[HN Gopher] Why data on the economy doesn't match our feelings
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Why data on the economy doesn't match our feelings
Author : toomuchtodo
Score : 26 points
Date : 2025-03-11 18:29 UTC (4 hours ago)
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| 0cf8612b2e1e wrote:
| So unemployment -- as we'd like to say it: "functional
| unemployment" -- it's really in the 20s, which is horrifying. And
| for people of color, it's much worse.
|
| If you look at the linked "functional unemployment" chart
| (https://www.lisep.org/tru) the numbers in the past three years
| are the lowest on record. It has been on a consistent downward
| trajectory, minus 2008 crash plus COVID, so that does not seem
| worth highlighting. The basket of goods argument (the
| representative purchases for a household is unrepresentative) is
| more compelling.
| gruez wrote:
| >If you look at the linked "functional unemployment" chart
| (https://www.lisep.org/tru) the numbers in the past three years
| are the lowest on record. It has been on a consistent downward
| trajectory, minus 2008 crash plus COVID, so that does not seem
| worth highlighting.
|
| Agreed. It's dishonest to take one headline metric (ie. U3
| unemployment), redefine it to mean something entirely different
| (ie. U6 unemployment or whatever), and then conclude things are
| much worse than initially thought because the redefined metric
| is much worse than the original
|
| Suppose that there was a "sickness" metric that measured how
| many people are in hospital. Then someone comes along and
| claims the country is much sicker than people thought, citing a
| "functional sickness" metric that measured anyone who called in
| sick, and that's "horrifying". They'd be laughed out of the
| room.
| gruez wrote:
| >And if you look at the basic things that they can afford to buy,
| they have inflated over the last 20 years more rapidly than the
| CPI. So they're worse off.
|
| This is an unsatisfying explanation. By his own admission these
| factors has been happening for the past two decades, but the
| divergence between consumer expectations and "fundamentals" only
| really happened post pandemic:
|
| https://archive.is/ry4YC
|
| https://archive.is/yiT52
| Leary wrote:
| Maybe because real estate prices are not captured by CPI, only
| rental prices. People are taking longer and longer to save up for
| a house[1].
|
| https://www.crews.bank/blog/real-estate-prices-vs.-income
| toomuchtodo wrote:
| https://www.pewresearch.org/short-reads/2024/10/25/a-look-at...
|
| > One commonly used (though also criticized) benchmark for
| housing affordability is that no more than 30% of household
| income should go toward housing costs. Households that spend
| more than that are considered "cost burdened" by the U.S.
| Department of Housing and Urban Development.
|
| > By that standard, 31.3% of American households were cost
| burdened in 2023, including 27.1% of households with a mortgage
| and 49.7% of households that rent, according to 1-year
| estimates from the Census Bureau's American Community Survey
| (ACS). (Many more people own than rent: In the second quarter
| of 2024, 65.6% of occupied housing units were owned while 34.4%
| were rented, according to the most recent estimates from the
| Census Bureau's Current Population Survey/Housing Vacancy
| Survey.)
| chickenpotpie wrote:
| Only looking at home prices compared to salary is very
| misleading because it doesn't account for changes in interest
| rates. Mortgages were almost 20% interest in the 80s. Cheaper
| doesn't mean much if you still can't afford the monthly
| payment.
|
| Also looking at average price doesn't account for the rising
| quality of housing. In the 1980s the average home was around
| 1,700 square feet. Today, it is nearly 2,700.
|
| https://fred.stlouisfed.org/series/MORTGAGE30US
|
| https://www.newser.com/story/225645/average-size-of-us-homes...
| bluefirebrand wrote:
| Forget comparing old builds to new builds
|
| If you look at the pricing trend of a single house, it tells
| quite a story
|
| In my city, A house that would have been 80k in the 80s is
| listed between 500-600k today, depending on the neighborhood
| and how updated it is
|
| In the 80s you could get a 15-20 year mortgage at 20%
|
| Now you get a 30 year mortgage at 5%
|
| If your monthly payment today is less than it would be at
| 20%, it is _only_ because you are expected to be paying for
| it at least an extra 10 years compared to the past
|
| There is absolutely no question that houses are less
| affordable today than they used to be
|
| And that's before even thinking about how salaries haven't
| grown anywhere near as quickly as real estate prices
| chickenpotpie wrote:
| > Forget comparing old builds to new builds
|
| Why? It's extremely relevant.
|
| > In the 80s you could get a 15-20 year mortgage at 20%
|
| 20% was the rate for 30 year mortgage in the 1980s. My
| source is specifically for 30 year mortgages.
|
| > If your monthly payment today is less than it would be at
| 20%, it is only because you are expected to be paying for
| it at least an extra 10 years compared to the past
|
| That's a gross overgeneralization. Interest rates are lower
| across the board today.
|
| > If your monthly payment today is less than it would be at
| 20%, it is only because you are expected to be paying for
| it at least an extra 10 years compared to the past
|
| I never said they weren't but you also haven't provided any
| evidence that arent.
|
| > And that's before even thinking about how salaries
| haven't grown anywhere near as quickly as real estate
| prices
|
| You're literally just repeating your original claim with no
| new evidence.
| chickenpotpie wrote:
| Honestly, this is a completely bogus interview that is at best,
| misleading, and at worst, outright lies.
|
| > Well, all that is absolutely true, but sadly it's even worse
| than that. What it doesn't account for is people who have a piece
| of a job -- they work an hour or two here and there, but they
| want a full-time job. It doesn't account for that.
|
| The BLS does track that as part of the U-6 unemployment rate
| which is near a 20 year low. The U-6 unemployment rate counts
| people that work less than 35 hours per week, but want to work
| more hours, as unemployed.
|
| https://fred.stlouisfed.org/series/U6RATE
| everybodyknows wrote:
| That quote is not in the context of U-6. From the preceding
| paragraph:
|
| > ... we do the monthly unemployment rate. It is a crucial
| piece of data, but the headline one does not account for ...
|
| FRED explains:
|
| > U-3 is the traditionally reported unemployment rate ...
|
| https://fredblog.stlouisfed.org/2015/05/the-many-flavors-of-...
| chickenpotpie wrote:
| Correct but theyre saying the headlines are wrong because the
| statistic that they use is not accounting for people that are
| reluctantly part time, but they're not mentioning that there
| is a statistic that does track that and that statistic also
| reports that unemployment is low.
|
| It is a lie by omission.
|
| This interview was about how the data and our feelings about
| the economy don't match. The crux of their argument is that
| we're looking at the wrong data and the right data shows the
| true state of the economy, but the true data exists and
| doesn't align with our feelings either.
| borgdefenser wrote:
| In my adult life, the only time I can ever remember the consensus
| that the economy was good was Christmas 1999.
|
| The internet gave people hope about the future in 1999 but now
| with the internet our desires can never match the reality that
| follows.
|
| Instead people live in either a post-bubble crash that is about
| to crash further or if things are going well that just means we
| are in a super bubble that will have a historic crash. Repeat.
| kittikitti wrote:
| When I was laid off, HR strategically did it so it wouldn't be
| reflected in the unemployment numbers. I don't trust any of these
| macro economic numbers.
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