Because the basket of goods for inflation doesn't separate optional from mandatory consumption.
If housing, healthcare and education are outpacing the topline inflation number, a lot of marginal families will be squeezed. The cheap LG TV doesn't really make up for it.
Nevertheless if you lump those costs into an inflation number it won't be a lot higher, the Total Living Cost calculated for 2023-2024 showed 4.4% inflation vs 3% CPI. There are a lot of ways to slice and dice this, which is why people stick to the classic CPI.
If you factor in an extra 1.4% inflation per year into the numbers, you're not going to see any "real" wages growth over the 40 year period.
So the 1984 income is 60,420, if you calculate 60420 * (1.014)^40, which is assuming there's a 1.4% difference between the two disputed methodologies, you'd get about 105k. But the actual 2024 income is 83,730. Which I think means that if you take the non-CPI methodology to calculate real income growth, it's actually negative.
I'm not saying one method is more correct than the other (I don't know enough about economics to judge), but 1.4% annual difference matters a lot when you're talking about four decades.
The data shows that inflation inclusive of housing, education, and healthcare isn't that much higher than CPI, which is because CPI already includes shelter, which accounts for ~36% of CPI.
You assertion that CPI doesn't include housing is just wrong.
I'm not asserting they don't include housing. I'm saying housing is non-optional, so having low inflation on flat screen TVs is cold comfort if you're struggling to pay rent. The basket of goods isn't the same for everyone.
It's been like 5 years now of low consumer sentiment and increasing consumer debt while people who don't feel it are flabbergasted, the top line CPI number is fine, why aren't people happy?
I think once you have a good command of data and broader trends its harder to be cynical or a doomer. You just see that things aren't perfect but are larger better than the past on most metrics.
I think it's the dissonance between what the data say and just looking around. I see far more homeless, friends and family are more stressed, life in general just feels harder with less opportunity. Then you have the data people saying "no your life is actually great." So why the dissonance? I don't think it's just social media brainwashing.
I'm not saying any one person's individual life is necessarily better or worse, just that the median person is doing a little better than a few years ago. obviously there are long tails of outcomes in the US.
I'd also point out that the US has seen better wage growth and less inflation in recent years than the rest of the OECD, by comparison we're doing OK-er than our peers.
The reason we have data is because of all the biases that come with “just looking around”. Confirmation bias and selection bias are very powerful.
I strongly dislike Donald Trump, and he has done some terrible things to our country. But my dislike of him also makes me more likely to notice the bad things happening around me.
It happens with conservatives too. Ask my conservative family about how frequently men pretend to be trans and go into women’s bathrooms to get a peek. Ask them how often non-citizens vote. Ask them how the current crime rate compares to when they grew up.
Yeah this seems right to me. Politics is so polarizing it's a guarantee that half the country is going to be pissed no matter who is in charge. Most of my family leans left, it's hard to stay positive when the leader of your country actively and proudly hates you while also making terrible policy decisions.
It's much easier if you don't spend all of your free time mainlining negative national partisan news straight into your face. All of the most miserable people I know are very online and very into politics. It's not to say that you shouldn't care, just that the vast majority of the time you can do anything about it, so you're better served to focus elsewhere.
I completely agree, especially if you consider humanity as a whole.
I have asked this question many times to the doomers, and honestly don’t think I’ve ever gotten a good answer: if you had to be born as a random human somewhere on earth, and the only thing you get to choose is the year in which you’re born, what year would you choose? You can’t choose your race, intelligence level, physical abilities, parents, socioeconomic status, country, gender, sexual orientation, etc. Only the year.
So doomers: if the world is completely fucked up and going down the tubes, when would you prefer to have been born? Huge bonus if you can actually give some data showing that the average human was better off during whatever time you choose.
Why is it that the cynics and doomers always have such a poor grasp of the data?
Because the basket of goods for inflation doesn't separate optional from mandatory consumption.
If housing, healthcare and education are outpacing the topline inflation number, a lot of marginal families will be squeezed. The cheap LG TV doesn't really make up for it.
Nevertheless if you lump those costs into an inflation number it won't be a lot higher, the Total Living Cost calculated for 2023-2024 showed 4.4% inflation vs 3% CPI. There are a lot of ways to slice and dice this, which is why people stick to the classic CPI.
If you factor in an extra 1.4% inflation per year into the numbers, you're not going to see any "real" wages growth over the 40 year period.
So the 1984 income is 60,420, if you calculate 60420 * (1.014)^40, which is assuming there's a 1.4% difference between the two disputed methodologies, you'd get about 105k. But the actual 2024 income is 83,730. Which I think means that if you take the non-CPI methodology to calculate real income growth, it's actually negative.
I'm not saying one method is more correct than the other (I don't know enough about economics to judge), but 1.4% annual difference matters a lot when you're talking about four decades.
Yes, if I ignore that point then the top line number is the same. But it's a choice to compute top line CPI the way they do.
I'm explaining why people are still squeezed despite the top line number saying they shouldn't be.
When data and anecdotes disagree, then double check the way you compile your data.
The data shows that inflation inclusive of housing, education, and healthcare isn't that much higher than CPI, which is because CPI already includes shelter, which accounts for ~36% of CPI.
You assertion that CPI doesn't include housing is just wrong.
I'm not asserting they don't include housing. I'm saying housing is non-optional, so having low inflation on flat screen TVs is cold comfort if you're struggling to pay rent. The basket of goods isn't the same for everyone.
It's been like 5 years now of low consumer sentiment and increasing consumer debt while people who don't feel it are flabbergasted, the top line CPI number is fine, why aren't people happy?
> I'm saying housing is non-optional, so having low inflation on flat screen TVs is cold comfort if you're struggling to pay rent.
You're missing the point, rest is included in that top line low inflation number.
> the top line CPI number is fine, why aren't people happy?
secular stagnation? Cultural malaise? Expectations formed by ZIRP.
I think once you have a good command of data and broader trends its harder to be cynical or a doomer. You just see that things aren't perfect but are larger better than the past on most metrics.
I think it's the dissonance between what the data say and just looking around. I see far more homeless, friends and family are more stressed, life in general just feels harder with less opportunity. Then you have the data people saying "no your life is actually great." So why the dissonance? I don't think it's just social media brainwashing.
I'm not saying any one person's individual life is necessarily better or worse, just that the median person is doing a little better than a few years ago. obviously there are long tails of outcomes in the US.
I'd also point out that the US has seen better wage growth and less inflation in recent years than the rest of the OECD, by comparison we're doing OK-er than our peers.
The reason we have data is because of all the biases that come with “just looking around”. Confirmation bias and selection bias are very powerful.
I strongly dislike Donald Trump, and he has done some terrible things to our country. But my dislike of him also makes me more likely to notice the bad things happening around me.
It happens with conservatives too. Ask my conservative family about how frequently men pretend to be trans and go into women’s bathrooms to get a peek. Ask them how often non-citizens vote. Ask them how the current crime rate compares to when they grew up.
Yeah this seems right to me. Politics is so polarizing it's a guarantee that half the country is going to be pissed no matter who is in charge. Most of my family leans left, it's hard to stay positive when the leader of your country actively and proudly hates you while also making terrible policy decisions.
It's much easier if you don't spend all of your free time mainlining negative national partisan news straight into your face. All of the most miserable people I know are very online and very into politics. It's not to say that you shouldn't care, just that the vast majority of the time you can do anything about it, so you're better served to focus elsewhere.
I completely agree, especially if you consider humanity as a whole.
I have asked this question many times to the doomers, and honestly don’t think I’ve ever gotten a good answer: if you had to be born as a random human somewhere on earth, and the only thing you get to choose is the year in which you’re born, what year would you choose? You can’t choose your race, intelligence level, physical abilities, parents, socioeconomic status, country, gender, sexual orientation, etc. Only the year.
So doomers: if the world is completely fucked up and going down the tubes, when would you prefer to have been born? Huge bonus if you can actually give some data showing that the average human was better off during whatever time you choose.
The discussion here was about the USA, not the world.
That's why I pointed out that US real income, employment, and inflation figures all beat the OECD average.
OK, feel free to answer the same question for the USA.