A shopper carries multiple bags in Chicago's Magnificent Mile shopping district on December 2, 2023.
Taylor Glasscock | Bloomberg | Getty Images
Some social media users say that while the U.S. economy remains remarkably strong, affordability is worse than ever, even when compared to the Great Depression.
One of the latest trends on TikTok, “quiet depression” aims to explain how important expenses such as housing, transportation, and food are taking an increasing share of the average American's take-home pay. They say life is more difficult today than during the worst economic period in this country's history. Some TikTokers.
But economists strongly disagree.
“TikTok's idea that life was better in 1923 than it is today is divorced from reality,” said Brett House, a professor of economics at Columbia Business School.
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Compared to 100 years ago, “Today, life expectancy is much longer, the quality of life is much better, there are much more opportunities to realize one's potential, human rights are more widely respected, and there is more access to information and education.” access has been broadly expanded,” House said.
By the numbers alone, the country has continued to expand since the coronavirus pandemic, avoiding earlier predictions of a recession.
Officially, the National Economic Research Bureau define recession “A significant decline in economic activity that spreads throughout the economy and lasts for more than a few months.” In the past 100 years he has had more than 10 recessions, some of which lasted a year and a half.
The only Great Depression the United States experienced during the industrial era spanned the decade from the 1929 stock market crash to 1939, when the United States entered World War II.
Susan Hausman, director of research at the W.E. Upjohn Employment Institute, told CNBC that the recession is “a whole other order of magnitude.” “We haven't seen anything like this in 80 to 90 years.”
Indeed, the latest quarterly gross domestic product report, which tracks the overall health of the economy, rose more than expected, showing that the Federal Reserve's efforts to curb inflation have been successful so far, a rare occurrence in economic history. It is a great accomplishment.
The central bank has signaled in its latest economic forecast that it will cut interest rates in 2024 even though the economy is still growing, which could bring inflation to the Fed's 2% target without triggering inflation. This will be the long-awaited path to a “soft landing” back. Significant increase in unemployment rate.
“Yes, the economy is slowing and the job market is cooling, but we are not in a recession,” said Soong Won Sohn, professor of financial economics at Loyola Marymount University and chief economist at SS Economics. ” he said.
But regardless of the country's economic status, many Americans are struggling in the face of soaring prices for everyday goods, with most having exhausted their savings and now relying on credit cards to make ends meet.
Low-income households have been hit particularly hard, said Thomas Phillipson, a public policy research professor at the University of Chicago and former acting chairman of the White House Council of Economic Advisers.
The lowest-paid workers spend more of their income on necessities like food, rent, and gasoline, and these categories also saw higher-than-average increases in inflation.
Phillipson said: “Inflation has hit the poor harder than the rich in terms of the percentage of real income lost, because the categories that make up a larger share of the household budget have had relatively higher inflation rates.'' ” he said.
Housing issues in particular weigh heavily on many Americans' opinions about the state of the country as a whole, no matter what other data say. Year-to-date, home prices nationwide have increased 6.1%, well above the median annual increase over the past 35 years, according to the S&P CoreLogic Case-Shiller Index.
Although mortgage rates have fallen, they are still above 7% and the supply of homes for sale remains very low.
That's why Americans feel so bad about their financial health, House said, even though the country is in good shape. “The real estate market is likely dampening the sentiment of many Americans about the U.S. economy, as homeownership is the biggest investment decision of most people's lifetimes.”
