The Rent is Too Damn High

One thing that's been kind of mulled over recently is why people are so down on Biden's handling of the economy. By every traditional measure, the US economy is doing amazingly well. GDP is growing at a healthy slightly above long term average rate, which is strong considering global factors. US GDP growth is outpacing the rest of the developed countries. Unemployment has remained at incredibly low levels for a very sustained period of time - and inflation has come mostly under control. It's certainly a lot lower than you would expect after having more than two full years of under 4% unemployment. Inequality, while high, is actually going down. Going by income quintiles, it is the lowest wage earners that have gained the most.

The economy is doing great under Biden - and yet everyone tells pollsters that they think we're in a recession. Even consumer confidence - it's still well below pre-pandemic levels, but it's not that far off - which is amazing considering that people think the economy is in the dumps.

Why?  People should have more disposable income now. But they are behaving as if they don't.

There's been an argument that it's media coverage. There's probably some truth to this - media outlets are hooked on the bullshit narrative that the more conservative you are, the better a job you do with the economy. Literally the reverse is true. Conservatives suck at managing the economy for everybody except the groups getting tax cuts. Their entire ethos is about wealth extraction for the already powerful. But good luck getting this perspective published on a major op-ed page.

BUT - it's 2024. No one follows that shit anymore - or at least no one whose opinion can be swayed. Media just echoes comfortable messages to their audience in order to keep the subscription money flowing in. Maybe in the olden days when there was no other game in town and your bullshit proclamations couldn't be challenged by anyone with any audience at all - back then this sort of shit was important. But today? No one picking up these cues doesn't already believe them 100%.

So what is it then?  What has everyone down in the dumps? It's housing.

These numbers are harder to parse - people move because their rents are too damn high. So they end up paying around the same amount in shelter costs but get shittier homes. We don't have a housing decent-ness indicator - so what we end up seeing is that CPI Shelter is only a bit higher than headline inflation. But we do have other numbers - like housing index costs or the inflation of median rental prices of similar units in similar neighbourhoods. And by those measures - housing costs are bonkers.

Now bear in mind that housing markets are very local, and high volatility can make the worst situations seem way shittier than the typical conditions - but some of the horror stories are so ludicrously nuts that even if they are distant outliers, we're still looking at the median values being way off what we would expect. That said, here's a horror story that sums it up:

As a lawyer at age 47 I am unable to afford living in the apartment I did at age 27 while waiting tables

Shit is not normal.

So this is where the pessimism about the economy is coming from. Maybe people do have more money - in real terms. Maybe they can afford more stuff than they could in the Before Times prior to COVID. But it all feels shitty right now because the biggest line item in their budget buys like half of what it used to - even though it still takes the same fraction of their paychecks. IOW, people feel the economy sucks shit because The Rent is Too Damn High.

Anyways - that's my current take on why we're seeing this disconnect between people's opinions on The Economy and the actual performance of The Economy.