Another explanation is that for the news industry in particular, things are very bad. The layoffs are many, and they are not being made up elsewhere. No bottom is seen.
This has been my theory. If you're a midcareer white collar professional, most of the wage increase missed you and/or your career is anchored in the stagnant wages of the past, and even if you're doing OK, all your stuff is more expensive. If you missed out on buying a home, you're really feeling it. The economy is great for the bottom 40% but the media doesn't know anyone who is experiencing that.
I am a midcareer white collar professional. Unless I'm a senior.
Whoa, that *doesn't* fit my priors in that it's less unfair and K-shaped than I glumly expect everything to get.
Yay!
Is this good news in that the economy is good for the people who actually need it? Or bad news in that managers count as middle class for the purpose of this stuff and therefore we have yet another example of the middle class being hollowed out and the rich getting richer? Someone tell me how to feel about it.
Wages going dramatically up at the bottom end of the scale seems like an important and surprising change for the better.
I'm not sure what the definition of "management" is for this, but I agree this is probably helping the lower end of the wage scale.
One depressing interpretation is that the minimum wage has dropped so low that other, free market mechanism for rising wages - "I can't accept this job because I can't live off this wage" - have been activated for the first time in a while.
I think it's more that they can't fill the job without offering better wages. Which is a problem if you're a manager or owner who is shitty at using labor efficiently.
Yes I saw 1 given as an example- 20 reporters laid off from the DC WSJ bureau is a national story, 20 jobs being added when a new fast-casual restaurant opens in suburban LA is a random Tuesday.
I think they're called 'Ruby Tuesday', but your name is better.
10: That's what I'm saying. This is the first time in a long time that NoBoDy WaNtS tO wOrK aNyMoRe* resulted in people actually having to pay higher wages, because for a long time there has been a (meager) floor before things bottomed out.
*jfc it's annoying to type like that
I'm not sure how much of this is policy and how much is because covid killed people. I assume both played a noticeable role.
Big Fiscal needs to be remembered as a huge success, and the culmination of everything we were yelling at Obama at re: the recession and stimulus. They did a huge stimulus this time, and it was partly because the institutional Democratic Party, under pressure, changed its thinking.
Dot-com recession: took about 48 months to get back to where we started in jobs.
Great Recession: over 72 months.
Covid Recession: 28 months, now at 3% pre-pandemic levels & still climbing.
Also, even household net worth is getting better bottom-up. The Fed's Survey of Consumer Finances surveyed this in 2019 and 2022 and between those years , the 12.5th percentile household (middle of the bottom quartile) went from $400 net worth to $3,500. The 37.5th, from $67k to $93k. The 62.5th, from $260k to $357k. The 95th (middle of the top 10%), from $3m to $3.8m.
So that's an 866% increase for the lowest group, then 40%, 37%, and at the top, 26%.
(At the lowest end it was mostly by paying down debt, but gross assets increased some too. There's still a huge disparity between renters and owners.)
https://en.wikipedia.org/wiki/The_Elephant_Curve
Same thing, just ... band-passing through a different part of the US economy?
How much of paying down debt is Biden's student loan forgiveness?
Wow that's ugly. Someone tell me if it's paywalled or not.
I have no idea if it is convincing or not.
Fortunately, you can all reach your own conclusions.
Separately, IRA investments are going overwhelmingly into red districts. IDK how that interacts with the Biden-vibes.
I'm not doom and gloom, but I'm also not going to call the economy good until the housing crisis gets resolved. I'm hearing a lot of stories about eviction these days and the city is having to budget waaaaay more money than before on paying peoples rent or putting them up in hotels.
We're opening up the floodgates as far as allowing new housing through zoning, but mortgage rates are high and there aren't all very many builders around to do the work.
25: Fortunately, you can all reach jump to your own conclusions.
Fixt.
I'm not doom and gloom, but I'm also not going to call the economy good until the housing crisis gets resolved.
What would that look like? What's the headline from the Fed or CEA or whoever that would allow you to say "brilliant, looks like the housing crisis is over now"?
This is not a "gotcha" by the way, it's a sincere question, because different people mean different things when they talk about a housing crisis. A housing crisis could be defined as "more than X number of people in the US are literally unhoused", but someone else might define it, just as honestly, as "in these cities the median rental property costs more than X% of the median wage" or "nationally, our population has gone up X% in the last ten years, and the number of housing units hasn't risen anywhere close to matching that". Any or all of those could be true without any of the others being true.
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Joy: discovering a great hardware store.
Sorrow: discovering the owner is approximately 113 years old.
|>
"More and more people who might have taken out loans at a lucky time will be exposed to higher rates," he said. He said there was a wide disparity in the share of households expected to face more expensive financing, varying from 10 per cent in Germany and France, to 60-70 per cent in Italy and Spain.I imagine there are parallels in the US?
33: Reminds me of Coyne's Hardware back home.
No. He's long gone and his store closed in the 80s.
If he had died in the 1940s he maybe could have reincarnated as this lady.
Some metrics I'd like to see:
- Reduction in homelessness from its record highs in 2023
- Reduction in the percentage of households paying > 30% of income as rent
- Housing inventories return to pre-pandemic levels
- Median sale prices return to pre-pandemic trends
- Increase in homeownership rate for people under 35
39 Those are all admirable goals. I don't think cramming the toothpaste back into the tube on prices is realistic, especially because, unlike the other items on the list, this is really goring some oxen. (Others draw blood, this one hurts a lot of people -- people whose support you need for everything else -- very substantially.)
Carp, I see a poll with Tester up by 9 points. Is that an outlier or should I be happy?
Increasingly sweaty lies the head that wears the crown.
Some of those are linked. More inventory would mean downward pressure on prices. My rule of thumb is that the crisis will be over when my students believe that they will be able to afford a house. Along the Wasatch front real estate was pretty cheap until very very recently, and so it wasn't crazy for someone to be working a job, supporting a family, and going to school while owning a small house or renting cheaply. Renting a small house now is three times my mortgage, and no one is moving out of the smallish houses, so there's nowhere to put Gen Z.
For a culture where people get married and move out young, it's now get married and live in parents' basement, and no wonder everyone is cranky.
Housing inventories return to pre-pandemic levels
What does this mean? You must mean housing capacity or something?
39: I agree with Charley that four of those seem like good objectives but I disagree on which four.
One has already been achieved, three more are (on current trends) going to happen soon, one is nowhere near happening and the trends are going the wrong way.
- Reduction in homelessness from its record highs in 2023
Unquestionably good. Looking at it, there was a steady trend downwards for a long time until 2016, so it seems like a reduction back to the levels of, say, 2022 should be easily achievable. What strikes me is that it's a very geographically localised problem.
- Reduction in the percentage of households paying > 30% of income as rent
At present 30% is the average rent-to-income so this is a big ask, but also definitely worth achieving!
- Housing inventories return to pre-pandemic levels
They're heading in the right direction https://fred.stlouisfed.org/series/ACTLISCOUUS but... why is this particularly important?
- Median sale prices return to pre-pandemic trends
There's also room for hope here - eyeballing it, the pre-pandemic trend looks like about $450k and the current price is $480k https://tradingeconomics.com/united-states/average-house-prices
- Increase in homeownership rate for people under 35
This has been happening for the last fifteen years. It's higher now than it was before the pandemic https://www.census.gov/housing/hvs/files/currenthvspress.pdf
44: The intermediary solution is probably delayed marriage aided by soaking.
Regarding home ownership among younger adults, it is very difficult to know how to bridge the gap between the reality that more of them own houses now than at almost any time in the last 15 years, and the perception that it was once commonplace for younger adults to own a house and now it's virtually impossible.
In fact it's about as easy for someone under 35 to own a house now as it was in most of the 1980s and 1990s, and considerably easier than it was in the 2010s.
https://www.census.gov/housing/hvs/data/charts/fig07.pdf
It seems to be largely the fault of taking the NY Times seriously:
https://cepr.net/nyt-tells-us-that-as-homeownership-rate-among-the-young-rises-it-is-becoming-an-impossible-dream
Because it certainly isn't based on what's actually happening:
https://www.census.gov/library/stories/2023/07/younger-householders-drove-rebound-in-homeownership.html
47: I usually suggest the novel solution of living in an apartment with roommates and finishing one's degree first.
They're heading in the right direction https://fred.stlouisfed.org/series/ACTLISCOUUS but... why is this particularly important?
In my state, housing inventories (the amount of houses for sale at any one time) are particularly bad and contribute to a lot of the other problems we are having. People can't find houses to buy where they want to live, and anything good gets snapped up immediately after a bidding war.
48 is interesting. Definitely not my perception based on news reports, but I guess NYT pushing a dubious narrative isn't exactly surprising to me.
48: I think the vibes are from the utterly rapid rise in some parts of the country. My house, a "starter home" has more than tripled in value since 2011, and most of that value came after 2020. We're fine, but also not moving to a bigger house and freeing this one up. Why?
If you were making the median salary in my town, five years ago you could have easily afforded the median house. If you bought in a gentrifying area, even better. Now, you won't qualify. And when people with better salaries suddenly decided to move to remote work and go skiing, now you won't compete unless you start making California tech money or have a cash offer. We have the income to have a bigger house but I can't compete with stock options or generational wealth so we're staying put.
If you're a youngster, your salary will probably catch up. If you're 30-something in a non-tech career, housing felt like it jumped out of reach overnight, just as you finally climbed out of the recession hole.
There's also room for hope here - eyeballing it, the pre-pandemic trend looks like about $450k and the current price is $480k
Again, situation much worse in my state. I had originally moved here because it was an affordable place to live. Prices are still lower than national averages, which are driven by metro areas, but people here don't have metro area salaries.
If you live at home, you probably can't ask your parents or siblings to jump for you.
48: But rents haven't been stable either. People under 35 might not have bought homes back in the day, but they weren't spending as much on rent.
52, 53: exactly. And it's not just vibes, it might actually be objectively true in your area, and the fact that your area is an unlucky outlier doesn't really provide much comfort. "It is all too easy, when the Berlin Wall is coming down, to have a large chunk of it land on your foot."
The problem isn't everywhere, but it is hardly a local problem in a few areas. The after effects of the 2008 recession left housing supply low at a time when millennials, a very large generation, are at prime settling down age.
Right. And builders like to build the bigger homes that go for $600k, not the smaller homes that are more affordable. So until they're built and people in my position move up, the younger buyers are kind of stuck.
I don't know what they are building, but $600,000 is about what I'd have to pay to move into an old house in good shape that is in my neighborhood and bigger than my current house.
The problem isn't everywhere, but it is hardly a local problem in a few areas
Under-35 home ownership rates in the US are pretty much the same now as they were during most of the 1980s and 1990s. Then there was a rise which peaked around 2005 and then a drop which bottomed out around 2015.
And these rises and falls are not huge. In the glory days of 2005, about 43% of under 35s owned a house. In the dark days of 2015, about 36% of under 35s owned a house. Now, it's just under 40%. Average-to-good.
Now I fully believe that in some parts of the country it is very, very difficult for someone under 35 to own a house. But it's not a nationwide problem, or even a problem affecting most of the country. Numerically, it can't be!
I understand the rate isn't going down. The consequences of not owning are going up with the lack of affordable rentals.
Yes, I think what it boils down to is homes are unaffordable in the places people actually want to live, so people are making big other sacrifices for homeownership - moving to a place like Texas, or to 100 miles away from their job, or paying 40% of their income to mortgage, or some or all of the above.
California's homeownership rate is now about 12% lower than the rest of the county, and we're the future. (Most other places that say they're doing better on housing are just suburbanizing their hinterlands, but they too will run out of land within a conceivable drive of the job centers, just like CA did.)
I don't understand how people live in California, economics-wise.
And yes, a good chunk of the country has not changed much (or is not even growing in population) so we're averaging together with places the situation is static. The newspapers focus on the big-metro experience.
But rents haven't been stable either. People under 35 might not have bought homes back in the day, but they weren't spending as much on rent.
I'm not even sure about that now. As a share of income housing overall hasn't moved a huge amount. In 2021-22, if I'm reading this right, the average 25-34 year old spent 18.6% of after tax income on "shelter" which covers rent or homeownership costs (mortgage, taxes, maintenance).
In 2011-12 it was 18.3%.
In 2004-52 it was 17.5%.
https://www.bls.gov/cex/tables/cross-tab/mean.htm#ref-agebyinc
I think what it boils down to is homes are unaffordable in the places people actually want to live
NY and CA, looks like it.
It doesn't help that those are also the places where the people who get to decide what news is live.
54: I can't look at a half century of prices that aren't inflation adjusted and make any sense of it. I don't think relative to income housing is 10x as expensive as it was in 1980...prices do seem to be going up fast lately.
52, 53, 57 yeah, another thing that Kevin Drum hammers on about - it is not true that it's now impossible for young people to buy houses. The problem is very localized though and if press coverage comes from well-educated young elites in NYC and CA on journalism salaries then they may paint a picture that is more doom and gloom than the median young person. I'm not trying in any way to diminish the reality Cala and others are living in areas where tech salaries and trust-funders distort local markets and lives.
Worlds colliding
https://x.com/aodespair/status/1758489119934570939?s=46&t=nbIfRG4OrIZbaPkDOwkgxQ
66: Did you divide average shelter cost by income after taxes?
NY and CA are the places dominated enough by in-demand metros that you see it happening in the state stats. But lots of metros are in this position. (Less the ones that, as I said, are still eating up their hinterland.)
A better stat to consider is not the average share of income spent, but what share of households are spending an excessive share, whether on rent or mortgage. Calling that threshold 30% of income:
2010: 50.3%
2017: 49.5%
2022: 51.9%
NY and CA, looks like it.
Western Washington is pretty crazy as well.
72: That's not much of an increase either.
All well and good to have discussions of the different people's actual lived experience of the economy, but I think it should absolutely be removed from any context of how people answer poll questions on the same. Issue polling is fucked, particularly any in which the respondent perceives a partisan advantage* in their answer. Ds do this some, Rs now do it massively.
For instance nearly every R respondent in any recent polls say economy is bad. Or with a smaller significant (but smaller) partisan divide just over 50% in August said unemployment is near a 50-year high. Trust me that most are the same people who are pissed the service is worse at their favorite restaurant because "young people don't want to work anymore."
So discuss away, but don't pretend the actual real issues are the most significant factor (or certainly not if you are comparing to say 2017 to 2020).
*See also concern's about Biden's vs. Trumps age.
Bad faith fucks the discourse. Full stop.
See also concerns about Fani Willis. A real thing there, but my god, if you wanted to see a high-tech lynching look at the Fulton county follies underway right now. I was especially struck by her dad's testimony, lawyers nitpicking with her father as to when exactly she had to leave her home due to continuing threats and abuse. Some of the lawyers well ensconced in the movement that is egging on that exact behavior (and certainly their clients are).
I'm a 50-ish year old, and I can't own in a house in the place I live, and I'm paid a fuckload more than the average wage. Most of my friends who do own very nice houses and will retire with a million pound asset in 15 years don't earn more than me. They just bought their house before 2009 or thereabouts, so they had no substantial deposit requirements and very little scrutiny of their ability to pay. A friend of mine who owns a very nice four bedroom terrace was shocked to learn that my rent is more than his mortgage and his place is double the size of mine. I'd guess he earns about the same as me, but for years his wife didn't work.
The one couple I know my age who have recently bought a house had to beg their parents to give them their "inheritance" now (and they are both the same age as me) in order to put together enough of a deposit that they could buy the place, and their mortgage is such a high percentage of their income that they live quite precariously. These are professionally employed people who both earn multiples of the national average wage with relatively frugal lifestyles.
Yeah. I'm very aware that in a bad year our disposable income would not exist if we didn't own a house bought 20 years ago.
77: I'm also very aware that the difference between my current situation of owning a nice house and the alternative where I am paying through the nose to rent somewhere crap is pretty much all luck, in the rather gloomy form of the timely demise of a moderately well off grandparent, plus deciding to buy exactly when I did (during a temporary GFC induced downturn) and not two years later.
The housing crisis has various aspects but the basic issue is that decades of terrible land-use policy are finally running up against a level of increased housing demand that can't be met in the short-term. This has been building in high-demand cities for a long time but now it's spilling out into lots of other places and causing the same kind of crisis, because those places also have the same terrible land-use policies. It's fixable but only in the long term and it requires a lot of political will that local office-holders aren't often accustomed to having to exercise.
I'm still waiting for the right moment to ask my city council rep to propose bringing back the land value tax.
I find all the stats around housing really confusing and feel like I'm missing some key point that explains all the contradictions. Like this graph seems to say average prices have nearly doubled in the past decade (which is also true in my neighborhood), so how is that not affecting homeownership rates?
https://fred.stlouisfed.org/series/CSUSHPINSA
One possible confounding factor here could be inheritance? Like maybe lots of people can afford housing, but only because they're getting inheritances?
There's also just a long lag. Recent price trends only affect a very small percentage of current homeowners.
And since so many mortgages are fixed-rate and last for 30 years, whatever the price happens to be at closing gets locked in for a long time.
Right, 85 is true for me, my housing costs are great. But I do kinda feel like it means I can't move.
Yeah, I could sell my house at a tidy profit but then I'd have to spend it all on another place.
You could just get a yurt. There's a company in Vermont that does it and will assemble on site in adjacent states.
I will say that there is a staggering amount of housing developments and apartment complexes that are being built along my commute to work, or have recently opened up.
Pittsburgh has turned its former warehouse and light industrial area into so many condos and apartments. But they all very expensive.
Anecdotally, or maybe there's stats on this, there's a not insignificant number* of people about 45 or younger** who own homes in expensive metros who inherited them and if they sold would almost certainly move away entirely because of the expense of new homes, even factoring in the windfall of the new selling price.
More generally, pointing to high priced areas as a local problem misses the segment of the population living in more affordable areas who got priced out of expensive ones after living there for years. They may own homes while simultaneously feeling that homeownership has gotten too expensive.
*Enough to shape perception even while being a small percentage? Maybe?
**I don't really know where to put a cut off. I'm thinking of people around my age I knew who owned Bay Area homes about a decade ago.
78: If I'd waited till I was tenured to buy a house, we'd be paying three times what we are. If, by contrast, we'd moved into a big house in 2018 (we decided to give it a few more years bc we liked the school, which closed in 2021), we'd have a bigger house with a smaller mortgage than I would currently pay to buy my own place now. I think it's not that housing is expensive -- it's still a mcol market -- but the speed of the change is astonishing to live through.
I could have bought in Lawrenceville in 2003. Still kicking myself over that one. But at least I'm on the bus route to Oakland.
People were like "but that's where the heroin addictions are." They didn't add that the heroin addicts were apparently real estate geniuses.
Maybe they explains how they can afford to keep buying heroin.
Some years ago when I was employed at a rich university, I heard that some of the wealthiest parents would buy their kids residential property to live in during college* then sell it after graduation and end up making good money on the deal. I don't know if that fully offset the cost of attendance in tuition/fees/books. Sounded nice to be that rich, though.
*Maybe all four years? Or maybe only after however many years the university wanted students to live together in official undergrad residences, if that was one of those universities that wanted everyone to start in the dorms.
Parents did that at Nebraska when I was there. But I rented a house with a bunch of guys for $108/month each.
97.1: We bought our house from someone who did that. They live in the richest neighborhood in town in a house with a tennis court. When she found out at closing that we were taking the homestead exemption for property tax and not buying it as an investment property she whispered to her realtor "wait, they're going to LIVE in that house?"
More common than I thought, I guess.
When I got my job at that place, someone who may not have known I was in a two-year term-limited position, asked me if I had bought a home or was renting, and my initial reaction was to wonder if I'd misheard the question.
99: The best way to deal with people like that, if you ever see their house, is to say, "Oh, you mean lawn tennis".
26: I just realized I was confused. In spite of the clear context, I couldn't get past "IRA=Individual Retirement Accounts." Sorry.
Our neighbors did that - bought the house next door for their kids to live in during college. Then they ended up renting it out, and now they're using it as a vacation home.
"Like this graph seems to say average prices have nearly doubled in the past decade (which is also true in my neighborhood), so how is that not affecting homeownership rates?"
Part of the answer might be "what's happened to nominal after tax income over the same period?" It's gone up by about 50%, looks like. (Case-Shiller is, I think, not inflation adjusted).
And I wonder if another part is what ttaM is talking about. If houses have become less affordable but rent has become even more less affordable, house ownership might stay the same, because you need *somewhere* to live and it's a choice between bad and worse.
Might the various above be the push needed to make CLT construction take off in the US?
Chap in a Little Tent. Much shorter construction time, more flexible, cheaper.
106: It's in the building codes, but it needs appropriate supplier networks to be built up, and that can be a chicken-and-egg problem. I know of one company taking a stab at it, riskily - this will be the tallest mass timber building on the West Coast, and it's not some public work proof-of-concept, just your bog-standard greedy developer.
People of England! This seems made up: https://www.theguardian.com/commentisfree/2024/feb/14/brexit-tackle-politics-children-football
110 is hilarious. I really hope it's not made up.
Wow. Seems totally real too: https://www.youtube.com/watch?v=Z0YJP4FxSfE
https://www.reddit.com/r/EASportsFC/comments/12ne3qn/brexit_means_brexit/
https://twitter.com/BrexitTackles
Is part of the subtext here that English soccer is traditionally brutish and physical compared to say Spain and so this is bringing back traditional English soccer? Kinda like "can he do it on a cold rainy night in Stoke" or "4 4 fucking 2"?
Like a Brexit tackle is just a tackle you make when you're playing "Brexit ball" which is stereotypical English soccer where you play very physically and focus on defense, and instead of playing to possess the ball and do something skillful, you just kick it down the field as far as you can and have your fastest guy run after it. I'd bet the etymology is "brexit ball" to "brexit tackle" and only then the yelling of "brexit means brexit" after you do a Brexit tackle.
(Though I did see some speculation that instead it might come from a specific tackle BoJo made in a celebrity game.)
109: If only there were a town, in search of an industry...
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The recommendation to use the unvented bags left the team with a substantial velocity problem.|>
If you're at all likely to actually play football you're probably also young enough that there's basically no chance of you approving of the Conservative Party or any of its works.
Schlachtbummeler bait here www.bloodgoldreport.com... Wagner, Africa, sanctions busting, DISMIS and all sorts of grimness
119 but of course the UAE is all over that report
Inheard somewhere that In the 70's the population in MA declined but we built more housing than we did since 2009:when our population grew a lot.
What also stinks about the "economy" is the lack of decent social welfare state which was actually nicer during COVID. Like, I know a secretary at work whose daughter just had a baby. Grandpa is able to take a day of from work. Grandma is switching from 5 8 hour days to 4 9 hour days which she can do because she's been there forever. Husband/father works 3 12-hour overnights. He can cover the other 3 days. No way they could afford $6k childcare. She's 26 (pregnancy was an accident, thought she couldn't get pregnant because of PCOS). They live in Spike's state which is a little bit.cheaper.
Meanwhile heallth insurance goes up and out of pocket costs too and the very top of the income scale isn't really subsidizing everyone else as much as they should.
I do understand that the economy is good, and my personal situation is pretty good, because Tim was really underpaid at his old job.
Also, my taxes are probably going up because they had been drawing on reserves to cover inflation. We passed a law to make millionaires pay more for education and transportation but then they got a big tax cut.