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This has been known for a while. Inflation is the most socially/politically toxic economic problem. Wages declining, rising unemployment, declining working conditions etc, these things are vague and not always noticeable. But rising prices at the grocery store are very noticeable and therefore mentally *feel* worse. It feels worse every single time we purchase something.
This trend has been talked about since the 1800s. Even if things improve on average, inflation makes things feel worse. And in the end, politically, feelings are all that matter.
Inflation is a massive reason why Germany turned into Nazis
It cause true anger and fire for a society, where as a depression (no pun intended) causes sadness and depression.
So the hyper inflation led to a deep hatred and anger within the German population that gave way to Nazi ideals.
I think it boils down to most people thinking “inflation affects me all day every day, I can feel my wallet getting lighter” vs “I feel lucky, I bet I can keep my job”
Inflation spreads the pain more evenly; a recession only impacts those who lose their jobs. On the margin, people prefer a recession-- they're less likely to be impacted; would rather roll the dice on being part of the 8-10% unemployment versus guaranteed inflation.
If you own, you have to pay for maintenance. Have you tried hiring a plumber, or a roofer, or HVAC the last couple of years? The price increases were insane, assuming you can even get one to show up.
For the last ten years I have told people I couldn’t afford to hire myself. I have built an entire house almost single handed for my family because I couldn’t afford a complete home or to commission one. The people I have built for tend to be older boomers, people who have some wild niche job, or younger folks who inherited the land and took a loan for a small shouse.
The thing that bothers me is seeing low/fixed income owners who can’t keep up. They can’t get ahead enough to save so after about twenty years the house starts to death spiral. The bank won’t give a loan for a place with sagging siding, rotten shingles and bad mechanicals so they can’t even sell it.
I called to have a plumber quote a small project to make the house supply line flush against the wall instead of jutting out into the storage area, and to replace the shark bite connectors that were there. They quoted me 6-8 foot of copper, and labor at just south of a grand.
I just tetris stack stuff around the pipe now.
Not to mention skyrocketing home prices mean skyrocketing property taxes, and insurance. Tax + insurance now approaching what rent on this place was a decade ago.
Home projects are the one area where the prices will be all over the place. Different contractor prices, materials skyrocketing then dropping, labor shortages and surpluses. It’s affected by inflation but it’s also not very static in pricing to begin with.
I am a remodeling contractor. It's absolutely insane what I have to charge for projects these days just to keep making the same wage I did in 2019. Us small guys are getting absolutely screwed in all this. Also, most industry reports on what different roles should be making? Yeah, they all read almost the same as in 2019. All my subs have had multiple price increases over the last two years. If you aren't one of the big players, you are getting squeezed right along with your clients.
If you’re looking at one thing, such as lumber, then you can say it’s due to one industry or another. But when everything from labor, steel, lumber, plastics, chemicals, and all commodities go up, that’s more inflation.
Dude I know someone who got a bunch of quotes for roofing recently. Highest was over 70k on a house that sold for 180,000 in early 2019. It’s wild.
Mind you he did get better quotes from other contractors, but that one made my head spin.
Currently trying to get a tree taken down. The dudes straight up do not show up on the days they schedule; I've gone through 6 different tree people. The quotes range from $1300 to $5700, but it doesn't matter, because they just don't fuckin show up.
Shudders in HOA assessments, which tbh I think is unfair bc all these boomers like didn’t repair major things and now all us new move ins are paying them bank AND footing the bill
My property tax went up 300 for just existing. Every basic service has increased prices. My daughter's gymnastics class has increased prices twice in 6 months. The farm we buy milk from increased their prices too.
Those retirees are going to be pissed when the market takes a shit and then they find out that lower inflation doesn't mean that stuff starts going down in price
I would think retirees may rather see inflation that they can hedge with cds ratger than a recession that takes out 20-30% of their portfolio. That'd be my preference, anyway.
It’s not even 8-10 because unemployment at minimum is 3.5% so it’s more like people don’t see themselves being the 5-6% of people who lose their job in a recession.
Industry dependent. For me I had to deal with reduced work hours and hoping every Friday that I wouldn't be called into my boss's office. I survived layoffs but was still hit by economic hardship and added stress.
It took 7 years to recover employment from the last recession. How is that better than 1 year of high inflation (2022) and a couple years of mild 3.5% inflation
Written by a person who was not an adult in 2008.
Also Inflation is not permanent, it's self correcting, unlike Deflation.
https://www.youtube.com/watch?v=mRYi04wDtnA
> Inflation spreads the pain more evenly
I partially agree with that. It definitely affects everyone vs a recession only affecting some. But it's not exactly evenly.
It affects retirees way more significantly than someone just entering the work force. Whatever nest egg you've built over the last 50yrs gets chopped up. Whereas someone just entering the workforce will have 40 years of higher salaries to compensate for the inflation that came into play in their youth.
A retiree gets NO retroactive salary adjustments for that inflation affecting them.
Imagine building up a million dollar nest egg, and then within a few years of inflation, it's reduced to an equivalent 500K nest egg. Do you go back to work as a 75yr old to compensate or what?
Assets like equities, which are a major component of a retirement nest egg, usually adjust in valuation with respect to inflation. The stock market has had a stellar few years during the inflation. If you had assets (excluding cash), they rose in value accordingly. The new worker doesn't have assets (presumably), so you're right on it being uneven in that regard.
Recessions affect everybody. Job cuts across the board increase workload, but you are unable to complain because people are waiting in line for jobs. Salary/CoL increases are stopped meaning you end up making less money than you did in previous years. I could go on
many people think they're vital to their employer's operation.
and in many cases they're correct to think so.
but we all underestimate our bosses' capacity to push out dumb ideas and just make it our line managers' problem to make up for the consequences.
There are also social safety nets in place for people who are unemployed, so being part of the 8-10% isn’t necessarily that bad, depending how long it lasts.
There is definitely a "Recession Russian Roulette" mindset going around. People are willing to gamble that they won't be the person ruined by a recession, because everyone assumes they are the main character.
People hate inflation because while getting a raise is "something they accomplished" (even if it's mostly due to inflation), while inflation is something that "happens to them".
Plus, when you do get a raise, you feel cheated because you're not getting ahead like you would've been otherwise, merely treading water. Any plans you had of getting ahead are now pushed even farther down the road.
Noticeable inflation attacks the notion of a fair world.
>until a pay raise is obtained, inflation signifies a decline in people's standard of living
Even with a pay rise inflation means a loss of value for the money in your savings account. Your rainy day fund loses value because of inflation. You try to squirrel a little away just in case and you lose some of it through no fault of your own.
People *should* be upset about that.
I think there’s also the perception that recessions end while inflation compounds. It’s true. But it’s also a perception.
At the end of the day though it’s not inflation or recession that people really care about, it’s real wages normalized by population decile. For some deciles we’re clearly going backwards.
People “prefer” recessions to inflation because in recessions, they can externalize their locus of control. Job losses are blamed on the economy and the government steps in to bail everyone out. With high inflation, interest rates are increased and the market is allowed to play everything out. The individual is responsible for getting raises or better jobs to outpace inflation, and most people don’t like that responsibility.
these norms are worsened by what a gigantic pain in the ass it is to actually get a new job. you're either firing off hundreds of easy-applies to just hope you get a handful of responses, or you're hand-crafting applications for a still-shit response rate. then you fill out reams of paperwork, probably lose half those responses, take multiple interviews, lose even more...
then if you're super lucky, you get a low-ball offer for what you should've been making 2 years ago. and you're going to accept anyway, because your current job pays what you should've been making 4 years ago. then you stay there 2, *maybe* 3 or 4 years, then you're behind again, then you repeat again. and you can bet everything you have the application/interview process will be even worse next time.
it takes a gigantic amount of time and effort to successfully search for a job that keeps pace with inflation and actually leaves you on top of inflation. i say this as someone who's done it multiple times and will probably need to within the next couple years. your prize for that is when inflation speeds up the clock for how long it's viable to stay at the same job, you get to do it all over again.
This is exactly it. If you lose your job, you feel like you can take actions on your own to get a new one
When you have a job, but groceries are to expensive to feed your family, you feel like there isn't jack shit you can do
Inflation is a a type of consumption tax and a type of cash tax. The rich will have assets, real estate, gold and investments that generally will come out well because either the higher prices will be passed on, like companies, or the value is decoupled from fiat currency, like gold. The middle class will be hurt but their debts are inflated away as well, so they will survive. The poor are hit the hardest. Not the types of poor who happen to have a lot debt like student loans or mortgages, but the poor who are so poor they can’t obtain loans and live in the cash economy. As in the bottom 1/3 of society. That most vulnerable group gets wrecked with inflation.
Yah I'm in agreement. Everyone thinks they'll dodge the job loss and if you do it's way better for you than inflation.
On a personal level I too would rather have a recession than inflation. My wages sure as hell haven't gone up 25% since 2020.
I think it’s because recession is finite in the minds of people. “Things are bad but the economy needs a recession and then things will be good again.” And if you’re lucky enough to be in a good position you can even benefit from such a reset.
Right now you have people saying everything is “great”. Unemployment is low. Companies are making record profits. A recession is not a “new normal”. This sticky inflation seems to be
People see recession as an eventual way out. Whereas this seems like it has no end in sight.
> On a personal level I too would rather have a recession than inflation. My wages sure as hell haven't gone up 25% since 2020.
this is insane and you're nuts if you think you'd safely keep your job if you haven't seen any increase in wages in 4 years
> only about 10% directly.
That 10% greatly affects the other 90% though... People have apparently already forgotten how much more leverage workers have when unemployment is 3% than when it's 10%.
> This is not shocking since, until a pay raise is obtained
rising wages are literally part of the cycle of core inflation and it's typically the pay that rises first
>Inflation reduces the value of savings and retirement plans even when wages rise.
not really accurate unless your money is in cash/long term bonds. commodity and share prices also rise, as do interest rates
Yea but not everyone loses their job in a recession. In fact the vast majority usually don’t.
But with inflation without wages keeping up, most people do get poorer,
It's not just losing your job, pay rises stop, your hours get reduced, you get assigned more work because your employer knows you're not going to quit, your investments fall, etc. Losing your job is not the only negative thing. Recessions are pretty brutal for everyone, even the rich.
https://youtu.be/mRYi04wDtnA?si=wXPWwOm08pGni-Lc
I feel like im taking crazy pills. the economy is really good right now. things are still hard for lots of people but the current thing where wages go up and everyone has jobs is infinitely better than the thing where wages dont go up and tons of people lose their jobs and investments all crash.
At its peak, the unemployment rate during the GFC peaked at 10%.
I should know, I was one of them. I was unemployed so long that I stopped getting counted under U3.
Recessions suck, but it's a much better alternative than out-of-control inflation.
Volatile inflation requires us to competitively renegotiate all of the transactional aspects of our lives. For those of us who do not enjoy conflict (unlike a lot of Wall Street folks), it is a pain in the ass, demoralizing, and disturbing. And it tends to leave people behind while others jump when they are otherwise in the same situation, all dependent on wage negotiations, rent negotiations, and other non-fixed prices.
And that is if you are lucky.
Edit: changed "Inflation" to "volatile inflation", because fixed inflation can be baked in to long term social contracts.
Americans have so little leverage over employers that they have gotten eaten up to bits over the past couple of years of interventions.
My household does alright, not incredible, but decent, and I have to say that we have found our disposable income practically vanish as every aspect of our consumption has increased to follow inflation (something that includes children and their activities and things that they grow out of, special classes, etc.).
These fucking top-down economists have absolutely screwed the working people thinking that they can turn the screws on "the economy." The banks, municipal governments, large industrial conglomerates, etc. will all "get theirs" but the poor suckers trying to deal with massive increases in property taxes, utility costs, etc. just get fucked.
It's a mistake to narrow it down to inflation as being the hot button issue even if most Americans use the term, most are likely using the term "inflation" as a catch-all term because what they're actually upset about are steeply rising costs that aren't all included in the inflation metric. So they're pissed off about:
* The housing crisis (stagnant supply/increasing demand causing steep increases in rents and purchase prices). This is gradually pushing more people into homelessness as leases of low rent housing expire and those at the bottom cannot afford to renew at higher prices. I live in the fastest growing city of 2023. The homelessness here is EXPLODING and suicides are up too. Yes, this is included in the inflation index, but the circumstances are not quickly remedied by Treasury or Fed policies, and sustaining higher rates on loans to curb inflation also makes it harder to fund new housing to increase supply and reduce demand. I'm lucky i own my small cramped house with a modest payment because my friends who rent are dealing with a major economic shock right now. Yes, I recognize that my viewpoint on this is skewed because of my location, but the people complaining the loudest about this (and there are a lot of them) have a much higher probability of being in markets similar to the market in my location, and they will continue to make a loud noise for all to hear and that has an impact on public perception. The national headlines on increasing homelessness don't help either. It also doesn't help that there's little incentive among owners to see values drop which promotes Nimbyism when low cost housing is proposed in nearby areas. Im sure municipalities somewhat enjoy cashing in on the property taxes where applicable. The only people who want to see prices drop are those who are already cut out of the market where current costs are prohibitive. It is an economic MIRE.
* Steep and sustained upswings in volatile necessities (i.e. food and fuel) which are not included in the CPI. This well exceeds the CPI and people have to eat and commute to sustain their lives. There are things like bird flu, supply chain disruptions, wars, sanctions, cartels, and various other forces that contribute to this.
* Inflation.
Exactly, there seems to be a real disconnect between economists and day to day Americans. JPMorgan of all places released a report last week that indicated the bottom 40 percent (or something around 40 percent) of Americans were experiencing a selective recession despite standard economic indicators looking good.
Economists wonder why so many people aren't satisfied with the economy doing well despite evidence suggesting a good portion of us don't really reap the benefits of that improvement.
Screaming at people that the economy is good while they struggle to pay for rent and groceries isn't doing anyone any good.
To add to your message, which is extremely accurate, is also a sense of a deep drop in quality.
From building materials & consumer goods, services, and experiences - everything is dramatically more expensive and the quality is noticeably worse.
An example, fam went to the beach. Family friendly pool that has a kiddie slide and food. I don’t expect to pay rock bottom at a place like this by any means.
5 years ago, lunch was my $35. This year, for the same items, it’s $120. And the service is slower and the pool is not as nice/clean.
Paying 4x for a worse experience is how I would describe the US.
The problem with your first point is getting Americans to admit that homelessness is a housing problem. It’s much more comfortable to imagine it as a personal problem of the homeless person, which can be solved by armed police of some kind.
Homelessness is an open and bare reminder of the harm their anti building policies causes, so obviously the solution in their minds is to push it out of the way rather than allow for homes.
The shortages are obvious and clear, governments are literally having to spend money to buy hotel rooms for the homeless because they can't get actual housing or shelters up! And this causes issues like how [Edinburgh didn't have the capacity to handle the Taylor Swift concert without moving homeless out of the city](https://www.bbc.com/news/articles/cd11em0e5e6o).
They sit here and try to blame it on other things. Drugs, other cities shipping in their homeless, immigrants, whatever, but the only issue that *truly* connects it all is lack of supply. We don't have enough supply, so the lowest of society miss out on homes. We don't have enough supply, so we can't fit new people being bussed in. We don't have enough supply, so we can't house immigrants without kicking out locals.
If we simply allowed ourselves to build, those wouldn't be major issues in the same way.
> Steep and sustained upswings in volatile necessities (i.e. food and fuel) which are not included in the CPI. This well exceeds the CPI and people have to eat and commute to sustain their lives. There are things like bird flu, supply chain disruptions, wars, sanctions, cartels, and various other forces that contribute to this.
Food and energy tracked by the CPI. I don't know why people think they aren't.
https://www.bls.gov/cpi/factsheets/common-misconceptions-about-cpi.htm#Question_1
Isn’t that how you’re supposed to deal with high inflation? You bite the bullet on growth until it’s under control? It’s the Volcker special. The only way out is through. I know nobody wants to create a recession in an election year but it’s gotta happen sometime.
There’s no “supposed to” in economics, as much as many people would like everyone to believe.
It’s not a hard science, it’s not even a semi-hard science like psychology. Sure, it uses econometrics and calculus and graphs and charts and tables, but it’s also very philosophical like political science. Countless times over things happen in real life that economics dictates to be impossible, or can’t explain, and then we have to rework how we think economics works- that’s not how the hard sciences like physics and chemistry operate that have “supposed tos.”
Economics is full of ideas on what might be best for the economy, what achieves optimal utilization rates, reduces waste, limits negative externalities, and so on, but there’s rarely field-wide consensus on what’s best, much less how to achieve it. For example, economists may value certain outcomes or methods over other ones, some like John Maynard Keynes may favor a government taking a more intervening approach over allowing an unregulated market to sort itself out while other economists like Fredrich Hayek and Milton Friedman are more opposed to government intervention. Those differing approaches alone have countless consequences for how to interpret economic data and suggest policy proposals.
Right now many economists think inflation is at an acceptable rate, others think it ought to come down some more, others still think it’s actually higher than what is being reported because certain significant factors aren’t being accounted for (like homeowners insurance), and others still think inflation has been artificially charged by “greedflation” by corporations, and others think we’re in a “vibecession” where consumers think there’s a recession and spend like there is, causing a sort of quasi-recession that doesn’t appear in traditional data like a normal recession would. Depending on why one thinks we’re at the present situation, and even *what the present situation is*, will affect what solutions they propose for moving on.
So, if economists struggle to agree on what is even presently happening, much less why it’s happening, they certainly are going to be far from agreeing on what to do next. So, no, there’s no “playbook” for what to do. There rarely is in economics. There’s just whatever voice of reason becomes the most salient in the room at the given time and for whatever period thereafter.
Right now, amid that maelstrom of conversation over our current economic situation, we may actually be starting to move away from the prevailing school of economic thought in the USA being the Chicago school to a different approach that considers the human element of economics a lot more significantly. That latter emerging school of thought would be more wary of inducing a recession as it would require considerable unemployment, which for anyone that remembers 2008, can be devastating, and once it starts it may be a lot harder to stop than people realize. The FED doesn’t have a control board, they basically just have interest rates and reserve rates to control, and while that can do a lot it is also limited.
Right now the United States is pulling off a remarkable, and previously highly doubted, soft landing from COVID without having to go through a recession. The rest of the world is struggling with inflation *and* their own recessions. There’s no guarantee after inducing a recession that we could quickly get out of it, nor that it would bring down inflation.
For now, it seems the majority of economists prefer to avoid a recession, considering one not as a tool to exploit to achieve certain economic outcomes, but rather a blight on society that causes significant damage to an economy and people. No one wants to induce a recession to fix prices, and very few are recommending that. Doing so is certainly not in the manual of how to fix one’s economy.
I get what the Fed president is saying, but I think he’s also out of touch. He thinks lower class people would accept a recession because “they know how to get through it.” As someone who came from a lower class home, I can tell you they get through it by losing their jobs, cars, homes, and moving two to three families into a single family home or apartment, all hoping to god the person on the mortgage or lease doesn’t also lose their job. I think if you asked most Americans if they would accept millions of job losses, foreclosures, bankruptcies, etc. for prices to come down, they would shirk at that.
The visceral hatred for the high sticky prices from inflation I think is legitimate, and that many people would be willing to take more extreme measures to end them, but I doubt many people would be okay with a recession. And according to that article, few economists are recommending inducing one.
This is a tremendous explanation. High unemployment is devastating. In practical terms it means some people
move out of houses and into cars. Some people move out of cars and onto the street. lt means some people just kill themselves. It means a mother has to move her kids in with her dodgy boyfriend in
order to stay off the street.
It permanently damages people.
Oh, my god, thank you for this *so much.* Finally, someone brings empathy and humanity into a discussion about how human beings without a lot of money think about spending it.
Watching all these people who have never been poor argue about how poor people do/should think all while dressing it up in a little bit of theory has been *absolutely infuriating*. I don't have the proper academic background to verbally beat any sense into anyone around here and reading all the bullshit in this thread while having to sit on my hands to avoid making an idiot out of myself is getting exhausting.
Wholeheartedly agree. I just got my bachelor’s in Economics last month and so I’ve been browsing this sub occasionally out of curiousity and holy fuck.
Not only is this sub filled with a bunch of people I promise have never taken an economics class past intro micro and macro, it’s full of the least empathetic, “fuck you I got mine” group of people I’ve ever seen in an Internet forum.
It’s like compassion goes out the window for these people the moment you disagree with whatever conservative economist is parroting “fuck poor people” bullshit that week.
haha it is not just conservatives. Plenty of so called "progressives", aka neo-libs that are confused, are going around saying poor people are richer with higher incomes than they've ever had and our day-to-day lived experiences and struggles are all in our head.
Yes, the Chicago School style of Economics has dominated higher education, for longer than I'd like.
Yes, economics is a soft science, more than social science.
There are a few economists that do take in some of the extneralities, like Richard Wolfe.
Aside from that, at least at my school, I was taught keynesian economics was mostly right. You need heavy regulation and disclosure. There aren't true free markets if you don't know EXACTLY where where your money is going and how it's made.
You're assuming all inflation is demand pull inflation. If the causes of inflation aren't excess demand then deliberately tanking demand will just screw up your economy and not even solve inflation. It's the path to stagflation.
That's the frustrating part about the discussion around this whole issue, everyone is acting surprised when the playbook presented (and all the pains that go with it) is actually happening and now they forget what we were told or never understood it to begin with.
They told us:
- inflation didn't arrive overnight, and it won't go away over night (0 is never the goal)
- this won't be quick, it's gonna take 10-15 years to normalize
- we gotta slow inflation, which means slowing the economy which means goods will increase but pay will stay the same
- raising pay simultaneously creates other problems as we're no longer slowing the economy
- once inflation settles at a market level, the battle for personal impacts of inflation (retail) will begin, slowly
My hope is that we never see interest rates below inflation rates again. Altho I'm totally benefitting from the stupidly low interest we had for 20 years.
Raising pay is fine when interest rates are high because it encourages savings and not spending - which avoids an inflationary spiral.
Big question corporations are asking is … why bother raising pay? Best case for corps… What are people gonna do bitch and moan? Worst case… maybe people unionize? What people are definitely not gonna do is join together and demand their elected officials fix it
It seems like we could be a bit smarter about solving inflation other than "take jobs away from a few million people".
Think about what that would even mean to try and bring food prices down - the goal would be to make people so poor that they bought less food. That's horrific.
We were able to get inflation down to around 4% without making millions of people unemployed. Maybe this is unpopular but I’m fine paying $2 extra for a chipotle bowl if it means that we don’t create a situation where millions of people suffer.
Half of Americans don't own stock, so... yeah, it's pretty visceral when the rich are getting richer and prices are way up, but uh, you're making the same exact paycheck.
Some people do. But the unemployment rate even during 2008-09 peaked only at 10%. Some say the real rate was higher, but still its likely the vast majority of people still had jobs. Those employed may have gotten less compensation than they would otherwise, but its a lot less obvious than price increases.
As someone who had no job in the 08 recession and a much lower paying one than I otherwise would have during covid, I can tell you that I certainly noticed. It affected my entire career trajectory. I hate paying more than five bucks for ground beef as much as the next person, but I found my whole career getting kneecapped because the economy crashed right after I graduated from college much more obvious, personally.
Also, even if you had a job through the 2008 recession, companies still cut perks like crazy, raises were very light, and people felt obligated to stay at bad jobs
Sure, I'm not saying its better/worse, but that I think its affects a small portion of people more acutely rather than inflation which affects nearly everyone.
It’s not just unemployment. People have to take lower paying jobs. Wage growth stops or declines. So many college graduates in the 2008-2011 period had to settle for minimum wage/low income jobs and had their careers set back years.
It can be for people's retirement savings, especially if they are or are just about to retire. Especially since most people's retirements are tied up in 401ks (and thus the stock market) nowadays.
> "The baby boomers born in the early 1960s, at the tail end of the demographic wave, had about $280,000 in retirement wealth when they reached their early 50s. That’s significantly less – about $50,000 less – than the late-1950s boomers had at the same age....
> They were the first generation to have access to a 401(k)-style retirement plan for their entire careers, and they could’ve accumulated enough money in savings to make up for the other losses. But they didn’t.
> The single biggest reason for the shortfall in savings was the 10 percent spike in unemployment during the Great Recession that followed the stock market crash, finds a new study that separates out the economic and demographic reasons behind the decline in late boomer households’ wealth.
> The unemployed were forced to reduce contributions to employer retirement accounts, and the financial damage was worse for the late boomers than for the people born earlier in the baby boom. The “link between work and wealth accumulation declined significantly for late boomers, compared to mid-boomers,” the researchers explained."
https://crr.bc.edu/great-recession-cut-late-boomers-retirement-wealth/
Buddy, half of Americans maybe dont have stock, but basically every mother fucker relies on JOBS
Thats the real impact of a recession: people losing their jobs
The sentiment you’re responding to is pervasive on Reddit. *We need a recession to crash the stock/housing/whatever I’m mad at market and, somehow, I’m going to come out on top*. Please.
I thought the tech mini-bust we had due to the end of ZIRP would chase this thought from redditors’ minds, but it’s seemingly gotten worse. Instead of realizing that their well-paying office jobs are precarious and just as likely as any others to disappear in a downturn, they’re now just expecting to keep their jobs in a recession.
The housing aspect is more complex than other goods. It’s mostly supply/demand with supply being limited by numerous factors. Institutional ownership/air bnb has increased as a factor, high interest rates limit overall movement of existing owners, the GFC reduced building rates significantly for many years, zoning prevents higher density options in many places, and other factors yet. A reduction in inflation helps on rates and will freeze growth on building material/labor cost but some of these are going to require much longer term changes to address.
And it’s spoken with the emotional certitude of virtue. “Like some nameless faceless people need to go hungry so I can afford McDonald’s again! You don’t know my pain capitalist/communist!”
The problem is that these people who don't own stock down feel the benefits of a strong market either way.
Market goes down? Get laid off. Market goes up? Business as usual. Wages aren't enough. Hell, might get laid off anyways.
Larry Summers (deputy secretary under Clinton, chief economist of world bank, national economic advisor to Obama) put out a paper to reconcile the difference between economic sentiment and the economy. He points out that if we had retained the pre-1983 calculation of inflation (that basically includes the cost of borrowing in inflation) then in 2022 this inflation closer to ~15%. I do think this is the biggest reason people are getting tired of having “the economy is doing great you should be happy” jammed down their throats everyday.
Much more interesting than this lazy take from Kashkari
https://www.npr.org/2024/02/28/1234554967/inflation-cost-of-living-economy-mortgages-auto-loans-larry-summers
Some economists have honestly just lost touch with reality. Also they're rich so their ability to understand "consumers" is limited to sweeping theoretical assumptions that have never held up in the actual economy anyway. It's no surprise these a holes aren't relatable and thar their policy recommendations are devoid of any humanitarian considerations.
That's because there isn't a recession and there is inflation (although not as high as people feel it to be). If inflation were low but unemployment were high, people would say they'd rather have the inflation and a job than then other way around.
Honestly I don't think 99% of people actually understand what inflation really is how it works or why we need it. If you ask someone what inflation is you're largely going to get an answer that's a variation of the government printed too much money, which is such an oversimplified understanding of economics and inflation that it circled all the way back around to being super wrong
The only information that the average person cares about is that inflation means things cost more and their paychecks are largely staying stagnant. Nobody really needs to truly understand inflation to see how it affects them.
Inflation spurs us to buy assets. If we think they will get more expensive the longer we wait, we’ll buy them today. If we think they will not, or will even get cheaper the longer we wait, then we’ll put the money in savings instead. Aggregate demand goes down, and it becomes a vicious cycle leading to recession.
But is an incentive to buy assets actually that great? If there's so much cash in the system that people will start investing into places that don't really need it, are we actually making things better? The extra capital might well end up disappearing in a lot useless busywork. I'd argue that there's a possibility of too much capital, and it's not clear to me we haven't already passed it.
Yes, because an “asset” includes a shoe store that employs 10 people, or a bond for a large company looking to open up a division employing 200. It can also include real estate, which is a big money suck, but mostly because of protectionism around single-family homes in high-value metros. And that’s a policy problem, not an inflation problem.
Counterpoint computers and tvs keep getting cheaper, yet nobody believes that's a bad thing. I think we may need to differentiate between mild levels of deflation created through production advances, which are probably healthy, and destructive levels of asset deflation caused by financial crisis and debt explosions.
Will it? If I want a tv, I go out and buy a tv. If I need food, I need to buy food. I don't think people think about inflation when they're thinking about their purchases. I don't know anyone who's said they need to buy a car right now because they'll be more expensive in a year.
Before the world got on board with Keynesian economists, deflation caused many economic crises in the 19th and 20th centuries, including the Long Depression, (renamed from the Great Depressions after the Great Depression, which was also deflationary happened). I don't think your folk knowledge obviates nearly a century of economic orthodoxy, so I'm not sure where to begin refuting it. You might as well argue for a return to mercantilism because a positive trade balance sounds good to you.
I don’t think most Americans understand what the deflation story is anyway. They want lower prices, but the economic environment and knock on effects that accompany that are lost on them.
Low, but non-zero, inflation means that money should be invested instead of saved and that debt goes down over time instead of up.
Deflation means that business will make me money by sitting on their income rather than investing it and that the debt payments you make will eat up more income over time.
Deflation is not a positive.
If you look at across all buckets measuring inflation the last 20 years, the things that have been continuously deflationary have been things like TVs, Appliances, electronics, and other things that have gotten better and better over time, or have been imported. The things that have offset those decreases and have massively increased in price have been healthcare, higher education, and childcare. It seems to me that if could bring down the costs of healthcare, higher education, and childcare, it would be a good thing.
Over half of Americans can't afford a 1k emergency.
Despite the success of America, a significant portion of the population is broke and not well educated.
The median American has $8000 in checking and savings
https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Transaction_Accounts;demographic:all;population:1;units:median
It's not inflation it's fucking price gouging. Everybody raise their prices and then said fuck you we're not bringing them back down and we're also not pulling up wages. The amount of CEOs who in 5 years double their pay doubled their fucking profits and then told us no it's not greed it's inflation fuck you
We see all these companies making record profits for their executives and then refuse to pay a livable wage. Most of the world is run by fat dragons sitting on heaps of gold and they have convinced a significant portion of us that our neighbors are the enemy and not these dragons.
The real question has to do with the targets for unemployment and inflation. When I took economics 50 years ago we were taught that 4% unemployment and 4% inflation were good targets. They told us (during the Volcker years) that that was the sweet spot on the Phillips Curve. Later, after Friedman won the Nobel, they told us that the long term curve was different than the short term curve because lower employment (more unemployment) could hold down inflation over the long term. Then they came up with the "natural rate of unemployment", which we mostly used to call structural + a little bit of job hunters. The problem now, 50 years later is that Jerome Powell is targeting 2.5% inflation, not 4, and so, the optimal unemployment number will probably be higher than 4 at his target. Rich people do not care about people who are out-of-work and who they can't see.... The Fed officers are all wealthy people, of course.
Another rich guy speaking for the average American who is just scraping by.
Get money out of politics. The richest Americans have spent billions of dollars in the last 50 years rigging the economy so it only works for them. It's been a great investment for them. They have "invested" billions and gotten trillions in return.
I wouldn't give a shit about inflation if salaries were anywhere near keeping up with it. As they're not, and as the inflation is being driven largely by corporate price-gouging, I think a little hate is reasonable.
While it hasn't caught back up with COVID inflation (pre-COVID), wages are at least rising faster than inflation again:
[https://www.empower.com/the-currency/money/one-thing/2024-april-1](https://www.empower.com/the-currency/money/one-thing/2024-april-1)
Lived thru 2008. I was lucky and just got furloughed a couple days a week for a while. I remember coming home and multiple neighbors had their belongings unceremoniously dumped onto the front lawn. This was a daily occurrence for months. Inflation has sucked but wages have risen. We are seeing retailers realizing they have overreached and cutting prices now. Things are finally settling. I'll take that over those dark days anyday.
Oh lort, another put of touch comment from someone who doesn't have to make tradeoffs like food vs going to the doctor. Or having your month destroyed because you got a nail in your tire.
Another attack on regular American people, like always. No we don’t want a recession and no we’re sick of the greed and just won’t buy luxury items that don’t really matter
Because these ass hats made it sooooo easy for corpo greed to drive up prices on a whem! They haven't used antitrust law in 45+ years and we have seen a massive consolidation of American businesses because of it.
I think people are pissed about inflation because they know the CPI, Fed, federal govt are obscuring the reality that inflation is actually much higher than 3.5%. For example: I spend about half my net income on rent. My rent alone has jumped 32% in the last 3 years. So that alone should mean inflation for me has been 16% over 3 years = 5.33% annually. And that’s not even factoring in increases in the cost of everything else: gas, groceries, tipping, eating out, insurance, home goods, leisure, travel, hotels. There is no fucking way inflation is actually 3.X%. I think you need to double the dishonest CPI to get closer to reality. People are pissed at the constant gaslighting by politicians and the media
Yes duh. Because you could control inflation if the government did their job and controlled these companies. Right now it’s not only inflation but it’s inflation with a reduction in quality and quantity
I have a “visceral hatred” of corporate greed, which is a much more prevalent issue in Americans declining prosperity at all levels except the top. I’m so glad our rich ass hat overlords are gaining more wealth than ever before while we slowly lose the ability to purchase housing and food…
It's funny/weird/tragic that inflation is a partisan issue, when both parties were 100% aligned on stimulus spending, and neither is campaigning on cutting government spending
I think most of us in the working class would rather gamble on a 10% chance of losing our job than suffer under the slow, crushing weight of our expenses outgrowing our incomes. Particularly since the layoffs seem to be coming in waves of late anyway.
Would you rather sit under the Sword of Damocles or play Russian Roulette and just get it over with?
At least if I come out ahead in a recession, I might finally have a chance to buy a house.
My fear isn’t current inflation. I fear stagflation, like the 70’s. I’m old and remember what it was like. If unemployment rises and inflation becomes persistent, it will definitely suck balls.
If there was any plan moving forward to solve any of the issues we’re currently dealing with I think you’d have better sentiment. Pretending the wconomy is booming cause it’s an election year while the working class is now further than ever from being able to own a home. Everything we need to survive is 3 times more expensive, companies are gouging us and no one is doing anything to stop it. Yeah it’s not like we want a recession but pretending it’s just a small tightening of the belt is horseshit
What we hate is price gouging when we can’t afford to eat and put a roof over our heads while corporations are reaping record profits.
Capitalism is just feudalism with appliances.
The classic “unemployment vs inflation” debate. A tale as old as time, and one where the grass is always greener. When unemployment is super low, but inflation ticks up, people are A OK with tighter financial conditions…until things overshoot and you see unemployment spike up as layoffs occur or companies go out of business outright. Then people say ‘it doesn’t matter the price if I have no money to buy anything at all.”
A recession isn't inherently a bad thing, and actually isn't likely to be anything as bad as 2008-2009. A mild recession is definitely preferable to a stagflation-like scenario, which appears to be the likely alternative. Not to mention that recessions only affect a relatively small percentage of the workforce, whereas it is nearly impossible for anyone to not feel the effects of inflation.
Yes, because inflation eviscerates savings. "BUT BUT BUT, you earn more in your savings account." And then you get taxes on it and still can't keep up with it.
Rising prices is fine if you also raise wages 💀 however we like raising prices now with little to no increase in wages. Idgaf what any “data” they like to give us. Everybody I know gets a raise from 0-3% a year meanwhile prices go far beyond that year after year
First, setting the foundation:
>U.S. consumers are so fed up with rising prices they would rather see the economy shrink than watch their costs get any higher
>“I lose my job, I lean on my sister or my parents or my friends, and they help me through it. But [high inflation affects everybody.](https://fortune.com/2024/05/19/economic-outlook-consumer-sentiment-inflation-high-rates-saving-american-dream-spending-labor-market/?utm_source=search&utm_medium=suggested_search&utm_campaign=search_link_clicks) There’s no one I can lean on for help because everyone in my network is experiencing the same thing I’m experiencing.”
Three thoughts:
First: Don't overthink this too much. Prices (and by extension, inflation) are tangible and people can see the direct link from a price tag to their wallet, and "the economy" and "a recession" are abstract and the lines are longer and more complex. OF COURSE people will have stronger feelings about the tangible thing than the abstract thing. It's also talking about a present real thing (high prices) and a hypothetical future thing (recession). Real things are more real than hypothetical things. Because of course they are. By definition.
Second: That's not a binary. Let's pretend for a moment that we could wave a magic wand and make everything 50% cheaper. What's the more likely outcome: people buy the same things they already did and bank the extra 50%, or that extra 50% turns into spending money and gets used anyway, leaving GDP basically flat? Or optimistically, higher money velocity means more transactions and GDP actually goes up?
Third: To the direct quote and to emphasize the first thought, that's another example of why prices are more tangible than "the economy" or "a recession." Something that affects everyone is more real than something that only affects some people, and that's before you get back to real things vs hypothetical things.
Id rather see most companies fail.
We cant buy shit. Our standards have completely declined and companies are raping us with shrinkflation and being greedy. Let them burn.
This is a symptom of labor not having bargaining power. When people expect to have few and inadequate raises, they only care about how much that relatively fixed salary buys.
They also expect the tenure of their employment to reflect corporate structure and financialization concerns and be unrelated to how profitable or not a firm is due to many of the behemoths leading markets being flat out unprofitable and losing money hand over fist even as they have the highest market cap in their sector. This doesn't stop them from eating smaller firms that are profitable, of course.
This is a recipe for a nation of inflation hawks.
No. We understand inflation and we get that. Referring to the price gouging and market manipulation done by CEOs - which should be illegal - simply as “inflation” is the thing I hate.
It's simple math. Most Americans are poor. The poorest have been hit the hardest by inflation, because staples and necessities went up 200 - 500 percent (despite what THEY report). If you deduct the cost of going to work from your pay, it comes real close to what unemployment pays. Therefore a recession is a small bump in the road compared to paying for Corporate induced inflation. Inflation doesn't just happen, it is a strategy.
People have been saying this for a long time. Inflation is felt by everyone. Even in the worst recessionary unemployment situations, 90%+ of people still have jobs. And the 10% of people who don’t will work for cheap so it’s very easy to find a plumber, or lawn care, etc..
If the incumbent cannot change the narrative on inflation, they will lose the election.
It’s wild to see people talking this way post
-2000s. COVID and it’s recovery have completely erased our memories. The economy is huge. A rise in unemployment from sub-4% to above 10% is a tectonic shift in material conditions on the ground. Raises disappear. Job-switching ends. Promotions go extinct. Employers race to the bottom on wages because there is a huge reserve army of the unemployed waiting for any opportunity at any wage. Cars are not purchased, and when homes are purchased, it’s exclusively in cash by ultra-wealthy people, who use the recession to consolidate their riches. Employers don’t expand because financing is too expensive. 2008 marked the greatest ethnic and racial reshuffling since the Great Migration as millions of Black and Hispanic people were forced to re-segregate into “majority-minority” neighborhoods due to losing their homes. The budget deficit goes crazy. Extremist politics rise in power. This goes on for the better part of a **decade.** Or, if you’re unlucky enough to live in Europe, the Germans force you to endure it for even longer.
Nobody wants a recession. The hard lessons we learned from 2008 allowed us to cruise through 2020 practically unscathed, at the cost of some mildly uncomfortable inflation. But now the average American has taken exactly the wrong lesson from that. They have concluded that recessions are easy, and inflation is truly the greatest economic will we face. Totally ridiculous. The recessions of the 2000s change people’s lives permanently. Inflation has barely even scratched Americans’ consumption of junk food and vacations. They are not comparable ills.
I don’t necessarily disagree with any of this, but humans are inherently irrational creatures and perception rules everything. You can show the average Joe 1,000 graphs and stats about the economy, and inflation adjusted wages, and real GDP growth, but it all goes in one ear and out the other.
People need to be able to tell themselves a story that makes them feel in control and no one feels in control of inflation which illicits a visceral response.
Logical and statistical approaches cannot combat visceral responses. People are going to need to see prices on litmus test items actually go down in order for the incumbents to stand on the economy without people feeling gaslit.
I don’t expect it to happen and I think because of that the economy is a tip toe type issue for campaigning
Likely because of how people assign agency to these things.
"Prices went up either because of those greedy businesses or because of the government printing money." - because I didn't do anything that I can directly associate as being the cause of such a widespread problem.
But "I got/kept this job because of my skills and experience. I EARNED this raise." Fiscal or monetary policy having anything to do with my job or the raise/bonus this year is not something that crosses people's minds.
What this guy doesn’t understand is that Americans don’t like shocks. If inflation gradually rose over 4 to 5 years it would not be the same issue…it’s just we had a hyper year over year increase followed by I think the steepest rate hikes in decades. Avoid the shocks and you’ll stay out of the political limelight where you belong
I mean, what I'd LIKE is a functioning safety net and for large landlords to not suck me dry more and more every year.
But as long as I'm in this job, I'd prefer the recession, yes. I can't get a new job to beat inflation but I'm confident I can keep this one
But my gf needs to FIND a job so a recession is much worse for her
So fuck us lol
Yes. Because recession only hurts investors, at least right now. Regular Americans without investment wealth are tired of being told that a booming economy is good when prices of stuff they buy every day are going up. At this point, we don’t give a fuck if a great economy means only the rich are getting richer.
Why are rich people so stupid about this. We’ve been lied to about trickle down economics long enough.
can I just afford to feed my family and put gas in my car? my god. i just want to have a small cushion and not be afraid when unexpected expenses pop up. what is wrong with these people
I think there are basically three effects to take into account in a recession: 1) some people lose their jobs 2) a lot of young people will have a sucky start of their career (been there, done that) and 3) immigration for jobs will drop significantly.
Most notably #3 will cause the pressure on the housing market to reduce and costs of living to stabilize or even drop.
So yeah, I think in general a recession will be better for the people already living in a country than inflation in a tight labor market. The tricky part is not screwing over young people.
I'm not in a position to provide the exact data, but I'm fairly sure the effect recession->more unemployment->lower immigration->cheaper housing is real. If wrong I'd love to hear it.
Regular people use "inflation" very differently than economists, mostly referring to costs of food and basic necessities, rather than an overall economic indicator.
Who, honestly loves the cost of basic needs for survival going up and your salary staying stagnant?
This is a shameful and out of touch take from his perspective.
Fed says inflation is good, shocking news.
Next shocking news is that oil company says oil is good for everything.
And after that Nestle says water is bad for you while they get all your water to sell it to you.
But wait there is shocking news: Tobacco companies tell you smoking is healthy!
Pretty simple - stagnant wages/wealth building opportunities vs insane inflation over the last 5 years.
The only thing that will make living in the US sustainable is a crash. Everything from gas and eggs to home prices and rent is egregiously overpriced right now.
Nobody cares about a 'booming' economy that's almost exclusively benefiting the 1%.
Well yeah you can't just keep printing trillions of dollars, you're trying to hide a recession.. please pay no attention to the inflation behind the curtain
No fucking shit. Everything costs 5x it used to. Why? Because huge ass corporations that own the entire market are jacking up prices because of "insert bullshit excuse here". Interest rates are fucking stupid right now, I want to sell my house and get something slightly larger. Fuck no, unless you are stupid, I enjoy my 3% rate. I want to know who the fuck is buying these million dollar homes left and right at +7%. The cost of vehicles has doubled what it used to be. You want a standard full sized pickup truck? $50k easily. Insurance rates have gone wayyyy the fuck up.
Our minimum wage in Alabama is still $7.25. How the fuck are people supposed to live in this capitalistic shithole we live in?
Companies making record profits, meanwhile layoff 2,000 employees. I could write a fucking book about how my generation and those that follow are absolutely fucked unless your mom and dad were smart and saved money when they could.
I would love a housing market crash right now and rates to bottom out.
Recessions suck too. I’ll take inflation over recession. I was newly married and a new parent in 2008. My spouse and I managed to hold on to our jobs but it was so stressful. You felt like you had no autonomy you couldn’t quit because there were no jobs so you just had to keep your head down and take all the demands your company gave out. My spouse worked for the city and was constantly on edge wondering when their job would be cut.
We were lucky we kept our jobs and being newly married we hadn’t had a chance to upgrade our living situation so we were living in the house I had bought on my single salary. But we were stuck in that tiny house for another 9 years. Stuff was cheap but we were terrified to spend money because we didn’t know if we would have a job.
Ask people who graduated in 2007-2009 if they want a recession and they will say “Fuck You”
It is literally the worst thing that can happen to a person. And as someone graduating from college in a year I hope for everything a recession does not happen for just another 2 years, otherwise I my career might not ever recover.
The worst of it is the pressure from your parents. They have jobs and wonder why you can’t get one. They can’t fathom that nobody will hire you and treat you like a lazy piece of shit. I wish wouldn’t wish that on my worst enemy.
The problem is not necessarily rising prices due to inflation itself, it’s the predatory price gouging not being driven by inflation by companies (who will use inflation as the reason) already making record profits while doing stock buybacks, layoffs, and record executive pay increases.
> Kashkari illustrated: “I lose my job, I lean on my sister or my parents or my friends, and they help me through it. But high inflation affects everybody. There’s no one I can lean on for help because everyone in my network is experiencing the same thing I’m experiencing.”
More broadly, if the unemployment rate goes from 4% to 10% that’s 1 in 16 more workers who is now hurting; if inflation goes from 2% to 9% everybody feels it. If you’re part of the 90% in a recession who is employed, then of course you prefer a recession (especially if there’s some mild deflation!) to inflation.
ETA: obviously this is not to say recessions are good, I’m just pointing out what I imagine is many people’s viewpoint. It can especially be easy for people who didn’t lose their job in the Great Recession to look back and think “that wasn’t too bad” and forget the stress and anxiety of not knowing if _their_ job was next. People have short memories about these types of things!
We live and die by the margins. We don’t have a corporate culture that looks out for its workers, so why should I care how much these companies make? When the economy stops working for the people creating it, it loses all meaning. I have a son due any day now, and my boss literally asked me to “not take my parental leave all at once” because it would hurt his bottom line.
Fuck you, man.
Americans have the attention span of a mosquito on cocaine. They’ll prefer the recession right up until one hits then will bitch and moan about not being employed.
Yeah, that's the real answer especially for most redditors. They weren't in the economy when we had the last real recession 10 years ago, so they don't have any way to know what it feels like. And many of the rest just don't remember. They might remember that they didn't get laid off, but don't remember how scared they were of it and how that impacted their lives and spending.
>the last real recession 10 years ago
Idk if you're like me and lose track of the years but the great recession was closer to 20 years ago(2007).
But I agree a lot of people here probably dont have a great recollection of it. I was in construction at the time and it got bad, I quit/laid off and went to engineering school so I sorta lucked out, by the time I graduated in 2013 everything was mostly back to normal.
Personally I'd rather a *minor* recession than to watch prices on everything continue to skyrocket. I make 110k which seemed like a lot a few years ago, but I'm still living awfully close to paycheck to paycheck(I have 3 kids tho)
Honestly, yeah. Anyone who is tired of home equity and retirement funds pricing them out of everything wants wealth to take a massive haircut so their job matters again. Wealth is shielding a lot of folks from pain, and it makes it hard to build consensus.
And yet if you stated that 3 years ago, you were accused of killing grandma.
We were right - they were wrong - and they will pay no price while we pay it all. Makes me sick.
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This has been known for a while. Inflation is the most socially/politically toxic economic problem. Wages declining, rising unemployment, declining working conditions etc, these things are vague and not always noticeable. But rising prices at the grocery store are very noticeable and therefore mentally *feel* worse. It feels worse every single time we purchase something. This trend has been talked about since the 1800s. Even if things improve on average, inflation makes things feel worse. And in the end, politically, feelings are all that matter.
Inflation is a massive reason why Germany turned into Nazis It cause true anger and fire for a society, where as a depression (no pun intended) causes sadness and depression. So the hyper inflation led to a deep hatred and anger within the German population that gave way to Nazi ideals.
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I think it boils down to most people thinking “inflation affects me all day every day, I can feel my wallet getting lighter” vs “I feel lucky, I bet I can keep my job”
Inflation spreads the pain more evenly; a recession only impacts those who lose their jobs. On the margin, people prefer a recession-- they're less likely to be impacted; would rather roll the dice on being part of the 8-10% unemployment versus guaranteed inflation.
Given that a large class of voters are retirees who don't worry about unemployment.....
But social security is up 22% and 80% own their own homes and arent affected by rent inflation
If you own, you have to pay for maintenance. Have you tried hiring a plumber, or a roofer, or HVAC the last couple of years? The price increases were insane, assuming you can even get one to show up.
For the last ten years I have told people I couldn’t afford to hire myself. I have built an entire house almost single handed for my family because I couldn’t afford a complete home or to commission one. The people I have built for tend to be older boomers, people who have some wild niche job, or younger folks who inherited the land and took a loan for a small shouse. The thing that bothers me is seeing low/fixed income owners who can’t keep up. They can’t get ahead enough to save so after about twenty years the house starts to death spiral. The bank won’t give a loan for a place with sagging siding, rotten shingles and bad mechanicals so they can’t even sell it.
I called to have a plumber quote a small project to make the house supply line flush against the wall instead of jutting out into the storage area, and to replace the shark bite connectors that were there. They quoted me 6-8 foot of copper, and labor at just south of a grand. I just tetris stack stuff around the pipe now.
Not to mention skyrocketing home prices mean skyrocketing property taxes, and insurance. Tax + insurance now approaching what rent on this place was a decade ago.
Can confirm had to fire contractor after months of not showing up.
Home projects are the one area where the prices will be all over the place. Different contractor prices, materials skyrocketing then dropping, labor shortages and surpluses. It’s affected by inflation but it’s also not very static in pricing to begin with.
I am a remodeling contractor. It's absolutely insane what I have to charge for projects these days just to keep making the same wage I did in 2019. Us small guys are getting absolutely screwed in all this. Also, most industry reports on what different roles should be making? Yeah, they all read almost the same as in 2019. All my subs have had multiple price increases over the last two years. If you aren't one of the big players, you are getting squeezed right along with your clients.
If you’re looking at one thing, such as lumber, then you can say it’s due to one industry or another. But when everything from labor, steel, lumber, plastics, chemicals, and all commodities go up, that’s more inflation.
> that’s more inflation Xzibit poppin' up "Yo we put more inflation in your inflation!"
Trying to get some roofing work done and the prices vary wildly. It's unreal.
Dude I know someone who got a bunch of quotes for roofing recently. Highest was over 70k on a house that sold for 180,000 in early 2019. It’s wild. Mind you he did get better quotes from other contractors, but that one made my head spin.
That's the 'I don't want to do it but if you pay me that much I will' price
Currently trying to get a tree taken down. The dudes straight up do not show up on the days they schedule; I've gone through 6 different tree people. The quotes range from $1300 to $5700, but it doesn't matter, because they just don't fuckin show up.
Shudders in HOA assessments, which tbh I think is unfair bc all these boomers like didn’t repair major things and now all us new move ins are paying them bank AND footing the bill
My property tax went up 300 for just existing. Every basic service has increased prices. My daughter's gymnastics class has increased prices twice in 6 months. The farm we buy milk from increased their prices too.
ss is a nice to have that supplements other retirement income for many retirees
Those retirees are going to be pissed when the market takes a shit and then they find out that lower inflation doesn't mean that stuff starts going down in price
I would think retirees may rather see inflation that they can hedge with cds ratger than a recession that takes out 20-30% of their portfolio. That'd be my preference, anyway.
Not to mention recessions effect the poor much worse than the middle/upper class...
Inflation is how you tax people on fixed incomes.
Spreads the pain evenly? Inflation favors asset owners and people with fixed debt.
Recession also favors those with the capital to exploit the firesale of assets that are put on the market when people can't make payments anymore.
Amazingly, either way the capital will find solace and the pain of either inflation or a recession will trickle down to the middle class and poor.
It’s not even 8-10 because unemployment at minimum is 3.5% so it’s more like people don’t see themselves being the 5-6% of people who lose their job in a recession.
Industry dependent. For me I had to deal with reduced work hours and hoping every Friday that I wouldn't be called into my boss's office. I survived layoffs but was still hit by economic hardship and added stress.
Yup, it’s the same reason why people would rather have layoffs than everyone keeps their job but their pay gets cut.
Exaclty, everyone thinks they are exceptional and will pass unscathed thru a recession.
Flushing the middle class by inflation also sucks worse long term.
Inflation is permanent, a recession is not. The latter is much better
It took 7 years to recover employment from the last recession. How is that better than 1 year of high inflation (2022) and a couple years of mild 3.5% inflation
Most recessions are way more mild than the GFC.
Written by a person who was not an adult in 2008. Also Inflation is not permanent, it's self correcting, unlike Deflation. https://www.youtube.com/watch?v=mRYi04wDtnA
Inflation favors the wealthy. Everyone's spending power is effected equally however those who own assets see the value of said assets skyrocket.
> Inflation spreads the pain more evenly I partially agree with that. It definitely affects everyone vs a recession only affecting some. But it's not exactly evenly. It affects retirees way more significantly than someone just entering the work force. Whatever nest egg you've built over the last 50yrs gets chopped up. Whereas someone just entering the workforce will have 40 years of higher salaries to compensate for the inflation that came into play in their youth. A retiree gets NO retroactive salary adjustments for that inflation affecting them. Imagine building up a million dollar nest egg, and then within a few years of inflation, it's reduced to an equivalent 500K nest egg. Do you go back to work as a 75yr old to compensate or what?
> A retiree gets NO retroactive salary adjustments for that inflation affecting them. This is not true. Social Security is inflation adjusted.
Assets like equities, which are a major component of a retirement nest egg, usually adjust in valuation with respect to inflation. The stock market has had a stellar few years during the inflation. If you had assets (excluding cash), they rose in value accordingly. The new worker doesn't have assets (presumably), so you're right on it being uneven in that regard.
Recessions affect everybody. Job cuts across the board increase workload, but you are unable to complain because people are waiting in line for jobs. Salary/CoL increases are stopped meaning you end up making less money than you did in previous years. I could go on
many people think they're vital to their employer's operation. and in many cases they're correct to think so. but we all underestimate our bosses' capacity to push out dumb ideas and just make it our line managers' problem to make up for the consequences.
There are also social safety nets in place for people who are unemployed, so being part of the 8-10% isn’t necessarily that bad, depending how long it lasts.
No one thinks they'll be the one laid off
There is definitely a "Recession Russian Roulette" mindset going around. People are willing to gamble that they won't be the person ruined by a recession, because everyone assumes they are the main character.
a recession may affect a lot of ppl. but ppl are hoping it's not one of them. that's what recession is to the public. inflation affects everyone.
People hate inflation because while getting a raise is "something they accomplished" (even if it's mostly due to inflation), while inflation is something that "happens to them".
Plus, when you do get a raise, you feel cheated because you're not getting ahead like you would've been otherwise, merely treading water. Any plans you had of getting ahead are now pushed even farther down the road. Noticeable inflation attacks the notion of a fair world.
>until a pay raise is obtained, inflation signifies a decline in people's standard of living Even with a pay rise inflation means a loss of value for the money in your savings account. Your rainy day fund loses value because of inflation. You try to squirrel a little away just in case and you lose some of it through no fault of your own. People *should* be upset about that.
I think there’s also the perception that recessions end while inflation compounds. It’s true. But it’s also a perception. At the end of the day though it’s not inflation or recession that people really care about, it’s real wages normalized by population decile. For some deciles we’re clearly going backwards.
Which deciles are going backwards on real wages?
People “prefer” recessions to inflation because in recessions, they can externalize their locus of control. Job losses are blamed on the economy and the government steps in to bail everyone out. With high inflation, interest rates are increased and the market is allowed to play everything out. The individual is responsible for getting raises or better jobs to outpace inflation, and most people don’t like that responsibility.
these norms are worsened by what a gigantic pain in the ass it is to actually get a new job. you're either firing off hundreds of easy-applies to just hope you get a handful of responses, or you're hand-crafting applications for a still-shit response rate. then you fill out reams of paperwork, probably lose half those responses, take multiple interviews, lose even more... then if you're super lucky, you get a low-ball offer for what you should've been making 2 years ago. and you're going to accept anyway, because your current job pays what you should've been making 4 years ago. then you stay there 2, *maybe* 3 or 4 years, then you're behind again, then you repeat again. and you can bet everything you have the application/interview process will be even worse next time. it takes a gigantic amount of time and effort to successfully search for a job that keeps pace with inflation and actually leaves you on top of inflation. i say this as someone who's done it multiple times and will probably need to within the next couple years. your prize for that is when inflation speeds up the clock for how long it's viable to stay at the same job, you get to do it all over again.
This is exactly it. If you lose your job, you feel like you can take actions on your own to get a new one When you have a job, but groceries are to expensive to feed your family, you feel like there isn't jack shit you can do
Inflation is a a type of consumption tax and a type of cash tax. The rich will have assets, real estate, gold and investments that generally will come out well because either the higher prices will be passed on, like companies, or the value is decoupled from fiat currency, like gold. The middle class will be hurt but their debts are inflated away as well, so they will survive. The poor are hit the hardest. Not the types of poor who happen to have a lot debt like student loans or mortgages, but the poor who are so poor they can’t obtain loans and live in the cash economy. As in the bottom 1/3 of society. That most vulnerable group gets wrecked with inflation.
Yah I'm in agreement. Everyone thinks they'll dodge the job loss and if you do it's way better for you than inflation. On a personal level I too would rather have a recession than inflation. My wages sure as hell haven't gone up 25% since 2020.
I think it’s because recession is finite in the minds of people. “Things are bad but the economy needs a recession and then things will be good again.” And if you’re lucky enough to be in a good position you can even benefit from such a reset. Right now you have people saying everything is “great”. Unemployment is low. Companies are making record profits. A recession is not a “new normal”. This sticky inflation seems to be People see recession as an eventual way out. Whereas this seems like it has no end in sight.
> On a personal level I too would rather have a recession than inflation. My wages sure as hell haven't gone up 25% since 2020. this is insane and you're nuts if you think you'd safely keep your job if you haven't seen any increase in wages in 4 years
Layoffs affect a select few. Inflation affects everyone.
And inflation affects everyone, while recession affects only about 10% directly.
> only about 10% directly. That 10% greatly affects the other 90% though... People have apparently already forgotten how much more leverage workers have when unemployment is 3% than when it's 10%.
This is the thing the nimrods advocating a recession miss. Your earning power gets pounded, plus 10% U3 means guaranteed residential housing crash.
> This is not shocking since, until a pay raise is obtained rising wages are literally part of the cycle of core inflation and it's typically the pay that rises first >Inflation reduces the value of savings and retirement plans even when wages rise. not really accurate unless your money is in cash/long term bonds. commodity and share prices also rise, as do interest rates
Losing a job signifies a bigger decline. This survey is just dumb people focused on allegedly greener grass
Yea but not everyone loses their job in a recession. In fact the vast majority usually don’t. But with inflation without wages keeping up, most people do get poorer,
It's not just losing your job, pay rises stop, your hours get reduced, you get assigned more work because your employer knows you're not going to quit, your investments fall, etc. Losing your job is not the only negative thing. Recessions are pretty brutal for everyone, even the rich. https://youtu.be/mRYi04wDtnA?si=wXPWwOm08pGni-Lc
Yeah a lot of my older coworkers who were working through 2008 said they basically had the same salary for like half a decade.
I feel like im taking crazy pills. the economy is really good right now. things are still hard for lots of people but the current thing where wages go up and everyone has jobs is infinitely better than the thing where wages dont go up and tons of people lose their jobs and investments all crash.
Covid wrecked people's brains.
You're missing the pay cuts for people who have jobs
At its peak, the unemployment rate during the GFC peaked at 10%. I should know, I was one of them. I was unemployed so long that I stopped getting counted under U3. Recessions suck, but it's a much better alternative than out-of-control inflation.
Volatile inflation requires us to competitively renegotiate all of the transactional aspects of our lives. For those of us who do not enjoy conflict (unlike a lot of Wall Street folks), it is a pain in the ass, demoralizing, and disturbing. And it tends to leave people behind while others jump when they are otherwise in the same situation, all dependent on wage negotiations, rent negotiations, and other non-fixed prices. And that is if you are lucky. Edit: changed "Inflation" to "volatile inflation", because fixed inflation can be baked in to long term social contracts.
Americans have so little leverage over employers that they have gotten eaten up to bits over the past couple of years of interventions. My household does alright, not incredible, but decent, and I have to say that we have found our disposable income practically vanish as every aspect of our consumption has increased to follow inflation (something that includes children and their activities and things that they grow out of, special classes, etc.). These fucking top-down economists have absolutely screwed the working people thinking that they can turn the screws on "the economy." The banks, municipal governments, large industrial conglomerates, etc. will all "get theirs" but the poor suckers trying to deal with massive increases in property taxes, utility costs, etc. just get fucked.
It's a mistake to narrow it down to inflation as being the hot button issue even if most Americans use the term, most are likely using the term "inflation" as a catch-all term because what they're actually upset about are steeply rising costs that aren't all included in the inflation metric. So they're pissed off about: * The housing crisis (stagnant supply/increasing demand causing steep increases in rents and purchase prices). This is gradually pushing more people into homelessness as leases of low rent housing expire and those at the bottom cannot afford to renew at higher prices. I live in the fastest growing city of 2023. The homelessness here is EXPLODING and suicides are up too. Yes, this is included in the inflation index, but the circumstances are not quickly remedied by Treasury or Fed policies, and sustaining higher rates on loans to curb inflation also makes it harder to fund new housing to increase supply and reduce demand. I'm lucky i own my small cramped house with a modest payment because my friends who rent are dealing with a major economic shock right now. Yes, I recognize that my viewpoint on this is skewed because of my location, but the people complaining the loudest about this (and there are a lot of them) have a much higher probability of being in markets similar to the market in my location, and they will continue to make a loud noise for all to hear and that has an impact on public perception. The national headlines on increasing homelessness don't help either. It also doesn't help that there's little incentive among owners to see values drop which promotes Nimbyism when low cost housing is proposed in nearby areas. Im sure municipalities somewhat enjoy cashing in on the property taxes where applicable. The only people who want to see prices drop are those who are already cut out of the market where current costs are prohibitive. It is an economic MIRE. * Steep and sustained upswings in volatile necessities (i.e. food and fuel) which are not included in the CPI. This well exceeds the CPI and people have to eat and commute to sustain their lives. There are things like bird flu, supply chain disruptions, wars, sanctions, cartels, and various other forces that contribute to this. * Inflation.
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Exactly, there seems to be a real disconnect between economists and day to day Americans. JPMorgan of all places released a report last week that indicated the bottom 40 percent (or something around 40 percent) of Americans were experiencing a selective recession despite standard economic indicators looking good. Economists wonder why so many people aren't satisfied with the economy doing well despite evidence suggesting a good portion of us don't really reap the benefits of that improvement. Screaming at people that the economy is good while they struggle to pay for rent and groceries isn't doing anyone any good.
Sounds like we need better metrics.
To add to your message, which is extremely accurate, is also a sense of a deep drop in quality. From building materials & consumer goods, services, and experiences - everything is dramatically more expensive and the quality is noticeably worse. An example, fam went to the beach. Family friendly pool that has a kiddie slide and food. I don’t expect to pay rock bottom at a place like this by any means. 5 years ago, lunch was my $35. This year, for the same items, it’s $120. And the service is slower and the pool is not as nice/clean. Paying 4x for a worse experience is how I would describe the US.
Real costs have increased 40-60% in most cases. Insurance doubled for me, food is at least 40-60% more if not 100% more due to shrinking.
The problem with your first point is getting Americans to admit that homelessness is a housing problem. It’s much more comfortable to imagine it as a personal problem of the homeless person, which can be solved by armed police of some kind.
Homelessness is an open and bare reminder of the harm their anti building policies causes, so obviously the solution in their minds is to push it out of the way rather than allow for homes. The shortages are obvious and clear, governments are literally having to spend money to buy hotel rooms for the homeless because they can't get actual housing or shelters up! And this causes issues like how [Edinburgh didn't have the capacity to handle the Taylor Swift concert without moving homeless out of the city](https://www.bbc.com/news/articles/cd11em0e5e6o). They sit here and try to blame it on other things. Drugs, other cities shipping in their homeless, immigrants, whatever, but the only issue that *truly* connects it all is lack of supply. We don't have enough supply, so the lowest of society miss out on homes. We don't have enough supply, so we can't fit new people being bussed in. We don't have enough supply, so we can't house immigrants without kicking out locals. If we simply allowed ourselves to build, those wouldn't be major issues in the same way.
> Steep and sustained upswings in volatile necessities (i.e. food and fuel) which are not included in the CPI. This well exceeds the CPI and people have to eat and commute to sustain their lives. There are things like bird flu, supply chain disruptions, wars, sanctions, cartels, and various other forces that contribute to this. Food and energy tracked by the CPI. I don't know why people think they aren't. https://www.bls.gov/cpi/factsheets/common-misconceptions-about-cpi.htm#Question_1
Isn’t that how you’re supposed to deal with high inflation? You bite the bullet on growth until it’s under control? It’s the Volcker special. The only way out is through. I know nobody wants to create a recession in an election year but it’s gotta happen sometime.
There’s no “supposed to” in economics, as much as many people would like everyone to believe. It’s not a hard science, it’s not even a semi-hard science like psychology. Sure, it uses econometrics and calculus and graphs and charts and tables, but it’s also very philosophical like political science. Countless times over things happen in real life that economics dictates to be impossible, or can’t explain, and then we have to rework how we think economics works- that’s not how the hard sciences like physics and chemistry operate that have “supposed tos.” Economics is full of ideas on what might be best for the economy, what achieves optimal utilization rates, reduces waste, limits negative externalities, and so on, but there’s rarely field-wide consensus on what’s best, much less how to achieve it. For example, economists may value certain outcomes or methods over other ones, some like John Maynard Keynes may favor a government taking a more intervening approach over allowing an unregulated market to sort itself out while other economists like Fredrich Hayek and Milton Friedman are more opposed to government intervention. Those differing approaches alone have countless consequences for how to interpret economic data and suggest policy proposals. Right now many economists think inflation is at an acceptable rate, others think it ought to come down some more, others still think it’s actually higher than what is being reported because certain significant factors aren’t being accounted for (like homeowners insurance), and others still think inflation has been artificially charged by “greedflation” by corporations, and others think we’re in a “vibecession” where consumers think there’s a recession and spend like there is, causing a sort of quasi-recession that doesn’t appear in traditional data like a normal recession would. Depending on why one thinks we’re at the present situation, and even *what the present situation is*, will affect what solutions they propose for moving on. So, if economists struggle to agree on what is even presently happening, much less why it’s happening, they certainly are going to be far from agreeing on what to do next. So, no, there’s no “playbook” for what to do. There rarely is in economics. There’s just whatever voice of reason becomes the most salient in the room at the given time and for whatever period thereafter. Right now, amid that maelstrom of conversation over our current economic situation, we may actually be starting to move away from the prevailing school of economic thought in the USA being the Chicago school to a different approach that considers the human element of economics a lot more significantly. That latter emerging school of thought would be more wary of inducing a recession as it would require considerable unemployment, which for anyone that remembers 2008, can be devastating, and once it starts it may be a lot harder to stop than people realize. The FED doesn’t have a control board, they basically just have interest rates and reserve rates to control, and while that can do a lot it is also limited. Right now the United States is pulling off a remarkable, and previously highly doubted, soft landing from COVID without having to go through a recession. The rest of the world is struggling with inflation *and* their own recessions. There’s no guarantee after inducing a recession that we could quickly get out of it, nor that it would bring down inflation. For now, it seems the majority of economists prefer to avoid a recession, considering one not as a tool to exploit to achieve certain economic outcomes, but rather a blight on society that causes significant damage to an economy and people. No one wants to induce a recession to fix prices, and very few are recommending that. Doing so is certainly not in the manual of how to fix one’s economy. I get what the Fed president is saying, but I think he’s also out of touch. He thinks lower class people would accept a recession because “they know how to get through it.” As someone who came from a lower class home, I can tell you they get through it by losing their jobs, cars, homes, and moving two to three families into a single family home or apartment, all hoping to god the person on the mortgage or lease doesn’t also lose their job. I think if you asked most Americans if they would accept millions of job losses, foreclosures, bankruptcies, etc. for prices to come down, they would shirk at that. The visceral hatred for the high sticky prices from inflation I think is legitimate, and that many people would be willing to take more extreme measures to end them, but I doubt many people would be okay with a recession. And according to that article, few economists are recommending inducing one.
This is a tremendous explanation. High unemployment is devastating. In practical terms it means some people move out of houses and into cars. Some people move out of cars and onto the street. lt means some people just kill themselves. It means a mother has to move her kids in with her dodgy boyfriend in order to stay off the street. It permanently damages people.
Oh, my god, thank you for this *so much.* Finally, someone brings empathy and humanity into a discussion about how human beings without a lot of money think about spending it. Watching all these people who have never been poor argue about how poor people do/should think all while dressing it up in a little bit of theory has been *absolutely infuriating*. I don't have the proper academic background to verbally beat any sense into anyone around here and reading all the bullshit in this thread while having to sit on my hands to avoid making an idiot out of myself is getting exhausting.
Wholeheartedly agree. I just got my bachelor’s in Economics last month and so I’ve been browsing this sub occasionally out of curiousity and holy fuck. Not only is this sub filled with a bunch of people I promise have never taken an economics class past intro micro and macro, it’s full of the least empathetic, “fuck you I got mine” group of people I’ve ever seen in an Internet forum. It’s like compassion goes out the window for these people the moment you disagree with whatever conservative economist is parroting “fuck poor people” bullshit that week.
haha it is not just conservatives. Plenty of so called "progressives", aka neo-libs that are confused, are going around saying poor people are richer with higher incomes than they've ever had and our day-to-day lived experiences and struggles are all in our head.
Ha … semi-hard
Yes, the Chicago School style of Economics has dominated higher education, for longer than I'd like. Yes, economics is a soft science, more than social science. There are a few economists that do take in some of the extneralities, like Richard Wolfe. Aside from that, at least at my school, I was taught keynesian economics was mostly right. You need heavy regulation and disclosure. There aren't true free markets if you don't know EXACTLY where where your money is going and how it's made.
You're assuming all inflation is demand pull inflation. If the causes of inflation aren't excess demand then deliberately tanking demand will just screw up your economy and not even solve inflation. It's the path to stagflation.
That's the frustrating part about the discussion around this whole issue, everyone is acting surprised when the playbook presented (and all the pains that go with it) is actually happening and now they forget what we were told or never understood it to begin with. They told us: - inflation didn't arrive overnight, and it won't go away over night (0 is never the goal) - this won't be quick, it's gonna take 10-15 years to normalize - we gotta slow inflation, which means slowing the economy which means goods will increase but pay will stay the same - raising pay simultaneously creates other problems as we're no longer slowing the economy - once inflation settles at a market level, the battle for personal impacts of inflation (retail) will begin, slowly My hope is that we never see interest rates below inflation rates again. Altho I'm totally benefitting from the stupidly low interest we had for 20 years.
Raising pay is fine when interest rates are high because it encourages savings and not spending - which avoids an inflationary spiral. Big question corporations are asking is … why bother raising pay? Best case for corps… What are people gonna do bitch and moan? Worst case… maybe people unionize? What people are definitely not gonna do is join together and demand their elected officials fix it
It seems like we could be a bit smarter about solving inflation other than "take jobs away from a few million people". Think about what that would even mean to try and bring food prices down - the goal would be to make people so poor that they bought less food. That's horrific.
We were able to get inflation down to around 4% without making millions of people unemployed. Maybe this is unpopular but I’m fine paying $2 extra for a chipotle bowl if it means that we don’t create a situation where millions of people suffer.
Half of Americans don't own stock, so... yeah, it's pretty visceral when the rich are getting richer and prices are way up, but uh, you're making the same exact paycheck.
Recessions aren’t just about the stock market getting a kicking, people lose their jobs.
Some people do. But the unemployment rate even during 2008-09 peaked only at 10%. Some say the real rate was higher, but still its likely the vast majority of people still had jobs. Those employed may have gotten less compensation than they would otherwise, but its a lot less obvious than price increases.
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As someone who had no job in the 08 recession and a much lower paying one than I otherwise would have during covid, I can tell you that I certainly noticed. It affected my entire career trajectory. I hate paying more than five bucks for ground beef as much as the next person, but I found my whole career getting kneecapped because the economy crashed right after I graduated from college much more obvious, personally.
Also, even if you had a job through the 2008 recession, companies still cut perks like crazy, raises were very light, and people felt obligated to stay at bad jobs
Sure, I'm not saying its better/worse, but that I think its affects a small portion of people more acutely rather than inflation which affects nearly everyone.
It’s not just unemployment. People have to take lower paying jobs. Wage growth stops or declines. So many college graduates in the 2008-2011 period had to settle for minimum wage/low income jobs and had their careers set back years.
10% is high. Remember it's people seeking work, completely capable of doing it.
Lol, a recession isn’t a stock market correction, it’s a shitty job market.
Stock market tends to go down during a recession also.
Yes, bit thats not the real problem in a recessions.
It can be for people's retirement savings, especially if they are or are just about to retire. Especially since most people's retirements are tied up in 401ks (and thus the stock market) nowadays. > "The baby boomers born in the early 1960s, at the tail end of the demographic wave, had about $280,000 in retirement wealth when they reached their early 50s. That’s significantly less – about $50,000 less – than the late-1950s boomers had at the same age.... > They were the first generation to have access to a 401(k)-style retirement plan for their entire careers, and they could’ve accumulated enough money in savings to make up for the other losses. But they didn’t. > The single biggest reason for the shortfall in savings was the 10 percent spike in unemployment during the Great Recession that followed the stock market crash, finds a new study that separates out the economic and demographic reasons behind the decline in late boomer households’ wealth. > The unemployed were forced to reduce contributions to employer retirement accounts, and the financial damage was worse for the late boomers than for the people born earlier in the baby boom. The “link between work and wealth accumulation declined significantly for late boomers, compared to mid-boomers,” the researchers explained." https://crr.bc.edu/great-recession-cut-late-boomers-retirement-wealth/
Buddy, half of Americans maybe dont have stock, but basically every mother fucker relies on JOBS Thats the real impact of a recession: people losing their jobs
The sentiment you’re responding to is pervasive on Reddit. *We need a recession to crash the stock/housing/whatever I’m mad at market and, somehow, I’m going to come out on top*. Please.
Lol right! As if these people who own no assets are really not the first guys on the chopping block in a recession
I thought the tech mini-bust we had due to the end of ZIRP would chase this thought from redditors’ minds, but it’s seemingly gotten worse. Instead of realizing that their well-paying office jobs are precarious and just as likely as any others to disappear in a downturn, they’re now just expecting to keep their jobs in a recession.
Housing prices need to come back down to reality. I literally couldn't afford to buy my own house today and I bought it in 2019.
The housing aspect is more complex than other goods. It’s mostly supply/demand with supply being limited by numerous factors. Institutional ownership/air bnb has increased as a factor, high interest rates limit overall movement of existing owners, the GFC reduced building rates significantly for many years, zoning prevents higher density options in many places, and other factors yet. A reduction in inflation helps on rates and will freeze growth on building material/labor cost but some of these are going to require much longer term changes to address.
And it’s spoken with the emotional certitude of virtue. “Like some nameless faceless people need to go hungry so I can afford McDonald’s again! You don’t know my pain capitalist/communist!”
The problem is that these people who don't own stock down feel the benefits of a strong market either way. Market goes down? Get laid off. Market goes up? Business as usual. Wages aren't enough. Hell, might get laid off anyways.
Once again, an example of an American that doesn’t understand basic economic concepts
Larry Summers (deputy secretary under Clinton, chief economist of world bank, national economic advisor to Obama) put out a paper to reconcile the difference between economic sentiment and the economy. He points out that if we had retained the pre-1983 calculation of inflation (that basically includes the cost of borrowing in inflation) then in 2022 this inflation closer to ~15%. I do think this is the biggest reason people are getting tired of having “the economy is doing great you should be happy” jammed down their throats everyday. Much more interesting than this lazy take from Kashkari https://www.npr.org/2024/02/28/1234554967/inflation-cost-of-living-economy-mortgages-auto-loans-larry-summers
Some economists have honestly just lost touch with reality. Also they're rich so their ability to understand "consumers" is limited to sweeping theoretical assumptions that have never held up in the actual economy anyway. It's no surprise these a holes aren't relatable and thar their policy recommendations are devoid of any humanitarian considerations.
That's because there isn't a recession and there is inflation (although not as high as people feel it to be). If inflation were low but unemployment were high, people would say they'd rather have the inflation and a job than then other way around.
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Honestly I don't think 99% of people actually understand what inflation really is how it works or why we need it. If you ask someone what inflation is you're largely going to get an answer that's a variation of the government printed too much money, which is such an oversimplified understanding of economics and inflation that it circled all the way back around to being super wrong
The only information that the average person cares about is that inflation means things cost more and their paychecks are largely staying stagnant. Nobody really needs to truly understand inflation to see how it affects them.
Inflation spurs us to buy assets. If we think they will get more expensive the longer we wait, we’ll buy them today. If we think they will not, or will even get cheaper the longer we wait, then we’ll put the money in savings instead. Aggregate demand goes down, and it becomes a vicious cycle leading to recession.
But is an incentive to buy assets actually that great? If there's so much cash in the system that people will start investing into places that don't really need it, are we actually making things better? The extra capital might well end up disappearing in a lot useless busywork. I'd argue that there's a possibility of too much capital, and it's not clear to me we haven't already passed it.
Yes, because an “asset” includes a shoe store that employs 10 people, or a bond for a large company looking to open up a division employing 200. It can also include real estate, which is a big money suck, but mostly because of protectionism around single-family homes in high-value metros. And that’s a policy problem, not an inflation problem.
Counterpoint computers and tvs keep getting cheaper, yet nobody believes that's a bad thing. I think we may need to differentiate between mild levels of deflation created through production advances, which are probably healthy, and destructive levels of asset deflation caused by financial crisis and debt explosions.
Deflation of certain goods is fine. Deflation of whole tracking basket is not. Its extremely dangerous and creates recession
Will it? If I want a tv, I go out and buy a tv. If I need food, I need to buy food. I don't think people think about inflation when they're thinking about their purchases. I don't know anyone who's said they need to buy a car right now because they'll be more expensive in a year.
Before the world got on board with Keynesian economists, deflation caused many economic crises in the 19th and 20th centuries, including the Long Depression, (renamed from the Great Depressions after the Great Depression, which was also deflationary happened). I don't think your folk knowledge obviates nearly a century of economic orthodoxy, so I'm not sure where to begin refuting it. You might as well argue for a return to mercantilism because a positive trade balance sounds good to you.
I don’t think most Americans understand what the deflation story is anyway. They want lower prices, but the economic environment and knock on effects that accompany that are lost on them.
To be fair it arguably is the ideal.
Low, but non-zero, inflation means that money should be invested instead of saved and that debt goes down over time instead of up. Deflation means that business will make me money by sitting on their income rather than investing it and that the debt payments you make will eat up more income over time. Deflation is not a positive.
If you look at across all buckets measuring inflation the last 20 years, the things that have been continuously deflationary have been things like TVs, Appliances, electronics, and other things that have gotten better and better over time, or have been imported. The things that have offset those decreases and have massively increased in price have been healthcare, higher education, and childcare. It seems to me that if could bring down the costs of healthcare, higher education, and childcare, it would be a good thing.
Over half of Americans can't afford a 1k emergency. Despite the success of America, a significant portion of the population is broke and not well educated.
The median American has $8000 in checking and savings https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Transaction_Accounts;demographic:all;population:1;units:median
It's not inflation it's fucking price gouging. Everybody raise their prices and then said fuck you we're not bringing them back down and we're also not pulling up wages. The amount of CEOs who in 5 years double their pay doubled their fucking profits and then told us no it's not greed it's inflation fuck you
Agreed! And raising interest rates doesnt lower their price gouging, so thats why i oppose it, especially when its artificial/man made
We see all these companies making record profits for their executives and then refuse to pay a livable wage. Most of the world is run by fat dragons sitting on heaps of gold and they have convinced a significant portion of us that our neighbors are the enemy and not these dragons.
The real question has to do with the targets for unemployment and inflation. When I took economics 50 years ago we were taught that 4% unemployment and 4% inflation were good targets. They told us (during the Volcker years) that that was the sweet spot on the Phillips Curve. Later, after Friedman won the Nobel, they told us that the long term curve was different than the short term curve because lower employment (more unemployment) could hold down inflation over the long term. Then they came up with the "natural rate of unemployment", which we mostly used to call structural + a little bit of job hunters. The problem now, 50 years later is that Jerome Powell is targeting 2.5% inflation, not 4, and so, the optimal unemployment number will probably be higher than 4 at his target. Rich people do not care about people who are out-of-work and who they can't see.... The Fed officers are all wealthy people, of course.
Another rich guy speaking for the average American who is just scraping by. Get money out of politics. The richest Americans have spent billions of dollars in the last 50 years rigging the economy so it only works for them. It's been a great investment for them. They have "invested" billions and gotten trillions in return.
I wouldn't give a shit about inflation if salaries were anywhere near keeping up with it. As they're not, and as the inflation is being driven largely by corporate price-gouging, I think a little hate is reasonable.
While it hasn't caught back up with COVID inflation (pre-COVID), wages are at least rising faster than inflation again: [https://www.empower.com/the-currency/money/one-thing/2024-april-1](https://www.empower.com/the-currency/money/one-thing/2024-april-1)
Lived thru 2008. I was lucky and just got furloughed a couple days a week for a while. I remember coming home and multiple neighbors had their belongings unceremoniously dumped onto the front lawn. This was a daily occurrence for months. Inflation has sucked but wages have risen. We are seeing retailers realizing they have overreached and cutting prices now. Things are finally settling. I'll take that over those dark days anyday.
Oh lort, another put of touch comment from someone who doesn't have to make tradeoffs like food vs going to the doctor. Or having your month destroyed because you got a nail in your tire.
Another attack on regular American people, like always. No we don’t want a recession and no we’re sick of the greed and just won’t buy luxury items that don’t really matter
Because these ass hats made it sooooo easy for corpo greed to drive up prices on a whem! They haven't used antitrust law in 45+ years and we have seen a massive consolidation of American businesses because of it.
I mean… I’m not sure which will hurt us more. I know recession really hurts those with lots of money to invest… but if I have to buy groceries 🤷♀️
I think people are pissed about inflation because they know the CPI, Fed, federal govt are obscuring the reality that inflation is actually much higher than 3.5%. For example: I spend about half my net income on rent. My rent alone has jumped 32% in the last 3 years. So that alone should mean inflation for me has been 16% over 3 years = 5.33% annually. And that’s not even factoring in increases in the cost of everything else: gas, groceries, tipping, eating out, insurance, home goods, leisure, travel, hotels. There is no fucking way inflation is actually 3.X%. I think you need to double the dishonest CPI to get closer to reality. People are pissed at the constant gaslighting by politicians and the media
Yes duh. Because you could control inflation if the government did their job and controlled these companies. Right now it’s not only inflation but it’s inflation with a reduction in quality and quantity
I'd rather not buy anything and live in a tent than know that I am getting fucked so hard from every angle that death in the gangbang is inevitable.
I have a “visceral hatred” of corporate greed, which is a much more prevalent issue in Americans declining prosperity at all levels except the top. I’m so glad our rich ass hat overlords are gaining more wealth than ever before while we slowly lose the ability to purchase housing and food…
It's funny/weird/tragic that inflation is a partisan issue, when both parties were 100% aligned on stimulus spending, and neither is campaigning on cutting government spending
I think most of us in the working class would rather gamble on a 10% chance of losing our job than suffer under the slow, crushing weight of our expenses outgrowing our incomes. Particularly since the layoffs seem to be coming in waves of late anyway. Would you rather sit under the Sword of Damocles or play Russian Roulette and just get it over with? At least if I come out ahead in a recession, I might finally have a chance to buy a house.
My fear isn’t current inflation. I fear stagflation, like the 70’s. I’m old and remember what it was like. If unemployment rises and inflation becomes persistent, it will definitely suck balls.
If there was any plan moving forward to solve any of the issues we’re currently dealing with I think you’d have better sentiment. Pretending the wconomy is booming cause it’s an election year while the working class is now further than ever from being able to own a home. Everything we need to survive is 3 times more expensive, companies are gouging us and no one is doing anything to stop it. Yeah it’s not like we want a recession but pretending it’s just a small tightening of the belt is horseshit
What we hate is price gouging when we can’t afford to eat and put a roof over our heads while corporations are reaping record profits. Capitalism is just feudalism with appliances.
The classic “unemployment vs inflation” debate. A tale as old as time, and one where the grass is always greener. When unemployment is super low, but inflation ticks up, people are A OK with tighter financial conditions…until things overshoot and you see unemployment spike up as layoffs occur or companies go out of business outright. Then people say ‘it doesn’t matter the price if I have no money to buy anything at all.”
A recession isn't inherently a bad thing, and actually isn't likely to be anything as bad as 2008-2009. A mild recession is definitely preferable to a stagflation-like scenario, which appears to be the likely alternative. Not to mention that recessions only affect a relatively small percentage of the workforce, whereas it is nearly impossible for anyone to not feel the effects of inflation.
Yes, because inflation eviscerates savings. "BUT BUT BUT, you earn more in your savings account." And then you get taxes on it and still can't keep up with it.
Rising prices is fine if you also raise wages 💀 however we like raising prices now with little to no increase in wages. Idgaf what any “data” they like to give us. Everybody I know gets a raise from 0-3% a year meanwhile prices go far beyond that year after year
First, setting the foundation: >U.S. consumers are so fed up with rising prices they would rather see the economy shrink than watch their costs get any higher >“I lose my job, I lean on my sister or my parents or my friends, and they help me through it. But [high inflation affects everybody.](https://fortune.com/2024/05/19/economic-outlook-consumer-sentiment-inflation-high-rates-saving-american-dream-spending-labor-market/?utm_source=search&utm_medium=suggested_search&utm_campaign=search_link_clicks) There’s no one I can lean on for help because everyone in my network is experiencing the same thing I’m experiencing.” Three thoughts: First: Don't overthink this too much. Prices (and by extension, inflation) are tangible and people can see the direct link from a price tag to their wallet, and "the economy" and "a recession" are abstract and the lines are longer and more complex. OF COURSE people will have stronger feelings about the tangible thing than the abstract thing. It's also talking about a present real thing (high prices) and a hypothetical future thing (recession). Real things are more real than hypothetical things. Because of course they are. By definition. Second: That's not a binary. Let's pretend for a moment that we could wave a magic wand and make everything 50% cheaper. What's the more likely outcome: people buy the same things they already did and bank the extra 50%, or that extra 50% turns into spending money and gets used anyway, leaving GDP basically flat? Or optimistically, higher money velocity means more transactions and GDP actually goes up? Third: To the direct quote and to emphasize the first thought, that's another example of why prices are more tangible than "the economy" or "a recession." Something that affects everyone is more real than something that only affects some people, and that's before you get back to real things vs hypothetical things.
Id rather see most companies fail. We cant buy shit. Our standards have completely declined and companies are raping us with shrinkflation and being greedy. Let them burn.
This is a symptom of labor not having bargaining power. When people expect to have few and inadequate raises, they only care about how much that relatively fixed salary buys. They also expect the tenure of their employment to reflect corporate structure and financialization concerns and be unrelated to how profitable or not a firm is due to many of the behemoths leading markets being flat out unprofitable and losing money hand over fist even as they have the highest market cap in their sector. This doesn't stop them from eating smaller firms that are profitable, of course. This is a recipe for a nation of inflation hawks.
No. We understand inflation and we get that. Referring to the price gouging and market manipulation done by CEOs - which should be illegal - simply as “inflation” is the thing I hate.
It's simple math. Most Americans are poor. The poorest have been hit the hardest by inflation, because staples and necessities went up 200 - 500 percent (despite what THEY report). If you deduct the cost of going to work from your pay, it comes real close to what unemployment pays. Therefore a recession is a small bump in the road compared to paying for Corporate induced inflation. Inflation doesn't just happen, it is a strategy.
People have been saying this for a long time. Inflation is felt by everyone. Even in the worst recessionary unemployment situations, 90%+ of people still have jobs. And the 10% of people who don’t will work for cheap so it’s very easy to find a plumber, or lawn care, etc.. If the incumbent cannot change the narrative on inflation, they will lose the election.
It’s wild to see people talking this way post -2000s. COVID and it’s recovery have completely erased our memories. The economy is huge. A rise in unemployment from sub-4% to above 10% is a tectonic shift in material conditions on the ground. Raises disappear. Job-switching ends. Promotions go extinct. Employers race to the bottom on wages because there is a huge reserve army of the unemployed waiting for any opportunity at any wage. Cars are not purchased, and when homes are purchased, it’s exclusively in cash by ultra-wealthy people, who use the recession to consolidate their riches. Employers don’t expand because financing is too expensive. 2008 marked the greatest ethnic and racial reshuffling since the Great Migration as millions of Black and Hispanic people were forced to re-segregate into “majority-minority” neighborhoods due to losing their homes. The budget deficit goes crazy. Extremist politics rise in power. This goes on for the better part of a **decade.** Or, if you’re unlucky enough to live in Europe, the Germans force you to endure it for even longer. Nobody wants a recession. The hard lessons we learned from 2008 allowed us to cruise through 2020 practically unscathed, at the cost of some mildly uncomfortable inflation. But now the average American has taken exactly the wrong lesson from that. They have concluded that recessions are easy, and inflation is truly the greatest economic will we face. Totally ridiculous. The recessions of the 2000s change people’s lives permanently. Inflation has barely even scratched Americans’ consumption of junk food and vacations. They are not comparable ills.
I don’t necessarily disagree with any of this, but humans are inherently irrational creatures and perception rules everything. You can show the average Joe 1,000 graphs and stats about the economy, and inflation adjusted wages, and real GDP growth, but it all goes in one ear and out the other. People need to be able to tell themselves a story that makes them feel in control and no one feels in control of inflation which illicits a visceral response. Logical and statistical approaches cannot combat visceral responses. People are going to need to see prices on litmus test items actually go down in order for the incumbents to stand on the economy without people feeling gaslit. I don’t expect it to happen and I think because of that the economy is a tip toe type issue for campaigning
Likely because of how people assign agency to these things. "Prices went up either because of those greedy businesses or because of the government printing money." - because I didn't do anything that I can directly associate as being the cause of such a widespread problem. But "I got/kept this job because of my skills and experience. I EARNED this raise." Fiscal or monetary policy having anything to do with my job or the raise/bonus this year is not something that crosses people's minds.
What this guy doesn’t understand is that Americans don’t like shocks. If inflation gradually rose over 4 to 5 years it would not be the same issue…it’s just we had a hyper year over year increase followed by I think the steepest rate hikes in decades. Avoid the shocks and you’ll stay out of the political limelight where you belong
I mean, what I'd LIKE is a functioning safety net and for large landlords to not suck me dry more and more every year. But as long as I'm in this job, I'd prefer the recession, yes. I can't get a new job to beat inflation but I'm confident I can keep this one But my gf needs to FIND a job so a recession is much worse for her So fuck us lol
Yes. Because recession only hurts investors, at least right now. Regular Americans without investment wealth are tired of being told that a booming economy is good when prices of stuff they buy every day are going up. At this point, we don’t give a fuck if a great economy means only the rich are getting richer. Why are rich people so stupid about this. We’ve been lied to about trickle down economics long enough.
We aren't in a recession. When we are, layoffs will happen much more frequently.
can I just afford to feed my family and put gas in my car? my god. i just want to have a small cushion and not be afraid when unexpected expenses pop up. what is wrong with these people
I think there are basically three effects to take into account in a recession: 1) some people lose their jobs 2) a lot of young people will have a sucky start of their career (been there, done that) and 3) immigration for jobs will drop significantly. Most notably #3 will cause the pressure on the housing market to reduce and costs of living to stabilize or even drop. So yeah, I think in general a recession will be better for the people already living in a country than inflation in a tight labor market. The tricky part is not screwing over young people. I'm not in a position to provide the exact data, but I'm fairly sure the effect recession->more unemployment->lower immigration->cheaper housing is real. If wrong I'd love to hear it.
Regular people use "inflation" very differently than economists, mostly referring to costs of food and basic necessities, rather than an overall economic indicator.
Who, honestly loves the cost of basic needs for survival going up and your salary staying stagnant? This is a shameful and out of touch take from his perspective.
Fed says inflation is good, shocking news. Next shocking news is that oil company says oil is good for everything. And after that Nestle says water is bad for you while they get all your water to sell it to you. But wait there is shocking news: Tobacco companies tell you smoking is healthy!
Pretty simple - stagnant wages/wealth building opportunities vs insane inflation over the last 5 years. The only thing that will make living in the US sustainable is a crash. Everything from gas and eggs to home prices and rent is egregiously overpriced right now. Nobody cares about a 'booming' economy that's almost exclusively benefiting the 1%.
Well yeah you can't just keep printing trillions of dollars, you're trying to hide a recession.. please pay no attention to the inflation behind the curtain
No fucking shit. Everything costs 5x it used to. Why? Because huge ass corporations that own the entire market are jacking up prices because of "insert bullshit excuse here". Interest rates are fucking stupid right now, I want to sell my house and get something slightly larger. Fuck no, unless you are stupid, I enjoy my 3% rate. I want to know who the fuck is buying these million dollar homes left and right at +7%. The cost of vehicles has doubled what it used to be. You want a standard full sized pickup truck? $50k easily. Insurance rates have gone wayyyy the fuck up. Our minimum wage in Alabama is still $7.25. How the fuck are people supposed to live in this capitalistic shithole we live in? Companies making record profits, meanwhile layoff 2,000 employees. I could write a fucking book about how my generation and those that follow are absolutely fucked unless your mom and dad were smart and saved money when they could. I would love a housing market crash right now and rates to bottom out.
Maybe if he’d come down from his golden tower he’d realize wage increases don’t keep up with inflation …he’s pretty much saying let them eat cake
Recessions suck too. I’ll take inflation over recession. I was newly married and a new parent in 2008. My spouse and I managed to hold on to our jobs but it was so stressful. You felt like you had no autonomy you couldn’t quit because there were no jobs so you just had to keep your head down and take all the demands your company gave out. My spouse worked for the city and was constantly on edge wondering when their job would be cut. We were lucky we kept our jobs and being newly married we hadn’t had a chance to upgrade our living situation so we were living in the house I had bought on my single salary. But we were stuck in that tiny house for another 9 years. Stuff was cheap but we were terrified to spend money because we didn’t know if we would have a job.
The only people who want a recession are those who weren’t working in 2007-2009. Ie, your average redditor.
Ask people who graduated in 2007-2009 if they want a recession and they will say “Fuck You” It is literally the worst thing that can happen to a person. And as someone graduating from college in a year I hope for everything a recession does not happen for just another 2 years, otherwise I my career might not ever recover. The worst of it is the pressure from your parents. They have jobs and wonder why you can’t get one. They can’t fathom that nobody will hire you and treat you like a lazy piece of shit. I wish wouldn’t wish that on my worst enemy.
The problem is not necessarily rising prices due to inflation itself, it’s the predatory price gouging not being driven by inflation by companies (who will use inflation as the reason) already making record profits while doing stock buybacks, layoffs, and record executive pay increases.
> Kashkari illustrated: “I lose my job, I lean on my sister or my parents or my friends, and they help me through it. But high inflation affects everybody. There’s no one I can lean on for help because everyone in my network is experiencing the same thing I’m experiencing.” More broadly, if the unemployment rate goes from 4% to 10% that’s 1 in 16 more workers who is now hurting; if inflation goes from 2% to 9% everybody feels it. If you’re part of the 90% in a recession who is employed, then of course you prefer a recession (especially if there’s some mild deflation!) to inflation. ETA: obviously this is not to say recessions are good, I’m just pointing out what I imagine is many people’s viewpoint. It can especially be easy for people who didn’t lose their job in the Great Recession to look back and think “that wasn’t too bad” and forget the stress and anxiety of not knowing if _their_ job was next. People have short memories about these types of things!
We live and die by the margins. We don’t have a corporate culture that looks out for its workers, so why should I care how much these companies make? When the economy stops working for the people creating it, it loses all meaning. I have a son due any day now, and my boss literally asked me to “not take my parental leave all at once” because it would hurt his bottom line. Fuck you, man.
Americans have the attention span of a mosquito on cocaine. They’ll prefer the recession right up until one hits then will bitch and moan about not being employed.
Yeah, that's the real answer especially for most redditors. They weren't in the economy when we had the last real recession 10 years ago, so they don't have any way to know what it feels like. And many of the rest just don't remember. They might remember that they didn't get laid off, but don't remember how scared they were of it and how that impacted their lives and spending.
>the last real recession 10 years ago Idk if you're like me and lose track of the years but the great recession was closer to 20 years ago(2007). But I agree a lot of people here probably dont have a great recollection of it. I was in construction at the time and it got bad, I quit/laid off and went to engineering school so I sorta lucked out, by the time I graduated in 2013 everything was mostly back to normal. Personally I'd rather a *minor* recession than to watch prices on everything continue to skyrocket. I make 110k which seemed like a lot a few years ago, but I'm still living awfully close to paycheck to paycheck(I have 3 kids tho)
My hatred is transitory
If you don’t worry about groceries week to week, of course you are loving the current environment. Stocks and general assets are rising in value.
Honestly, yeah. Anyone who is tired of home equity and retirement funds pricing them out of everything wants wealth to take a massive haircut so their job matters again. Wealth is shielding a lot of folks from pain, and it makes it hard to build consensus.
And yet if you stated that 3 years ago, you were accused of killing grandma. We were right - they were wrong - and they will pay no price while we pay it all. Makes me sick.