Current Events > Some Americans live in a parallel economy where everything is terrible

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Mandelaconomy

https://finance.yahoo.com/news/some-americans-live-in-a-parallel-economy-where-everything-is-terrible-162707378.html

Is the economy booming or busting?
Depends on whom you ask.
The official data is buoyant economic growth is solid, the job market is strong, and stocks keep hitting record highs.
Yet many Americans think the economy stinks.
The latest gloomy indicator is a Guardian-Harris survey in which 55% of respondents said they think the economy is shrinking and 56% think were in the midst of a recession.
Economic output, adjusted for inflation, grew by a solid 3% during the most recent 12-month period. The unemployment rate is 3.9%. And the US economy created over 3.5 million jobs in 2023.

You basically cant have a recession when the economy is growing and employers keep hiring at this rate. But this Harris poll isnt a one-off.
A leading measure of small business sentiment is near recessionary levels. So are some consumer confidence surveys. President Bidens approval rating is in the tank, too, indicating many Americans associate the poor economy they think we have with the job Biden has done as president.
The Guardian-Harris survey also found that 49% of respondents think the S&P 500 index is down for the year. In reality, stocks have been ripping: The S&P 500 is up 13% this year on top of a 24% gain last year.
Something seems off with the Guardian-Harris finding that half of Americans think the stock market is in decline. In a different survey, Gallup found that 62% of Americans own stocks, mostly through retirement and investing accounts. If that's true, wouldn't most or all of those people know their portfolios are gaining value?
The Guardian-Harris poll didn't specify how many respondents own stocks, but these two surveys seem to conflict. People know how much money they have, and stock market investors are either underrepresented in the Harris poll or overrepresented in Gallup's.

Statistical anomalies probably explain part of the reason why polls show people to be remarkably dour about an economy doing pretty well, but it would be a mistake to think this is just a measurement problem. Or worse, to think many people are just too dumb to know how good they have it.
This is perhaps Biden's top problem as he seeks a second term in office: convincing Americans that the economy is working for them without talking down or sounding dismissive.

Inflation is obviously one of the main economic gremlins of the last three years.
Yahoo Finances Janna Herron recently explained how consumers consider the optimal level of inflation to be basically zero, considerably lower than the Federal Reserves 2% target.
If zero inflation is ideal for most people, inflation peaking at 9% in June 2022 served as a traumatic shock. Even the current rate of 3.4%, fairly close to the Feds target, is way too high if your hope is prices never go up.
There's plenty of other evidence showing Americans continue to feel stung by prices that have gone up and stayed up, even if the annual rate of change is now more benign.
Another challenge for Biden is that many Americans are probably comparing today's US economy to the economy in 2019. On that basis, yes, inflation is worse now, gas prices are higher, and there are unnerving wars in Europe and the Middle East.

Compared to the rest of the world, however, US economy looks fantastic. No economy emerged from the COVID pandemic stronger. Inflation, caused mainly by COVID-related supply chain snafus, emerged mostly everywhere, and it has fallen more quickly in the United States than in most other places. Telling voters it could be worse, however, is rarely a winning message.
Its also irrational to compare the Biden economy to that of his predecessor, Donald Trump, whos back this year making another run for the White House.
Theres a good chance the economy would have looked more or less the same from 2017 to 2021 if Biden were president instead of Trump. Same for the last three years, if Trump were in office instead of Biden.
The factors that have changed the US economy in the last few years are more influential than anything Trump or Biden has done.
Trump enjoyed a benign economic environment. And, importantly, American shale energy firms were competing for market share with Middle East oil drillers, which led to overproduction and low gas prices for consumers. On the other hand, Trump got slammed with the COVID outbreak in 2020 and the madness of lockdowns and business closures.
Biden took office as COVID vaccines were rolling out, allowing a gradual return to normal. But COVID disruptions generated the inflation thats been the bane of Bidens presidency.
Russias 2022 invasion of Ukraine sent energy prices soaring just as the OPEC+ nations were cutting output and American drillers were focusing on profitability over market share. All of that pushed energy prices higher, contributing to a big chunk of the soaring inflation in 2022 that still hangs over Biden's economic record.
Something else that may be bumming people out is the end of COVID stimulus.
In annual surveys conducted by the Federal Reserve, Americans reported their best financial health in 2021 when the economy was still making up lost ground from the pandemic-related downturn. The economy got progressively stronger in 2022 and 2023, but Americans said their financial situation deteriorated in each of those years as prices rose.

The peak thrust of $6 trillion worth of COVID-related stimulus for consumers and businesses flowed through in 2021. As those programs ended, the excess savings that built up while people were stuck at home receiving stimulus checks dried up and were basically gone by the end of 2023.
So, if Americans are comparing the economy now to one from three years ago that featured the government raining down helicopter money, then yeah, its a little tougher.
Now, do endless surveys asking people their opinions on the economy even matter? If Biden wins reelection in November, maybe not.
But if voters bounce Biden, it will be clear theyve been signaling their displeasure for a good long while. Even if the data doesn't totally back it up.

Prices have skyrocketed and companies are richer than ever, but the income of the average person is not reflecting that, unfortunately... once again, the answer comes back to corporate greed.

The stock market isn't an indicator of anything except the rich getting richer

the stock market is about as related to economy as sports gambling.

GrandConjuraton posted...

Prices have skyrocketed and companies are richer than ever, but the income of the average person is not reflecting that, unfortunately... once again, the answer comes back to corporate greed.

This is false.

The incomes of people, especially the lowest earners have increased more than inflation.

https://x.com/EconChrisClarke/status/1793800612079108450?t=b4uWYVKnIqhIWeK5luJhfg&s=19

When Fox News tells tens of millions of Americans daily that the country sucks, what do you think will happen?

All those things they claim colleges and high schools teach our kids is literal projection. Fox is teaching Americans to hate America.

The stock market might be doing great but the average person isn't

It's a not "parallel" or "Mandela." The economy is complex and affects different people in different ways

Kain_Highwind posted...

The stock market might be doing great but the average person isn't

They're doing better than they were 4 years ago.

I mean food and other goods are just objectively expensive for most people right now

Of course most people care about how the economy affects them and people they know directly.

Telling people who are struggling that everything is great and that theyre just wrong is still not the message that needs to be sent

BlueKat posted...

It's a not "parallel" or "Mandela." The economy is complex and affects different people in different ways

Berenstain Banks

ClayGuida posted...

They're doing better than they were 4 years ago.

People had stimulus and extended unemployment checks coming in every week four years ago

'rural rage' is a very real phenomenon. Uneducated people in nowhereville usa, only see the prices at the supermarket and blame Biden for it.

No, yahoo. Nobody lives in an alternate reality.

Can journalism please get better?

I'm sure a lot of it is the cost of everything being so much higher. Like even if your income is going up that doesn't mean much if your expenses are going up just as fast if not faster.

ssb_yunglink2 posted...

I mean food and other goods are just objectively expensive for most people right now

Of course most people care about how the economy affects them and people they know directly.

Telling people who are struggling that everything is great and that theyre just wrong is still not the message that needs to be sent

How about this:

In the past 4 years we've had high inflation that has thankfully significantly reduced. During this time, we've had huge job growth and 50 year record low unemployment rates. In fact, there's been such an abundance of jobs and strong labor demand that the wage increases of the lowest earners have actually beaten inflation! That means more money in the pockets of our most needy. And we see this based on higher spending in traveling, dining out, etc (all adjusted for inflation.).

Everything is not great and it can be better, especially in regards to housing prices as that is one of the most salient costs people experience on a regular basis. For home owners, it's been great. They've locked in housing costs with low mortgage, and their home value has soared. For others are renting, it hasn't been that great. Rents increased and home ownership is slipping further away for many. But we can fix this! We should build more homes in our towns and cities in an effort to drive down costs of rents and home ownership, but this is a task that each individual city and state has to undertake as Zoning and building laws are a very local thing.

Kain_Highwind posted...

People had stimulus and extended unemployment checks coming in every week four years ago

Stim didn't arrive until June or July. Not May.

And not everyone got unemployment checks.

I'm no expert but still not sure about some inflation being a good thing and some deflation being the devil.

UnsteadyOwl posted...

I'm sure a lot of it is the cost of everything being so much higher. Like even if your income is going up that doesn't mean much if your expenses are going up just as fast if not faster.

Fixed incomes are factor too. Rising costs for goods that might seem trivial, sting to folks living on retirement or disability.

emblem-man posted...

How about this:

In the past 4 years we've had high inflation that has thankfully significantly reduced. During this time, we've had huge job growth and 50 year record low unemployment rates. In fact, there's been such an abundance of jobs and strong labor demand that the wage increases of the lowest earners have actually beaten inflation! That means more money in the pockets of our most needy. And we see this based on higher spending in traveling, dining out, etc (all adjusted for inflation.).

Everything is not great and it can be better, especially in regards to housing prices as that is one of the most salient costs people experience on a regular basis. For home owners, it's been great. They've locked in housing costs with low mortgage, and their home value has soared. For others are renting, it hasn't been that great. Rents increased and home ownership is slipping further away for many. But we can fix this! We should build more homes in our towns and cities in an effort to drive down costs of rents and home ownership, but this is a task that each individual city and state has to undertake as Zoning and building laws are a very local thing.

Yes, id say this is a much more reasonable message. This addresses the fact that the country as a whole isnt falling off a cliff like some claim, while also admitting that things are not perfect for everyone and there is still a lot of work to be done.

Rai_Jin posted...

I'm no expert but still not sure about some inflation being a good thing and some deflation being the devil.

What do you mean?

ssb_yunglink2 posted...

Yes, id say this is a much more reasonable message. This addresses the fact that the country as a whole isnt falling off a cliff like some claim, while also admitting that things are not perfect for everyone and there is still a lot of work to be done.

The housing cost is one that's honestly just difficult to fix at a national level. I'd love for Biden to use his platform to talk about YIMBY stuff and push cities to increase supply to drive prices lower, but honestly it might not be a good thing for Biden to use his soap box to talk about that stuff because the large voting base consists of home owners who agree with NIMBY policies and don't want their house to have any risk of decreasing in value.

Biden talking about most YIMBY policies would be instantly labeled as a war against suburban home owners.

I feel both. Shit is really expensive now, but my investments and income are increasing too >_> idk

mistymermaid posted...

'rural rage' is a very real phenomenon. Uneducated people in nowhereville usa, only see the prices at the supermarket and blame Biden for it.

Same people who think that "lowering inflation" will make prices go down

emblem-man posted...

What do you mean?

we had so much inflation but if there would be 2% deflation people supposedly stop buying and hoard money or something?

emblem-man posted...

This is false.

The incomes of people, especially the lowest earners have increased more than inflation.

https://x.com/EconChrisClarke/status/1793800612079108450?t=b4uWYVKnIqhIWeK5luJhfg&s=19

That's if you believe we've only had about 20% cumulative inflation since covid (and let's just disregard shrinkflation and shitflation). The lowest earners are going to have the highest growth because going from $10/hr to $12/hr is an easy 20% increase, but it's still an unlivable wage in this high inflation environment.

Rai_Jin posted...

we had so much inflation but if there would be 2% deflation people supposedly stop buying and hoard money or something?

Just to be sure. Do you mean deflation or disinflation?

Deflation tends to lead to other bad things like high unemployment, lower wage growth, etc.

I mean many do but also many don't but think they do.

1337toothbrush posted...

That's if you believe we've only had about 20% cumulative inflation since covid (and let's just disregard shrinkflation and shitflation). The lowest earners are going to have the highest growth because going from $10/hr to $12/hr is an easy 20% increase, but it's still an unlivable wage in this high inflation environment.

If you want to define inflation as something different, I guess you're fine to do that.

It would have been an unlivable wage before as well.

emblem-man posted...

Just to be sure. Do you mean deflation or disinflation?

Deflation tends to lead to other bad things like high unemployment, lower wage growth, etc.

deflation is just the opposite of inflation no?

Rai_Jin posted...

deflation is just the opposite of inflation no?

you dont want your economy to deflate. Inflation can be bad, but deflation is almost always bad. People often get laid off in large numbers when the economy begins to deflate

Rai_Jin posted...

deflation is just the opposite of inflation no?

Not exactly.

Disinflation just means a decrease in inflation. As in, it's disinflation if inflation goes from 9% to 2%. In disinflation, inflation is still a positive number.

Deflation is when inflation goes below 0.

ssb_yunglink2 posted...

People often get laid off in large numbers when the economy begins to deflate

but when was the last time it has happened, about 100 years ago?

Rai_Jin posted...

but when was the last time it has happened, about 100 years ago?

Someone correct me if I'm wrong but wasn't the financial crisis of ~08 a deflationary period.

emblem-man posted...

Someone correct me if I'm wrong but wasn't the financial crisis of ~08 a deflationary period.

yes thats correct. It absolutely has not been 100 years since the u.s. has experienced deflation

Rai_Jin posted...

but when was the last time it has happened, about 100 years ago?

try 2008-2009 for a good example of what deflation does to the country

it doesn't look to me like deflation was the actual cause of the problems there.

Rai_Jin posted...

it doesn't look to me like deflation was the actual cause of the problems there.

So i give you an example of recent deflation and how awful the economy was during it, and this doesnt dissuade you at all from the idea that deflation is bad

Okay.

there was deflation and the economy was awful but I would have to find something that explains how they are related. On first glance it looks like the trouble of the companies who cut jobs was because it was harder to get new credits after the bad house credits.

also while not the most trustworthy, investopedia holds back a bit

https://gamefaqs.gamespot.com/a/forum/8/8ddf6fce.png

emblem-man posted...

If you want to define inflation as something different, I guess you're fine to do that.

It would have been an unlivable wage before as well.

The fed themselves change the definition of inflation by shuffling around items in the "basket of goods" they use to calculate inflation and all the selectivity and exclusions they apply to massage the numbers.

1337toothbrush posted...

The fed themselves change the definition of inflation by shuffling around items in the "basket of goods" they use to calculate inflation and all the selectivity and exclusions they apply to massage the numbers.

Yeah, but it's not as if it's some secret what they include and how they weight each item.
I guess I'm mostly pushing back on the allusion that it's some conspiracy or something

emblem-man posted...

Yeah, but it's not as if it's some secret what they include and how they weight each item.
I guess I'm mostly pushing back on the allusion that it's some conspiracy or something

It's not a conspiracy, it's simply making the numbers look better than they really are.

This isnt complicated; COLA has been exceeding annual raises.

Somewhat interesting detail; Japan doesnt have inflation like the US. Cost of living has been within a +/- swing for decades.

It's really easy to understand what's happening, and I'm not sure why news outlets don't "get it."

Wages go up, but visually, that's usually pretty "small." I'm going to use just random numbers I pulled out my ass here so don't get too technical here. Say you make $10 an hour, and over the past 4 years, you got a couple dollar an hour raise overall so you make $12 now. In the same time, you've seen Bread go from $2 a loaf to $4 a loaf.

That fuckin' sucks. Most people tend to think "I make a couple bucks more for nothing? My grocery bill has tripled! My bills go up! This fucking sucks!" All this is happening right after a pandemic where people got price gouged on literally fucking everything, so they're already more perceptive of prices than they would be normally.

It doesn't matter if they're doing better or worse, really. It feels awful. Gotta figure your average persons involvement with the stock market is "I have an account with some money and a manager and I don't care as long as I can retire" if they have one at all.

Then, they look in to inflation and it's really easy to find "what exactly is going on" with inflation, and by that I mean read whatever narrative that verifies what you're feeling.

End result? The economy sucks because I feel like it does.

And if Trump wins theyll say the economy is great, like overnight. Liberals do that to an extent as well, but definitely not as much.

And it will just take time until people get comfortable with the new prices.

R_Jackal posted...

Say you make $10 an hour, and over the past 4 years, you got a couple dollar an hour raise overall so you make $12 now. In the same time, you've seen Bread go from $2 a loaf to $4 a loaf.

R_Jackal posted...

End result? The economy sucks because I feel like it does.

Or it sucks because they make 20% more but food is 100% more expensive. This "vibecession" narrative is absolute bullshit, just like the "no one wants to work anymore" narrative being spun a while back.

emblem-man posted...

And it will just take time until people get comfortable with the new prices.

Are our wages going to magically increase to reflect the increased prices?

Most of your average americans aren't going to be nuanced or do a deep dive on this. They are going to look at a few factors that they deal with all the time. They will look at housing, vehicles, food, and gas. Pretty much all areas people feel are pretty bad.

People look at their checks and they know for damn sure whatever raise they have had hasn't been able to offset those things.