Why Americans are bummed out about the economy
Why Americans are bummed out about the economy
Because grocery bills and rent prices are unlikely to return to where they were just a few short years ago, the psychological scars from the war on inflation will linger, write Dana M. Peterson and Erik Lundh.
US consumers remain unimpressed with this progress, however, because they remember what they were paying for things pre-pandemic. Used car prices are 34% higher, food prices are 26% higher and rent prices are 22% higher than in January 2020, according to our calculations using PCE data.
While these are some of the more extreme examples of recent price increases, the average basket of goods and services that most Americans buy in any given month is 17% more expensive than four years ago.
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Alternate headline: “Why Humans Dislike Being Poor”
Americans are right now at some of the best economic times, so that's surprising
I'm so tired of repeatedly posting this but you fucknuggets just refuse to learn.
America has a ridiculous growth in the number of millionaires these last 10 years.
And nearly ALL of them are children from wealthy families.
They skew the median income bracket making it look like most Americans are making 65k+ a year.
This isn't the case, and 60% of Americans live paycheck to paycheck.
And people like you are actively trying to hide this.
Look, if the median is 70K it means 50% of households are making this much
That's what median means
Median as you're using it doesn't tell us much beyond a very general bit of information.
For example both of these data sets have 5 as a median. But in the second one you would not say 5 is representative of half the country.
[1,2,3,4,5,6,7,8,9]
[1,1,1,1,5,5,6,8,9]
Yes, but the average is HIGHER than the median so it's more like [1, 2, 3, 4, 5, 10, 12, 15, 22]
Well yeah, those weren't meant to be representative. That would look something like,
[1,1,2,2,5,6,7,15,22]
It's more like [2x10, 3x20, 4x20, 5x10, 6x10, 7x5, 8x5, 9x5, 10x5, 12x5, 13, 15, 20, 40, 200]
The whole point of using median is that 0 is fixed, but the upper bound is not, so median is way better than average.
So sure in your example it is not a good measurement, but your example does not represent the real world distribution.
The real word distribution of wealth is actually kind of insane.
And that's forcing people into Quintiles. When you look at the income distribution before the median it becomes very clear it's not a straight slope or at least not in the good way. This was ten years ago. As you can see the median does not represent the mode. Which is what people think of when you say median.
I've never heard of anyone mixing up mode and median, it's always mean and median.
That's because most people don't even know what the mode is. I've met a depressing number of people who think Median is the science term for the colloquial definition of Average. When you tell them the Mode is literally the spot with the most data points they then need the actual statistics definitions of Median and Average explained.
In this case everyone argues over median and average, not even realizing the mode clearly shows an entire section of our country is hurting really bad.
70k is not enough in many states anymore.
I'm a Europoor, and 70k USD wouldn't be "comfortable" even here. Maybe in Eastern Europe, but rents and house prices are soaring there as well, so I'm not sure.
That's right, but the average in those more expensive states is also higher. But I do agree the states that don't build new housing (the states where rents grow faster) are not affordable
I think you are mistaking median and mean.
The median household income is 70K+, not the mean
There is a disconnect between the statistics and reality. I am not sure where, but I suspect inflation is not being calculated correctly. It may be that lower cost items rose at a higher rate, so even though it averages out, it's harder to reduce spending. 17% doesn't seem to match the numbers I've seen for take out and home prices for example.
At the end of the day, it doesn't matter what's on a chart it matters how many things people had to choose to not buy or do because they couldn't afford it.
Didn't they just adjust the whole inflation index again to not count a bunch of significant things? It's a joke.
Same with unemployment. It only counts "able individuals who are actively searching for a job". A lot of people aren't included in those numbers when they should be.
The inflation index is and has always been a metric for the rich.
The reason that most of the excluded things are not goods or services the wealthy use is so that those companies can profit more from the already economically burdened all while shaming those same burdened people by saying 'You can't be struggling, inflation has ONLY been 6%!
Sure for yachts and luxury cars the prices have barely changed but generic meat and fresh vegetables have literally doubled in price in 4 years while the high end offerings have gone up less than 20%.
Sure for yachts and luxury cars the prices have barely changed
I'm not sure if that's actually true, but I'd note that for certain luxury goods, weird things happen with prices. You can wind up in a situation where higher prices make a good more-desirable because it's more-exclusive, more of a status symbol.
https://en.wikipedia.org/wiki/Veblen_good
A Veblen good is a type of luxury good, named after American economist Thorstein Veblen, for which the demand increases as the price increases, in apparent contradiction of the law of demand, resulting in an upward-sloping demand curve. The higher prices of Veblen goods may make them desirable as a status symbol in the practices of conspicuous consumption and conspicuous leisure. A product may be a Veblen good because it is a positional good, something few others can own.
For luxuries like that, the price can be largely decoupled from the cost of production, and can instead be linked to ability to pay. Like, if the reason you're buying something is to show off that you can afford to pay the price, the cost of manufacture may not be what sets the price, even in a competitive market.
That being said, that's not all that common. It probably doesn't apply to whole classes of goods, but rather specific things like a brand (since if there's interest in the thing other than as a status symbol, competitors can produce a cheaper thing and find buyers). And the reason that it can be decoupled from the cost of production is only because the price is well above the cost of production.
CPI does not include yachts in its calculation
Food goes up 20%, Consumer electronics go down 20% and they'll call it zero inflation. Not an exact example but an illustration of why things dont feel right. The things you have to buy most often are rising faster than the luxuries. Education, Healthcare, Housing it's a similar story there.
Correction: Food goes up 20%, housing prices go up 80%, Consumer electronics go down 20% and they'll call it negative inflation. The things most important to people and their biological survival are intentionally not part of the CPI so, they get ignored in most inflation reports.
EDIT: To be clear, the CPI tracks "in-place" or active rent paid by tenants plus utilities (and subsidies, where applicable). It does not track current asking prices or purchase price as it considers purchasing a home to be an investment. This means that it is a very poor way of measuring the housing situation.
Rent/housing is like a third of CPI, it's already being taken into account. Remember, CPI already talked into account these numbers, including higher food costs. But it also takes into account that energy costs did not increase as quickly. Even if some things went up 30%, if other things go up 10% the average can't possibly be 30%
Also consumer spending is very strong in America right now, so even if some people can't afford things, other people are way outspending them
The CPI only takes rental prices into account, not home purchases or rental values. Additionally, it only captures active rentals, not asking prices, meaning that it has significant lag and is a poor indicator for trends in rental prices.
This is true, but the average person is paying a mortgage or rent, not moving every single month so the current rental price is the most relevant to people's expenses