Unit2Sucks said:
calbear93 said:
Unit2Sucks said:
I'm just acknowledging the connection between the media narratives and consumer perception of the economy.
You talk about food prices continuing to go up, but the WSJ article you recently shared said that the basket of food had gone down in price over the last year. So should we ignore that and just accept the negative implications? Or do we acknowledge the improvement?
The economy is doing fine whether the media wants people to know or not. I do agree that consumer perception on the economy matter and may have an impact on the election. It would be great if the media wasn't so invested in bothsidesism, false equivalency and protecting the horse race.
I think economy is fine, but I don't buy the "fake news" or blaming media bias by either side. There are specific news organization that are clearly biased for one side or another, but the overall media is not intentionally creating fake news.
As far as the economy, there are certain things that sour people's opinions. Housing costs which are extremely sticky are a big factor. Looking at the mortgage rate, rent, increasing property tax, etc., the more and more unaffordability and immovability of housing sours people's views. Also, until there is overall deflation, lower inflation rate means that, for the most part, people are still dealing with high prices on groceries from the inflation spike. People are not going to associate 3% increase in their "merit" based compensation to offsetting inflation. On top of that, they are paying higher interest payment on their credit card payments. All of that will make them feel not great about the economy. You and I as asset owners can look at these issues as not material and view from a total economy viewpoint. For example, I don't mind higher interest since I don't carry any variable interest debt (or any debt) but have only benefitted from higher interest from my current overweighted cash balance in this over-exuberant equity market. People like us are not the ones who need to be won over by Biden in the battleground states.
t4k shared some interesting perception data from the NYT this morning. Do you feel like this polling reflects the actual economy?
As for grocery prices, the clickbait WSJ article acknowledged that their basket of groceries has come down in price over the last 12 months (although that was mostly lost in the excessive handwringing and ignoring of offsetting wage gains).
Only 1/5 of those polled think the economy is good or excellent even though objectively the economy is about as good as it's been in a long time. One interpretation could be that for the vast majority of Americans, the economy will never and can never actually be good. That's capitalism for you.
I guess we can all just keep going in circles on this. The economy will continue to hum along and people will continue to perceive it negatively.
tequila4kapp said:
New York Times/Siena poll results Saturday on the economy:
"Thinking about the nation's economy, how would you rate economic conditions today?":
- 4 percent said excellent
- 17 percent said good
- 27 percent said only fair
- 52 percent said poor
Voter perception about the direction of the country:
- Right track: 25 percent
- Wrong direction: 64 percent
- Don't know/Refused: 11 percent
If I had to boil down the point where you and I are maybe missing the mark in our discussion, it is that irrespective of the overall economic health, there are certain aspects that linger that create bigger impact for most Americans.
Where you and I agree is that the economy is doing extremely well in light of the actions taken to reduce inflation.
Where you and I disagree is that, irrespective of the overall healthy economy, the higher interest rate and the overregulation in home development are creating an unaffordable or more expensive housing market for many people and much higher debt service payment at a time when household debt level is at an extremely high level. The wage increase will not be viewed as countering the higher expenses since most people view the wage increase as merit based that they earned while the higher expenses are created by bad policies. I think that is generally reflected in the polling data. Whether they are wrong or not does not matter. It's perspective, and it's a perspective that has always existed.
As long as there is overregulation in the housing market (CA is a great example) and there is higher interest rate, people are not going to want to move out (especially if they already have locked in low interest rate) and there will be lack of housing. What happens when supply is less than demand? Prices increase. Just like rent. With rent control and with people unable to purchase homes, there is more competition for more limited supply. Housing makes up a big chuck of expenses. And the frustration with inability to afford to buy a house will sour people's views irrespective of how good the overall economy is. And when the economy is doing well and inflation remains higher than 2-3% (I don't want to discuss whether historical inflation was higher because historical interest rate was also higher - we are not going back to much lower interest rate which is below historical rate unless inflation is also lower), there will be resistance by the Fed to lower rates.
Like any entitlement (government gives something for free to people, they will never be able to take it back), people remember how much lower mortgage rate, food prices, etc. were and that they are still struggling now despite working hard and "earning through merit" those wage increases. I don't know if you view your compensation increase as just better economy independent of you instead of you having earned that raise. But that's their view on wage increase. When you are looking to buy something, and you see it be a lot more expensive, you don't most likely think - hmmm, i got that pay raise - therefore, things are also more expensive.
