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Comment by jkelleyrtp | Hacker News Reader

It seems like the economy is on a “K” shaped flywheel. How much worse can the economy get for the regular worker before the systems just pops? We’ve put so much speculation into an AI/tech salvation that seems premature, especially when you look at ROI vs depreciation timelines.

I’m not sure what timeline to place on that but there has to be a floor for how bad it can get for the regular man.

Shit is just expensive. Young people can’t buy houses, good jobs are drying up, and inflation isn’t stopping.

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Graph looks like it's going up to me.

https://fred.stlouisfed.org/series/MEHOINUSA672N

I'm sure the Fed chart is accurately measuring what it's measuring but when I was a kid in Southern California it was normal to buy a house and raise kids on a single teacher or construction worker salary. That has become nearly impossible over the past couple decades. Many others have seen similar changes in their own areas and I don't think they're being crazy when they say it has gotten much harder to finance a normal household on a normal salary.

I don't know what the disconnect is with that chart and people's observations. Is that chart controlling for number of incomes and hours worked? If a household income increases by 20% because the members are working a combined 80% more hours that's not great. Category differences in inflation might be another factor. Sure TVs and other niceties are a lot cheaper, but essentials like housing and medical care eat up a huge portion of most budgets.

The housing crisis is limited to California and other blue states; most places have the opposite problem.

Also, most US households are homeowners, which means housing prices going up increases their (imputed) income.

> Is that chart controlling for number of incomes and hours worked?

Why should it? It's bad practice to control for random things - that gets you collider bias.

But see:

https://fred.stlouisfed.org/graph/?g=cWvT

https://fred.stlouisfed.org/series/LNS11300060

> I don't know what the disconnect is with that chart and people's observations.

The disconnect is that CPI consistently significantly underestimates inflation as experienced by real people.

Slightly overestimates. Alternatives like Truflation show it lower.

You may be thinking of Shadowstats, which is run by a crank who just takes the official numbers and adds a number he made up to them.

I don't know why cranks always think inflation is secretly higher. Deflation is a lot worse than inflation, so if you're a doomer, believing in deflation would be more effective.

The idea that CPI sucks is far from a conspiracy theory... not sure why you're trying to color it like that.

The problem is that the error integrates over time, which IMHO is why graphs like that seem to suggest our standard of living is higher than ever... when a conversation with anyone at a local bus stop will tell you the exact opposite.

It's almost impossible for the standard of living to not be higher than ever. That becomes true if you assign any value at all to new medical discoveries. Like, people have been cured of type 1 diabetes in the last year.

I don't think a guy at a bus stop represents the median household well. I'd rather have https://www.census.gov/programs-surveys/cps.html.

That chart for sure includes higher portion of double income households (because now more women are in the workforce than in the 80s). This reconciles your view with the Fed graph

(Edit-misspelled Fed)

Households can have more than two incomes - roommates, children who work, grandparents etc.

In practice, household sizes have gone down over time as more people live on their own, which means the income graph is lower than it otherwise would be.

https://fred.stlouisfed.org/graph/?g=cWvT

As for dual income families, they're mostly a good thing that happens when women can afford to pay for childcare. That is, that book The Two-Income Trap was mostly false. This is part of the topic of Claudia Goldin's economics Nobel, the other part being that the gender wage gap is caused by motherhood interrupting women's careers.

https://www.nobelprize.org/uploads/2023/12/goldin-lecture-sl...

Inflation measures aren’t fit for purpose. The biggest expense is housing and housing as a proportion of income is what is killing people financially.

Housing is the largest component of both inflation measures.

https://en.wikipedia.org/wiki/Personal_consumption_expenditu...

I take it back.

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