you triangulate -- Colo -Ks -upstate NY? Nice essay. So we get the structure of feeling about things mislabeled (or not) "inflation", "economy sucks", etc., but what do we do about it so that the would-be fascist and the apartheid court don't win in November? Any help from Doug? (ps George now is into pizza joints? just kidding, Caspar David Friedrich)
Mike, great to hear from you. Actually between WNY and Manhattan, depending on what I'm teaching, and elsewhere, depending on speaking. I enjoy travel, but can be disorienting. Two Georges! I'm not sure I've much solace for November. America might wake up, and duck this bullet. But,speaking as a member of the ancien regime, I'm not sure we don't deserve our fate, more or less, along with our ilk around the world. Overstated for emphasis, but we are watching ruling elites lose their legitimacy, and blaming those who know longer believe in them. And, as with the ancien regime, valuable things will likely be lost. Maybe another essay, in a more visible space. So I'm in Berlin a few months ago, it's some huge anniversary for Friederich, so we go to the Museum Island . . . and the paintings are all out on loan, to exhibits around the world, marking the anniversary.
Go back three years and the economic consensus was that the US would be in a recession at this point. Prices would be fine because there would be high unemployment and thus people would not have money to spend. Pouring in money and luck traded the recession for moderate inflation in general and significant inflation in a few sectors, such as housing.
It is understandable that many people are unhappy with the current economy as they remember the pre-pandemic low interest rate, low inflation, low unemployment work. Everyone would like that world back. But I suspect that most of the folks most aggrieved by today's economy would choose it over a low interest, low inflation world where they are unemployed. But Biden gets no credit for avoiding that world because it didn't happen and thus is not on the average citizen's horizon,
Unfortunately, none of the media, including the mainstream media spends much time on the alternative world that we managed to avoid. Nor do they talk about the alternative world Trump would likely bring by extending the 2017 tax cuts without offsetting spending in a high interest world.
Great analysis David. I had to research this a bit. The Fed has attempted to produce the measure you describe. It used to publish the household financial obligations ratio quarterly, which is the percentage household income expended on property tax, insurance and debt service. This is no longer computed due to lack of quality data on property tax and insurance. The debt service ratio is still computed. All available data suggests that these ratios have been flat to improving during the Biden administration:
It may be that the story is swallowed by averaging. I was recently surprised to discover that the average income in my town is $650K. This is driven by a handful of very wealthy individuals. I leave it to you to guess which side of that average I'm on. So let's run with that a bit. Since property tax and insurance are regressive, they fall much harder on the lower half of earners. If the theory holds, then sentiment would erode from the bottom up. You can't see it in the averages, because the top earners overwhelm the statistic. But further up the income ladder, there may be a different problem. While incomes can climb infinitely, zero is a fixed number. Incomes may be large enough to accommodate higher expenses, but the nature of earnings in our economy is precarious. Climbing the beanstalk is great, as long as you don't look down.
Along that line of thought, the total indebtedness of households has increased dramatically during the Biden administration, even though average household debt service as a percent of income hasn't changed much. That indicates that wealthier taxpayers are taking on more debt in absolute terms, which must add to the sense of precariousness:
you triangulate -- Colo -Ks -upstate NY? Nice essay. So we get the structure of feeling about things mislabeled (or not) "inflation", "economy sucks", etc., but what do we do about it so that the would-be fascist and the apartheid court don't win in November? Any help from Doug? (ps George now is into pizza joints? just kidding, Caspar David Friedrich)
Mike, great to hear from you. Actually between WNY and Manhattan, depending on what I'm teaching, and elsewhere, depending on speaking. I enjoy travel, but can be disorienting. Two Georges! I'm not sure I've much solace for November. America might wake up, and duck this bullet. But,speaking as a member of the ancien regime, I'm not sure we don't deserve our fate, more or less, along with our ilk around the world. Overstated for emphasis, but we are watching ruling elites lose their legitimacy, and blaming those who know longer believe in them. And, as with the ancien regime, valuable things will likely be lost. Maybe another essay, in a more visible space. So I'm in Berlin a few months ago, it's some huge anniversary for Friederich, so we go to the Museum Island . . . and the paintings are all out on loan, to exhibits around the world, marking the anniversary.
Go back three years and the economic consensus was that the US would be in a recession at this point. Prices would be fine because there would be high unemployment and thus people would not have money to spend. Pouring in money and luck traded the recession for moderate inflation in general and significant inflation in a few sectors, such as housing.
It is understandable that many people are unhappy with the current economy as they remember the pre-pandemic low interest rate, low inflation, low unemployment work. Everyone would like that world back. But I suspect that most of the folks most aggrieved by today's economy would choose it over a low interest, low inflation world where they are unemployed. But Biden gets no credit for avoiding that world because it didn't happen and thus is not on the average citizen's horizon,
Unfortunately, none of the media, including the mainstream media spends much time on the alternative world that we managed to avoid. Nor do they talk about the alternative world Trump would likely bring by extending the 2017 tax cuts without offsetting spending in a high interest world.
Great analysis David. I had to research this a bit. The Fed has attempted to produce the measure you describe. It used to publish the household financial obligations ratio quarterly, which is the percentage household income expended on property tax, insurance and debt service. This is no longer computed due to lack of quality data on property tax and insurance. The debt service ratio is still computed. All available data suggests that these ratios have been flat to improving during the Biden administration:
https://www.federalreserve.gov/releases/housedebt/default.htm
It may be that the story is swallowed by averaging. I was recently surprised to discover that the average income in my town is $650K. This is driven by a handful of very wealthy individuals. I leave it to you to guess which side of that average I'm on. So let's run with that a bit. Since property tax and insurance are regressive, they fall much harder on the lower half of earners. If the theory holds, then sentiment would erode from the bottom up. You can't see it in the averages, because the top earners overwhelm the statistic. But further up the income ladder, there may be a different problem. While incomes can climb infinitely, zero is a fixed number. Incomes may be large enough to accommodate higher expenses, but the nature of earnings in our economy is precarious. Climbing the beanstalk is great, as long as you don't look down.
Along that line of thought, the total indebtedness of households has increased dramatically during the Biden administration, even though average household debt service as a percent of income hasn't changed much. That indicates that wealthier taxpayers are taking on more debt in absolute terms, which must add to the sense of precariousness:
https://www.newyorkfed.org/microeconomics/hhdc