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In response to
"(I don't have an account anymore and can't read past the first tweet) -- nm"
by
Reagen
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unrolled.
Posted by
mafic
May 22 '24, 20:19
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More on the break between economic data & perceptions.
New Harris Guardian Poll reveals that majority of Americans believe we are in a recession. This despite other measures which show greater personal job security, with desire & confidence increasing in ability to switch jobs.
Here is the link to the poll results and story
Exclusive Harris poll for the Guardian shows the majority of Americans think the country’s in recession – but it isn’t.
I have written a lot about differences in perceptions vs aggregate data. They are odd but I do think it is importantly to acknowledge that this has been an extraordinary time. Problems that were simmering pre pandemic came to a boil with pandemic.
It is not one thing or one administration but a series of unfortunate events that are important to take a step back and acknowledge, notably for the largest share of those in the labor force - millennials.
I think about the arch of experiences leading into the pandemic and it is not hard to see why people feel bad.
This has not been an easy century thus far. We opened it with the bursting of the tech bubble, 9/11 and then as wages stagnated, we extended housing debt..
…quite literally built a house of cards that came crashing down as home values stopped appreciating as rapidly as they once were. Loans were given to people on the ability to tap the equity in their homes to service the debt.
People who had no ability to afford homes were leveraging up. Once housing appreciate slowed, they couldn’t tap the equity they needed to service their debt. I know 🤯
Remember NIJA loans - no income no job applications? It was a thing. All got worse as home values imploded.
The subprime debt crisis, which became a global financial crisis triggered a deep and painful recession, which further undermined wage growth and under employment.
I remember buying my daughter a small fridge for her dorm room…
…in the mid 2010s at a big box electronics store. The person who waited on me recognized me from TV. He had gotten laid off from his position in a Wall Street firm with an office in Chicago during the financial crisis.
He told me his story and was doing his best to make ends meet. I admired his tenacity and sat and shed a tear in my car after he brought the fridge to load it. The pain even lower income hh suffered was greater.
Many millennials graduated into the Great Recession of 2008-09 and the extremely weak sub-par recovery that followed.
People who graduate into those circumstances tend to suffer a blow to their lifetime earnings.
I spent a lot of time debunking myths about millennials. Many firms and C-suite level people believed that they had higher turnover rates and no loyalty.
Wrong. They had lower turnover rates for their age than baby boomers or Gen X. The circumstances of their birth cohort left them lagging and unable to job hop like their predecessors.
After more than a decade of struggling to recover, unemployment fell & wages started to pick up.
Inflaion remained tepid. Cheap goods from abroad kept inflation low but had other consequences. We failed to make good on promises to retrain & replace jobs for workers displaced by trade.
We started to see what is known as a high pressure economy. Low unemployment was opening opportunities to many who had been overlooked or sidelined ealier in the recovery.
Then a pandemic hits. Massive layoffs, robust recovery. Lots of bipartisan legislation.
There was a concerted effort over the last four years to get life boats with supplies to travers COVID-tainted waters.
Many don’t realize how much bipartisan legislation was actually passed due to our divisive politics.
The world shut down, literally overnight. It was much easier to turn the lights off and shut down the global economy than ramp up and reopen it.
Plants took time to ramp back up, while waves of COVID compounded supply chain snarls.
Add the push to buy a lot of stuff - goods - to alleviate the monotony of a quarantines and it is little surprise that demand collided with supply, and prices soared.
Much of the slowdown in inflation last year was due to a healing of supply chains. However, they remain fragile.
Workers that were once treated as disposable suddenly were deemed essential. Their wages were leveled up as they worked front line jobs and the risk of contagion. That gave them a moment to move from the shadows of the economy into the sun, only to be burned by the flames of inflation.
Millennials, which took it on the chin in the wake of global financial crisis had the opportunity to job hop (along with a lot of others). This enabled them to catch up on what was lost to the timing of their birth and entrance into the labor market in terms of wage gains.
They now represent the largest group of 30-somethings that we have ever had. - 12k a day are turning 35. They are aging into their peak household formation years and want what generations before them had - to buy a home, the epitome of the American Dream.
Not so fast. Housing affordability has tanked. This isn’t just the Federal Reserve. Supply of homes constrained by decades of NIMBY policies and efforts to limit density with big lots. Add the bust and under building following subprime mortgage crisis, & little surprise we are supply constrained.
Now overlay that with the stress of pivot online, caring for kids and WFH.
Again, lots of bipartisan efforts to alleviate problem - expansion of child tax credit, subsidies for childcare facilitators and for low-income hh to obtain childcare.
Most of those have lapsed. Last bout of subsidies for low-income hh expires Oct 1.
That has left the largest generation without the mortgage they would like & paying the equivalent of a second mortgage to obtain childcare if they can afford it.
Now add the surge in inflation. Prices increase have abated from the searing pace we saw upon reopening and Russia’s invasion of Ukraine, but level of prices still high and the pace of inflation still running hotter for longer than anything we have seen this century.
The economic aggregates look very good but it is understandable after all we have been through that bad vibes persists about the economy.
We have made extraordinary strides and beat the odds thus far on credit tightening by Federal Reserve and a recession.
Partisanship is further distorting lens through which we view the economy, but it is not the only issue.
We have an economy that adds up well but leaves many still wanting & needing. The latter includes rising ranks of those in poverty and working homeless.
These problem predate the pandemic and are not new. What is hard is that they persist. Understanding that is important.
My two cents.
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