump that much is that he won so big mainly because the Democrats picked a weak candidate to run against him and they should have had an actual primary and picked someone better.
As has been stated repeatedly in this topic, the median US household has more disposable income than the median in any other country. That doesn't sound like there is a national crisis to me.
Is it because all the fear mongering about $5 eggs (They are $3 at my grocery, btw) was overblown?
Because the median voter is largely uninformed and irrational.
> Is it because all the fear mongering about $5 eggs (They are $3 at my grocery, btw) was overblown?
It is overblown in that most Americans can comfortably afford essentials and more compared to their peers and most of history. That doesn't mean they aren't any less annoyed about the current economy, which is what drives votes.
Is this only true when they make decisions you don't agree with or also when they elect politicians you like?
can you clarify where "real america" is? are places like Spartanburg, SC or Tuscaloosa, AL "real america" because you can commonly find BMWs and Mercedes in these areas.
That said, they're also not uncommon - a quick look at registration data suggests ~8% of cars "on the road" are BMWs, though of course just because a car legally could be on the road doesn't mean it's being driven with any regularity (I had a co-worker years back whose pastime was buying old BMWs and fixing them up; apparently they could be had relatively inexpensively at the time, as servicing was pricey).
Which is why all this pedantry misses the point: there's nothing terribly special about BMW; total cost of ownership is probably higher than domestic brands, but you could just as well pad out your ordinary expenses with a Ford or GM payment; a new Suburban or nicer pickup can soak up just as much excess cash as that X3.
Then again, Real Americans drive increasingly old used cars.
Relatedly, MB didn’t import the EQC into the US. Yet the GLC is the best-selling Mercedes in America. I just learned that they cancelled the EQC due to disappointing sales and will be introducing an electric GLC to the US.
Similarly, how many households do you know with combined income of less than $62k? Because that is also the majority.
You're not going to find these people in BMWs or big houses, well not without life destroying debt at least. People being completely aloof of these data (or headlines like this one) are how you get November 5th.
[1] - https://en.m.wikipedia.org/wiki/Income_in_the_United_States
Sure, and for all of us driving around and near Atherton or any other wealth enclave even in a normal city, all these cars will seem common. And especially common to engineers with multi-million dollar RSU portfolios who hang around the homes of other engineers with multi-million dollar RSU portfolios. It might even make us think everything is OK.
Half the country earns below the median wage. (yes, its a joke but true)
Tons of people live on fixed incomes like social security. One big medical co-pay destroys your entire budget for the year. My mom got a $2000 balance bill under her medicare provider for cataract removal. If I wasnt her backstop, this would have wiped out a year of savings.
Not everyone is a SWE, in fact most people have normal jobs with normal incomes. Yes, incomes are going up, but only median incomes. Not everyone's income is going up.
Seeing BMWs should not be a handwave that everyone is doing well. We really should have empathy for the troubles a fraction of our neighbors are going thru. In a country with a large enough population, fractions are a huge number of people.
It’s easy to point fingers at something (anything, really) and have it stick when the actual cause - including bad health habits, unmet social needs, a constant barrage of BS on the media, and no meaningful plan or hope to actually resolve any of this - seems unapproachable/unresolvable.
anxiety because their standard of living went down from before the high inflation from the economic so-called stimulus, and election because they trust Trump to grow the economy by removing obstacles to growth. The US economy is more dynamic than the European economy because of less regulation and bureaucracy. As one example, companies are more willing to hire workers for a speculative new project if they don't have to pay extensive wages to lay people off if the project fails. American workers are used to it and are willing to take good jobs when they are offered, and it just makes the economy go faster, "ahead of its rivals".
That informed electorate?
Mosty because of marketing and social medias.
When you are targeted 24h/d by ads on what shit you should buy or subscribe to and you feel you couldn't afford 10% of it while your social medias feed seems to show a lot of people enjoying them, you feel like cost of living is way too high.
Because when inflation got under control, prices didn’t go down. They just stopped going up so fast.
We’re at the tail end of the most significant period of inflation in the US since the 1970’s. While incomes are growing slowly and unemployment is low, the pain of inflation is still being felt.
Until real incomes grow significantly, people are going to feel worse off than before the period of inflation.
I've traveled the world a lot, including the US South. They are VERY rich out there, but think they are poor, that's it.
But there is also that famous stat that income in Mississippi is on par with Britain or France.
https://www.forbes.com/sites/timworstall/2016/03/07/still-tr...
https://www.nationalreview.com/corner/its-great-to-live-in-t...
I agree with deepsun that the comparison factor is huge here:
https://www.optimallyirrational.com/p/the-aim-of-maximising-...
That’s ~$7000 more than the median earnings of the overall population (https://www.bls.gov/news.release/wkyeng.t01.htm).
There will be college grads struggling and non grads thriving, but on average a person just out of college is doing at least as well as the general population income wise and can expect their incomes to rise with time.
> That’s ~$7000 more than the median earnings...
You shouldn't be comparing an average to a median. You should be using either the average earnings, or the median new grad salary.
She has a car to worry about though. That’s more than I ever had.
It’s not a pissing match. Not trying to take away from their experience. I just feels it’s weird that US people always say gas and cars are so expensive when relatively, gas is incredibly cheap in the USA (not sure about cars, but given how many there are, they should be cheaper too).
It's an old beat up car with 150k miles that was given to them.
She goes to Western North Carolina University. There are no buses, there are no sidewalks, every road is essentially a divided highway. It's not a lifestyle choice where they are living 50 miles away from where they work. Even then, the car was used to go to Hurricane Helene Relief volunteering, otherwise it's for groceries, and to take them to trail heads to hike.
Even then, I'm speaking to the point that they have NO extra money. The lifestyle of burning $30/month in gas is not the point nor the issue.
Second reaction - jeez - what a garbage assumption to make. Paraphrasing you: "oh, they must just spend too much to have any money. Bad life choices." Garbage assumption dude, you so missed the mark - you would be ashamed if you knew the person in question here.
Further, they are not the only person I know in that situation - and if it were just due to excess of spending money; I would have not raised it as an example of "my sampling bias".
It's very bad practice to assume and then contradict someone else's lived experience based on that assumption. It's a great way to be wrong, way wrong (and sometimes not even know it). Your bet is bad. I'm sure there are plenty of examples out of the millions of people that we are talking about, where it would be right. In this case, nope - just ignorant and wrong.
I look at my home country, Spain, where salaries are far lower than in the US for most jobs, and housing costs are ballooning. People might not have huge student loans and very high healthcare bills, but taxes climb really fast when you go past minimum wage. You have people demonstrating because, in their 30s, they still cannot live independently. Pensioners helping their kids, because they get checks a bit over 2000 a month, which are much better than what the recent college graduates are making. If you compare median salary to median rent, or median condo price, the US is still more affordable.
For all the stresses we have in the US, there are few countries that aren't facing very similar situation.
That sounds like barely enough to retire on.
At $15k/mo you can get like 65 months of service.
Not counting income from savings or SSI
Palo Alto was deemed the seventh most expensive location for assisted living in California, according to a new study by Mirador, a platform that helps people research nationwide assisted living locations.
The average yearly cost of assisted living in Palo Alto is $91,177, compared to the state average of $63,927, according to the study.
Source: From https://www.paloaltoonline.com/seniors/2024/10/04/study-reve....
Being old is expensive. You don't necessarily realize how many things you do that save money rely on being at least somewhat youthful and able bodied. And 1 million sounds like a lot but that is going to be in 2070 dollars and has to last you between 10 to 40 years.
You could live on a 10% yield indefinitely.
I think you have a vision of old people as unhealthy and inactive, I can't think of any DIY that I do now that I would not be able to do well into my 80's.
Their respective spouses are doing great though so they're legitimately carrying the team.
So it's not a matter of everyone in the US having it easy, but how hard a road most people have now elsewhere.
There’s major issues that become rounding errors on these kinds of statistics. ~0.5% of the US population is incarcerated or homeless. It’s a lot of people and a major issue, but the US population is huge.
"But millions of Americans who owe far more than $500 may not benefit — 1 in 4 U.S. adults with health care debt owe more than $5,000, according to a KFF poll conducted for this project; 1 in 8 owe more than $10,000."
https://www.npr.org/sections/health-shots/2022/06/16/1104969...
And this is likely to be a severe undercount. Given that 1 in 4 Americans can't even afford treatment and so they just go untreated rather than take on the debt.
https://www.usnews.com/news/health-news/articles/2024-11-21/...
How many Americans have health care debt?
The article also states:
"Health care debt in the U.S. now affects more than 100 million people, according to a nationwide KFF poll conducted for this project. The toll has been especially high on Black communities: Fifty-six percent of Black adults owe money for a medical or dental bill, compared with 37% of white adults."
The US has a population of ~335 million people. If 100 million people have medical debt, that would be 1 in 3 people. And the census date seems to back that to a point.
https://www.census.gov/library/stories/2021/04/who-had-medic...
The problem with all of these stats are that the definition of debt can change which can swing the number fairly widely. The KFF poll that is referenced by NPR mentions the debt is framed as either actual debt or other forms of debt such as "debt that patients accrue is hidden as credit card balances, loans from family, or payment plans to hospitals and other medical providers." Which means that if this form of debt is the metric that makes sense (I think it does given that the above are all forms of debt), then the percentage of adults is really not 1 in 4, but 1 in 3, which is even more disturbing.
Taking such an expansive view of debt and things become largely meaningless. You end up defining some billionaires as being in medical debt. Here’s an analysis that ignores debt under 250$ as trivial.
https://www.healthsystemtracker.org/brief/the-burden-of-medi...
“This analysis shows that 20 million people (nearly 1 in 12 adults) owe medical debt. The SIPP survey suggests people in the United States owe at least $220 billion in medical debt. Approximately 14 million people (6% of adults) in the U.S. owe over $1,000 in medical debt and about 3 million people (1% of adults) owe medical debt of more than $10,000.”
But of course that’s a biased survey. ~88 billion of debt that shows up on people’s credit reports suggesting the actual numbers are likely significantly below that estimate.
Which means under 1/12th of Americans have more than 5,000$ in medical debt and 1/24th owe more than 10k.
That seems like a huge issue, but only 387,721 Americans declared bankruptcy in 2022. The discrepancy is people who get a moderate medical bill often just don’t pay it for years. Until they’re forced to pay, or the statute of limitations runs out and it goes away.
Practically what probably matters is "how many years do you have to work to take care of your basic needs after you retire, and how does this change if you (a) have medical problems (b) want kids (c) [add your other variants of ordinary life choices people should be able to make]"
More than enough. The vast majority retire on less and have comfortable retirements.
Despite the narrative, Social Security pays out quite a lot and isn’t going insolvent any time soon. The average payout ($1,900) is more than double that of Canada ($850).
A retired couple would have almost $4000/month in monthly income.
Add on top a paid off home, Medicare eligibility, and Social Security, most people retire with a few hundred thousand, which is very comfortable in most of the US.
Nursing home care runs $8k/mo or more per person. And low-end ones can be sketchy... you hear horror stories.
That $4k/mo won't be enough as you head into your 80s or 90s. Also consider inflation over 3 or 4 decades.
What I’ve noticed is what Americans consider “bare minimum” is pretty luxurious.
“I’m not even middle class” means buying a single family home in the most expensive coastal cities, multiple international (Mexico and Canada don’t count) per year, a couple SUVs less than 5 years old, lots of toys, plus $5M when they retire at 55.
Of course most people can’t afford that. That’s upper class in the US.
Social Security has COLA (Cost of Living Adjustments). It tracks with inflation over time.
An under-appreciated point that extends far beyond the financial is that Americans have an anomalously high amount of optionality in life.
In most countries with falling birthrates (save some exceptions like Japan) a huge part of this decrease is in the 15-25 age group. There is usually also a decline in the 25-29 but there's an increase or the same rates as we've had historically on the 30+ range.
What this mean is basically that we've eradicated teen pregnancy, and that's definitely something desirable in a developed society.
These are extremely important years for career building.
It's more about the fact that young women are choose to build their education and career (like men do) rather than have children.
>a huge part of this decrease is in the 15-25
It is.
Starting in your 30s, especially later 30s makes this extremely difficult. It takes months of perfectly hitting ovulation windows to get pregnant, and then you generally want at least ~9 months between children, so you're looking at ~2 years per child, all while fertility starts to rapidly decline as you head into your 40s.
The long and short is that a sustainable population is going to require the majority to start having children in their 20s. That figure going down has nothing to do with teen pregnancy.
30% of couples who don’t use birth control and who have regular sex get pregnant within one month.
60% get pregnant within three months.
80% get pregnant within six months.
"Women younger than 30 have about a 20 percent chance of getting pregnant naturally each month. By age 40, the chance of pregnancy is about five percent each month." [1]
Things like IVF do not dramatically change the odds either. They're better of course, but it's far from guaranteed - it's still just a rather expensive roll of the dice.
Then on top of all of this, having children later greatly increases the chances of miscarriage, developmental issues (like Down syndrome) and so on.
Life's brutal here - you're in a race against time, yet the later you start the longer it takes, and the harder it becomes.
> Things like IVF do not dramatically change the odds either. They're better of course, but it's far from guaranteed - it's still just a rather expensive roll of the dice.
Sadly, literally all of our peers who were trying and having kids in the same demographic as us, +/- a few years, struggled hard and most needed fertility treatments. At least 2-3 of them were never able to conceive, despite the expensive and time-consuming treatments. It's brutal.
I will also add, I have a number of friends who are >= 10 years younger than I am and many of them also struggled with miscarriages in their late 20s while trying to start families.
Most of the significant expenses people describe are optional. It is more rational to match your spending to what you can afford with howevermany kids than it is to match the number of kids you have to an arbitrary lifestyle.
I feel this in my bones as I read this while rocking my infant who won't sleep for the last 2 hours.
https://www.abc.net.au/news/2024-06-04/why-australians-arent...
It's just now we suddenly consider that too bad. Back then it was normal, just like everyone else.
It may have been when my parents were born though (mid 1940s, one in what is now Israel and the other in what was then the Soviet Union).
But anyway my parents were 1983 Israelis, they didn't come with future-Israel purchasing power - so they were able to afford their housing on the income of the time :) Other kids in my class had ± similar housing. Some were poor and had worse housing, but not 5 people in a 62m flat level of poverty- for that to be common you had to go back another couple decades (e.g. my mother's childhood experience in the 40s-50s was more like that, might have been common up to the 60s).
Because in 2019 real estate was not only expensive by itself, but also all the future growth was added to a price.
Today in 2024 you can buy very cheap in some places (north, for example).
> there was a stock-market crash in 1983
Not just stock-market. By the time of the crash, Likud laid waste to the whole economy to undermine "the left".
In practice having 2 or 3 kids is going to mean going from studio/1 br to 2/3 br and double or triple housing costs.
[0]: https://ec.europa.eu/eurostat/statistics-explained/index.php...
Automation may actually be the answer to a declining birth rate, and we might stabilize at a much lower world wide population as a result (say 4 rather than 8 billion). People will complain less about Waymo stealing jobs when there are no uber drivers left, but we really aren’t there yet, we still have a surplus of labor.
But I’m not so sure about your second sentence. How does a situation where world wide population drops to 4 billion come about?
Even if US birth rates are declining, birth rates are climbing elsewhere so I’m struggling to see how in aggregate, the world population declines to half of what it is today.
Where are birth rates climbing? Narnia?
Every source I've looked at shows a drop in fertility.
You're talking about fertility rate, which is number of births per person. That's decreasing everywhere.
ayewo may have been talking about number of births. That is increasing in Africa, but even with Africa, is still decreasing in total worldwide:
https://ourworldindata.org/grapher/annual-number-of-births-b...
From definitions I find online, first order vs second order refers to systems. So if you're applying those adjectives to a specific metric, I'm not sure that's correct.
I don't think we can say that people "universally" agree about what metric the term "birth rate" should refer to, because different people in this thread are using the term to refer to different metrics. However, I do think that generally the term "birth rate" refers to the number of babies born per year (or other unit of time), and the term "fertility rate" refers to the number of babies born per woman. Fertility rate is actually somewhat more complicated than that, because it takes into account the different fertility rates for women of different ages, and then sums those together, to simulate how many children a woman would have who passes through all the different ages.
I'm not saying it's not smart, it's just not very savory, and isn't a great solution for the longer term.
Depending on the country of retiring, this could have majority tax implications. It's a big reason why people choose to retire in certain states: additional income tax on retirement income is possible, depending on the state.
The government can and often does find other ways to tax people.
> Increased demand for housing raises prices for everyone including natives.
While true locally, at a national level immigration is typically small compared to native populations. It is a manageable problem.
> And typically, retirees require healthcare services well above the population average.
In other words, they will be forced to put money into the local economy. They’re paying out of pocket, not on public assistance.
Comparatively wealthy foreigners that spend a lot of money on the local economy is any government’s wet dream. It’s a significant boost to their tax base and soft political power. I plan on retiring in a country like Thailand because as long as you don’t criticize the king, you’ll be treated like one.
I'm not claiming there are no productive or welcome foreign retirees -- there are many. But I was responding to "xenospn"'s comment that they bring in money for free, which is absolutely not universally true.
I don't remember the details (I had a work visa and retirement is still 2 decades away at least) but to get a retirement visa (valid for one year) you need proof of sufficient funds and health insurance.
This is basically a snide way of saying that "yes, retiring to a country with low cost of living is often a mutually beneficial transaction, for both the retiree and the country in question"
* As demand for medical services grows, the price goes up, incentivizing more people to get medical training
* As demand for housing grows, build more housing
* Gradually expand issuance of retirement visas, so supply can grow in response to demand
There's a reason countries push retirees out, barring the ones who are incredibly rich, once they develop into a middle economy. It's because a typical retiree making a low six figures or less becomes literal dead weight. Locals can make more money than them while actually doing a job.
Thailand is pushing foreign non-workers out because they're developed to the point that they don't need or want those people. Decades ago, Thailand was incredibly poor. One retiree could splurge a bit of cash and pay the wages of dozens of people. That era is gone. Now it's just people acting like they own the place and driving up prices of property that locals are now competing for.
And yes, they could incentivize more people to become doctors for foreigners. But not everyone wants to grow up to be a servant and literally wiping the bums of an elite class of elderly colonists. Some prefer to work in other fields.
And yes, they could build new houses. Your home country could build new houses too. Retire at home and just build a new house there instead of going to a "cheaper" country. If it's too expensive at home, just get more money and build more.
And no, the won't expand issuance of visas because they need to take care of their own elderly.
Hm, I wonder if letting retirees in was helpful for Thailand in escaping poverty? The retirees didn't seem to ruin the Thai economy, as your 'burden' theory appears to predict.
>And yes, they could incentivize more people to become doctors for foreigners. But not everyone wants to grow up to be a servant and literally wiping the bums of an elite class of elderly colonists. Some prefer to work in other fields.
There's a lot of immigration from the developing world to the developed work for medical careers, e.g. NHS workers in the UK. If your people are immigrating to work in medicine anyway, maybe it's better for them to stay home so you can tax them and collect the revenue?
You're going rather heavy on narrative vibes such as "wiping the bums of an elite class of elderly colonists", and rather light on the agency of people in the developing world to make economic decisions for themselves.
If demand for medical services rises, salaries will also rise. If no one steps in to fill those roles, salaries will rise further, to the point where medical services become expensive. And retirees will go to a different country, where people want to work in medicine. Capitalism works!
The snide "hmmmm" doesn't contradict anything I've said. Only incredibly poor countries do it. Whenever they have a functional economy, they drop it. And plenty of countries went directly from poor to rich without taking in retirees. See: Singapore, Korea, China, Taiwan. If anything, countries that take in retirees seem to lag compared to those who don't.
And decisions of government officials taking a cut of money from visa approvals for retirees really doesn't have anything to do with the agency of the people. There's a reason countries get rid of these policies: locals don't like it. No need to continue to assert that forcing yourself on unwilling people is good because their rents go up.
Based on my research, there are a few countries which tightened their retirement visa requirements, but getting rid of it outright is actually quite uncommon. You talk as though this is a common thing. Can you name 5 countries that outright eliminated their retirement visa program? (Not just "considering it", actually eliminated it)
And there's virtually no country that doesn't let people with absolutely massive amounts of money buy their way in. 50 people a year buying top floor apartments in the middle of town in cash affects things far less than 150000 people a year happily paying quadruple what locals would pay to rent a normal apartment.
Any chance to translate to plain english? The keywords "neccesary" and "ordinary" indicate rhetorical bullshit is afoot.
A Netflix subscription is ordinary but not necessary.
Also: fuck me, if americans have a 700/month car payment on average most americans you're likely to interact with on a daily basis will be deep under the poverty line. Like, the actual poverty line of "struggling to survive", not the bullshit metric used to cut people off from welfare.
One primary way to increase spending is a vehicle upgrade.
Most vehicles sold are used vehicles. But if you consider only the new vehicles, the average monthly payment for new vehicles is about $740/mth.
Who defines what car is "necessary" (or is no car necessary in car-centric America?) vs "ordinary"?
> This includes things like car payments on a new BMW or a mortgage
So you're not accounting at all for how much of your income goes toward e.g. interest on the loan vs. the principal? Isn't that kinda important?
Also, do car loans for cheaper cars somehow not fall in this picture? Why do you portray people as buying new BMWs when all cars in general have gotten so expensive?
https://fortune.com/2023/05/23/inflation-economy-consumer-fi...
Response Percent
Put it on my credit card and pay it off in full at the next statement 37
Put it on my credit card and pay it off over time 16
With the money currently in my checking/savings account or with cash 45
Using money from a bank loan or line of credit 3
By borrowing from a friend or family member 10
Using a payday loan, deposit advance, or overdraft 2
By selling something 7
I wouldn't be able to pay for the expense right now 13
Note: Number of unweighted respondents 11,400
from https://www.federalreserve.gov/publications/files/2023-suppl...
Though to me it looks pretty dire - having to sell something, borrow from family/friends, etc. for 400 bucks is pretty terrible.
Another aspect of these numbers is how much of the ordinary expenses are not luxury items but things like a car (because public transport is terrible), childcare (because people need to work to pay for it and the car that’s needed to shuttle kids around) and some healthcare (because public healthcare is nonexistent).
Americans pay a lot of money for things other developed countries would say is a basic human right.
Not really. Most social groups are fairly homogeneous. Even those that view themselves as knowing a wide swat of people from all sorts of live are unaware that beyond some superficial diversity they tend to have unconsciously selected for commonality of outlook and context.
I learned this at a young age when due to circumstance I elected to do my back then obligatory military service year before going to university as opposed to all my friends that first finished their studies and then (mostly) opted for the 'conscientious objector' route and spend 24 months in civil service.
Going into the army without a degree you get to spend a lot of time with many people that can't read or write, could not finish high-school, never had opened a book or seen any of the films or heard the music your mates loved. Often violence and making baffling poor health and safety decisions were a very frequent occurrence.
What I'm saying is that unless forced by circumstances beyond your control, your circle of acquaintance is probably less a cross cut of society than you imagine.
Redefining pay check to paycheck to a definition literally nobody but yourself uses and then concluding few fit this definition isn't useful.
Looking at the numbers: low unemployment, strong consumer spending, average income increasing at a rate higher than inflation, I'd say the majority is doing better than most years. They might not feel that way though, and we've been in a continuous vibes-cession since COVID.
I’d like to see that plotted against average consumer debt
slightly below pre-pandemic levels, and significantly below 2005-2008 levels.
The trend is basically back to where it would be if you just extrapolated 2019.
You can even see the origin of the "vibe-session" here, things got pretty good for a lot of people in the money shower of the pandemic stimulus combined with low "stay at home" spending. Its the return to normal that has people spun with "the economy sucks".
So crap going crappier, with a short reversal for a couple of years.
Apartment in a moderate-cost area is about $70,000-$100,000/year.
Median salary in the US is $59,300
What considered poverty level in the US for: 1 person: $15,060 2 people: $20,440 3 people: $25,820 4 people: $31,200
According to recent data from the U.S. Census Bureau, around 50% of Americans make $70,000 or more annually.
That means about 50% of the US can not afford a place to live.
"Apartment in a moderate-cost area is about $70,000-$100,000/year."
Are we saying apartment rental is between 5 and 8 thousand dollars a month? What is the definition of this moderate cost area??
Back to the original post I think there are several statistics that apply to different geographical areas or demographics in the same post, leading us to conclusion that half the continent is out on the street, and demonstrating risk of back of the napkin calculations on policy decisions, even if we assume good will and honest effort :-/
He's arguing below that about 50% of the US population is homeless, which is not even close to accurate.
In the Netherlands, you aren’t taxed on your primary residence, but all other wealth has an approximately 2% annual wealth tax. This makes it challenging to accumulate wealth through any means other than a primary residence, which was many of my coworkers’ primary way of saving.
Granted, they also have mandatory pensions, which can give you a good income in retirement, but that’s different than wealth accumulation
Bullshit. American unemployment pays consdeirably more than UK unemployment. Throw on food stamps and housing assisitance on there, and the US might still be below the more generous European countries, but you definitely have a safety net.
> unlike in Europe... So owning your home is a big part of having something to retire on and pay bills
So what, like the UK? And Ireland? And argaubly all of Europe east of Germany and in Scandinaivia, all places where home ownership is comparable or greater than the US?
UK unemployment (called Jobseeker's Allowance) is up to £90.50/week. $115.30 in dollars.
Also your math is off: even at your $4200/mo estimate, that's $50,400/yr, nowhere near your "not too far off" $60k. And that puts it at 30%-50% below the $70k-$100k range, which makes that range laughably inaccurate.
That would mean you are paying $2k a month in tax and insurance?!
So 50% of the US are homeless?
Can you clarify? Because I'd find it hard to believe that half of Americans are literally homeless. It might make more sense if you're referring to home-owners.
I agree that homelessness is a problem, but you appear to be arguing in bad faith. If 50% of the US actually "can't afford housing", we'd have $170M people living in tents, and that is demonstrably not the case.
I would believe a claim that states that a large portion (maybe 50%, maybe more, maybe less) of the country are facing financial insecurity that makes them feel like their housing situation is precarious. But that wasn't the claim put forth upthread.
It happens. It's disgusting when it does. It IS a problem.
But it's not happening to half the country. That's nonsense. And when you say nonsense, it keeps others from taking the problem seriously.
(I still don't agree with GP's thinking or math, but I don't think you're arguing against what they actually said.)
A big problem with renting is the capriciousness of the rental market in many places, which you can't solve with "basic math". That plus the availability of the 30-year fixed-rate mortgage in the US means that rental costs can be much more unpredictable than buying. Some people will -- very reasonably -- pay a bit more for peace of mind. And that's before we get into the topic of no-fault evictions, and how that can wreck a family's housing situation, sometimes with not too much notice.
Renter protections in the US are not great compared to in many other places, and that can make renting unpredictable and more "costly" in other ways.
> around 50% of Americans make $70,000 or more annually.
Wait a second. "50% of Americans making X or more" means X is the median. Does that imply a ton of people are working more than one job?
I don't see how that computes. The internet suggests that, on the high end, a family will spend around $10,000 on home repairs, maintenance, and insurance, which is in line with my experience. So almost $100,000 in yearly property taxes for a typical family home? Not a chance.
I suspect you are thinking of buying a home rather than owning a home, but homes are bought with wealth, not income, so an income figure here doesn't make much sense if that is, in fact, what you are thinking of. If that is not what you are thinking of, I, for one, don't understand what you are trying to say. This figure doesn't seem to have any applicability.
What do you mean by this? In the US, over 60% of people have a mortgage [1], which almost always means it's coming from some percentage of their income. When you get a home loan, the banks only real concern is your credit score and income. Anecdotal, but I don't know a single person that doesn't have their monthly mortgage scaled to their income, since I don't know a single person under 60 without a mortgage that's coming from their income.
[1] https://www.investopedia.com/percent-homeowners-have-mortgag....
A mortgage is the rental of wealth. It is independent of the home. But, even if we want to conflate them for the sake of discussion, it is still dependent on many variables that does not round to a single number. The rent on a $20,000 mortgage is quite different to the rent on a $200,000 mortgage. Two buyers buying identical homes for identical prices, but who come with different amounts of wealth, will have very different rental payments. A single number is meaningless, even if we assume 100% of people are paying mortgage rent.
But, as you point out, ~40% of the people don't have a mortgage, and therefore have no such cost to begin with. The idea that they also need $107K doesn't make any sense.
That still feels like a fair over-estimated amount to me, but I think that's what they were getting at. (It could also be a figure of the amount needed to qualify for a mortgage on a place with some amount of downpayment.)
Most people in the US will say they own their home even if they have a significant mortgage against it. You can be upset that people are not using the word correctly, but that's kinda pointless.
That doesn't even pass a minimum-effort sniff test. I live in one of the most expensive cities in the country, and I'm in your quoted range for a 4-bedroom condo.
My sibling lives in a more affordable, but desirable, area and spends a little less than half of what I spend a year, for a single-family home with a good-sized yard that's more than twice the size of my condo. (And they bought last year when interest rates were high.)
Your own stats don't even make sense. You claim it costs $70k-$100k/yr for housing, but that to afford a home, a family needs to make $107k/yr? That doesn't make sense. If housing costs that much, that family needs to make north of $200k/yr to afford it.
Where are you getting this information?
No way that's correct.
- it invented numbers (they were erroneous) - it told me that given the nature of LLMs he cannot name his sources nor give me a link to it.
This make your statement quite unlikely. Can you link us to the stats directly?
Not sure if I would call all of those moderately priced areas, either. Some of those at least are the most expensive in the country.
HN love to look down on ChatGPT, yet are willing to hide behind it when it’s convenient.
I feel that this is pretty well established as a misleading metric https://www.investopedia.com/financial-edge/0609/what-the-un...
> strong consumer spending
how does this track against consumer debt?
> average income increasing at a rate higher than inflation
but has it caught up? https://www.bankrate.com/banking/federal-reserve/wage-to-inf...
> I'd say the majority is doing better than most years
most years being the past 2 or 3? because I feel like we were all doing a lot better before 2020
I fail to see how it's "misleading". U3 doesn't include people who don't want a job. That seems... fine? If you don't want a job, and don't have a job, why should you be factored into the health of the labor market? Isn't it more misleading to lump people who want a job but can't find a job, with people who don't want a job and aren't working?
>but has it caught up? https://www.bankrate.com/banking/federal-reserve/wage-to-inf...
The linked article says:
>Source: Bankrate's Wage To Inflation Index using the Department of Labor's employment cost index (ECI) and consumer price index (CPI)
Using BLS's weekly wage data adjusted by CPI gets the opposite conclusion, so my guess is that there's something funky going on with the employment cost index. For one, it includes benefits, so if health insurance costs go down, then "average income" (as computed by bankrate's index) will go down, even if your take-home is the same. At best, the only thing you can conclude from that is "employers' spending on employees is rising slower than inflation", which is slightly different than "employees' incomes are rising slower than inflation".
Which year is your baseline, and why?
Most of it comes down to politics:
https://www.fisherinvestments.com/en-us/insights/market-comm...
100k in 2020 is 120k today https://www.usinflationcalculator.com/
do I need to spell it out for you? you are delusional if you think there is not concrete evidence that everyone's making less and spending more
The data shows that far more people are in my situation than in your situation. Do I need to spell it out for you? People are acting like they are doing better in the numbers, responding on polls that they are doing better, but they all think everyone else is doing bad or the economy in general is doing bad.
Can you imagine how bad it would be if our actual economy did as poorly as the rest of the world? We went through a mismanaged global pandemic, and came out smelling roses when it comes to the US's economy. We are in a fantastic position for world domination. China and Europe shat the bed. India is up and coming and may be an economic rival, but they are not there yet.
If you think this economy is bad, try going back to 2008. To 1992.
So please, yes, spell it out for me. The facts do not care about your feelings, no matter how strongly you have your feelings, or who told you to have the feelings and to feel helpless.
I don't believe you
nobody gets a 30% adjustment without taking a new job or a promotion, and if you did that then it defeats the point of this discussion
It tracks pretty much as one would expect had the pandemic not happened, following a well-established longer-term trend: https://fred.stlouisfed.org/series/CCLACBW027SBOG
> I feel like we were all doing a lot better before 2020
There we go again, going by "feelings" rather than the data.
do you want to discuss the point or just be a snarky troll about it?
I also shop mostly at ethnic grocery stores (Superking, Ranch 99, H mart, etc) and IMO the problem isn’t inflation but general consolidation across many industries. I’m always shocked when I travel to less populated regions (even in California) and see their grocery availability, usually dominated by a single major chain like Albertsons or a local one like Publix. SoCal has competitive prices for groceries despite the high cost of living because there are so many people (and immigrants) to support many competitors, none of whom have real pricing power. My grocery budget hasn’t gone up significantly in the last five years despite switching to Costco for my meat rather than the cheaper halaal butcher.
Eggs are always more expensive at the ethnic stores here but cheap at TJs because they use it as a competitive loss leader. A lot of the country can’t support such competition so there’s zero incentive for suppliers to drive down costs.
So they were famously cheap for things that poor and blue collar families weren’t looking for anyway. UMC goods on a LMC budget, really.
You mean 10%? 10x is just not believable.
As houses get older, their value should decrease. Even large-scale renovations often should not push the value up quite as much as one would hope. Certainly the value of land can go up, based on housing/zoning policy, coupled with supply and demand in a particular area.
At any rate, most things are temporary. Interest rates are headed downward again, and the Fed expects to make more cuts. Presumably we won't get back down to zero, but that's probably a good thing.
Also let's consider history: interest rates are still objectively not all that high right now. They're on par with or lower than what rates were in much of the 90s, and even some of the 00s. It's only the 10s that saw zero rates. And hell, go back to the 80s and prior, and the current rate situation looks delightfully low.
> High interest rates have also helped crash the real estate market, so even if you just own a home, you've taken a bath since the high interest policy has been implemented.
A note on this: so what? What matters is the cost of comparable housing. If my house has lost 25% of its value, it stands to reason that similar houses in similarly-desirable locations will have lost a similar amount, and still be affordable for me if I wanted to sell my house and move.
But again we run into the problems caused by the 30-year fixed-rate mortgage! Anyone who has bought a house with a mortgage recently enough, at a price high enough, might be in a situation where they can't move because they won't be able to sell their current house at a high enough price in order to pay off their mortgage (and still have enough of a down payment for their next house). This is a problem we've created for ourselves, and it's super annoying.
It also sounds like you're basing your statement on your tax assessment, which implies that your tax assessor has correctly allocated the value increase to the appropriate category. That has not been the case very frequently in my personal experience.
I have to raise an eyebrow when someone says "truth" and/or "should", as if there's a hidden One True Way. I do think that David Ricardo's theory of rent holds.
> As houses get older, their value should decrease.
"Value should decrease" is doing a lot of lifting in oversimplifying, if not positioning itself counter to, reality. eg My area is growing by ~10k a year across 3 adjacent municipalities. Population growth (migration+births) contributes to a growing area in a way that's self-reinforcing (availability). So depreciation is often outpaced on that basis which has nothing to do with specific characteristics of structure.
Houses also have a multidimensional value. Proximity to specific locations (subjectively vary in value), safety, amenities, maintenance costs, etc all contribute. Home from 1950? https://www.zillow.com/homedetails/1826-3rd-St-N-Fargo-ND-58...
What about the multimillion dollar homes on cliffs? https://www.theguardian.com/us-news/2024/feb/14/dana-point-l... - with less than 2 mil, you can rehabilitate these places with some demo and rebuild.
How does this affect the calculations? Well, it doesn't seem to hurt as much as some might imagine. People are resilient and optimistic, long term, and happy to own the roof over their head in the short term to give themselves agency. These value motivate people to buy what's available and prices do not fall as if they exist in a vacuum.
I'm not the OP, but I notice that it's very strange that the other major expensive durable good the typical American household will own [0] is a steeply depreciating asset.
I also notice that "housing as both shelter and investment" is not universal policy. Japan does things totally differently and has historically done well by it.
[0] That is, the automobile.
There is a proclivity to wash over a lot of the difficulties, constraints, and "norms" of earlier generations and making the current economic times seem so much worse. Things like living with multiple roommates (2-4) in your 20's is MUCH rarer today, as is sharing a bedroom with a sibling. Vacationing frugally at a nearby lake, not some international expedition. Packing a box lunch. I agree that by many measures, times are tough, but also, the base expectation level has definitely increased dramatically.
> low unemployment
In an economy where you can easily deliver packages or drive uber, there will always be close to zero unemployment. This number stopped making sense a few years ago.
> strong consumer spending
In a high inflation environment, one has to consume "strongly" just to maintain the same standards of living.
> average income increasing at a rate higher than inflation
If you underreport inflation, then the average income will increase faster. But even if not, average is not what you and I receive, and it is determined by some people making lots of money while others have stagnating salaries.
> majority is doing better than most years
You cannot prove this from the above points. Average income doesn't mean that the majority is doing better. Something called inequality will not allow that to happen.
> They might not feel that way though
That is pop psychology at its worst. Nobody cares about feelings, you just need to look at the numbers in a critical way.
Part time employment is roughly where it was in absolute numbers (not even per capita) in 2009. https://fred.stlouisfed.org/series/LNS12600000
> In a high inflation environment, one has to consume "strongly" just to maintain the same standards of living.
You're wrong here too. Here's a chart that's inflation-adjusted: https://fred.stlouisfed.org/series/PCEC96
> If you underreport inflation
Ah I see... your entire worldview is predicated on just assuming different facts than what your interlocutors are. Feel free to substantiate this rather fundamental claim.
> That is pop psychology at its worst. Nobody cares about feelings, you just need to look at the numbers in a critical way.
"Look at the numbers in a critical way" is an interesting framing of "make shit up."
Strong disagree: you can't spend what you don't have (or can't borrow), so spending is a vital signal.
There's a natural experiment that just happened that refutes your argument: after Covid, most of the world had high inflation (with some actual recessions), but the US did better than everyone else, with stronger American consumer spending helping the recovery (leading to more jobs to service the strong demand). Your argument falls apart when you consider why UK or French consumers consume as "strongly" to maintain their lifestyles.
> If you underreport inflation, then the average income will increase faster.
There's no one way to calculate inflation (since this depends on how you choose your 'basket'). But like I said, based on vibes, everything is awful.
Yes you can, just borrow more [1]:
[1] https://washingtonstatestandard.com/2024/08/26/us-credit-car...
> Your argument falls apart when you consider why UK or French consumers consume as "strongly" to maintain their lifestyles
They don't have access to cheap credit as the US consumer has, and being smarter than Americans they refrain from going into more debt.
> There's no one way to calculate inflation
Yes, there is, it is just different for lower income earners. Economists just don't want to measure the impact on people who have to spend large part of their salaries on rents, health care, cars, all things with prices that increase higher than official inflation.
Did you purposely leave out my parenthetical to use it as a dunk? Borrowers are not dumb (and the amount of debt is also a useful signal on economic health by the way, and right now it's not terrible; definitely not in recession territory)
> Yes, there is, it is just different for lower income earners
Well, don't leave me hanging - what's the one way to calculate inflation then? Which specific mix of goods and services (and locations) should be used as a national benchmark in THE inflation equation?
I don't disagree with your overall point, but I do think pre-2008-crash mortgage lending could be a counterexample. Certainly there were a lot of shenanigans going on, but ultimately borrowers made the -- IMO dumb -- choice to stretch themselves far too thin, and buy bigger and more expensive houses than they truly could afford.
Perhaps everyone today has learned from history, though. (But I wouldn't bet on it.)
The market can be irrational far longer than they can be solvent, however, and not being ‘dumb’ can make that worse.
Pre’08, you had to be dumb as a borrower in 90% of markets, or you’d be flat out unable to buy anything. As to if continuing to buy in those conditions was dumb or not, is mostly something that can only be judged retroactively.
Certainly these are just two metrics among many that people could look at, but if we're talking about consumer spending being strong, it does not appear to be because people are borrowing more today than long-established trends would expect. (I do think it's concerning that consumer debt has more or less only gone up over time, but that's a separate discussion.)
French consumers definitely don't maintain their lifestyle.
I'm reminded of this excerpt from 1984:
But actually, he thought as he re-adjusted the Ministry of Plenty's figures, it was not even forgery. It was merely the substitution of one piece of nonsense for another. Most of the material that you were dealing with had no connexion with anything in the real world, not even the kind of connexion that is contained in a direct lie. Statistics were just as much a fantasy in their original version as in their rectified version. A great deal of the time you were expected to make them up out of your head. For example, the Ministry of Plenty's forecast had estimated the output of boots for the quarter at 145 million pairs. The actual output was given as sixty-two millions. Winston, however, in rewriting the forecast, marked the figure down to fifty-seven millions, so as to allow for the usual claim that the quota had been overfulfilled. In any case, sixty-two millions was no nearer the truth than fifty-seven millions, or than 145 millions. Very likely no boots had been produced at all. Likelier still, nobody knew how many had been produced, much less cared. All one knew was that every quarter astronomical numbers of boots were produced on paper, while perhaps half the population of Oceania went barefoot. And so it was with every class of recorded fact, great or small. Everything faded away into a shadow-world in which, finally, even the date of the year had become uncertain.
---
Of course, I'm sure none of that would ever apply to our numbers, only to those of our opponents.
Nobody wants to believe they’re living in a peak, and it is hard to predicate. People claiming economic downturns are near are a dime a dozen.
That said, there are possible indicators. Yes, unemployment is low, but what form is employment taking? Is it generally trending toward fulfillment, growth and/or rewarding or is it trending toward mundane, unfulfilling and/or unrewarding?
Is everyone benefitting from the official economic growth? Or are the gains statistically lopsided?
Let’s take a common mentioned stat about wage growth. Yes since 2020 wages finally raised. But if you look at it overall since 1970[0], it still behind productivity gains. Wages are not keeping up with overall productivity growth and people are still going to notice that in some form. Everyone talks about since 2020, but that misses the broader story. (As an aside, I suspect by the end of 2025 wages will significantly stagnant again. Growth won’t continue on the best take of the current trajectory)
Then there’s inflation. Regardless of cause, an entire generation+ of people have never experienced such rapid prices rising, particularly with groceries. People aren’t going to forget this, no matter what the official line is. This also eats away at wage growth which as noted above, has not kept paced with productivity gains.
The official sources though say everything is great, or heading toward it. Maybe, especially if you’re seeing the benefits, but if you’re locked out of the majority of gains, what if any you do get will feel meaningless. This shouldn’t be discounted.
It is entirely possible that wealth inequality combined with the world political climate is starting to show more cracks in the system and this might be peak. We may be seeing the warning signs of a big changes, whether it manifests itself as mostly political or economic is anyways guess I suppose
[0]: https://www.cnbc.com/2022/07/19/heres-how-labor-dynamism-aff...
Edit: why disagree?
Because it is hilariously wrong. You have been operating under the false understanding, for who knows how long, that the media are talking about job postings when they are talking about jobs numbers.
https://www.cnn.com/2024/10/29/economy/us-job-openings-jolts...
While it's a local biaised, as a Swiss resident, I feel the same about the evolution of the IT job market here.
Typically, right now I am relatively bearish but I feel I am 3-6m too early.
Trend is downward for both hiring and seeker, which I would interpret as employers are hesitant to invest in IT due to current US politic unknowns, typically, the tarifs and actual impacts on economy.
Because if you are able put money into savings or investments then you probably have the other stuff you listed.
Tricky to account for differences in consumer culture, no? Because the number of people who consume all they earn, no matter how much that is, is not staying equal over time or location.
In the theme of the day: "Your coverage has been denied, due to [insert nonsense]", while profiteering from record profits in the billions.
Immense economical value has been "produced", benefiting no-one but the very few.
From the New-York Times [1]:
The company’s profits rose on his watch, jumping to more than $16 billion last year from $12 billion in 2021. But amid the growth, the company and its parent also attracted scrutiny from lawmakers and regulators who accused them of systematically refusing to authorize health care procedures and treatments.
They imagine the amount of money they have today, but at yester-decade's interest rate.
And -- this is certainly a bit of a gamble -- but I know people who have taken on higher rate mortgages now with the expectation they'll be able to refinance within a few years at a lower rate. That's certainly more expensive even in the meantime than having a lower-rate loan to start, and there's always the risk that rates don't actually come down, but it's an option for many (admittedly not all).
Continuing to yell at people about the numbers doesn't seem to be an effective strategy, maybe try a different approach?
https://www.nytimes.com/2024/01/23/briefing/economy-inflatio...
Therefore, it's important to find out why people believe things, despite being contrary to empirical evidence.
https://www.statista.com/chart/32428/inflation-and-wage-grow...
https://www.brookings.edu/articles/has-pay-kept-up-with-infl...
Real wage growth surged post-pandemic, especially for lower-income workers.
Most economists have explained the vibes as: People blame inflation for increased prices but credit their own industriousness for wage gains, and are angry they don't get to basically double dip.
A 2% annualized increase in real wages is excellent? Compare it to real wage increases elsewhere and you'll see that "only" is not the correct modifier to use.
Real median earnings since Q4 2019 are only around 3% higher:
https://fred.stlouisfed.org/series/LES1252881600Q
Real median household income is still lower than 2019:
A 3% increase over 5 years is not bad at all. Go look at historical data or data from other places if you would like more information.
For a worker with credit card debt, or one who already struggles to afford public transit, the real wage growth is illusory.
Here’s [1] the wage graph from BLS during that time period, same source as the author. See that incredible, record setting spike at precisely the month in question, never seen before or after? Gee, what do you suppose did that?
The US had just poured 2 trillion into wages for free for pandemic recovery.
This is why you shouldn’t fill your head with nonsense from such crappy sources. Liars will lead you into your own echo chamber. Read proper economic journalists until you learn enough not to believe stuff like that article.
Given how arrogant you are, it is ironic that you're the one that interpreted the graph incorrectly. They didn't reference the spike "precisely the month in question". The figure they referenced at the start of the graph was Q4 2020. The spike in the FRED graph was in Q2. Perhaps you should think before you type next time, so you don't paint yourself the fool you claim others to be.
If they had referenced the spike in Q2, the decrease would have been >5%. If you want to start casting stones, you better be sure you're right.
Zoom in if you cannot read it. A spike is not a single month. It’s a spike with an upside and downside. You think the effects of a free few trillion poured into people’s hands only affected an infinitesimal width spike?
So no, I did not interpret this graph incorrectly, and the poster chose a point from an artificial spike to mislead.
Perhaps if you aggregated inflation, which is a lagging variable, it will turn out he chose precisely the quarter that made his point better than any other quarter, in which case he really went the extra mile to provide misleading claims.
If you’re going to attempt to discredit a correct argument, at least evaluate it correctly.
>If you’re going to attempt to discredit a correct argument, at least evaluate it correctly.
Sure, it is part of the downward slope of a multi-quarter spike, but that is not what you said. What you are doing now is attempting to re-frame prior inaccurate wording to claim that you were accurate all along. That first quote is what you said in your first comment. Q4 was the second quarter of decline following the spike. You said the spike was at "precisely the month in question", which it certainly was not. Q4 2020 was half a year after the peak of the spike. That hardly qualifies for even a very generous interpretation of the word "precise".
>Perhaps if you aggregated inflation, which is a lagging variable, it will turn out he chose precisely the quarter that made his point better than any other quarter, in which case he really went the extra mile to provide misleading claims.
Not only is this reaching, but you've just demonstrated that you don't understand what the graph you said was misleading refers to. Real wages does account for aggregate inflation.
That you confuse the word spike to mean only the tip is odd. The downward part of a spike is part of a spike, and the cause and use of this anomaly is not in question. Choosing an outlier high point as a basis to make general claims will always lead to misrepresentations.
Is a railroad spike only the tip? Is a volleyball spike only the highest (or lowest) part? Is a signal spike the zero width instant of maximum value?
I cannot think of a use of the word spike that means the tip and not the entirety. Looking at online dictionaries I cannot find the use you claim. I do find many definitions and examples including both the upside and downside. So I’m quite correct claiming the author choose the spike, and obtains the expected poorly reasoned claims as a result.
> Not only is this reaching, but you've just demonstrated that you don't understand what the graph you said was misleading refers to. Real wages does account for aggregate inflation.
If you dig through my posts, you’ll see I taught mathematical grad econ at a top 50 university. What you misread, then try to use Econ 101, is simply incorrect. As your other comprehension showed, you ignored the precise word “lagging” that I wrote, because real wages at a given date do not include inflation from the future.
Please read and think. You’re so bent on trying to argue you don’t read what I wrote, and instead argue your misreadings.
Let me simplify: it’s well known inflation as a result of cash transfer causes lagging inflation (pretty much all schools of economics agree on this, from Keynesian, neo, Austrians, Friedman, all the flavors of monetarists, pretty much everyone). Hence the precise Econ term lagging variable. Other ones are that wage growth usually lags inflation. This is all basic economics. It’s why I precisely put the word “lagging” in that sentence. It means future inflation above. Most definitely not a part of that spike.
Here, there was an economic shock causing the govt to expand the money supply without expanding production. This money, handed out in large part as cash, adds to real wages at that moment. This will lead to inflation, but that is not part of those real wages. Later, inflation will devalue money, making real wages decrease. Then later again, historically wages gain back purchasing power as people get salary increases. This is done (alert, another term so read carefully) because wages are called a “sticky variable” in Econ. Wages are easy to ratchet up but not down, due to psychology of humans. Wages are hard to move freely like many other variables. Ideally from a math model side, if wages were not sticky, then as the shock passed, prices could fall, and all values return to baseline. But people don’t see that, so it’s easier to ratchet up wages, which ratchets up prices, locking in inflation.
So to maximize the type of nonsense this post spreads, you can always fiddle with the chunks in these troughs to make things look much worse than they are.
So next time please learn the difference between aggregate inflation (current) and the phrase lagging variable. And don’t put claims into my writing so you can argue straw men.
I’m done. You’re trying to correct something that is simply your odd usage of a word.
It's important to understand that the stock market is a leading indicator.
Everyone doesn't immediately get laid off when the stock market tanks. Everyone doesn't immediately get a raise when the stock market is roaring.
A lot of people are just now experiencing the stock market mini-crash of 2022, when the pandemic helicopter money dried up. In two years a lot of people are going to be experiencing the investments that are being made in the market right now. Most of them are going to wrongly ascribe those good times to the person holding high political office even though that person had nothing to do with it. This won't be the first time it has happened.
Now I wonder, are there historical exceptions to this general rule? Also, does the "lead time" grow and shrink substantially?
it changes based on other people's guesses in their participation in the stock market. Aka, it's chaotic.
I don't think so. It is probably loosely correlated with the economy at best.
The stock market can soar in times of cutbacks which hurt non-asset owners but which benefit profit margins. The stock market can boom on liquidity surges that do not translate into economic investments. The stock market can crash while the overall economy does fine(wasn't 2000 basically this, with the economy not really suffering until after 9/11?).
I wonder if my impression that this has increased a lot in the last decades is correct, and what would be the impact of this on the whole "stock market as indicator of economy" thing.
Historically it's been done through wages, but those have been de facto frozen since the 1970s.
Using markets as the primary way to redistribute wealth seems convoluted at best, and yet another perversion of their original purpose.
Food, housing, energy, healthcare, education. Real wage growth and job security measured against the prices and durations of those things. That’s what matters to people who don’t own significant real assets, those are the things that can get extremely bad (someone tries to murder the CEO of United Healthcare on the street bad) without showing up in the numbers you see in the press.
Simon Kuznets himself, the inventor of GDP as a metric sternly cautioned policymakers about treating it as a summary statistic.
You're correct that they do matter and can get bad, but are not bad currently as regularly reported in the press.
Lower income households in the US did better than everyone else by these metrics coming out of COVID.
It's more like, how save when you need the money right now.
There is a certain subset of people, though, that do make money and actively choose to not save it. Kind of a perpetual "YOLO" attitude.
I don't think the OP was judging.
Granted, I think that this is mostly a product of the fact that he was pretty young (22 at the time), and I haven't really talked to him in 11 years, so it's very likely that he doesn't do this anymore.
Ideally, others success should be net-positive/neutral for others.
In practice, inequality has these perverse impacts at least:
(Wealth is a spectrum. “Rich” and “non-rich” below stand in for any significant relative difference.)
1. The non-rich often put unrealistic pressure on themselves to keep up with wealthier lifestyles.
But beyond that self-inflicted wound:
2. The rich can afford outsized amounts of critical or survival type services and assets. Like land. Fresh vegetables. This imbalance raises the cost of meeting basic needs.
3. Markets respond to more rich by creating higher end services and products. Some have subjective value (fashion), some are luxuries (massages are beneficial, but not critical for most), but many are practical.
For instance, computing hardware, internet access options, expensive healthcare interventions, medications, private transport growth relative to public transport, etc.
4. And the rich also perversely put unrealistic social and employer pressures on the lifestyles of the non-rich. I.e. dress and personal technology shibboleths, etc.
—-
It is worth pointing out that the large role of real estate as a passive wealth compounder, tracking up with the product of increased overall economy and inequality growth, is perverse enough.
But the common arrangement of property taxes that tax both land (the limited and exclusionary asset) and its development (the non-exclusionary asset we should not be disincentivizing in any way), adds another perversity to land economics.
When a problem compounds already, it doesn’t need any more perverse incentives!
If property taxes were replaced by just land taxes (renormalized to be revenue neutral) it would:
1. increase the return on development, and
2. increase the costs of holding (absolutely or relatively) undeveloped land!
Which would both increase development (i.e. housing, multi-housing) and increase supply of (relatively) unused land.
This would be a net win for those who are impacted or concerned about inequality, but also those with a libertarian or capitalist viewpoint. As it removes a wealth tax. (Which isn’t just a double tax, but an unlimited repetitive tax on the same already taxed/unrealized non-exclusionary wealth!)
Whether rich or poor, improving one’s property with already taxed capital or self-supplied labor, would not perversely raise one’s taxes.
It's 5 mins of driving. It's also not having any financial sense.
Is that not true in other economies? Was that not true at some (mythical?) point in the past? What number, specifically, would you like to see before you're willing to declare "The Economy is Good"?
Basically the point you made is an example of the Economics of Vibes. It's non-falsifiable and allows you to justify any position you want. We're about to start a global trade war, it seems, based on those vibes.
In point of fact household savings rate as a proportion of household income is not particularly low right now. In fact it had a huge spike during the pandemic (lots of assistance and nothing to buy, same thing that caused the inflation burp).
Apartment in a moderate-cost area is about $70,000-$100,000/year.
Median salary in the US is $59,300
What considered poverty level in the US for: 1 person: $15,060 2 people: $20,440 3 people: $25,820 4 people: $31,200
According to recent data from the U.S. Census Bureau, around 50% of Americans make $70,000 or more annually.
That means about 50% of the US can not afford a place to live.
No, at best the conclusion is that 50% of the US can not afford to own a home. But not owning a home != homelessness. Renting still exist. Roommates still exist. There's a house in my neighborhood that has 3 (El Salvadorian, I believe) families living inside of it, and they are contributing 3x income to make it work (this depends on zoning laws though).
More particularly, 50% of the single person households in the US. This does not apply to a couple unless they are aiming for the Leave it to Beaver dream of a stay-at-home wife.
The average rent for an apartment in the United States is between $1,559 and $1,748 per month, depending on the source (google AI). This would be $21000 per year in rent.
And yet, they do. I don't think your numbers lead to your conclusion.
Being single and wanting to own your own home is going to be the closest situation to your conclusion. 50% of those folks being unable to achieve that dream sounds plausible.
The median rent is $1621. One bedroom and studio apartments will be on the lower end, and a $60K salary is likely to be sufficient.
For everyone who wants to obtain housing for themselves and a significant other, they have $120K to work with. Now the house looks achievable.
The problem is that moderate cost area is of now has a lot better quality of life, with plenty of things in short driving distances, compared to what it was back when housing was "affordable".
You can go browse Zillow across US and find ~100k houses, which even at higher interest rates are affordable on a $60k household salary. Of course the quality of life is going to be much worse than what you normally know, but it would be similar to what your grandparents had when they bought the house.
... in what sane world is that a "moderate-cost area"? $70k/yr is well over $5k/month, and looking right now at the prices in my metropolitan area, you have to pretty much get a combo of 3 bedroom, luxury, and city-center to get something that expensive. And even then, I'd consider this metropolitan area to be high cost, just not obscene cost like SF or NY.
>50% of the population has enough cash savings for three months of expenses
The median amount of cash in bank account is $8k
The median US household networth is $193k.
Further, the wage increases in recent years have happened mostly at the lower end of the income scale, not at the top!
When polled, the US population is very happy about their own economic situation, yet still believes that we are in some sort of terrible economic downturn.
IMHO, the reason for this disconnect is housing. We haven't built enough, it's made people very unhappy, and restrictive zoning prevents fixing it. The housing theory of everything could even extend to the current political situation in South Korea...
Although, does that reflect in higher quality of life? Some statistics say no. The best quality of life is where there is good access to quality healthcare, education, clean air and water, culture, and low crime. When taking into account all the above, somewhat surprisingly, Austria and Switzerland come as top places to live. https://en.wikipedia.org/wiki/City_quality_of_life_indices
https://www.forbes.com/sites/laurabegleybloom/2024/09/10/new...
And the US is massive and diverse, with many states larger than those other countries. If you look at quality of life across US states, it’s likely the best states (think New Hampshire versus Mississippi) would outrank all those countries, since the average across all states ranked #3.
At that point, it's not really the company that's the problem...
Housing being too expensive is not a company problem for example.
Many of those people living paycheck to paycheck have a budget where they're saving or investing a significant amount of their money, and accordingly, money feels tight. This is the financially sound way to avoid lifestyle creep, but it doesn't mean you're in a precarious position. Or alternatively, they're paying for really expensive, but optional things like private schooling and expensive cars or vacations.
Obviously some people are struggling, but this paycheck-to-paycheck stat is not an accurate way to quantify that. It's best IMO to look at objective metrics like the poverty rate, or people's objective financial picture (available via surveys.)
I don't think that's the common understanding of what "living paycheck to paycheck" means.
It's usually just the inverse of saying most people don't have ready cash savings laying around; because there's no need to when you have credit every which way all the time.
Much better to look at the debt load on people and how that changes over time. Someone who makes $5k a month and spends $3k on debt service and lives off $2k is going to feel much different from someone who makes the same $5k, lives on $2k, and spends $3k on candles or whatever (since they can stop buying candles anytime but you can't easily stop paying down debt).
Clearly you're not in that situation, and likely have never been anywhere near it with that privileged view of the world.
Many people in the States are living on the edge; i.e. paycheck to paycheck, not, "oh, well, I'll just dip into my equities if the need arises".
This is quite a precarious situation to me. People should not need nor be encouraged to rely on debt to live life, especially month to month.
The default mode should be working people make enough to, if budgeted moderately well, can pay for everything plus save money away post tax[0]
Anything less and you’re only growing systemic issues over time
[0]: including tax exempt savings like 401Ks is ill-reflective of people’s ability to save money aside for emergencies and unexpected costs
How can you be "paycheck to paycheck" if you have a massive savings pile? Are you dumping it all into 25 year treasuries?
How I got here is living way below my means in my twenties, saving up tons of money, and nowadays living at my means while still maxing retirement. I also have almost all that saved money invested, which just grows the pot as it sits. I also have zero debt besides a 3% mortgage.
So basically I spend all of every paycheck, after retirement has been deducted, but if I lost my job I could maintain my current life with zero income for a few years before running dry.
At which point, it actually kind of makes sense to blow your entire income on lifestyle.
An aside, if you’re spending 100% of your income on just lifestyle stuff… you don’t to work at all if your retirement covers it.
Well then now we know that the media will happily use unreasonable definitions to bolster stats for click bait stories and headlines.
People assume paycheck to paycheck means "Spending each paycheck entirely on absolute necessities to live" but the survey definition is "Do you save any money from your take home pay every pay period".
This is how you get people at every income level reporting they live paycheck to paycheck.
Necessary spending is food, utilities, clothes, rent. But not eating out, fancy housing is a nice neighborhood, designer clothes, etc.
"After long term saving and paying for my indulgent lifestyle, I just don't have anything left at the end of the month!"
Somewhat offtopic, but I call these articles "parading the idiot". Where a newspaper or other media outlet runs an article interviewing a person where the subject is clearly out of step with everyone else in their assumptions.
See also articles where a property investor complains about how hard they are doing financially because they have to sell one of their eighteen investment properties.
I don’t understand. Isn’t everybody living paycheck-to-paycheck then?
How?..
These are not people I know, but some of what's in this article "rhymes with" things I see high-income, high-spending associates doing: https://www.cnbc.com/2018/03/06/budget-breakdown-of-a-couple...
From that article: "As Dogen puts it, they’re effectively “scraping by,” in part because they’re still living “paycheck-to-paycheck,” despite their generous salaries."
That's right: they're each making $250K/yr, and living paycheck-to-paycheck as they describe it.
https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...
There are too many people living in poverty in the US, or 1-step removed from it, but much less than are commonly believed.
Do any of our "rivals" have entire regions with the levels of poverty seen in places like Mississippi, southern Ohio, or northern Michigan? I grew up in an area with patches of poverty like that.
Are we measuring the right thing?
For all its economic power, the US has the largest income inequality in the G7, coupled with the lowest life expectancy and the highest housing costs, according to the OECD. Market competition is limited and millions of workers endure unstable employment conditions.
Europe’s social safety net needs to be paid for, warned Christine Lagarde, president of the European Central Bank, in a speech in November. Boosting competitiveness is necessary for long-term prosperity, she argued: “Failure to do so could jeopardise our ability to generate the wealth needed to sustain our economic and social model.”
Objectively? Yes. People are living better than before the pandemic.
However, incessant propaganda works. Fox News and AM talk radio convinced people that the prices went up by like 10x and the country is on the brink of collapse.
You're working harder perhaps, but many in other places have straight up no jobs or millions applying just for the most basic jobs. Many of those people would kill to get into America.
Consider, the top voted comment on an article about how good the economy is a disagreement.
I wonder how many of the negative effects of an actual bad economy can also be caused by widespread pessimism? Is it better to have a bad economy filled with happy optimists, or a good economy filled with unhappy pessimists?
By every metric, the economy is strong.
A large portion of the households living "paycheck to paycheck" are either doing so by choice or don't understand what the term means and are ignoring things like retirement savings when they make that statement.
That's pretty stark. But the U.S. outperformance on GDP growth and productivity growth is very real over the last 5-15 years especialy and has been documented in numerous stories like this. The looming questions seem to be
1. can Europe maintain its social benefits and living standards with such anemic growth (that is, is the goal of more humane and equal society compatible with a robust economy)
2. can the U.S. preserve its competitiveness and overall GDP performance if it imposes more regulations/taxes designed to reduce income disparities, provide more social services, etc.
This is already being answered by reports like the one in the FT
> 2. can the U.S. preserve its competitiveness and overall GDP performance if it imposes more regulations/taxes designed to reduce income disparities, provide more social services, etc.
No, because it will turn the US into a country like all the ones mentioned in question 1
This is a good point. Aggregate GDP is definitely not the right measure for this, and even GDP per capita adjusted for inflation and PPP does not account for economic inequality.
Median household income adjusted for inflation and PPP would probably be the least bad option if we had to choose a single statistic:
https://worldpopulationreview.com/country-rankings/median-in...
How much must I pay to not get consistently bullshat?
You can't because you aren't the customer of news, you are the product.
Which country is that true of?
$4/he starting wage makes you around my parents age (50+) so I’m guessing you easily earn six figures now since you hang out on HN. The crowd here does not represent poor people very well (which is fine!) but you can’t extrapolate your experience to everyone. Yea the stock market is great, but it says nothing about the single mom working two jobs to put food on the table with no energy left to tinker with ETFs.
This is oft repeated by politicians (including Bernie Sanders recently), but I've seen some good arguments why this can be a misleading claim. Ex. https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...