Hacker News Reader

Comment by bettercallsalad | Hacker News Reader

When I come across a headline like that, I can’t help but think these must be a propaganda tool to make people believe economy is doing great. It’s similar to saying “headline inflation is slowing - yayyy we have brought inflation down!” and now everyone clap.

Just like inflation the effects of these economic indicators are cumulative. Total inflation is up over 37% over last year and half (when you combine over quarters and that doesn’t even include housing), your average rent in most livable cities with jobs in the country are over 2000, and guess what wages haven’t gone up meaningfully compared to that. And cherry on top, a good chunk of people don’t have a 1000 dollar saving.

Yet everyone is cheering - rent growth is slowing. Inflation is down.

If there ever was a most delusional group of people, that would be the economics experts making commentaries in media. Good lord.

View on HN

The point of the article (and the headline) isn’t that rent growth is meaningfully slowing.

The important bit is “(where housing got built)”. It’s arguing that increasing the housing supply is reducing rent pressure, and the situation is worse where nothing is being built.

It’s not trying to convince you that things are great and you should be cheery, it’s arguing a policy position.

The places that aren’t building should be, and the places that are building should build more. The only way to arrest rent growth or bring about a decrease in rents is to increase the housing supply or crash the economy.

> Total inflation is up over 37% over last year and half (when you combine over quarters)

I don't think you have that right. If they say inflation was 8% for a quarter or whatever, that means it's 8% above the year-ago quarter. You don't sum the 8% over consecutive quarters. Each instance is comparing to a year ago, to account for seasonal effects.

(Also, remember that all these year-over-year numbers are skewed by pandemic effects. Inflation in 2022 looked high because demand was pent-up and time-shifted into that year. Inflation in 2023 will look less compared to the high baseline of 2022.)

> a good chunk of people don’t have a 1000 dollar saving.

This is kind of a myth. The Bankrate.com survey that this figure comes from indicated that 37% of Americans don't have $1,000 lying around to pay for an emergency.

What most people don't say is that of the remainder, 23% would pay for it by cutting back spending in other areas, and another 15% would simply put it on a credit card. Only 15% of respondents said they would borrow from friends and family.

That is to say: most Americans don't have $1,000 lying around because credit is easy to obtain in this country, and for most things there is no need to have it available in cash.

The economy is doing great though. If you are in the top 30%, things have been delightful the last few years.

The divide between the haves and the have-nots has exploded. Unfortunately its the haves who have the power (not just the 1%, its that 30%) and shoot down anything that will detract from their personal wealth or quality of life.

"I support affordable housing and new builds, but we cannot lose the character of our neighborhood!"

"I support a higher minimum wage, we are simply moving product sourcing overseas to maintain growth targets"

"I support taxing the wealthy, we only make $5M annually, go after those making $50M."

"I support taxing the wealthy, we only make $1M annually, go after those making $10M."

"I support taxing the wealthy, we only make $500k annually, go after those making $5M."

"I support taxing the wealthy, we only make $250k annually, go after those making $2.5M."

.....

The hard pill to swallow is that those who "made it" over the last few years are the ones who need to "take it" to balance things out.

But don't worry well compensated average HN reader, nobody is gonna allow your home value to drop much.

> I support taxing the wealthy, we only make $250k annually

That's the 4th %-ile not 30th %-ile; the 30th %-ile is 75k [1]. I'm not sure people making 75k are that enthusiastic about the past few years given that they're now paying 1/3 of their pre-tax income to rent [2] (previously 1/4). But yeah people in the 4th %-ile are going to be pretty happy with their rent control err 2% mortgage.

[1]: https://en.wikipedia.org/wiki/Income_in_the_United_States

[2]: https://www.rent.com/research/average-rent-price-report/

It looks like you're relating 2019 individual incomes with 2023 median household rents. A better comparison would be with 2023 household incomes (the median household has more than one income, and one person households are mostly renting smaller/cheaper than the median home).

The 70-percentile US household income was $113,200 in 2021. In 2023 it's likely over $120k (since the median growth of 2022 vs 2021 was 5.4%). The 2023 median US household income is probably around $75k

I'm not sure where you're going with that. My point was really that being at the top is nice but the 30th %-ile aren't enthusiastic.

120k is going to be like 85k after tax so assuming they use the median rent rate they went from 21% to 28% of their post-tax salary going to rent. That's certainly going to be noticed (5.5k / month to 5k / month; 10% drop)

And the median household definitely noticed considering their income decreased [1].

[1]: https://www.census.gov/library/stories/2023/09/median-househ...

>don't worry well compensated average HN reader, nobody is gonna allow your home value to drop much.

I know personally some very well compensated HN users in the Bay area who can’t even afford a home that could drop in value.

> Total inflation is up over 37% over last year and half

Mind telling me how you arrived at this figure?

They made it up. City average all items is up 3.7% in the last twelve months.

You can find the real numbers at bls.org

Edit: yes, of course, bls.gov

bls.gov

Averages aren’t really useful here. For a lot of people food and housing represent a significant proportion of their take home. In my region both of these are up significantly higher than 3.7 in the last twelve months. Worse is certain brands at the grocery store seem to be leading the charge, which means not only are prices going up, but for many people the utility per doller is also going down.

Honestly “headline inflation” is a poor statistic anyway because it lumps together a bunch of unrelated things into a magic number that masks the underlying causes of price increases.

If people thought in terms of the cost of housing going up xx% because of lack of supply or the cost of energy going up xx% because fossil fuels are produced largely by cartels and hostile powers they might consider policy tools to decrease housing and energy costs by addressing those issues directly.

Instead we think in terms of “inflation” and the only solution for “inflation” is some magical monetary policy lever that has a side effect of destroying working peoples’ lives.

Source for that number? Reported quarterly numbers are often annualized.

Reply on news.ycombinator.com