[The Soup Nazi]

The flipside to some of our posts? From Zakaria's newsletter:

Inflation Is Real

Don’t you know the economy is better, you ungrateful fools? That’s the message some Americans may be getting, incidentally and unfortunately, from celebrations of inflation’s taming, Bloomberg writes in an editorial—but it’s not a complete picture of how the economy is being experienced.

Yes, inflation has receded, and wages have risen, Bloomberg writes. But household budgets have still been tightened, and Americans still feel pain.

“Since 2020, prices overall have risen by roughly 20%,” Bloomberg notes. “Average wages have indeed risen a fraction more. But for many families, the cost of living depends especially on the prices of groceries, utilities, housing and credit. As reporting by Bloomberg Economics and Businessweek shows, groceries are up 25% since 2020; the food budget for a four-person household is up more than 30%. Housing is less affordable than it has been for years … The share of wages spent on interest payments … is at its highest since just before the crash of 2008—and close to a record. Unsurprisingly, debt delinquencies are rising fast. In short, many households don’t just feel worse off; they are worse off. An abruptly higher cost of living is most painful for those who are on fixed incomes, have lagging wages, or are struggling for whatever reason with financial insecurity. Telling them the economy is in excellent shape only adds insult to injury.”

Making a similar point in a New York Times guest opinion essay, former Obama Treasury adviser Steven Rattner points out that workers still aren’t sharing in the windfall brought by productivity gains, as they did decades ago. And as does Bloomberg’s editorial board, Rattner points at housing costs and lived economic experience beyond the numbers: “Consider one marker of generational progress: moving out. Nearly half of all Americans aged 18-29 live at home with their parents, the highest share since the Great Depression. In recent decades, rents in American cities have far outstripped income growth for young Americans, even those with college degrees. Those seeking to buy their first home and ‘climb the property ladder’ face the double whammy of high house prices and high mortgage rates, creating a massive affordability problem.”