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But is the majority of the population thriving? It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck

But is the majority of the population thriving? It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck. A handful of companies are thriving, but barely any of its employees.

nightski 2y ago
We need to differentiate living paycheck to paycheck out of necessity vs. choice. It might be surprising but there are a lot of people who choose to do so because why save when you could die tomorrow.
- codr7 2y ago
  Judge much? It's more like, how save when you need the money right now.
  - tombert 2y ago
    Not the OP but I don't think that is who they are talking about. People who don't have money to save obviously are going have trouble saving it. There is a certain subset of people, though, that do make money and actively choose to not save it. Kind of a perpetual "YOLO" attitude. I don't think the OP was judging.
    - codr7 2y ago
      How do you know? Have you walked in their shoes?
      - tombert 2y ago
        I mean, I don't have access to anyone's internal brain-state other than my own, obviously, but I have had at least one coworker outright tell me that this was their mentality. This coworker made roughly the same yuppie engineer salary I did, and didn't have any familial responsibility, and flatout told me that he didn't have much interest in saving money, he likes to spend it and live for the now. Granted, I think that this is mostly a product of the fact that he was pretty young (22 at the time), and I haven't really talked to him in 11 years, so it's very likely that he doesn't do this anymore.
        codr7 2y ago
        I'm not saying these people don't exist, just that judging is usually unfair.
- boringg 2y ago
  Or they get caught up living a lifestyle that they feel like they need to give the appearance of success!
  - Nevermark 2y ago
    This is an under appreciated problem with inequality. Ideally, others success should be net-positive/neutral for others. In practice, inequality has these perverse impacts at least: (Wealth is a spectrum. “Rich” and “non-rich” below stand in for any significant relative difference.) 1. The non-rich often put unrealistic pressure on themselves to keep up with wealthier lifestyles. But beyond that self-inflicted wound: 2. The rich can afford outsized amounts of critical or survival type services and assets. Like land. Fresh vegetables. This imbalance raises the cost of meeting basic needs. 3. Markets respond to more rich by creating higher end services and products. Some have subjective value (fashion), some are luxuries (massages are beneficial, but not critical for most), but many are practical. For instance, computing hardware, internet access options, expensive healthcare interventions, medications, private transport growth relative to public transport, etc. 4. And the rich also perversely put unrealistic social and employer pressures on the lifestyles of the non-rich. I.e. dress and personal technology shibboleths, etc. —- It is worth pointing out that the large role of real estate as a passive wealth compounder, tracking up with the product of increased overall economy and inequality growth, is perverse enough. But the common arrangement of property taxes that tax both land (the limited and exclusionary asset) and its development (the non-exclusionary asset we should not be disincentivizing in any way), adds another perversity to land economics. When a problem compounds already, it doesn’t need any more perverse incentives! If property taxes were replaced by just land taxes (renormalized to be revenue neutral) it would: 1. increase the return on development, and 2. increase the costs of holding (absolutely or relatively) undeveloped land! Which would both increase development (i.e. housing, multi-housing) and increase supply of (relatively) unused land. This would be a net win for those who are impacted or concerned about inequality, but also those with a libertarian or capitalist viewpoint. As it removes a wealth tax. (Which isn’t just a double tax, but an unlimited repetitive tax on the same already taxed/unrealized non-exclusionary wealth!) Whether rich or poor, improving one’s property with already taxed capital or self-supplied labor, would not perversely raise one’s taxes.
- makk 2y ago
  As if those are the only two choices. And as if those choices are ones that most individuals can independently make.
- newhotelowner 2y ago
  my employees have no problem doordashing Chipotle or tim Horton or Starbucks. It's 5 mins of driving. It's also not having any financial sense.
  - mempko 2y ago
    Is that why you hired them? What other disdain do you have for them?
sokoloff 2y ago
I know plenty of people making $250K/yr or more who are living paycheck to paycheck. At that point, it's not really the company that's the problem...
- DonnyV 2y ago
  Here come the "its an individual's problem not a systemic problem" anecdotes. But when you look at all the data....its a systemic problem.
  - brink 2y ago
    They're not saying that it's not a systemic problem, they're just saying it's not a company problem. Housing being too expensive is not a company problem for example.
- saagarjha 2y ago
  Maybe you know too many people who make $250k/year.
  - throwawayq3423 2y ago
    Live in one of the handful of world class cites, 250k goes fast.
    - jwagenet 2y ago
      Yes, of course, but that’s if you are eating out frequently, have a recent model year car payment, have a pretty loose leisure budget (or lack of), live in above average cost of housing, etc. Raising your spending to you means doesn’t make you living paycheck to paycheck. One can live in SF for less than 100k.
- notJim 2y ago
  The living paycheck to paycheck stat is meaningless. It generates headlines, because bad news wins, but if you dig in, even the surveys that ask about this reveal that a large percentage of people living paycheck to paycheck are very financially secure, both objectively, and according to their own assessment. I don't have time right now, but I'd encourage anyone reading this to go find the actual source for this stat and read their full report. Last time I looked, it was freely available. Many of those people living paycheck to paycheck have a budget where they're saving or investing a significant amount of their money, and accordingly, money feels tight. This is the financially sound way to avoid lifestyle creep, but it doesn't mean you're in a precarious position. Or alternatively, they're paying for really expensive, but optional things like private schooling and expensive cars or vacations. Obviously some people are struggling, but this paycheck-to-paycheck stat is not an accurate way to quantify that. It's best IMO to look at objective metrics like the poverty rate, or people's objective financial picture (available via surveys.)
eduction 2y ago
Article: "For all its economic power, the US has the largest income inequality in the G7, coupled with the lowest life expectancy and the highest housing costs, according to the OECD. Market competition is limited and millions of workers endure unstable employment conditions." That's pretty stark. But the U.S. outperformance on GDP growth and productivity growth is very real over the last 5-15 years especialy and has been documented in numerous stories like this. The looming questions seem to be 1. can Europe maintain its social benefits and living standards with such anemic growth (that is, is the goal of more humane and equal society compatible with a robust economy) 2. can the U.S. preserve its competitiveness and overall GDP performance if it imposes more regulations/taxes designed to reduce income disparities, provide more social services, etc.
- makk 2y ago
  3. Can the US endure at all when the current path feels unsustainable for most of its citizens?
  - nec4b 2y ago
    Millions voting with their feet don't think that.
    - deleted 2y ago
      [deleted]
- bpt3 2y ago
  > 1. can Europe maintain its social benefits and living standards with such anemic growth (that is, is the goal of more humane and equal society compatible with a robust economy) This is already being answered by reports like the one in the FT > 2. can the U.S. preserve its competitiveness and overall GDP performance if it imposes more regulations/taxes designed to reduce income disparities, provide more social services, etc. No, because it will turn the US into a country like all the ones mentioned in question 1
ajross 2y ago
> a good chunk of the population live paycheck to paycheck. Is that not true in other economies? Was that not true at some (mythical?) point in the past? What number, specifically, would you like to see before you're willing to declare "The Economy is Good"? Basically the point you made is an example of the Economics of Vibes. It's non-falsifiable and allows you to justify any position you want. We're about to start a global trade war, it seems, based on those vibes. In point of fact household savings rate as a proportion of household income is not particularly low right now. In fact it had a huge spike during the pandemic (lots of assistance and nothing to buy, same thing that caused the inflation burp).
- DonnyV 2y ago
  Family needs to make $107,700 a year to own a home. Apartment in a moderate-cost area is about $70,000-$100,000/year. Median salary in the US is $59,300 What considered poverty level in the US for: 1 person: $15,060 2 people: $20,440 3 people: $25,820 4 people: $31,200 According to recent data from the U.S. Census Bureau, around 50% of Americans make $70,000 or more annually. That means about 50% of the US can not afford a place to live.
  - umvi 2y ago
    > That means about 50% of the US can not afford a place to live. No, at best the conclusion is that 50% of the US can not afford to own a home. But not owning a home != homelessness. Renting still exist. Roommates still exist. There's a house in my neighborhood that has 3 (El Salvadorian, I believe) families living inside of it, and they are contributing 3x income to make it work (this depends on zoning laws though).
    - rootusrootus 2y ago
      > at best the conclusion is that 50% of the US can not afford to own a home. More particularly, 50% of the single person households in the US. This does not apply to a couple unless they are aiming for the Leave it to Beaver dream of a stay-at-home wife.
  - 2y ago
black_13 2y ago
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sangnoir 2y ago
> But is the majority of the population thriving? Looking at the numbers: low unemployment, strong consumer spending, average income increasing at a rate higher than inflation, I'd say the majority is doing better than most years. They might not feel that way though, and we've been in a continuous vibes-cession since COVID.
- buffet_overflow 2y ago
  > strong consumer spending I’d like to see that plotted against average consumer debt
  - gruez 2y ago
    https://fred.stlouisfed.org/series/CDSP https://fred.stlouisfed.org/series/CDSP slightly below pre-pandemic levels, and significantly below 2005-2008 levels.
    - kelnos 2y ago
      It's always fun to see a graph like this and realize that (aside from the pandemic), that the last time people were significantly better off by this metric was 30 years ago, while many of us were children, or not even born yet. And yet everyone is complaining that things are so bad, and that this is a new phenomenon.
  - Workaccount2 2y ago
    https://fred.stlouisfed.org/series/CCLACBW027SBOG https://fred.stlouisfed.org/series/CCLACBW027SBOG The trend is basically back to where it would be if you just extrapolated 2019. You can even see the origin of the "vibe-session" here, things got pretty good for a lot of people in the money shower of the pandemic stimulus combined with low "stay at home" spending. Its the return to normal that has people spun with "the economy sucks".
    - coldtea 2y ago
      >The trend is basically back to where it would be if you just extrapolated 2019 So crap going crappier, with a short reversal for a couple of years.
ricardobayes 2y ago
Some of the population is definitely thriving. Although, does that reflect in higher quality of life? Some statistics say no. The best quality of life is where there is good access to quality healthcare, education, clean air and water, culture, and low crime. When taking into account all the above, somewhat surprisingly, Austria and Switzerland come as top places to live. https://en.wikipedia.org/wiki/City_quality_of_life_indices https://en.wikipedia.org/wiki/City_quality_of_life_indices
- SideQuark 2y ago
  The most recent report ranking country quality of life has US at #3 https://www.forbes.com/sites/laurabegleybloom/2024/09/10/new-report-ranks-the-best-countries-for-quality-of-life-business-and-more/ https://www.forbes.com/sites/laurabegleybloom/2024/09/10/new... And the US is massive and diverse, with many states larger than those other countries. If you look at quality of life across US states, it’s likely the best states (think New Hampshire versus Mississippi) would outrank all those countries, since the average across all states ranked #3.
  - juki 2y ago
    You're misreading that. The survey ranks USA as #3 overall, but #22 on quality of life. The overall ranking is mainly thanks to the agility (#1), power (#1), entrepreneurship (#2) and cultural influence (#3). The other categories aren't that good: https://www.usnews.com/news/best-countries/united-states https://www.usnews.com/news/best-countries/united-states
umvi 2y ago
> It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck. This is oft repeated by politicians (including Bernie Sanders recently), but I've seen some good arguments why this can be a misleading claim. Ex. https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-other https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...
benreesman 2y ago
Asset prices are extremely high. When politicians or business journalists say “the economy is doing well” they mean asset prices. The stock market is high on a number of metrics, which is great if you own a bunch of equities. Housing prices are soaring, which is great if you own real estate. Food, housing, energy, healthcare, education. Real wage growth and job security measured against the prices and durations of those things. That’s what matters to people who don’t own significant real assets, those are the things that can get extremely bad (someone tries to murder the CEO of United Healthcare on the street bad) without showing up in the numbers you see in the press. Simon Kuznets himself, the inventor of GDP as a metric sternly cautioned policymakers about treating it as a summary statistic.
- bpt3 2y ago
  > Food, housing, energy, healthcare, education. Real wage growth and job security measured against the prices and durations of those things. That’s what matters to people who don’t own significant real assets, those are the things that can get extremely bad (someone tries to murder the CEO of United Healthcare on the street bad) without showing up in the numbers you see in the press. You're correct that they do matter and can get bad, but are not bad currently as regularly reported in the press. Lower income households in the US did better than everyone else by these metrics coming out of COVID.
  - shkkmo 2y ago
    Kindly show your work.
hammock 2y ago
>But is the majority of the population thriving? Which country is that true of?
bpt3 2y ago
> It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck. By every metric, the economy is strong. A large portion of the households living "paycheck to paycheck" are either doing so by choice or don't understand what the term means and are ignoring things like retirement savings when they make that statement.
divbzero 2y ago
> But is the majority of the population thriving? This is a good point. Aggregate GDP is definitely not the right measure for this, and even GDP per capita adjusted for inflation and PPP does not account for economic inequality. Median household income adjusted for inflation and PPP would probably be the least bad option if we had to choose a single statistic: https://worldpopulationreview.com/country-rankings/median-income-by-country https://worldpopulationreview.com/country-rankings/median-in...
mullingitover 2y ago
> But is the majority of the population thriving? It's important to understand that the stock market is a leading indicator. Everyone doesn't immediately get laid off when the stock market tanks. Everyone doesn't immediately get a raise when the stock market is roaring. A lot of people are just now experiencing the stock market mini-crash of 2022, when the pandemic helicopter money dried up. In two years a lot of people are going to be experiencing the investments that are being made in the market right now. Most of them are going to wrongly ascribe those good times to the person holding high political office even though that person had nothing to do with it. This won't be the first time it has happened.
- canadaduane 2y ago
  This is such a great, succinct insight. I've heard various pieces of it, but you put it all together, thank you. Now I wonder, are there historical exceptions to this general rule? Also, does the "lead time" grow and shrink substantially?
  - chii 2y ago
    > does the "lead time" grow and shrink substantially? it changes based on other people's guesses in their participation in the stock market. Aka, it's chaotic.
- 01100011 2y ago
  > the stock market is a leading indicator I don't think so. It is probably loosely correlated with the economy at best. The stock market can soar in times of cutbacks which hurt non-asset owners but which benefit profit margins. The stock market can boom on liquidity surges that do not translate into economic investments. The stock market can crash while the overall economy does fine(wasn't 2000 basically this, with the economy not really suffering until after 9/11?).
  - drowsspa 2y ago
    Honestly nowadays industry seems to be just about maximizing stock value through hype and CEOs are basically hired just for that. Like all stocks are meme stocks now, profits be damned because you can always do some accounting maneuver, and as long as stock goes up you're all getting your bonus. I wonder if my impression that this has increased a lot in the last decades is correct, and what would be the impact of this on the whole "stock market as indicator of economy" thing.
jandrewrogers 2y ago
US Federal Reserve studies indicate that the percentage of US households with no excess income after necessary expenses (as distinct from "ordinary expenses" as a term of art) is on the order of 10-15%. This definition roughly matches most people's intuition of what "living paycheck-to-paycheck" means. That isn't nothing but it implies 85-90% of Americans are not actually living paycheck-to-paycheck. There is another 25-30% of households that spend all of their income on ordinary expenses beyond necessary expenses. This includes things like car payments on a new BMW or a mortgage on a big house; "ordinary" is determined by expense category, not expense necessity, so a lot of spending on luxury goods is classified as "ordinary". By implication, there is effectively no ceiling to ordinary expenses. By contrast, the median US household has >$12,000/year in excess income after all ordinary expenses. Technically these households could have expanded their lifestyle to consume that income, but in many cases they are spending it on things that are not classified as "ordinary" and therefore not saving it. The categories of "non-ordinary" expenses (which have a sensible objective criteria) are almost entirely obvious lifestyle flex things, so not particularly controversial. The implications of these statistics are pretty wild. The median household can easily accumulate a million dollars in inflation-adjusted net worth, not including their house, over a 40 year career. And they can do it without being particularly thrifty, since ordinary expenses covers a lot of luxury spending. Americans have very high incomes, both in theory and practice, they just would rather spend it than save it.
- savingsPossible 2y ago
  Can you provide some links? Searches understandably are finding more 'ordinary/necessary' expenses for business than for families
  - pembrook 2y ago
    America blows past the rest of the developed world on disposable income per capita and it’s not even close: https://en.m.wikipedia.org/wiki/Disposable_household_and_per_capita_income https://en.m.wikipedia.org/wiki/Disposable_household_and_per... And before someone chimes in “that’s because of the billionaires throwing off the average!” Look at the median disposable income chart. America is still at the top. The median American is far wealthier than the median European person, even after accounting for things Americans normally complain about like healthcare, education costs, and retirement contributions. This results in some crazy stats, like the fact the median Mississippi resident has more disposable income than the average UK resident (and that includes financial hub London). And again, this is AFTER accounting for healthcare, education, etc costs.
corimaith 2y ago
If America isn't doing well, what does that make the rest of the world? An absolute metric isn't going to be objective, but from a financial and jobs perspective America certainly has it alot better. Which is what the article is about. You're working harder perhaps, but many in other places have straight up no jobs or millions applying just for the most basic jobs. Many of those people would kill to get into America.
Romanulus 2y ago
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8f2ab37a-ed6c 2y ago
Article from a couple of days ago on the "most Americans are living paycheck-to-paycheck" myth: https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-other https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...
davidklemke 2y ago
The article addresses this directly, arguing the point that the social safety net has a cost which is what is curtailing the economy in some respect: For all its economic power, the US has the largest income inequality in the G7, coupled with the lowest life expectancy and the highest housing costs, according to the OECD. Market competition is limited and millions of workers endure unstable employment conditions. Europe’s social safety net needs to be paid for, warned Christine Lagarde, president of the European Central Bank, in a speech in November. Boosting competitiveness is necessary for long-term prosperity, she argued: “Failure to do so could jeopardise our ability to generate the wealth needed to sustain our economic and social model.”
qudat 2y ago
Based on what I’m seeing on YT from financial influencers, people are burning cash by purchasing cars they can’t afford
- thedougd 2y ago
  From what I see on the road it’s pickup trucks they can’t afford.
samirillian 2y ago
It’s funny because right after Trump was elected there was an ft article about all the metrics that showed that poor people were doing worse in real terms. One ft author uses one index to prove one point another uses others to prove another point. I’ve noticed that divide in particular between ft standard sub (40/mo) and ft premium (80/mo) How much must I pay to not get consistently bullshat?
- Clubber 2y ago
  >How much must I pay to not get consistently bullshat? You can't because you aren't the customer of news, you are the product.
epistasis 2y ago
More of the economy is thriving than ever before. >50% of the population has enough cash savings for three months of expenses The median amount of cash in bank account is $8k The median US household networth is $193k. Further, the wage increases in recent years have happened mostly at the lower end of the income scale, not at the top! When polled, the US population is very happy about their own economic situation, yet still believes that we are in some sort of terrible economic downturn. IMHO, the reason for this disconnect is housing. We haven't built enough, it's made people very unhappy, and restrictive zoning prevents fixing it. The housing theory of everything could even extend to the current political situation in South Korea...
cyberax 2y ago
> But is the majority of the population thriving? Objectively? Yes. People are living better than before the pandemic. However, incessant propaganda works. Fox News and AM talk radio convinced people that the prices went up by like 10x and the country is on the brink of collapse.
- dgfitz 2y ago
  I dunno, doesn’t feel like we ever saw the ass-end of that “bullwhip effect” does it?
jacobr1 2y ago
Noah Smith recently wrote a good blog post on some of the nuances here: https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-other https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-... There are too many people living in poverty in the US, or 1-step removed from it, but much less than are commonly believed.
deadbabe 2y ago
The population is not the economy.
deleted 2y ago
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johanneskanybal 2y ago
That's true of course and an important part why everything is so polarized. Without getting too political I don't believe the current direction is sustainable and that the start of the down spiralling already has happened.
bastloing 2y ago
Everyone I know is doing well and looking forward to the next 4 years. Just look at the stock market, which anyone can invest in. I started back when I was making $4 an hour, now doing very well.
- yurishimo 2y ago
  Not everyone can invest in the stock market… at least not in a way that is helpful. Sure, I might be able to put $20/mo in if I’m working poor and over a few years it will double if I’m lucky. $4/he starting wage makes you around my parents age (50+) so I’m guessing you easily earn six figures now since you hang out on HN. The crowd here does not represent poor people very well (which is fine!) but you can’t extrapolate your experience to everyone. Yea the stock market is great, but it says nothing about the single mom working two jobs to put food on the table with no energy left to tinker with ETFs.
  - bastloing 2y ago
    If anything it's easier now than ever to invest in stocks. Online trades, no commissions, and fractional shares. When I started I had to pay a broker to do the trades. And still against those odds somehow it worked.
Buttons840 2y ago
There's a lot of debate over the true state of the economy, but it seems that, one way or another, pessimism abounds. Consider, the top voted comment on an article about how good the economy is a disagreement. I wonder how many of the negative effects of an actual bad economy can also be caused by widespread pessimism? Is it better to have a bad economy filled with happy optimists, or a good economy filled with unhappy pessimists?
- chasd00 2y ago
  It’s tied to politics. If your team isn’t in power was just voted out then the economy sucks or is teetering on the brink of disaster. However, if your team is in power or just voted in then things are looking great or will turn around soon.
  - makeitshine 2y ago
    I just look at things like this and worry. https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe
abe94 2y ago
the living "paycheck to paycheck" claim isn't quite true, this article does a good job breaking it down: https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-other https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...
known 2y ago
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blackeyeblitzar 2y ago
A handful of companies (Microsoft Google Amazon Meta) will end up taking all the gains from the AI revolution as well. Capital wins because they don’t have to work as hard or worry about risks or access to talent. The playing field is tilted deeply against all entrepreneurs and really anyone lacking capital. I say this as a pro capitalism person. Something will need to change to give everyone enough influence and power.
alfiedotwtf 2y ago
[flagged]
analog31 2y ago
Something I wonder, along these lines, is whether we're measuring the right thing. For instance, does "thriving" depend on things like life expectancy, infant mortality, maternal mortality, quality of health care, pollution, crime, incarceration, traffic deaths, and so forth? The way I think about it, "economics" is supposed to study the quality of life, not just a few isolated numbers that happen to be in units of dollars. Do any of our "rivals" have entire regions with the levels of poverty seen in places like Mississippi, southern Ohio, or northern Michigan? I grew up in an area with patches of poverty like that.
- 0xDEAFBEAD 2y ago
  Things are not bad in Mississippi: https://www.nationalreview.com/corner/its-great-to-live-in-the-american-economy/ https://www.nationalreview.com/corner/its-great-to-live-in-t...
  - analog31 2y ago
    Indeed, this is exactly what I'm talking about, an article cherry picking one number. I haven't been to Mississippi, but I've been to other areas of deep poverty in the US. I don't think there are regions of France with poverty like that. Are we measuring the right thing?
ETH_start 2y ago
This is a common trope, but it's wrong. Americans' hourly wages and the disposable income is far higher in the median than that of people in the EU.
luxuryballs 2y ago
The metrics they use to measure this appear to show productivity growth when it’s just an inflation bubble.
switch007 2y ago
I also dislike this narrative that if your economy isn't as good as the US then you're failing. And, well, that's exactly where the US wants your economy
deleted 2y ago
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madeofpalk 2y ago
If you could live in any country, but you don't get to pick who you are or where you live in that country, which country would you pick?
deleted 2y ago
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nightski 2y ago

We need to differentiate living paycheck to paycheck out of necessity vs. choice. It might be surprising but there are a lot of people who choose to do so because why save when you could die tomorrow.

codr7 2y ago
Judge much? It's more like, how save when you need the money right now.
- tombert 2y ago
  Not the OP but I don't think that is who they are talking about. People who don't have money to save obviously are going have trouble saving it. There is a certain subset of people, though, that do make money and actively choose to not save it. Kind of a perpetual "YOLO" attitude. I don't think the OP was judging.
  - codr7 2y ago
    How do you know? Have you walked in their shoes?
    - tombert 2y ago
      I mean, I don't have access to anyone's internal brain-state other than my own, obviously, but I have had at least one coworker outright tell me that this was their mentality. This coworker made roughly the same yuppie engineer salary I did, and didn't have any familial responsibility, and flatout told me that he didn't have much interest in saving money, he likes to spend it and live for the now. Granted, I think that this is mostly a product of the fact that he was pretty young (22 at the time), and I haven't really talked to him in 11 years, so it's very likely that he doesn't do this anymore.
      - codr7 2y ago
        I'm not saying these people don't exist, just that judging is usually unfair.
boringg 2y ago
Or they get caught up living a lifestyle that they feel like they need to give the appearance of success!
- Nevermark 2y ago
  This is an under appreciated problem with inequality. Ideally, others success should be net-positive/neutral for others. In practice, inequality has these perverse impacts at least: (Wealth is a spectrum. “Rich” and “non-rich” below stand in for any significant relative difference.) 1. The non-rich often put unrealistic pressure on themselves to keep up with wealthier lifestyles. But beyond that self-inflicted wound: 2. The rich can afford outsized amounts of critical or survival type services and assets. Like land. Fresh vegetables. This imbalance raises the cost of meeting basic needs. 3. Markets respond to more rich by creating higher end services and products. Some have subjective value (fashion), some are luxuries (massages are beneficial, but not critical for most), but many are practical. For instance, computing hardware, internet access options, expensive healthcare interventions, medications, private transport growth relative to public transport, etc. 4. And the rich also perversely put unrealistic social and employer pressures on the lifestyles of the non-rich. I.e. dress and personal technology shibboleths, etc. —- It is worth pointing out that the large role of real estate as a passive wealth compounder, tracking up with the product of increased overall economy and inequality growth, is perverse enough. But the common arrangement of property taxes that tax both land (the limited and exclusionary asset) and its development (the non-exclusionary asset we should not be disincentivizing in any way), adds another perversity to land economics. When a problem compounds already, it doesn’t need any more perverse incentives! If property taxes were replaced by just land taxes (renormalized to be revenue neutral) it would: 1. increase the return on development, and 2. increase the costs of holding (absolutely or relatively) undeveloped land! Which would both increase development (i.e. housing, multi-housing) and increase supply of (relatively) unused land. This would be a net win for those who are impacted or concerned about inequality, but also those with a libertarian or capitalist viewpoint. As it removes a wealth tax. (Which isn’t just a double tax, but an unlimited repetitive tax on the same already taxed/unrealized non-exclusionary wealth!) Whether rich or poor, improving one’s property with already taxed capital or self-supplied labor, would not perversely raise one’s taxes.
makk 2y ago
As if those are the only two choices. And as if those choices are ones that most individuals can independently make.
newhotelowner 2y ago
my employees have no problem doordashing Chipotle or tim Horton or Starbucks. It's 5 mins of driving. It's also not having any financial sense.
- mempko 2y ago
  Is that why you hired them? What other disdain do you have for them?

sokoloff 2y ago

I know plenty of people making $250K/yr or more who are living paycheck to paycheck. At that point, it's not really the company that's the problem...

DonnyV 2y ago
Here come the "its an individual's problem not a systemic problem" anecdotes. But when you look at all the data....its a systemic problem.
- brink 2y ago
  They're not saying that it's not a systemic problem, they're just saying it's not a company problem. Housing being too expensive is not a company problem for example.
saagarjha 2y ago
Maybe you know too many people who make $250k/year.
- throwawayq3423 2y ago
  Live in one of the handful of world class cites, 250k goes fast.
  - jwagenet 2y ago
    Yes, of course, but that’s if you are eating out frequently, have a recent model year car payment, have a pretty loose leisure budget (or lack of), live in above average cost of housing, etc. Raising your spending to you means doesn’t make you living paycheck to paycheck. One can live in SF for less than 100k.
notJim 2y ago
The living paycheck to paycheck stat is meaningless. It generates headlines, because bad news wins, but if you dig in, even the surveys that ask about this reveal that a large percentage of people living paycheck to paycheck are very financially secure, both objectively, and according to their own assessment. I don't have time right now, but I'd encourage anyone reading this to go find the actual source for this stat and read their full report. Last time I looked, it was freely available. Many of those people living paycheck to paycheck have a budget where they're saving or investing a significant amount of their money, and accordingly, money feels tight. This is the financially sound way to avoid lifestyle creep, but it doesn't mean you're in a precarious position. Or alternatively, they're paying for really expensive, but optional things like private schooling and expensive cars or vacations. Obviously some people are struggling, but this paycheck-to-paycheck stat is not an accurate way to quantify that. It's best IMO to look at objective metrics like the poverty rate, or people's objective financial picture (available via surveys.)

eduction 2y ago

Article: "For all its economic power, the US has the largest income inequality in the G7, coupled with the lowest life expectancy and the highest housing costs, according to the OECD. Market competition is limited and millions of workers endure unstable employment conditions." That's pretty stark. But the U.S. outperformance on GDP growth and productivity growth is very real over the last 5-15 years especialy and has been documented in numerous stories like this. The looming questions seem to be 1. can Europe maintain its social benefits and living standards with such anemic growth (that is, is the goal of more humane and equal society compatible with a robust economy) 2. can the U.S. preserve its competitiveness and overall GDP performance if it imposes more regulations/taxes designed to reduce income disparities, provide more social services, etc.

makk 2y ago
3. Can the US endure at all when the current path feels unsustainable for most of its citizens?
- nec4b 2y ago
  Millions voting with their feet don't think that.
  - deleted 2y ago
    [deleted]
bpt3 2y ago
> 1. can Europe maintain its social benefits and living standards with such anemic growth (that is, is the goal of more humane and equal society compatible with a robust economy) This is already being answered by reports like the one in the FT > 2. can the U.S. preserve its competitiveness and overall GDP performance if it imposes more regulations/taxes designed to reduce income disparities, provide more social services, etc. No, because it will turn the US into a country like all the ones mentioned in question 1

ajross 2y ago

> a good chunk of the population live paycheck to paycheck. Is that not true in other economies? Was that not true at some (mythical?) point in the past? What number, specifically, would you like to see before you're willing to declare "The Economy is Good"? Basically the point you made is an example of the Economics of Vibes. It's non-falsifiable and allows you to justify any position you want. We're about to start a global trade war, it seems, based on those vibes. In point of fact household savings rate as a proportion of household income is not particularly low right now. In fact it had a huge spike during the pandemic (lots of assistance and nothing to buy, same thing that caused the inflation burp).

DonnyV 2y ago
Family needs to make $107,700 a year to own a home. Apartment in a moderate-cost area is about $70,000-$100,000/year. Median salary in the US is $59,300 What considered poverty level in the US for: 1 person: $15,060 2 people: $20,440 3 people: $25,820 4 people: $31,200 According to recent data from the U.S. Census Bureau, around 50% of Americans make $70,000 or more annually. That means about 50% of the US can not afford a place to live.
- umvi 2y ago
  > That means about 50% of the US can not afford a place to live. No, at best the conclusion is that 50% of the US can not afford to own a home. But not owning a home != homelessness. Renting still exist. Roommates still exist. There's a house in my neighborhood that has 3 (El Salvadorian, I believe) families living inside of it, and they are contributing 3x income to make it work (this depends on zoning laws though).
  - rootusrootus 2y ago
    > at best the conclusion is that 50% of the US can not afford to own a home. More particularly, 50% of the single person households in the US. This does not apply to a couple unless they are aiming for the Leave it to Beaver dream of a stay-at-home wife.
- 2y ago

black_13 2y ago

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sangnoir 2y ago

> But is the majority of the population thriving? Looking at the numbers: low unemployment, strong consumer spending, average income increasing at a rate higher than inflation, I'd say the majority is doing better than most years. They might not feel that way though, and we've been in a continuous vibes-cession since COVID.

buffet_overflow 2y ago
> strong consumer spending I’d like to see that plotted against average consumer debt
- gruez 2y ago
  https://fred.stlouisfed.org/series/CDSP https://fred.stlouisfed.org/series/CDSP slightly below pre-pandemic levels, and significantly below 2005-2008 levels.
  - kelnos 2y ago
    It's always fun to see a graph like this and realize that (aside from the pandemic), that the last time people were significantly better off by this metric was 30 years ago, while many of us were children, or not even born yet. And yet everyone is complaining that things are so bad, and that this is a new phenomenon.
- Workaccount2 2y ago
  https://fred.stlouisfed.org/series/CCLACBW027SBOG https://fred.stlouisfed.org/series/CCLACBW027SBOG The trend is basically back to where it would be if you just extrapolated 2019. You can even see the origin of the "vibe-session" here, things got pretty good for a lot of people in the money shower of the pandemic stimulus combined with low "stay at home" spending. Its the return to normal that has people spun with "the economy sucks".
  - coldtea 2y ago
    >The trend is basically back to where it would be if you just extrapolated 2019 So crap going crappier, with a short reversal for a couple of years.

ricardobayes 2y ago

Some of the population is definitely thriving. Although, does that reflect in higher quality of life? Some statistics say no. The best quality of life is where there is good access to quality healthcare, education, clean air and water, culture, and low crime. When taking into account all the above, somewhat surprisingly, Austria and Switzerland come as top places to live. https://en.wikipedia.org/wiki/City_quality_of_life_indices https://en.wikipedia.org/wiki/City_quality_of_life_indices

SideQuark 2y ago
The most recent report ranking country quality of life has US at #3 https://www.forbes.com/sites/laurabegleybloom/2024/09/10/new-report-ranks-the-best-countries-for-quality-of-life-business-and-more/ https://www.forbes.com/sites/laurabegleybloom/2024/09/10/new... And the US is massive and diverse, with many states larger than those other countries. If you look at quality of life across US states, it’s likely the best states (think New Hampshire versus Mississippi) would outrank all those countries, since the average across all states ranked #3.
- juki 2y ago
  You're misreading that. The survey ranks USA as #3 overall, but #22 on quality of life. The overall ranking is mainly thanks to the agility (#1), power (#1), entrepreneurship (#2) and cultural influence (#3). The other categories aren't that good: https://www.usnews.com/news/best-countries/united-states https://www.usnews.com/news/best-countries/united-states

umvi 2y ago

> It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck. This is oft repeated by politicians (including Bernie Sanders recently), but I've seen some good arguments why this can be a misleading claim. Ex. https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-other https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...

benreesman 2y ago

Asset prices are extremely high. When politicians or business journalists say “the economy is doing well” they mean asset prices. The stock market is high on a number of metrics, which is great if you own a bunch of equities. Housing prices are soaring, which is great if you own real estate. Food, housing, energy, healthcare, education. Real wage growth and job security measured against the prices and durations of those things. That’s what matters to people who don’t own significant real assets, those are the things that can get extremely bad (someone tries to murder the CEO of United Healthcare on the street bad) without showing up in the numbers you see in the press. Simon Kuznets himself, the inventor of GDP as a metric sternly cautioned policymakers about treating it as a summary statistic.

bpt3 2y ago
> Food, housing, energy, healthcare, education. Real wage growth and job security measured against the prices and durations of those things. That’s what matters to people who don’t own significant real assets, those are the things that can get extremely bad (someone tries to murder the CEO of United Healthcare on the street bad) without showing up in the numbers you see in the press. You're correct that they do matter and can get bad, but are not bad currently as regularly reported in the press. Lower income households in the US did better than everyone else by these metrics coming out of COVID.
- shkkmo 2y ago
  Kindly show your work.

hammock 2y ago

>But is the majority of the population thriving? Which country is that true of?

bpt3 2y ago

> It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck. By every metric, the economy is strong. A large portion of the households living "paycheck to paycheck" are either doing so by choice or don't understand what the term means and are ignoring things like retirement savings when they make that statement.

divbzero 2y ago

> But is the majority of the population thriving? This is a good point. Aggregate GDP is definitely not the right measure for this, and even GDP per capita adjusted for inflation and PPP does not account for economic inequality. Median household income adjusted for inflation and PPP would probably be the least bad option if we had to choose a single statistic: https://worldpopulationreview.com/country-rankings/median-income-by-country https://worldpopulationreview.com/country-rankings/median-in...

mullingitover 2y ago

> But is the majority of the population thriving? It's important to understand that the stock market is a leading indicator. Everyone doesn't immediately get laid off when the stock market tanks. Everyone doesn't immediately get a raise when the stock market is roaring. A lot of people are just now experiencing the stock market mini-crash of 2022, when the pandemic helicopter money dried up. In two years a lot of people are going to be experiencing the investments that are being made in the market right now. Most of them are going to wrongly ascribe those good times to the person holding high political office even though that person had nothing to do with it. This won't be the first time it has happened.

canadaduane 2y ago
This is such a great, succinct insight. I've heard various pieces of it, but you put it all together, thank you. Now I wonder, are there historical exceptions to this general rule? Also, does the "lead time" grow and shrink substantially?
- chii 2y ago
  > does the "lead time" grow and shrink substantially? it changes based on other people's guesses in their participation in the stock market. Aka, it's chaotic.
01100011 2y ago
> the stock market is a leading indicator I don't think so. It is probably loosely correlated with the economy at best. The stock market can soar in times of cutbacks which hurt non-asset owners but which benefit profit margins. The stock market can boom on liquidity surges that do not translate into economic investments. The stock market can crash while the overall economy does fine(wasn't 2000 basically this, with the economy not really suffering until after 9/11?).
- drowsspa 2y ago
  Honestly nowadays industry seems to be just about maximizing stock value through hype and CEOs are basically hired just for that. Like all stocks are meme stocks now, profits be damned because you can always do some accounting maneuver, and as long as stock goes up you're all getting your bonus. I wonder if my impression that this has increased a lot in the last decades is correct, and what would be the impact of this on the whole "stock market as indicator of economy" thing.

jandrewrogers 2y ago

US Federal Reserve studies indicate that the percentage of US households with no excess income after necessary expenses (as distinct from "ordinary expenses" as a term of art) is on the order of 10-15%. This definition roughly matches most people's intuition of what "living paycheck-to-paycheck" means. That isn't nothing but it implies 85-90% of Americans are not actually living paycheck-to-paycheck. There is another 25-30% of households that spend all of their income on ordinary expenses beyond necessary expenses. This includes things like car payments on a new BMW or a mortgage on a big house; "ordinary" is determined by expense category, not expense necessity, so a lot of spending on luxury goods is classified as "ordinary". By implication, there is effectively no ceiling to ordinary expenses. By contrast, the median US household has >$12,000/year in excess income after all ordinary expenses. Technically these households could have expanded their lifestyle to consume that income, but in many cases they are spending it on things that are not classified as "ordinary" and therefore not saving it. The categories of "non-ordinary" expenses (which have a sensible objective criteria) are almost entirely obvious lifestyle flex things, so not particularly controversial. The implications of these statistics are pretty wild. The median household can easily accumulate a million dollars in inflation-adjusted net worth, not including their house, over a 40 year career. And they can do it without being particularly thrifty, since ordinary expenses covers a lot of luxury spending. Americans have very high incomes, both in theory and practice, they just would rather spend it than save it.

savingsPossible 2y ago
Can you provide some links? Searches understandably are finding more 'ordinary/necessary' expenses for business than for families
- pembrook 2y ago
  America blows past the rest of the developed world on disposable income per capita and it’s not even close: https://en.m.wikipedia.org/wiki/Disposable_household_and_per_capita_income https://en.m.wikipedia.org/wiki/Disposable_household_and_per... And before someone chimes in “that’s because of the billionaires throwing off the average!” Look at the median disposable income chart. America is still at the top. The median American is far wealthier than the median European person, even after accounting for things Americans normally complain about like healthcare, education costs, and retirement contributions. This results in some crazy stats, like the fact the median Mississippi resident has more disposable income than the average UK resident (and that includes financial hub London). And again, this is AFTER accounting for healthcare, education, etc costs.

corimaith 2y ago

If America isn't doing well, what does that make the rest of the world? An absolute metric isn't going to be objective, but from a financial and jobs perspective America certainly has it alot better. Which is what the article is about. You're working harder perhaps, but many in other places have straight up no jobs or millions applying just for the most basic jobs. Many of those people would kill to get into America.

Romanulus 2y ago

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8f2ab37a-ed6c 2y ago

Article from a couple of days ago on the "most Americans are living paycheck-to-paycheck" myth: https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-other https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...

davidklemke 2y ago

The article addresses this directly, arguing the point that the social safety net has a cost which is what is curtailing the economy in some respect: For all its economic power, the US has the largest income inequality in the G7, coupled with the lowest life expectancy and the highest housing costs, according to the OECD. Market competition is limited and millions of workers endure unstable employment conditions. Europe’s social safety net needs to be paid for, warned Christine Lagarde, president of the European Central Bank, in a speech in November. Boosting competitiveness is necessary for long-term prosperity, she argued: “Failure to do so could jeopardise our ability to generate the wealth needed to sustain our economic and social model.”

qudat 2y ago

Based on what I’m seeing on YT from financial influencers, people are burning cash by purchasing cars they can’t afford

thedougd 2y ago
From what I see on the road it’s pickup trucks they can’t afford.

samirillian 2y ago

It’s funny because right after Trump was elected there was an ft article about all the metrics that showed that poor people were doing worse in real terms. One ft author uses one index to prove one point another uses others to prove another point. I’ve noticed that divide in particular between ft standard sub (40/mo) and ft premium (80/mo) How much must I pay to not get consistently bullshat?

Clubber 2y ago
>How much must I pay to not get consistently bullshat? You can't because you aren't the customer of news, you are the product.

epistasis 2y ago

More of the economy is thriving than ever before. >50% of the population has enough cash savings for three months of expenses The median amount of cash in bank account is $8k The median US household networth is $193k. Further, the wage increases in recent years have happened mostly at the lower end of the income scale, not at the top! When polled, the US population is very happy about their own economic situation, yet still believes that we are in some sort of terrible economic downturn. IMHO, the reason for this disconnect is housing. We haven't built enough, it's made people very unhappy, and restrictive zoning prevents fixing it. The housing theory of everything could even extend to the current political situation in South Korea...

cyberax 2y ago

> But is the majority of the population thriving? Objectively? Yes. People are living better than before the pandemic. However, incessant propaganda works. Fox News and AM talk radio convinced people that the prices went up by like 10x and the country is on the brink of collapse.

dgfitz 2y ago
I dunno, doesn’t feel like we ever saw the ass-end of that “bullwhip effect” does it?

jacobr1 2y ago

Noah Smith recently wrote a good blog post on some of the nuances here: https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-other https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-... There are too many people living in poverty in the US, or 1-step removed from it, but much less than are commonly believed.

deadbabe 2y ago

The population is not the economy.

deleted 2y ago

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johanneskanybal 2y ago

That's true of course and an important part why everything is so polarized. Without getting too political I don't believe the current direction is sustainable and that the start of the down spiralling already has happened.

bastloing 2y ago

Everyone I know is doing well and looking forward to the next 4 years. Just look at the stock market, which anyone can invest in. I started back when I was making $4 an hour, now doing very well.

yurishimo 2y ago
Not everyone can invest in the stock market… at least not in a way that is helpful. Sure, I might be able to put $20/mo in if I’m working poor and over a few years it will double if I’m lucky. $4/he starting wage makes you around my parents age (50+) so I’m guessing you easily earn six figures now since you hang out on HN. The crowd here does not represent poor people very well (which is fine!) but you can’t extrapolate your experience to everyone. Yea the stock market is great, but it says nothing about the single mom working two jobs to put food on the table with no energy left to tinker with ETFs.
- bastloing 2y ago
  If anything it's easier now than ever to invest in stocks. Online trades, no commissions, and fractional shares. When I started I had to pay a broker to do the trades. And still against those odds somehow it worked.

Buttons840 2y ago

There's a lot of debate over the true state of the economy, but it seems that, one way or another, pessimism abounds. Consider, the top voted comment on an article about how good the economy is a disagreement. I wonder how many of the negative effects of an actual bad economy can also be caused by widespread pessimism? Is it better to have a bad economy filled with happy optimists, or a good economy filled with unhappy pessimists?

chasd00 2y ago
It’s tied to politics. If your team isn’t in power was just voted out then the economy sucks or is teetering on the brink of disaster. However, if your team is in power or just voted in then things are looking great or will turn around soon.
- makeitshine 2y ago
  I just look at things like this and worry. https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe

abe94 2y ago

the living "paycheck to paycheck" claim isn't quite true, this article does a good job breaking it down: https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-other https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...

known 2y ago

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blackeyeblitzar 2y ago

A handful of companies (Microsoft Google Amazon Meta) will end up taking all the gains from the AI revolution as well. Capital wins because they don’t have to work as hard or worry about risks or access to talent. The playing field is tilted deeply against all entrepreneurs and really anyone lacking capital. I say this as a pro capitalism person. Something will need to change to give everyone enough influence and power.

alfiedotwtf 2y ago

[flagged]

analog31 2y ago

Something I wonder, along these lines, is whether we're measuring the right thing. For instance, does "thriving" depend on things like life expectancy, infant mortality, maternal mortality, quality of health care, pollution, crime, incarceration, traffic deaths, and so forth? The way I think about it, "economics" is supposed to study the quality of life, not just a few isolated numbers that happen to be in units of dollars. Do any of our "rivals" have entire regions with the levels of poverty seen in places like Mississippi, southern Ohio, or northern Michigan? I grew up in an area with patches of poverty like that.

0xDEAFBEAD 2y ago
Things are not bad in Mississippi: https://www.nationalreview.com/corner/its-great-to-live-in-the-american-economy/ https://www.nationalreview.com/corner/its-great-to-live-in-t...
- analog31 2y ago
  Indeed, this is exactly what I'm talking about, an article cherry picking one number. I haven't been to Mississippi, but I've been to other areas of deep poverty in the US. I don't think there are regions of France with poverty like that. Are we measuring the right thing?

ETH_start 2y ago

This is a common trope, but it's wrong. Americans' hourly wages and the disposable income is far higher in the median than that of people in the EU.

luxuryballs 2y ago

The metrics they use to measure this appear to show productivity growth when it’s just an inflation bubble.

switch007 2y ago

I also dislike this narrative that if your economy isn't as good as the US then you're failing. And, well, that's exactly where the US wants your economy

deleted 2y ago

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madeofpalk 2y ago

If you could live in any country, but you don't get to pick who you are or where you live in that country, which country would you pick?

deleted 2y ago

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