It isn't fucking rocket science, the money is largely going to those who are already wealthy, so who gives a shit if his economy is "good"? It's just more of the same trickle down bullshit with no...
It isn't fucking rocket science, the money is largely going to those who are already wealthy, so who gives a shit if his economy is "good"? It's just more of the same trickle down bullshit with no real awareness about what actually constitutes a healthy economy where the balance of wealth distribution is much more fair. We are so far gone that people expect us to think what we have now is good? That is laughable on the face of it.
I don't have a problem admitting that the economy is good in the sense that money is flowing at high levels, that businesses are thriving, essentially that there is economic stimulation. But, like...
I don't have a problem admitting that the economy is good in the sense that money is flowing at high levels, that businesses are thriving, essentially that there is economic stimulation. But, like most people citing how good the economy is, it's from the perspective of an economist, not the average American and the expenses they are incurring in comparison to the pay they receive.
Frequently I see the news tout that inflation is dropping, not rising, but what they're talking about is the rate of inflation, not the cost of goods. The statistic they're citing is that inflations rate of increase is dropping, which does very little to help the average consumer this month. I'm glad that inflation isn't rising as fast anymore, it was untenable, but it was untenable before our explosive inflation from Covid. So, wages weren't keeping up with inflation in 2019, they were keeping up even less from 2020-2022, now they're barely above the current rate of inflation according to statistica. How many years of this 2% difference do we need to see in order for the balance to fall back into favor of the average consumer? Casually glancing at rent and home costs will immediately confirm what all of us are feeling. Housing costs are something like 50% higher than in 2020, right? Have your wages increased by 50%? No.
Please, someone correct me if I'm wrong. As with OP, I try to make my opinions in an informed manner.
Increases in wages over the past few years have made inflation in food and consumer goods bearable. But increases in the cost of housing and healthcare have made the situation unbearable for many...
Increases in wages over the past few years have made inflation in food and consumer goods bearable. But increases in the cost of housing and healthcare have made the situation unbearable for many people. Rent keeps going up by painful amounts each year. High interest rates may have stabilized real estate costs, but certainly haven't dropped them. And even if you were lucky enough to afford a house ten years ago, insurance and taxes have also shot up in the past few years adding hundreds to your monthly payment, meaning less money to spend and less money to save.
Housing costs need to be addressed first and foremost, because I believe it is the primary factor driving both income insecurity and the epidemic of homelessness in our country.
My property tax and home owners insurance were going up between 10%-30% every year for 10 years in FL. That is a big part of my I finally moved away. The other being the obvious political...
My property tax and home owners insurance were going up between 10%-30% every year for 10 years in FL. That is a big part of my I finally moved away. The other being the obvious political hellscape it has become.
I felt like this video was a good breakdown of things from a conceptual standpoint. NPR's Planet Money had a related episode, Why are we so bummed about the economy?, with some good information...
I felt like this video was a good breakdown of things from a conceptual standpoint.
NPR's Planet Money had a related episode, Why are we so bummed about the economy?, with some good information from an economist studying consumer sentiment and the economist heading the Michigan consumer sentiment survey.
Some quotes that stuck with me:
The share of people telling us over the last year that they've heard bad news about inflation is so much higher than it was in the late '70s in spite of the fact that, objectively, by any measure, inflation was so much worse in the '70s than it was now. People lining up around the block to pump gas - that's not a thing right now. And still people are saying, oh, I'm hearing such terrible news about the economy.
People want to talk - they want to talk about gun control. They want to talk about immigration. They want to talk about climate change. And, you know, some of these things have stronger ties to the economy than others, but it's - people want to talk about a lot of things ... What we are able to see is that political polarization is weighing on people in addition to inflation. And I think that's reflected in how much people want to talk about political factors at the end of the survey.
As an indicator, it does seem like consumer sentiment is, like, sort of broken - at the moment, at least. And Claudia doesn't know what to make of it. Like, maybe our vibes will always be misaligned with the economics numbers going forward. Or maybe Claudia says it's just that the pandemic disrupted the economy so fully and left us all so battered and bruised that it is just going to take a while for people to get back in sync with the economic data again.
My personal feeling is one thing that seems to get glossed over a lot in these discussions is talking about the pandemic as if it were ancient history, as if over a million deaths and months of shutdowns are things that will not have long-term effects. If vibes are bad, maybe it's more than economic reasons. Maybe it's partially because grandma died, our favorite restaurant closed, and our social lives changed permanently in some ways. The quote about how people being surveyed often want to talk about things other than the economy seems to show that there is more going on outside of money.
I know for me it's taken maybe 18 months since the epoch moment of RTO efforts starting for my social situation to get back to where it was in Febrary of 2019. So many people moved, I switched...
I know for me it's taken maybe 18 months since the epoch moment of RTO efforts starting for my social situation to get back to where it was in Febrary of 2019. So many people moved, I switched jobs a couple of times, and just now people have both moved back to my area or I've met new people to fill the empty spots in my social life. I had a really good thing going with my job in early 2019 - a ton of really cool people all going into the office every day. 2023 was the first year where I could easily pick from a ton of different in-person-only companies like you could pre-pandemic.
If I didn't have as much ability to be professionally mobile and I hadn't been as lucky finding new friends in the area I'd be pretty bummed about everything, too.
It's always hard to square the story told by aggregate data with individual experiences, and it is harder given that we tend to put more emphasis on personal experience or anecdotes rather than...
Exemplary
It's always hard to square the story told by aggregate data with individual experiences, and it is harder given that we tend to put more emphasis on personal experience or anecdotes rather than data. If you are struggling more now than in the past, then it doesn't matter what the data shows, the economy is doing poorly. Likewise if you know people struggling or live in a region where things are different than the averages, your perceptions won't necessarily reflect the national data.
I often see comments on this topic with trite lines about replacing the term economy with other people's yacht money, or talking about the disconnect between stock performance and daily finance. But this betrays a fundamental lack of understanding of all of the data being analyzed.
Here's one opinion essay that goes into the disconnect between the data and the public sentiment.
So why are people so negative about an economy that by all standard measures is doing very well?
First, there was the argument that there were real economic problems that justified public negativity. People really hate inflation, even if their incomes are keeping up, and a year ago real wages were still somewhat depressed. But at this point inflation is way down and real wages are up.
This is where folks tend to miss when talking about stocks or yacht money. One of the core metrics is real wages, and those have been improving.
Second, there was the argument that, in effect, the customer is always right: If people feel that they’re doing badly, you should figure out why, not lecture them that they should be feeling better.
But here’s the funny thing: There’s substantial evidence that people don’t feel that they personally are doing badly. Both surveys and consumer behavior suggest, on the contrary, that while most Americans feel that they’re doing OK, they believe that the economy is doing badly, where “the economy” presumably means other people.
So the point that the author is trying to make is that people are responding to surveys on economic sentiment and giving answers that are out of sync with their own experiences, and these differences will show up on the data.
At the end of 2022, 73 percent of households said that they were “at least doing OK financially,” down from the previous year [...] but not significantly below the number in 2019. In 2019, however, half the population said that the national economy was good or excellent; in 2022 that number was down to just 18 percent.
So fewer households are reporting doing ok financially in 2022 as in 2019, but the decrease in economic sentiment seems disproportional to the change in personal experiences reported.
According to a recent poll by The Wall Street Journal, 74 percent of Americans say that inflation has moved in the wrong direction over the past year — a result stunningly at odds with the data, which shows inflation plunging.
This one's fairly easy; inflation goes up, goes down, or sideways. Yet when inflation has been going down, people still believe it is going up, on average. Some of this might be explained by misunderstandings on what it means for a rate of change to change, but more on this later.
several organizations regularly survey consumers to ask how much inflation they expect, and these expectations have come way down, which is completely at odds with claims that inflation is getting worse.
So when individuals are being asked what their personal expectations of inflation are, those expectations have been improving overall. And yet, when different studies ask questions not framed by personal experience, the sentiment is more negative.
The Federal Reserve Bank of Atlanta asks businesses how much they expect their costs to rise over the next year; their median answer is 2.5 percent, down from 3.8 percent last year.
More data showing that inflation expectations are improving by small business owners.
So when people are asked about their own experiences, not “the economy,” what they say about inflation is consistent with official data showing rapid improvement.
So there is a disconnect in answers from people depending on if you ask them qualitatively about the economy in general, versus asking specific quantitative questions about their experience.
There are a number of reasons that could exist. It's possible we are seeing the limits of what our common metrics can capture in sentiment and there is something missing from our economic picture when trying to suss out how households feel they are doing on average.
There's also the fact that averages hide a lot. For instance, averages can obscure disparate outcomes if the distance between real wages for the bottom third of earners and the middle third of earners grows. 30% of people can be doing objectively worse and 30% can be doing disproportionally better than the other third, and that can result in averages that have improved while a large population does worse. That may also cause negative perceptions amongst those doing well, as they watch their neighbors struggle.
I also think some of it can be explained by Daniel Kahneman's work on the weight that we give to loss vs gain in his book "Thinking fast and slow." The gist is that we interpret loss and gain, even hypothetical loss and gain differently. We tend to inflate the magnitude of loss when comparing potential loss and gain side by side.
There's also likely a political element, as summarized by the essay author.
What explains negativity about a good economy? Partisanship is surely a factor: Republicans’ assessment of the current economy roughly matches what it was in June 1980, when unemployment was twice as high and inflation four times as high as they are now.
I also think that even when wages increase to cover inflation, including housing, we feel the pain of higher prices more often and more accutely than the satisfaction of higher wages. We feel the negative with every bill and shopping trip. That isn't cancelled out emotionally or in sentiment by a higher paycheck beyond, say, a couple months after the raise.
So I don't want to say that people aren't suffering. Some are. And if a third of the country is doing worse, then just because another third is doing better doesn't help those folks. But there really, truly does seem to be a phenomenon where if you survey people about their experiences then you get a happier picture than if you ask about the national economy. Which is weird from a data perspective, that we are no longer seeing good correlation between our qualitative assessments and our quantitative measures. Regardless of the reason, it is worth figuring out and not dismissing out of hand as either the people are wrong, or the economists are out of touch. Because the data shows something more is at play, and that is when good research gets done.
This is a good point, basically echoing the content of the YouTube video with other sources, but the delivery would have been way better without the unnecessary dunk on people's intelligence -...
This is a good point, basically echoing the content of the YouTube video with other sources, but the delivery would have been way better without the unnecessary dunk on people's intelligence - "fundamental lack of understanding", nah I didn't get that impression. Differing opinions can be valid at the same time. Let's take a certain someone's advice and not dismiss out of hand as the people being wrong, yeah?
Let's look at the full context of the quote. And I believe this to be true. Summarizing this complex topic as simply being about stocks or rich people's money does show a lack of understanding of...
Let's look at the full context of the quote.
I often see comments on this topic with trite lines about replacing the term economy with other people's yacht money, or talking about the disconnect between stock performance and daily finance. But this betrays a fundamental lack of understanding of all of the data being analyzed.
And I believe this to be true. Summarizing this complex topic as simply being about stocks or rich people's money does show a lack of understanding of the underlying data and discussions.
Pointing this out, as its own top comment, not in reply to anyone or pointed at any individual is about as gentle a way as possible to advance my position. It also isn't a critique of a person's intelligence to suggest that there are aspects of the issue they are currently unaware of.
While I never seek to offend, I can't choose how people choose to react to an opinion no matter how neutrally or carefully written.
If this is true, along with the changes in consumer sentiment compared to the past, do you think that this implies a change in self-centeredness in the general population? One person is not the...
If you are struggling more now than in the past, then it doesn't matter what the data shows, the economy is doing poorly.
If this is true, along with the changes in consumer sentiment compared to the past, do you think that this implies a change in self-centeredness in the general population? One person is not the economy, after all. Then again, as you point out, it's more the trend that people are doing better while thinking the economy is worse. Do you think this might be the result of a decrease in holding personal opinions and an increase in hive-mind kind of activity?
Most of the data I see is represented in figures like medians, quintiles, and deciles, which are pretty resistant to the weaknesses of averages you mentioned. Like you mentioned, I see a lot of comments suggesting that economists are out of touch and the data doesn't represent reality, so I wonder if "knowing that averages aren't representative" is decreasing trust in the data.
100% agree with your last point. It's a really interesting and difficult problem. The amount of conjecture on the topic is getting a little too much for me though. Hopefully someone will be able to generate some satisfying empirical data on this topic soon.
Those are good questions; I don't know if I have formed any good insights. I don't believe that the conflating of personal experience with the economy is self-centeredness, partly because of the...
Those are good questions; I don't know if I have formed any good insights.
I don't believe that the conflating of personal experience with the economy is self-centeredness, partly because of the term's negative connotations. However, people's understanding of the world is framed by their personal experiences. Relatively few people look at the data first to form an opinion about things like the economy when they have proxies or signals for the economy in their day-to-day lives. E.g., is it a struggle to buy my groceries, have I gotten a raise recently, do I feel secure in my job, have I struggled to find a new job? If individual decisions are the "atom" of economics, then individual purchases and security are the "atom" of the economy, and it is natural for people to look at things at a personal level.
I'm not sure about hivemind. Perhaps social media plays a role. I've seen the same exact glib one-line takes on the situation across Tildes, Lemmy, Kbin, etc. So, these ideas or takes are viral.
At the same time, it could be community-focused. I suspect that people in communities hit hardest by economic changes such as globalization, industrial decline, etc., look around and see their whole world eroding and naturally conflating that with the economy. While I don't think that is correct, I don't think it is self-centered. I think it is very natural, given the heuristics with which our minds assimilate data, which requires conscious effort and training to overcome. Which really verges more on behavioral psychology, al la Daniel Kahneman, than economics.
I do feel it is fair to say that averages shouldn't be taken at face value. However, when you do break data down into deciles, do a deeper analysis, isolate factors, etc., I think you can get a pretty good idea of how things sit. I don't know that people's trust in data is eroded because the averages aren't representative; I think people have always struggled to accept data despite their own perceptions. It is very, very hard to suspend your own beliefs while critically reviewing data that goes contrary to your personal experiences or understanding of things.
What I find most interesting about this discussion and data isn't that the economy is "fine" because that is such a subjective term. What is really interesting is that people overall will seemingly concur with the averages and the data when asked specific questions, such as what their expectations/predictions for inflation. Yet when given a more general prompt, they express qualitative views wildly different from the quantitative prompts.
The phenomenon reminds me of Stephen Tetlock's "Super Forecasting" and the discussion on people's use of qualitative terms vs the quantitative figures they would translate them to. Thinking Fast and Slow and Super Forecasting are two books I would recommend if this topic interests you.
To your last point, I agree; I suspect this will generate some interesting papers in behavior psychology, which often overlap in research lines with economics.
Great discussion, and much appreciated! Have a great day!
I think it could be related to speed and efficacy of the social media feedback loop. In my opinion, everyone is programmed to some degree or another by their environment and cultural context, but...
So I don't want to say that people aren't suffering. Some are. And if a third of the country is doing worse, then just because another third is doing better doesn't help those folks. But there really, truly does seem to be a phenomenon where if you survey people about their experiences then you get a happier picture than if you ask about the national economy. Which is weird from a data perspective, that we are no longer seeing good correlation between our qualitative assessments and our quantitative measures. Regardless of the reason, it is worth figuring out and not dismissing out of hand as either the people are wrong, or the economists are out of touch. Because the data shows something more is at play, and that is when good research gets done.
I think it could be related to speed and efficacy of the social media feedback loop.
In my opinion, everyone is programmed to some degree or another by their environment and cultural context, but that's turned up to eleven in the digital world's constant stream of information. People barely have time to digest anything anymore, they just skim text scroll video shorts until they confirm their world view or reject it and move on. The end result is that people have entrenched views which don't have to reflect reality very well and may be contradictory in part.
Of course, that's based on nothing but personal experience and ~vibes~ so not much different than the rest of the thread. :)
That's a good point. I do suspect confirmation bias plays a part in reinforcing people's beliefs and sentiments. I suspect some of what we are seeing in the data is that people have a certain...
That's a good point. I do suspect confirmation bias plays a part in reinforcing people's beliefs and sentiments. I suspect some of what we are seeing in the data is that people have a certain entrenched belief about the economy conceptually, but when you ask specific questions, it doesn't allow for the intuitive, heuristic-driven responses. Social media and the shift in where people receive their news likely play a role in this dissonance and could help explain the difference in historical vs present sentiments in similar economic periods.
I hope we will get some papers about this phenomenon in economics or behavioral psychology. It would be interesting to look deeper at the explanatory variables for people's perceptions and sentiments. It would be a big undertaking to survey not only sentiments and predictions but also social factors such as new sources, etc.
I'm knee jerk replying here which I know isn't the spirit of tildes, so I will come back and give a more thought out edit later after looking over the linked content, buuuuuuut: Because my mother...
I'm knee jerk replying here which I know isn't the spirit of tildes, so I will come back and give a more thought out edit later after looking over the linked content, buuuuuuut:
Because my mother was able to raise three kids with the exact same career/job title that I have, I make twice as much numerically as she did, and it's literally impossible for me to provide for my one kid in anything close to the way she did. I did get to but a house (like she did) but it's less than half the size, built twenty years before hers, and in horrible shape.
Literally because it doesn't matter if the numbers went up when standards of living and my ability to provide for my family have dropped.
Exactly. People live in the world, they do not live in graphs and charts. And whatever the mean or median happens to be, half the people in a country of millions are doing worse than that. That's...
Exactly. People live in the world, they do not live in graphs and charts. And whatever the mean or median happens to be, half the people in a country of millions are doing worse than that. That's a lot of people not doing well, and they don't and shouldn't feel better because the lines are going up or down or whatever on a suit's graph.
I watched this video and it's sticking with me. I want my views to be evidence based and their argument is that by looking at traditional economic indicators the economy is good, actually. Which I...
I watched this video and it's sticking with me. I want my views to be evidence based and their argument is that by looking at traditional economic indicators the economy is good, actually. Which I should agree with, but at the same time there's near constant news of layoffs, companies reducing the quality of goods, and a general sense of 'greedflation' whether that's real or not.
I'm curious what other people are thinking, and if there's a way the economy can be failing (outside of housing) while those traditional indicators of GDP, business ownership, stock ownership, savings, and debt might look ok.
Yep. Knowing that $1500's a month is going into a hole that you'll never see again, as opposed to say towards a 30 year loan on a house that you own, is a huge difference for people. It doesn't...
Yep. Knowing that $1500's a month is going into a hole that you'll never see again, as opposed to say towards a 30 year loan on a house that you own, is a huge difference for people. It doesn't take high level math to look at what your making, what your realistic mobility options are, and what your costs are, to figure out that you may never own a home.
Rent/housing is insane, food costs are up, gas is up, and I suspect it's harder than ever to actually move up at your job. Granted these day they say you MUST job hop if you want to get real pay, but even then you're just living this horrible cycle of interviews and 2 year positions hoping you can get enough real raises to keep up with the markets.
Happened to me. Only moved away from home at 25 (average is like 20 in Denmark) because I finally qualified for student housing - some years later I moved in with my partner, but then I dropped...
High priced housing means you're going to be delayed in moving out on your own and delayed in being able to establish a family. It means you're more likely to be priced out of the area your family is in, and forced to move away from your social network.
Happened to me.
Only moved away from home at 25 (average is like 20 in Denmark) because I finally qualified for student housing - some years later I moved in with my partner, but then I dropped out, got broken up with, and all in the span of six months I could no longer afford to live in my hometown of Copenhagen nor anywhere close to it. Probably 80% of my welfare would have been rent and nothing else. I wouldn't be able to afford enough food or other bills.
So now I live on another island away from everyone I knew. It's been 2 years and only recently have I started to get back on my feet. It has been so hard.
I think it's because the economists and the general public aren't on the same page at the most basic levels. Start asking people what the economy even is and you'll get a wide variety of answers....
I think it's because the economists and the general public aren't on the same page at the most basic levels. Start asking people what the economy even is and you'll get a wide variety of answers.
Most people have a pretty good grasp on their own personal financial situation. They know how much money comes in, how much goes out, and how much is left over at the end of the month. To the general public, when that third number gets smaller, the "economy" is bad. It doesn't really matter how stocks are doing because half of Americans don't own any and a good chunk of those who do have them in retirement funds that they won't see for decades.
When corporations make more money it's paid out to shareholders who effectively remove much of it from circulation. Sure that's good for GDP, but GDP is meaningless to the ordinary person. In the real world this is just widening the chasm between the upper-upper class and the rest of us.
Also, if you look at opinion polling you'll see a phenomenon where people will admit that while they personally are doing better "the economy" is doing worse. I don't know where to attribute that gap. Probably TV news and the fact that every time you log onto Facebook you see someone else with a life-or-death GoFundMe.
I've heard it said, and I tend to agree, that if in many cases you replace the word "economy" with "rich people's yacht money" a lot of things make much more sense. "Rich people's yacht money has...
I've heard it said, and I tend to agree, that if in many cases you replace the word "economy" with "rich people's yacht money" a lot of things make much more sense.
"Rich people's yacht money has seen growth of 2% in Q1 this year, exceeding expectations" or "under this government, rich people's yacht money has improved year on year" meanwhile I'm counting food into the shopping trolley because the prices that matter to me are still insane.
Personally I think "the economy" is doing worse because it's doing what it's been optimised to do, what economists might consider good. Extract wealth from workers and funnel it to the rich. It's just doing it more these days.
It costs me $140 to buy the groceries that I would buy for $80 three years ago...and I get less. Anybody else notice that pasta has started the shrinkflation? A fair number of boxes are now 12oz...
It costs me $140 to buy the groceries that I would buy for $80 three years ago...and I get less.
Anybody else notice that pasta has started the shrinkflation? A fair number of boxes are now 12oz instead of 16oz at the same prices.
I can't speak for others, but for me personally, it comes from knowing that I am doing OK because I am living in very lucky circumstances. I live on an old family farm that hasn't had a mortgage...
... you'll see a phenomenon where people will admit that while they personally are doing better "the economy" is doing worse. I don't know where to attribute that gap.
I can't speak for others, but for me personally, it comes from knowing that I am doing OK because I am living in very lucky circumstances. I live on an old family farm that hasn't had a mortgage in living memory, and I have a remote work job that pays me city wages even though I live in the boonies. For almost everyone else I know, housing expenses are huge and growing, and they have had to cut back spending in almost every other area to accommodate it. They are struggling way more today than they were five years ago, and it really feels like almost my entire social circle has slipped from solid middle class to lower middle class. (Mind you, most of my social circle is in Australia these days, not the US, but it really does look like a lot of my Americans friends and family are struggling with housing costs as well.)
It would be pretty weird for me to report that the economy is great just because my costs are abnormally low.
Is “the economy” being used as a standard for expected future prosperity? Perhaps this statement means “I’m doing great this year, but I don’t expect the good times to last.” Or it’s as you said,...
I’m financially better but the economy is worse
Is “the economy” being used as a standard for expected future prosperity? Perhaps this statement means “I’m doing great this year, but I don’t expect the good times to last.” Or it’s as you said, “I’m doing fine but my neighbors are not.”
I think it's complicated. Inflation was accompanied by wage increases, especially for previous minimum wage earners (their wages pretty much doubled). Many people saved money during COVID and have...
I think it's complicated. Inflation was accompanied by wage increases, especially for previous minimum wage earners (their wages pretty much doubled). Many people saved money during COVID and have been able to spend it at a higher than normal rate afterwards. We hear news of layoffs, but unemployment rates are still extremely low.
I'm not saying that the situation out there is good by any means. Many people out there are indeed suffering. But it's perhaps not as bad for the general masses as the news would have us believe.
For some people. Many people in the middle tier of income haven't received much if any increase in income. For me, I've received 9% in raises since 2020, and in the same time my rent has gone up...
Inflation was accompanied by wage increases
For some people. Many people in the middle tier of income haven't received much if any increase in income. For me, I've received 9% in raises since 2020, and in the same time my rent has gone up 45%, grocery bill up 40%, utilities up 25%, car insurance up 50%, and property taxes up 25%.
My 65k base salary is going significantly less far than it was 4 years ago, there's no ifs, ands, or buts about it.
Yep, I specifically called out the disparity there. Minimum wage earners got the highest percentage increase. Middle class did not get equivalent increases.
Yep, I specifically called out the disparity there. Minimum wage earners got the highest percentage increase. Middle class did not get equivalent increases.
Assessments and taxes are so weird and interesting aren't they? Property assessment values in some areas are pretty static, if all they do is type and quality of construction, age of house, lot...
Assessments and taxes are so weird and interesting aren't they?
Property assessment values in some areas are pretty static, if all they do is type and quality of construction, age of house, lot size, municipality amenities and other things that don't change (much). Assessments in BC can be pretty wild, because they're based on availability of recent market data:
Sales comparison approach: Market value is based on the sale price of comparable properties. This valuation method works best for properties that are frequently bought and sold such as residential housing.
My guess is that the market value in (dollars) in your area overall went down, but taxes (dollar-per-sqft) increased quite a bit to pay for municipal development /services that needed money regardless of market performance?
"Land is valued based on its highest and best use," per area unlimited by its actual size, which is why a parking space will cost more than my rural house even though one can't build on just one spot. Sometimes even best use doesnt work because Agricultural Land Reserve farm land in Richmond can be sold for well over $300k an acre, with a $300k assessment, that you can't even build a barn or shed on 🤷♀️
Ah, I didn't consider cars. I associated property tax with real estate, so I was confused why your landlord would be charging you property tax on top of your rent.
Ah, I didn't consider cars. I associated property tax with real estate, so I was confused why your landlord would be charging you property tax on top of your rent.
Since 2016, once you factor in all my annual cost of living raises (3% max), the cuts to my health insurance and other benefits, inflation, and the cut during covid to avoid layoffs.... I make 10%...
Since 2016, once you factor in all my annual cost of living raises (3% max), the cuts to my health insurance and other benefits, inflation, and the cut during covid to avoid layoffs....
I make 10% less than I did in 2016. The only reason I was doing any better since then was tightening the belt, and external factors. Like not paying wage tax while remoting (3%), and the COVID aid.
It turns out when your wage increases 3% a year, but your healthcare costs increase 10%, it doesn't keep pace once inflation rises above 2%.
At work so I can't watch the video, but I suspect that Americans think the economy is bad because the media pumps the narrative without nuance 24/7. The economy is certainly better currently than...
At work so I can't watch the video, but I suspect that Americans think the economy is bad because the media pumps the narrative without nuance 24/7. The economy is certainly better currently than it was, but the benefits of that prosperity don't meaningfully impact a majority of citizens. I'm sure there's an upper echelon of society that is having a good time, but the majority is certainly not. The system is rigged to filter benefits of prosperity to the top and under capitalism, this is "as designed". People can argue against that concept trying to spin it as "croney corporatism" or some other economic system that is aesthetically "not capitalism" but at the end of the day, capitalists or people with capital/private property will always be butt fucking the rest of us under the current economic organization, capitalism and on a more global scale, imperialism.
It isn't fucking rocket science, the money is largely going to those who are already wealthy, so who gives a shit if his economy is "good"? It's just more of the same trickle down bullshit with no real awareness about what actually constitutes a healthy economy where the balance of wealth distribution is much more fair. We are so far gone that people expect us to think what we have now is good? That is laughable on the face of it.
I don't have a problem admitting that the economy is good in the sense that money is flowing at high levels, that businesses are thriving, essentially that there is economic stimulation. But, like most people citing how good the economy is, it's from the perspective of an economist, not the average American and the expenses they are incurring in comparison to the pay they receive.
Frequently I see the news tout that inflation is dropping, not rising, but what they're talking about is the rate of inflation, not the cost of goods. The statistic they're citing is that inflations rate of increase is dropping, which does very little to help the average consumer this month. I'm glad that inflation isn't rising as fast anymore, it was untenable, but it was untenable before our explosive inflation from Covid. So, wages weren't keeping up with inflation in 2019, they were keeping up even less from 2020-2022, now they're barely above the current rate of inflation according to statistica. How many years of this 2% difference do we need to see in order for the balance to fall back into favor of the average consumer? Casually glancing at rent and home costs will immediately confirm what all of us are feeling. Housing costs are something like 50% higher than in 2020, right? Have your wages increased by 50%? No.
Please, someone correct me if I'm wrong. As with OP, I try to make my opinions in an informed manner.
Increases in wages over the past few years have made inflation in food and consumer goods bearable. But increases in the cost of housing and healthcare have made the situation unbearable for many people. Rent keeps going up by painful amounts each year. High interest rates may have stabilized real estate costs, but certainly haven't dropped them. And even if you were lucky enough to afford a house ten years ago, insurance and taxes have also shot up in the past few years adding hundreds to your monthly payment, meaning less money to spend and less money to save.
Housing costs need to be addressed first and foremost, because I believe it is the primary factor driving both income insecurity and the epidemic of homelessness in our country.
Yeah, our property taxes went up 20% this year. They are more than our mortgage payment.
My property tax and home owners insurance were going up between 10%-30% every year for 10 years in FL. That is a big part of my I finally moved away. The other being the obvious political hellscape it has become.
I felt like this video was a good breakdown of things from a conceptual standpoint.
NPR's Planet Money had a related episode, Why are we so bummed about the economy?, with some good information from an economist studying consumer sentiment and the economist heading the Michigan consumer sentiment survey.
Some quotes that stuck with me:
My personal feeling is one thing that seems to get glossed over a lot in these discussions is talking about the pandemic as if it were ancient history, as if over a million deaths and months of shutdowns are things that will not have long-term effects. If vibes are bad, maybe it's more than economic reasons. Maybe it's partially because grandma died, our favorite restaurant closed, and our social lives changed permanently in some ways. The quote about how people being surveyed often want to talk about things other than the economy seems to show that there is more going on outside of money.
I know for me it's taken maybe 18 months since the epoch moment of RTO efforts starting for my social situation to get back to where it was in Febrary of 2019. So many people moved, I switched jobs a couple of times, and just now people have both moved back to my area or I've met new people to fill the empty spots in my social life. I had a really good thing going with my job in early 2019 - a ton of really cool people all going into the office every day. 2023 was the first year where I could easily pick from a ton of different in-person-only companies like you could pre-pandemic.
If I didn't have as much ability to be professionally mobile and I hadn't been as lucky finding new friends in the area I'd be pretty bummed about everything, too.
It's always hard to square the story told by aggregate data with individual experiences, and it is harder given that we tend to put more emphasis on personal experience or anecdotes rather than data. If you are struggling more now than in the past, then it doesn't matter what the data shows, the economy is doing poorly. Likewise if you know people struggling or live in a region where things are different than the averages, your perceptions won't necessarily reflect the national data.
I often see comments on this topic with trite lines about replacing the term economy with other people's yacht money, or talking about the disconnect between stock performance and daily finance. But this betrays a fundamental lack of understanding of all of the data being analyzed.
Here's one opinion essay that goes into the disconnect between the data and the public sentiment.
Gift link: I’m OK, but Things Are Terrible
This is where folks tend to miss when talking about stocks or yacht money. One of the core metrics is real wages, and those have been improving.
So the point that the author is trying to make is that people are responding to surveys on economic sentiment and giving answers that are out of sync with their own experiences, and these differences will show up on the data.
So fewer households are reporting doing ok financially in 2022 as in 2019, but the decrease in economic sentiment seems disproportional to the change in personal experiences reported.
This one's fairly easy; inflation goes up, goes down, or sideways. Yet when inflation has been going down, people still believe it is going up, on average. Some of this might be explained by misunderstandings on what it means for a rate of change to change, but more on this later.
So when individuals are being asked what their personal expectations of inflation are, those expectations have been improving overall. And yet, when different studies ask questions not framed by personal experience, the sentiment is more negative.
More data showing that inflation expectations are improving by small business owners.
So there is a disconnect in answers from people depending on if you ask them qualitatively about the economy in general, versus asking specific quantitative questions about their experience.
There are a number of reasons that could exist. It's possible we are seeing the limits of what our common metrics can capture in sentiment and there is something missing from our economic picture when trying to suss out how households feel they are doing on average.
There's also the fact that averages hide a lot. For instance, averages can obscure disparate outcomes if the distance between real wages for the bottom third of earners and the middle third of earners grows. 30% of people can be doing objectively worse and 30% can be doing disproportionally better than the other third, and that can result in averages that have improved while a large population does worse. That may also cause negative perceptions amongst those doing well, as they watch their neighbors struggle.
I also think some of it can be explained by Daniel Kahneman's work on the weight that we give to loss vs gain in his book "Thinking fast and slow." The gist is that we interpret loss and gain, even hypothetical loss and gain differently. We tend to inflate the magnitude of loss when comparing potential loss and gain side by side.
There's also likely a political element, as summarized by the essay author.
But I also think there are other reasons. While real wages are improving they haven't recovered from the high at the start of 2020 and I think people are feeling that realized loss much more than any subsequent gains.
I also think that even when wages increase to cover inflation, including housing, we feel the pain of higher prices more often and more accutely than the satisfaction of higher wages. We feel the negative with every bill and shopping trip. That isn't cancelled out emotionally or in sentiment by a higher paycheck beyond, say, a couple months after the raise.
So I don't want to say that people aren't suffering. Some are. And if a third of the country is doing worse, then just because another third is doing better doesn't help those folks. But there really, truly does seem to be a phenomenon where if you survey people about their experiences then you get a happier picture than if you ask about the national economy. Which is weird from a data perspective, that we are no longer seeing good correlation between our qualitative assessments and our quantitative measures. Regardless of the reason, it is worth figuring out and not dismissing out of hand as either the people are wrong, or the economists are out of touch. Because the data shows something more is at play, and that is when good research gets done.
This is a good point, basically echoing the content of the YouTube video with other sources, but the delivery would have been way better without the unnecessary dunk on people's intelligence - "fundamental lack of understanding", nah I didn't get that impression. Differing opinions can be valid at the same time. Let's take a certain someone's advice and not dismiss out of hand as the people being wrong, yeah?
Let's look at the full context of the quote.
And I believe this to be true. Summarizing this complex topic as simply being about stocks or rich people's money does show a lack of understanding of the underlying data and discussions.
Pointing this out, as its own top comment, not in reply to anyone or pointed at any individual is about as gentle a way as possible to advance my position. It also isn't a critique of a person's intelligence to suggest that there are aspects of the issue they are currently unaware of.
While I never seek to offend, I can't choose how people choose to react to an opinion no matter how neutrally or carefully written.
If this is true, along with the changes in consumer sentiment compared to the past, do you think that this implies a change in self-centeredness in the general population? One person is not the economy, after all. Then again, as you point out, it's more the trend that people are doing better while thinking the economy is worse. Do you think this might be the result of a decrease in holding personal opinions and an increase in hive-mind kind of activity?
Most of the data I see is represented in figures like medians, quintiles, and deciles, which are pretty resistant to the weaknesses of averages you mentioned. Like you mentioned, I see a lot of comments suggesting that economists are out of touch and the data doesn't represent reality, so I wonder if "knowing that averages aren't representative" is decreasing trust in the data.
100% agree with your last point. It's a really interesting and difficult problem. The amount of conjecture on the topic is getting a little too much for me though. Hopefully someone will be able to generate some satisfying empirical data on this topic soon.
Those are good questions; I don't know if I have formed any good insights.
I don't believe that the conflating of personal experience with the economy is self-centeredness, partly because of the term's negative connotations. However, people's understanding of the world is framed by their personal experiences. Relatively few people look at the data first to form an opinion about things like the economy when they have proxies or signals for the economy in their day-to-day lives. E.g., is it a struggle to buy my groceries, have I gotten a raise recently, do I feel secure in my job, have I struggled to find a new job? If individual decisions are the "atom" of economics, then individual purchases and security are the "atom" of the economy, and it is natural for people to look at things at a personal level.
I'm not sure about hivemind. Perhaps social media plays a role. I've seen the same exact glib one-line takes on the situation across Tildes, Lemmy, Kbin, etc. So, these ideas or takes are viral.
At the same time, it could be community-focused. I suspect that people in communities hit hardest by economic changes such as globalization, industrial decline, etc., look around and see their whole world eroding and naturally conflating that with the economy. While I don't think that is correct, I don't think it is self-centered. I think it is very natural, given the heuristics with which our minds assimilate data, which requires conscious effort and training to overcome. Which really verges more on behavioral psychology, al la Daniel Kahneman, than economics.
I do feel it is fair to say that averages shouldn't be taken at face value. However, when you do break data down into deciles, do a deeper analysis, isolate factors, etc., I think you can get a pretty good idea of how things sit. I don't know that people's trust in data is eroded because the averages aren't representative; I think people have always struggled to accept data despite their own perceptions. It is very, very hard to suspend your own beliefs while critically reviewing data that goes contrary to your personal experiences or understanding of things.
What I find most interesting about this discussion and data isn't that the economy is "fine" because that is such a subjective term. What is really interesting is that people overall will seemingly concur with the averages and the data when asked specific questions, such as what their expectations/predictions for inflation. Yet when given a more general prompt, they express qualitative views wildly different from the quantitative prompts.
The phenomenon reminds me of Stephen Tetlock's "Super Forecasting" and the discussion on people's use of qualitative terms vs the quantitative figures they would translate them to. Thinking Fast and Slow and Super Forecasting are two books I would recommend if this topic interests you.
To your last point, I agree; I suspect this will generate some interesting papers in behavior psychology, which often overlap in research lines with economics.
Great discussion, and much appreciated! Have a great day!
I think it could be related to speed and efficacy of the social media feedback loop.
In my opinion, everyone is programmed to some degree or another by their environment and cultural context, but that's turned up to eleven in the digital world's constant stream of information. People barely have time to digest anything anymore, they just
skim textscroll video shorts until they confirm their world view or reject it and move on. The end result is that people have entrenched views which don't have to reflect reality very well and may be contradictory in part.Of course, that's based on nothing but personal experience and ~vibes~ so not much different than the rest of the thread. :)
That's a good point. I do suspect confirmation bias plays a part in reinforcing people's beliefs and sentiments. I suspect some of what we are seeing in the data is that people have a certain entrenched belief about the economy conceptually, but when you ask specific questions, it doesn't allow for the intuitive, heuristic-driven responses. Social media and the shift in where people receive their news likely play a role in this dissonance and could help explain the difference in historical vs present sentiments in similar economic periods.
I hope we will get some papers about this phenomenon in economics or behavioral psychology. It would be interesting to look deeper at the explanatory variables for people's perceptions and sentiments. It would be a big undertaking to survey not only sentiments and predictions but also social factors such as new sources, etc.
Thanks for the discussion and have a great day!
I'm knee jerk replying here which I know isn't the spirit of tildes, so I will come back and give a more thought out edit later after looking over the linked content, buuuuuuut:
Because my mother was able to raise three kids with the exact same career/job title that I have, I make twice as much numerically as she did, and it's literally impossible for me to provide for my one kid in anything close to the way she did. I did get to but a house (like she did) but it's less than half the size, built twenty years before hers, and in horrible shape.
Literally because it doesn't matter if the numbers went up when standards of living and my ability to provide for my family have dropped.
Exactly. People live in the world, they do not live in graphs and charts. And whatever the mean or median happens to be, half the people in a country of millions are doing worse than that. That's a lot of people not doing well, and they don't and shouldn't feel better because the lines are going up or down or whatever on a suit's graph.
I watched this video and it's sticking with me. I want my views to be evidence based and their argument is that by looking at traditional economic indicators the economy is good, actually. Which I should agree with, but at the same time there's near constant news of layoffs, companies reducing the quality of goods, and a general sense of 'greedflation' whether that's real or not.
I'm curious what other people are thinking, and if there's a way the economy can be failing (outside of housing) while those traditional indicators of GDP, business ownership, stock ownership, savings, and debt might look ok.
Yep. Knowing that $1500's a month is going into a hole that you'll never see again, as opposed to say towards a 30 year loan on a house that you own, is a huge difference for people. It doesn't take high level math to look at what your making, what your realistic mobility options are, and what your costs are, to figure out that you may never own a home.
Rent/housing is insane, food costs are up, gas is up, and I suspect it's harder than ever to actually move up at your job. Granted these day they say you MUST job hop if you want to get real pay, but even then you're just living this horrible cycle of interviews and 2 year positions hoping you can get enough real raises to keep up with the markets.
Happened to me.
Only moved away from home at 25 (average is like 20 in Denmark) because I finally qualified for student housing - some years later I moved in with my partner, but then I dropped out, got broken up with, and all in the span of six months I could no longer afford to live in my hometown of Copenhagen nor anywhere close to it. Probably 80% of my welfare would have been rent and nothing else. I wouldn't be able to afford enough food or other bills.
So now I live on another island away from everyone I knew. It's been 2 years and only recently have I started to get back on my feet. It has been so hard.
I think it's because the economists and the general public aren't on the same page at the most basic levels. Start asking people what the economy even is and you'll get a wide variety of answers.
Most people have a pretty good grasp on their own personal financial situation. They know how much money comes in, how much goes out, and how much is left over at the end of the month. To the general public, when that third number gets smaller, the "economy" is bad. It doesn't really matter how stocks are doing because half of Americans don't own any and a good chunk of those who do have them in retirement funds that they won't see for decades.
When corporations make more money it's paid out to shareholders who effectively remove much of it from circulation. Sure that's good for GDP, but GDP is meaningless to the ordinary person. In the real world this is just widening the chasm between the upper-upper class and the rest of us.
Also, if you look at opinion polling you'll see a phenomenon where people will admit that while they personally are doing better "the economy" is doing worse. I don't know where to attribute that gap. Probably TV news and the fact that every time you log onto Facebook you see someone else with a life-or-death GoFundMe.
I've heard it said, and I tend to agree, that if in many cases you replace the word "economy" with "rich people's yacht money" a lot of things make much more sense.
"Rich people's yacht money has seen growth of 2% in Q1 this year, exceeding expectations" or "under this government, rich people's yacht money has improved year on year" meanwhile I'm counting food into the shopping trolley because the prices that matter to me are still insane.
Personally I think "the economy" is doing worse because it's doing what it's been optimised to do, what economists might consider good. Extract wealth from workers and funnel it to the rich. It's just doing it more these days.
It costs me $140 to buy the groceries that I would buy for $80 three years ago...and I get less.
Anybody else notice that pasta has started the shrinkflation? A fair number of boxes are now 12oz instead of 16oz at the same prices.
"Basket of goods" my ass.
I can't speak for others, but for me personally, it comes from knowing that I am doing OK because I am living in very lucky circumstances. I live on an old family farm that hasn't had a mortgage in living memory, and I have a remote work job that pays me city wages even though I live in the boonies. For almost everyone else I know, housing expenses are huge and growing, and they have had to cut back spending in almost every other area to accommodate it. They are struggling way more today than they were five years ago, and it really feels like almost my entire social circle has slipped from solid middle class to lower middle class. (Mind you, most of my social circle is in Australia these days, not the US, but it really does look like a lot of my Americans friends and family are struggling with housing costs as well.)
It would be pretty weird for me to report that the economy is great just because my costs are abnormally low.
Is “the economy” being used as a standard for expected future prosperity? Perhaps this statement means “I’m doing great this year, but I don’t expect the good times to last.” Or it’s as you said, “I’m doing fine but my neighbors are not.”
I think it's complicated. Inflation was accompanied by wage increases, especially for previous minimum wage earners (their wages pretty much doubled). Many people saved money during COVID and have been able to spend it at a higher than normal rate afterwards. We hear news of layoffs, but unemployment rates are still extremely low.
I'm not saying that the situation out there is good by any means. Many people out there are indeed suffering. But it's perhaps not as bad for the general masses as the news would have us believe.
For some people. Many people in the middle tier of income haven't received much if any increase in income. For me, I've received 9% in raises since 2020, and in the same time my rent has gone up 45%, grocery bill up 40%, utilities up 25%, car insurance up 50%, and property taxes up 25%.
My 65k base salary is going significantly less far than it was 4 years ago, there's no ifs, ands, or buts about it.
Yep, I specifically called out the disparity there. Minimum wage earners got the highest percentage increase. Middle class did not get equivalent increases.
I don't see you calling out the distinction in your original comment I'm sorry.
How do you pay property taxes and rent?
My car, somehow even though the assessed value went down, the taxes went up
Assessments and taxes are so weird and interesting aren't they?
Property assessment values in some areas are pretty static, if all they do is type and quality of construction, age of house, lot size, municipality amenities and other things that don't change (much). Assessments in BC can be pretty wild, because they're based on availability of recent market data:
My guess is that the market value in (dollars) in your area overall went down, but taxes (dollar-per-sqft) increased quite a bit to pay for municipal development /services that needed money regardless of market performance?
"Land is valued based on its highest and best use," per area unlimited by its actual size, which is why a parking space will cost more than my rural house even though one can't build on just one spot. Sometimes even best use doesnt work because Agricultural Land Reserve farm land in Richmond can be sold for well over $300k an acre, with a $300k assessment, that you can't even build a barn or shed on 🤷♀️
It's its own flavour of crazy.
Ah, I didn't consider cars. I associated property tax with real estate, so I was confused why your landlord would be charging you property tax on top of your rent.
Since 2016, once you factor in all my annual cost of living raises (3% max), the cuts to my health insurance and other benefits, inflation, and the cut during covid to avoid layoffs....
I make 10% less than I did in 2016. The only reason I was doing any better since then was tightening the belt, and external factors. Like not paying wage tax while remoting (3%), and the COVID aid.
It turns out when your wage increases 3% a year, but your healthcare costs increase 10%, it doesn't keep pace once inflation rises above 2%.
Damn that’s crazy. I hope you get a raise one way or another.
At work so I can't watch the video, but I suspect that Americans think the economy is bad because the media pumps the narrative without nuance 24/7. The economy is certainly better currently than it was, but the benefits of that prosperity don't meaningfully impact a majority of citizens. I'm sure there's an upper echelon of society that is having a good time, but the majority is certainly not. The system is rigged to filter benefits of prosperity to the top and under capitalism, this is "as designed". People can argue against that concept trying to spin it as "croney corporatism" or some other economic system that is aesthetically "not capitalism" but at the end of the day, capitalists or people with capital/private property will always be butt fucking the rest of us under the current economic organization, capitalism and on a more global scale, imperialism.