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Most Americans are better off financially now than before the pandemic
@davidrmoran Delaware state retirees don't get COLAs. The legislature can vote an increase or a onetime bonus but rarely does and never is it guided by inflation considerations.
3% down from the portfolio's all-time high, here. (very early, 2022.) But that's deceiving. I've been adding regularly. So I have NOT made up the covid loss, to say nothing of a few stinky-poopy investment selections I've let go of, and redeployed the money. Certainly not suffering. The spouse-person even keeps her family afloat. Without her, they would all be starving or dead and gone from untreated, chronic conditions. Simple stuff, like high blood pressure. Sister in law just died over there from TB. NOBODY these days should die from TB. But it's a shit-hole country with zero social safety net.
Apologies for the rant. I'm going to post it, anyhow.
"Well thank goodness Krugman doesn't do that and isn't a political hack .. "
No, actually he doesn't "do that". If he presents information, especially if it may be open to various interpretations, he CITES SOURCES.
Anyone presenting factual information that is disliked is called a "hack" by some, regardless of the accuracy of the information. Oh well... nothing new with that.
The price of food and gas is not the big problem because housings and total expense on vehicles is a much bigger portion of someone expenses. Buying a house in many cases it at least 50% more than 3-4 years ago because prices are 30% up + mortgage rates are more than doubled. That isn't a political view. Krugman is a political hack. This is what he said In 2016 https://www.politico.com/story/2016/11/krugman-trump-global-recession-2016-231055
This is a 2020 article where "Krugman acknowledged that he had "reacted badly" and retracted his prediction three days after the election."
That was in 2016, four years prior. Not exactly keeping up either.
As to the "retraction", it was more of a declaration that he was right, just a bit early. Not exactly a full-throated retraction.
There’s a temptation to predict immediate economic or foreign-policy collapse; I gave in to that temptation Tuesday night, but quickly realized that I was making the same mistake as the opponents of Brexit (which I got right). So I am retracting that call, right now. It’s at least possible that bigger budget deficits will, if anything, strengthen the economy briefly. More detail in Monday’s column, I suspect.
On other fronts, too, don’t expect immediate vindication. America has a vast stock of reputational capital, built up over generations; even Trump will take some time to squander it.
The true awfulness of Trump will become apparent over time.
Did he actually predict immediate economic or foreign policy collapse? Here are the last two paragraphs of his column that he cited:
Now comes the mother of all adverse effects — and what it brings with it is a regime that will be ignorant of economic policy and hostile to any effort to make it work. Effective fiscal support for the Fed? Not a chance. In fact, you can bet that the Fed will lose its independence, and be bullied by cranks.
So we are very probably looking at a global recession, with no end in sight. I suppose we could get lucky somehow. But on economics, as on everything else, a terrible thing has just happened.
Not exactly the prospect of an immediate collapse which is what he said he was retracting. More like the difference between climate and weather. The world is hot and getting hotter. That's climate. The temperatures for the next week will be 10 degrees below normal for this time of year. That's weather. That's immediate.
Was his prediction wrong? Yes. Did he acknowledge it? Yes, eventually (thus the 2020 piece). Did he predict an immediate collapse? No. Had he predicted an immediate collapse, he would have been a hack - economies don't turn on a dime (or a buck, after inflation). He knows that.
OJ is right; Krugman provides citations. So you can read what he actually wrote to compare with what he says he wrote.
At what moment? He never said that there would be an imminent collapse, which is what I wrote would have IMHO a hack prediction. Even then, just a hack prediction, not necessarily the writing of a hack. What he demonstrated was that admissions of error are difficult to make; that's not bias.
Hacks often start with preconceived notions, cherry pick data, and disregard what that data represents or even the data itself. There's a difference between a well reasoned position piece and a hack writing.
There's an old saying that a house is not a home. The Fed presents data on its Home Ownership Affordability Monitor. It includes "all single-family attached and detached properties combined" (quote is from the Fed site). Nowhere does the Fed use the word "house".
No time frame appears in the quote above for the 30% figure. But since a second source (Bloomberg) is offered, and that source uses time frames including Jan 2020 - Oct 2023 and Q1 2020 - Q3 2023, we can work with that.
The Fed site actually says that median existing home repeat sale prices rose from $264.00K in Jan 2020 to $374.167K in Sept 2023 (a 41.7% increase). This isn't close to 30%. The point here is not whether the actual number is greater or less than 30%. Rather it is that giving "supporting" sources that actually conflict with one's asserted numbers is something hacks do.
---------
It was suggested that the ones hurt by this 30% increase in prices (presumably since Jan 2020) are largely first-time house (sigh) buyers. Instead of relying on shock value (another hack ploy) and disregarding counterbalancing income increases, let's compare the increases in costs and income.
Average wages rise (inflation, productivity, etc.). We've already seen that the increase in wages over this period is around 20%. So a typical individual worker aged 33 received a nominal wage 20% higher in 2023 than a typical individual worker aged 33 back in 2020. (We can use age-specific percentage increases instead if you have them.)
Now, independent of market wage increases (the 20%), individual workers' wages increase as they age - due to promotions, due to more experienced workers receiving higher wages generally. (Though above age 60, wages often decline with age.)
Let's take this step by step, starting with a typical wage earner, age 30 in 2020. That worker earned about $40,540. We know this because when we increase by 20% (the national average increase in wages since 2020), we get a typical wage of $48,650. That happens to be the typical wage earned by a 30 year old in 2023. https://dqydj.com/average-median-top-income-by-age-percentiles/
Since 2020 this typical worker has aged three years and is now receiving the wages of a typical 33 year old: $52,650. So in nominal terms this worker's wages have increased about 29.9%, the same as housing costs have increased.
IOW, despite the increase in existing housing costs, this typical worker is no worse off than he was three years ago with respect to housing.
The age factor is something often missed in analyses. It's true that a 33 year old today is less likely to afford a home than a 33 year old three years ago. Hence statistics like the Home Opportunity Affordability Monitor show a declining rate of affordability.
But at the level of the individual, the situation is better. As people age, they are supposed to be able to afford more. Right now, they can't afford more housing than they could three years ago, but neither are they stuck affording less.
As a nation, housing costs have risen bigly. That takes some of the bloom off "the American dream". But at the individual level, people are better off with respect to some purchases and not worse off with respect to first time home buying.
Old age is a different story. To the extent that people rely on savings (as opposed to inflation-adjusted Social Security), rising housing costs (including rent, property taxes, maintenance, etc.) are not a pretty sight. And not just recently. It's a mistake to assume that people who own their homes are in good shape.
As the largest expenditure in most older households’ budgets, housing costs figure heavily into financial security in older age. Incomes decline in older age, and not just at the point of retirement: while the 2017 median income of pre-retirement households ages 50 to 64 was $71,400, it was $46,500 for households ages 65 to 79 and just $29,000 for households ages 80 and older, according to analysis of data from the American Community Survey; and author tabulations. While these numbers show a pattern across all older households, individual households frequently see declines in incomes as they age [the opposite of what happens with first-time buyers]. As a result, affordability concerns can emerge as a new problem even for those in their 80s and older.
Jeopardy Question: How much longer will MFO posters need to endure FD's posts here until his most recent ban from Big Bang Investors is lifted at the end of the calendar year and he takes his self-aggrandizing traveling circus back over there?
In the meantime, as they say, you can't stop him, you can only hope to contain him.
The Big Bang Investors! moderator was inundated with complaints about FD1000 repeatedly posting about the same things (his 'system', his perfect timing, 'don't listen to experts', etc.). Sound familiar? The moderator is a strong free speech proponent but he felt FD1000 was interfering with the forum's objective to be a desirable community for asking questions, sharing experiences, getting advice, etc.
Sorry, if I were to choose 1 person I wished was gone from MFO, it wouldn't be FD, but it might be another here if a vote took place. Then again, I ignore that guy too. You can choose to ignore FD's comments, which I do, but he is not malicious, nor a bully.
We are enjoying the best cash flow of our lives due to the rates on MM funds and the house being paid for. Thus we can leave the IRA's alone for a few years. My wife is picking up grant-based consulting work. That reduces the need to spend from the MM's. So we can DCA a bit into equities for the long term.
We're on the right side of what Wilkins McCawber would describe as the key to a happy life.
Comments
and here's a view (correct imo) that political econ fretting is au fond a luxury these days
https://www.nytimes.com/2023/11/30/opinion/trump-fascism-2024-election.html
Apologies for the rant. I'm going to post it, anyhow.
No, actually he doesn't "do that". If he presents information, especially if it may be open to various interpretations, he CITES SOURCES.
Anyone presenting factual information that is disliked is called a "hack" by some, regardless of the accuracy of the information. Oh well... nothing new with that.
Krugman is a political hack. This is what he said
In 2016 https://www.politico.com/story/2016/11/krugman-trump-global-recession-2016-231055
For a guy who claims to keep up, you really don't keep up, do you?
https://www.foxnews.com/media/paul-krugman-trump-economy
https://www.nytimes.com/2023/11/30/opinion/trump-obamacare.html
That was in 2016, four years prior. Not exactly keeping up either.
As to the "retraction", it was more of a declaration that he was right, just a bit early. Not exactly a full-throated retraction. Krugman, The Long Haul, NYTimes Nov 11, 2016
https://archive.nytimes.com/krugman.blogs.nytimes.com/2016/11/11/the-long-haul/
Did he actually predict immediate economic or foreign policy collapse? Here are the last two paragraphs of his column that he cited: Krugman, What Happened On Election Day
https://www.nytimes.com/interactive/projects/cp/opinion/election-night-2016/paul-krugman-the-economic-fallout
Not exactly the prospect of an immediate collapse which is what he said he was retracting. More like the difference between climate and weather. The world is hot and getting hotter. That's climate. The temperatures for the next week will be 10 degrees below normal for this time of year. That's weather. That's immediate.
Was his prediction wrong? Yes. Did he acknowledge it? Yes, eventually (thus the 2020 piece). Did he predict an immediate collapse? No. Had he predicted an immediate collapse, he would have been a hack - economies don't turn on a dime (or a buck, after inflation). He knows that.
OJ is right; Krugman provides citations. So you can read what he actually wrote to compare with what he says he wrote.
Was Krugman as harsh about the high inflation under Biden? no. BTW, he was wrong about it anyway (https://www.nytimes.com/2022/07/21/opinion/paul-krugman-inflation.html)
Would he be harsh if it was under Trump? The easy answer is yes.
Thank you for proving my point.
At that moment in 2016 and even later about the inflation, Krugman was a political hack and showed why he was biased.
Hacks often start with preconceived notions, cherry pick data, and disregard what that data represents or even the data itself. There's a difference between a well reasoned position piece and a hack writing. There's an old saying that a house is not a home. The Fed presents data on its Home Ownership Affordability Monitor. It includes "all single-family attached and detached properties combined" (quote is from the Fed site). Nowhere does the Fed use the word "house".
No time frame appears in the quote above for the 30% figure. But since a second source (Bloomberg) is offered, and that source uses time frames including Jan 2020 - Oct 2023 and Q1 2020 - Q3 2023, we can work with that.
The Fed site actually says that median existing home repeat sale prices rose from $264.00K in Jan 2020 to $374.167K in Sept 2023 (a 41.7% increase). This isn't close to 30%. The point here is not whether the actual number is greater or less than 30%. Rather it is that giving "supporting" sources that actually conflict with one's asserted numbers is something hacks do.
---------
It was suggested that the ones hurt by this 30% increase in prices (presumably since Jan 2020) are largely first-time house (sigh) buyers. Instead of relying on shock value (another hack ploy) and disregarding counterbalancing income increases, let's compare the increases in costs and income.
"The typical age of a first-time homebuyer is 33 years old"
https://www.bankrate.com/mortgages/first-time-homebuyer-statistics/
Average wages rise (inflation, productivity, etc.). We've already seen that the increase in wages over this period is around 20%. So a typical individual worker aged 33 received a nominal wage 20% higher in 2023 than a typical individual worker aged 33 back in 2020. (We can use age-specific percentage increases instead if you have them.)
Now, independent of market wage increases (the 20%), individual workers' wages increase as they age - due to promotions, due to more experienced workers receiving higher wages generally. (Though above age 60, wages often decline with age.)
Let's take this step by step, starting with a typical wage earner, age 30 in 2020. That worker earned about $40,540. We know this because when we increase by 20% (the national average increase in wages since 2020), we get a typical wage of $48,650. That happens to be the typical wage earned by a 30 year old in 2023.
https://dqydj.com/average-median-top-income-by-age-percentiles/
Since 2020 this typical worker has aged three years and is now receiving the wages of a typical 33 year old: $52,650. So in nominal terms this worker's wages have increased about 29.9%, the same as housing costs have increased.
IOW, despite the increase in existing housing costs, this typical worker is no worse off than he was three years ago with respect to housing.
The age factor is something often missed in analyses. It's true that a 33 year old today is less likely to afford a home than a 33 year old three years ago. Hence statistics like the Home Opportunity Affordability Monitor show a declining rate of affordability.
But at the level of the individual, the situation is better. As people age, they are supposed to be able to afford more. Right now, they can't afford more housing than they could three years ago, but neither are they stuck affording less.
As a nation, housing costs have risen bigly. That takes some of the bloom off "the American dream". But at the individual level, people are better off with respect to some purchases and not worse off with respect to first time home buying.
Old age is a different story. To the extent that people rely on savings (as opposed to inflation-adjusted Social Security), rising housing costs (including rent, property taxes, maintenance, etc.) are not a pretty sight. And not just recently. It's a mistake to assume that people who own their homes are in good shape. https://generations.asaging.org/older-adults-aging-place-affordable-safe
https://www.google.com/search?q=bloomberg+magazine+no+rooms+for+first-time+buyers&oq=bloomberg+magazine+no+rooms+for+first-time+buyers&gs_lcrp=EgZjaHJvbWUyBggAEEUYOTIGCAEQLhhA0gEJMTgzMTBqMGo0qAIAsAIA&sourceid=chrome&ie=UTF-8#ip=1
About 28 more days
Jeopardy Question:
How much longer will MFO posters need to endure FD's posts here until his most recent ban from Big Bang Investors is lifted at the end of the calendar year and he takes his self-aggrandizing traveling circus back over there?
In the meantime, as they say, you can't stop him, you can only hope to contain him.
posting about the same things (his 'system', his perfect timing, 'don't listen to experts', etc.).
Sound familiar?
The moderator is a strong free speech proponent but he felt FD1000 was interfering with the forum's
objective to be a desirable community for asking questions, sharing experiences, getting advice, etc.
Actually, FD is an asset to MFO- just by his very presence he makes the rest of us look pretty good.
We're on the right side of what Wilkins McCawber would describe as the key to a happy life.