It's one thing to feel financially tight. It's another thing to have endless news articles and publications and posts warning of how bad the global economy is and how inflation is running out of control.
Not only does this constant negative message directly cause stress on the viewers, but it can cause fear in business which can lead to "precautionary" retractions... which can exacerbate the actual market problems.
Decision-makers in companies will make harsh short term decisions either to look responsible to shareholders or to cover their asses from upper management, and these decisions can have negative long term consequences to the company, employees (especially those laid off), and the market in general.
How often do we see news of mass layoffs, and a month or two later we see a big hiring round from the same companies? This is grossly inefficient for the companies, and it's obviously very harmful to those let go.
If the media didn't jump on every potential disaster with such fervor, we would all be better off. But promoting fear gets attention, and attention is potential revenue... or votes.
I think it's great to check media sensationalism, but I think there's a massive disconnect between the impacts of inflation on highly paid software engineers, and most Americans.
It's also a bit strange to see you view media as a completely separate entity from "decision-makers in companies". My experience has been that most decision makers in companies get most of their ideas entirely from the board and major investors. I recently left a publicly traded company, and pretty much every time our "leaders" met with the border and major investors they would come back singing a very different tune then they went in.
But these same major investors and board members also have relationships with people running major media companies (which are also just companies), in many cases they may even be the same people.
There's this trend I've seen on HN to just dismiss anything that seems wrong with the world, no matter the evidence, with "media sensationalism", as though we are living in fantastic times if it were for that pesky media distorting our views.
As the child of blue-collar parents, I'd agree that there's a lot of price anxiety in their neck of the woods.
I'd also add that the statistics can be misleading: of the jobs added, many are in food services and front-line healthcare. For the former, the positions don't provide hours and pay poorly. Not a great area to be adding jobs in amidst high inflation and depressed lending.
> I think it's great to check media sensationalism, but I think there's a massive disconnect between the impacts of inflation on highly paid software engineers, and most Americans.
Thank you for saying this, it's exactly what was going through my head while reading that post.
The very idea that money problems are in people's heads, while it can be true, people are panicking not because the media told them to but because they can see for themselves that they don't make enough money.
If you've never been through it you may not understand. When we hit the recession in the early 90's my family quite literally did not make enough money to afford everything month to month (stepfather worked at a grocery store). We were slowly going into debt just to survive (bills, housing, food, gas).
As far as I can tell, the mainstream media is working overtime to _downplay_ the actual state of things.
I'm a computer programmer with an advanced degree and three decades of experience and until about a year ago, I got a dozen unsolicited job offers a month. Now I can't recall the last time I saw any. Reddit's /r/cscareerquestions used to be flooded with people complaining about persistent recruiters, now it's flooded with credentialed people who've been looking for a job for months with no success.
My wife and I both make good salaries in a relatively low cost of living area and we're suddenly finding ourselves cutting back drastically just to keep from falling behind. I track my finances pretty carefully and I can compare what I spent on groceries and gas and medical expenses later year vs. this year (against the 0% pay raise we've both gotten for the past few years) and it's quite a bit.
I'm in a good position since I bought a house a long time ago at a fixed mortgage rate and am still employed, but I can't even imagine how people even a little worse off than me are doing... all while the network news and the places on the internet that haven't been shadowbanned are insisting that we're just exaggerating the scope of this financial crisis.
I remember 2000 and 2008, and neither seem like anything compared to this.
Don't shoot the messenger. If anything, inflation and shrinkflation's effects on the average American are, in my opinion, understated; and Thomas Jefferson (if you've ever read his comments about inflation) would've been calling for hangings.
Also, worth remembering, the median American income is $40,480 /yr., while median household is $74,580 /yr. Half of Americans make less than that per year. 20th percentile income, by median, says that 1/5th of American households make less than $28,000/yr (no law of averages with high earners skewing the result here). One glance at the housing market, or inflation, and I think they have every right to feel angry.
This is hardly just the news talking too much about the thing. Cumulative inflation over the last 4 years has been insane and most people haven’t gotten double digit raises (just to tread water in the best case). People feel the pinch because it’s an actual fact in their day to day life
> Between 2019 and 2022, hourly wage growth was strongest at the bottom of the wage distribution. The 10th-percentile real hourly wage grew 9.0% over the three-year period. When we look across the wage distribution, we see wage growth declining for each successive wage group until we reach the high-wage group. Compared with the 9.0% wage growth at the bottom, growth was less than half as fast for lower-middle-wage workers (3.9%) and less than one-third as fast for middle-wage workers (2.4%) between 2019 and 2022. Upper-middle wages grew even more slowly at 1.8% over the three-year period, while the 90th-percentile wage grew 4.9%—faster than the middle wages, but not as fast as the 10th-percentile wage.
If someone makes 25k and gets a 2.5k (10%) raise over a few years, they still aren't as well off as someone who made $200k in 2018 and got laid off and now only makes 120k.
I know you were responding to a comment about raises but seeing "done the best" in any context for the lowest earning workers feels odd.
Painfully tonedeaf comment. If you're at poverty level, not making ends meet, and inflation is 30% and your wage growth is 9%, you are falling behind. If you are above "making ends meet" and your income growth is only 3% but you are still "making ends meet", things are fine for you.
Inflation is absolutely decimating the lower half of the country. Your numbers are sophistry.
100% don't believe it. And you missed the overall conclusion from your own link:
> While our analysis finds fast wage growth at the 10th percentile and wage compression within the bottom 90% of the wage distribution, highly unequal wage growth has led the very top to amass a greater share of the overall earnings distribution, contributing to worsening inequality.
Perhaps more importantly and that during inflation/shrinkflation the median income has _decreased_ so not only do you get less for your money you also have less money!
I will say though on inflation we should shoot the messenger. Inflation is a disease; it describes a symptom (increased prices). The word inflation does not describe at all why prices increased. Did oil get more expensive so the cost of revenue increased? Did a company realize they were charging below market rate? The news can be do a tiny bit of investigation before reporting on it for hours on end.
> not only do you get less for your money you also have less money
The figures you cited are real median income, meaning the effect of inflation has been backed out.
The C-CPI-U was around 8% in 2022. If the Census report says that real incomes (what your paycheck can buy) decreased 2.3%, that means that nominal incomes (the numbers on your paycheck) increased by a little over 5%. The unlabeled table on page 14 shows that they used 7.8% as the deflator for 2022.
Do not repeat the nonsense that "not only has your [real] income decreased, but inflation has made things more expensive". That may or may not be the case, but if you're going to cite both, you should be citing nominal income, not real income. (In particular in 2022, this was not the case and this error leads the reader to an incorrect conclusion.)
I think a portion of people who say things like this don't know what they're talking about. Another portion knows exactly what they're talking about but realizes that other people won't and is able to spin misleading messages out of that gap in understanding. (Make no mistake, there are actual problems facing the median income American, but there is also a lot of mis-speak about them, some of which is intentional.)
> Do not repeat the nonsense that "not only has your [real] income decreased, but inflation has made things more expensive".
Non-Sequiter. That isn't a quote of something I wrote.
The thing I actually wrote is "so not only do you get less for your money you also have less money!". Which is accurate. Shrinkflation means when you go out to buy detergent you only get 15.5 oz instead of 16oz so you're getting less for your money. Real income decreasing by 2.3% means you have less money. "so not only do you get less for your money you also have less money!"
People really aren't going to care that their income is up 5% if the rent is up 8% ... The real value is noticed.
> Real income decreasing by 2.3% means you have less money.
You still appear to not understand.
You have MORE money in your paycheck (if you were a median income earner in both 2021 and 2022). That money just has less purchasing power by a greater amount than the increase in money.
More money (nominal income is up), but less purchasing power (real income is down).
I also can't stand, when it comes to inflation, that the media talks about a low-inflation quarter as though it is "relief for consumers."
What about it is relieving? Prices haven't gone down, prices aren't going down, we're supposed to feel relieved that prices are still going up, just slower?
I honestly dare the bankers on the Federal Reserve, and frankly, all of Congress, to live on a 20th percentile income. They'd be all over inflation in seconds once reality set in.
Edit: I might mean 80th, I'm struggling to remember which end is lower (20th or 80th).
The number of voters benefiting from student loan debt pauses is relatively small and they are also mostly not swing voters. I agree we should resume student loan debt payments, for a variety of reasons.
In the fall of 1972, President Nixon announced that "the rate of increase of inflation was decreasing". Probably the first time a sitting president used the 3rd derivative to increase the chances of reelection.
20th percentile means 20% of people earn the same or lower. 80th percentile would mean 80% earn the same or lower. So you were correct in the first place.
The BBC is a British institution though, and the British media has treated the effects of inflation here very differently to how the American media did, with endless front-page coverage of every last detail and prediction and problem whereas the American media downplayed the issue and how badly people were doing in day-to-day terms and instead told readers that inflation was some partisan Republican narrative.
Not sure if you are American or not, but at least from my prospective experience as someone in the US there seems to be a never ending glee from the media in predicting an imminent economic downturn and there were/are constant articles and stories about how difficult the economic situation is, how bad inflation is, and so on.
Maybe a Democratic Party partisan outlet would say it is just a Republican talking point but the average news media outlet I have seen has had something negative to say about the economy every week for the past few years.
It's not as applicative in this case, at least for the UK.
As a software developer based in the UK, the inflation mentioned in the article is felt very deeply by myself. The article cited 7.2% as the price inflation rate, which is close to the rate of 7.6% calculated by the Office for National Statistics based on my household spending[1] and is consistent with my personal experience.
On top of that, the UK Treasury adjusted the personal tax threshold policy back in April this year, basically freezing the tax bands to no longer rise with the inflation, which caused a direct 3.3% hit on my income. This freeze is estimated to be the largest over 50 years according to BBC[2], but since we are discussing media sensationalism, so maybe that's not something that would convince you.
Anyway, maybe the situation is different elsewhere, but I do find this article more truthful than not from where I stand.
> The article cited 7.2% as the price inflation rate, which is close to the rate of 7.6% calculated by the Office for National Statistics based on my household spending[1] and is consistent with my personal experience.
Do you know if those figures factor in non-consumables like housing and insurance?
Asking because many US areas are seeing 20-100% jumps (or higher), year over year over year. When your largest expenses skyrocket, single digit increase stats don't reflect reality well.
Not sure about the post's article one, but yes on the ONS calculator. Basically one enters their expenditure by categories and it will calculate the overall inflation rate. Though personally I wasn't impacted by these two categories.
You can directly view by kind on ONS as well[1]. It states CPIH over 12 months rate in July 2023 is 5.4 for housing and 9.0 for health.
Florida. We moved in 2021 to same size house (but 25mi further out) and our rent is 1.95x our last rent. Rents generally doubled in our last neighborhood, one expired lease at a time. Typically, long existing tenants were not given opportunity to renew and new tenants got the new doubled rate.
Some of those old tenants joined the ranks of homeless people with savings, because there was nowhere to go. My sister may be one (diff state). We'll know more tomorrow.
The media sensationalism isn't the underlying problem, it just exposes it. The modern economy runs primarily on the confidence and emotions of the market participants. It is at the mercy of an irrational mix of evolved ape behavior.
You are right, except in this instance there is very objective proof that inflation and homelessness are problems that have gotten worse recently and are having widespread impacts. If the media choose not to cover this, because of whatever reasons they have (maybe they worry about frightening the public ?) then it will not be addressed politically. They are called the 4th estate for a reason. They determine what political discussions are allowed. Inflation is an important issue for lower income and middle class workers.
Laying off then hiring should be a positive. Presumably the laid-off were your worst talent and workers, while the new hires are at least randomly distributed and should be selected towards the upper end of the talent range.
Unless you managed to somehow change the intellectual characteristics of the labor pool in the span of less than a year, this is impossible on an industry-wide basis. At best, one company gains and another loses, but even if it evens out, the deadweight loss of unemployment payouts, time spent applying and interviewing, onboarding and offboarding, relationship upheavals, all make this a net negative activity socially.
Again, that’s not how it works. You don’t lay off bad employees, you lay off randomly or lay off teams you no longer need or want. Layoffs are an opex reduction exercise, not a house cleaning.
That's not always true. Some layoffs cut entire organizational units regardless of individual performance. Others cut a certain percentage across the board (sometimes with exceptions for strategic growth areas). The CEO might tell every manager to cut 10%, and obviously they're going to take that chance to eliminate their worst performers.
> can cause fear in business which can lead to "precautionary" retractions... which can exacerbate the actual market problems.
Thing I learned a long time ago from an experience[1]. Managers often place more trust in what they read in rags like the NYT and the WSJ than they do their in house experts. Which is crazy because the guys that scribble for those outfits are relative buffoons with a knack for writing and nothing else. And relying on third hand bullshit most of the time.
[1] VP said we were idiots because what were were saying didn't line up with an article he read in Inc Magazine.
I visited Argentina earlier this year, and the psychological effects of years of inflation were very real. The exchange rate has gone from 5 pesos per USD, to 350 officially in the last 10 years. The unofficial rate is up to almost 900 pesos per USD. In March the unofficial rate was half of that, so the currency has lost 50% of its value in the last 6 months.
Everybody prefers to be paid in dollars, and if you're getting paid in cash, why pay taxes? I had an Argentinian tell me that I could pay ~25% of the list price if I paid in USD instead of credit card, because the unofficial exchange rate and not paying taxes on it would save that much. Money requires trust that you can exchange it for goods and services, which are provided by other members of society, so debasing the money supply like this is killing society in the lovely country of Argentina.
Gold creates hoarding behavior. Bitcoin has the same down side. Currencies need to have elasticity. The problem is how the elasticity happens. It can't be controlled by private interests. This is an unsolved monetary problem. I don't think it's unsolvable though.
Sorry, is there any reason to expect money to revert to behaving like gold any time soon? Sounds suspiciously like crypto tripe. Why would that be beneficial anyway? The relative purchasing power of poor countries won't change without some serious shifting in resource distribution worldwide.
You get the best exchange rate with crisp $100 bills, and any USD that is damaged or too worn will get rejected by the money changers... Which makes you see where the demand for dollars is greatest (The wealthy).
Could you please stop posting unsubstantive comments and flamebait? You've unfortunately been doing it repeatedly. It's not what this site is for, and destroys what it is for.
Lovely country of Argentina had 9 defaults in it's history. Maybe people and their parents, which certain % of them are part of government or economy. Should start taking little more responsilibity to understand how Finance works long term? Naa, let's default again, blame other things and not even understand how debt and modern monetary system works.
https://www.bloomberg.com/news/photo-essays/2019-09-11/one-c...
Just the governments, most people are not educated enough to understand that at some point you have to pay for all that welfare. Inflation is called a "hidden tax" after all.
>Not one mention that inflation is caused by the government and central banks expanding the money supply.
The recent inflation is more because of unfettered capitalism. Supply chain issues? Ok let's just keep on raising prices as much as we can. Things back under control? Ok, well we are still going to claim we have issues and just keep on raising prices.
Workers want more money? Ok instead of us shareholders taking the hit, we are going to pass on every bit of that (and more) to the consumer because "we can".
Want to go to a football game? A concert? Disney world? Cool- we are just going to keep increasing prices like crazy because there is a large enough people in the top 10% that will pay because that increase doesn't really matter.
Prices are being driven the fuck up because of greed and income divide.
Central Banks have allowed for the creation of tens of trillions of dollars / euro into a bases that were only in the tens of trillions.
That glut of new money took a flight to quality in banks and things like tech companies. Such firms, and all the people that contract with them or are employed by them as downstream from this money thus had a warped cost to capital compared to everyone else.
It wouldn’t make sense to operate a business and not choose the customer who can support a higher price point over the lower one with an identical cost, and with such a large delta, increasing margin as a matter of price increase made fundamentally more sense than investing in cost reductions.
The fact is that Central Banks had the largest role to play here assuming that choosing to make more money over less money by simply raising prices is not inherently evil.
> Not one mention that inflation is caused by the government and central banks expanding the money supply.
> Prices are being driven the fuck up because of greed and income divide.
Maybe...it's both? Could it actually be that the government and central banks collude to prop up the housing and stock markets and print money (through debt creation) in order to make sure that the upper quintile keeps getting paid and the reset squabble about it?
That is one lens with which to view the situation. But it's a simple lens when inflation is a large forceful re-structuring of the economic pyramid that is impacted by the attempts of central authorities to manage money.
Inflation is just a word that we have for changes between the costs of various goods and services and the amount of money that people are being paid for the work they do (averaged across various parameters to make communication simple). Those changes happen for many reasons, because people aren't making enough money... because people are hording money... because the govt et al increase the supply of money to counteract those phenomena... because the economic chain of supply has shifted... and for some massive combination of all those things and more. The economy is a complex machination that you're deeply oversimplifying with this two sentence comment. Although the government trying to predict such things and get involved can be deeply flawed, the alternative is the crushing burden of unemployment and crumbling structures.
As such, pointing the finger strongly at big government and saying "how dare you get involved" is myopic and heavy handed. We could also easily point the finger at the financiers and real-estate moguls who have brought us into a world where the average worker has little income and extreme "expenses" that filter into the coffers of wall street.
> Although the government trying to predict such things and get involved can be deeply flawed, the alternative is the crushing burden of unemployment and crumbling structures.
This is a little overstated, no?
I agree the economy is more complicated than simply money supply, but subscribe to Hayek’s view of the pretence of knowledge - that the central bank can possibly manage the economy better than the economy can manage itself. The problem with a small elite managing the money supply is that it isn’t predictable. We see them saying rates will be low for the foreseeable future and then a few quarters later start jacking up interest rates at the fastest rate in 40 years. Well, I guess it just sucks to be anyone that listened to the “low for long” guidance. But this uncertainty has a cooling effect on economic activity. If anything we should trust money supply to a predictable, simple equation rather than the whims of men behind closed doors.
I used to have a lot of financial anxiety when I was younger. These days I thought I was pretty well set but the increase in prices for everything has been kind of a wake up call, especially housing! Kind of shocking when SFH's in my southern suburb went from costing ~ 400k in 2017 to ~ 800k now. What blows me away is that it appears to have no bearing to what people can actually afford? I make multiples of the local median household income and even I'm starting to worry about affordability if I ever needed more space.
> What blows me away is that it appears to have no bearing to what people can actually afford?
If the houses aren’t sitting on the market, people can afford them. I think what actually happened is people realized that housing was underpriced. Which is insane in terms of the raw numbers, but it’s the truth: lack of supply along with increasing numbers of buyers means that the market really is that hot.
I don't buy this at all. There are shoddy houses in my area that were sold in 2021 for $100k that are now on the market for $250k in 2023. We're in a bubble.
Imo because the rich get richer, they inevitably need to store that wealth somewhere. Cash would be stupid because inflation, so they can buy property over market rates as a “safe haven”
The song “Rich Men North of Richmond” really captures the zeitgeist. It was #1 on the Billboard Hot 100 music chart in August. If you haven’t heard it, it’s worth a listen.
“‘Cause your dollar ain’t shit and it’s taxed to no end”
> Often, people are reluctant to engage with support services and instead shut down, which can hinder long-term financial planning and wealth accumulation, particularly if the cause of the anxiety is driven by high debts," says Vyas-Lee. And, she adds, "financial anxiety rarely resolves by itself, so professional support can be genuinely transformational for those who do step forward".
I'm genuinely curious about that professional help.
A this point it seems the general advice is "just accept to be poor", which doesn't seem to go in line with wealth accumulation over time.
Change is scary. Change for the worse is terrifying.
From my observation, most people rightfully assume their incomes aren’t going to rise very fast, if at all. We’re in a world where some people would call a 3% annual raise “generous”.
The correct and only way to get by inflation without getting pinched is to make sure your income raises to match cost of living increase. But a lot of people don’t live in the rat race so this might not be obvious and certainly doesn’t feel desirable.
As someone living in the urban rat race, inflation doesn’t feel like a big deal. In the 2010s amidst “low inflation” I saw rents rise in my city astronomically. In the same time period I worked / negotiated to increase my own pay astronomically. Prices go up, income goes up, life goes on.
For those with some savings, you also need to understand how to get into inflation-resistant investments if you want to not be pinched by savings. Otherwise this spiral of increasing wages makes your prior savings irrelevant.
On the other hand, those with some debt need the financial wisdom to use their spiraling wages to pay down debt principal and not let the debt spiral due to increasing interest rates.
So, high inflation can be a kind of continuous cash debt/savings jubilee, resetting small-time debtors and savers to living hand-to-mouth as it erases their cash history. But it can accelerate the gap between the worst debtors and the biggest investors who are on opposite sides of the spiral...
What are some examples of inflation-resistant investments that are not real estate? Should a person just put anything extra into mortgage even though interest rates in savings accounts are higher than mortgage interest? Stock market at the moment is something I don't understand and I don't want to get burned again with Bonds.
It's one thing to feel financially tight. It's another thing to have endless news articles and publications and posts warning of how bad the global economy is and how inflation is running out of control.
Not only does this constant negative message directly cause stress on the viewers, but it can cause fear in business which can lead to "precautionary" retractions... which can exacerbate the actual market problems.
Decision-makers in companies will make harsh short term decisions either to look responsible to shareholders or to cover their asses from upper management, and these decisions can have negative long term consequences to the company, employees (especially those laid off), and the market in general.
How often do we see news of mass layoffs, and a month or two later we see a big hiring round from the same companies? This is grossly inefficient for the companies, and it's obviously very harmful to those let go.
If the media didn't jump on every potential disaster with such fervor, we would all be better off. But promoting fear gets attention, and attention is potential revenue... or votes.