The Fed Thinks the US Economy Is Fine. Do You?

Fed spokescritters are saying the US economy is in decent health. From Bloomberg:

The U.S. economy doesn’t appear to be headed toward a recession, Federal Reserve Bank of San Francisco President Mary Daly said.

“When I look at the data coming in, I see solid domestic momentum that points to a continued economic expansion,” Daly wrote Tuesday in a post on Quora.com, citing data on labor markets and consumer spending.

Admittedly, Daly continued to say that weaker overseas conditions “trade uncertainties” were spooking markets and might give the confidence fairy enough of a fright to make a downturn a “self-fulfilling prophecy.”

The Financial Times described how other Fed governors said they weren’t inclined to give Mr. Market a sop right now because the economy didn’t need it:

Less-than-dovish commentary from Esther George, the Kansas City Fed president, and Patrick Harker, the Philadelphia Fed president, fuelled concerns that the central bank was unlikely to meet market expectations and slash interest rates roughly 100bp by the end of 2020, as futures prices currently indicate.

In television interviews, both Ms George and Mr Harker said they saw little reason for additional interest rate cuts beyond the Fed’s quarter-point reduction in July.

Ms George, who had voted against the rate cut, told Bloomberg: “As I look at where the economy is, it’s not yet time, I’m not ready, to provide more accommodation to the economy without seeing an outlook that suggests the economy is getting weaker.” Mr Harker said on CNBC that more accommodation “wasn’t required”.

However, it’s not as if everything on the domestic front is rosy. CNBC reported on Thursday that Markit’s Purchasing Manager Index (PMI) was in a contraction for the first time since September 2009. Admittedly, it was just barely in a contraction, at 49.9 when 50 is neutral. More detail from the story:

New orders received by manufacturers dropped the most in 10 years, while the data also showed export sales tanked to the lowest level since August 2009, the data shows….

Investors track PMI readings to get early indicators as to where the economy is headed. After the Markit reading, stocks fell and the yield curve inverted.

“The most concerning aspect of the latest data is a slowdown in new business growth to its weakest in a decade, driven by a sharp loss of momentum across the service sector,” Moore said. “Survey respondents commented on a headwind from subdued corporate spending as softer growth expectations at home and internationally encouraged tighter budget setting.”

Contrary to Daly’s view, the contraction wasn’t due just to softening exports but to slacker domestic demand as well.

As we’ve pointed out for some time, this recovery has been weak by historical standards and has also been significantly a two-tier affair, with higher income households getting more of the benefit of growth, particularly because the profit share of GDP has nearly doubled since 2002, when Warren Buffett deemed it to be unsustainably high. And the touted low unemployment rate also doesn’t tell the full story.

Labor force participation is lower than at similar points in past business cycles. And even data doesn’t capture another factor that makes the supposedly robust jobs data less impressive: that involuntary part time employment is high. From Business Insider early this year:

“During early 2018, involuntary part-time work was running nearly a percentage point higher than its level the last time the unemployment rate was 4.1%, in August 2000,” according to Rob Valletta, a vice president in the Economic Research Department of the Federal Reserve Bank of San Francisco. “This represents about 1.4 million additional individuals who are stuck in part-time jobs. These numbers imply that the level of IPT work is about 40% higher than would normally be expected at this point in the economic expansion.”

Mass unemployment — the historic kind, with dole queues, unemployment benefits, and idle workers on street corners — has been replaced by low-paid, part-time, “gig economy” or “zero-hours” contract work.

Finally, reader Scott has been lamenting for years that for the economic data he reviews (a lot!) the indicators that are based on measurements of activity have consistently been weaker than the ones that are significantly or entirely imputed.

So over to you, readers. What indicators do you use to measure the health of the parts of the economy you see? And what do they say to you?

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127 comments

  1. Sound of the Suburbs

    Fundamental problem.

    Global groupthink where all policymakers worked with the same false assumption.

    Global policymakers thought banks were financial intermediaries and didn’t realise bank credit impoverished the future.

    This is not how banks work.

    https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

    We are in the impoverished future, past prosperity came from.

    Our knowledge of privately created money has been going backwards since 1856.

    Credit creation theory -> fractional reserve theory -> financial intermediation theory

    “A lost century in economics: Three theories of banking and the conclusive evidence” Richard A. Werner
    http://www.sciencedirect.com/science/article/pii/S1057521915001477

    The central banks have put us right 35 years too late.

    Ben Bernanke gives a good illustration of how you see the world when you think banks are financial intermediaries.

    Ben Bernanke is famous for his study of the Great Depression and here it is discussed in the Wall Street Journal.

    https://www.wsj.com/articles/SB113392265577715881

    “Theoretically, neither deflation nor inflation ought to affect long-run growth or employment. After a while, people and businesses get used to changing prices. If prices fall, eventually so will wages, and the impact on profits, employment and purchasing power will be neutral. Borrowers suffer during deflation because their debts are fixed in value, but creditors benefit because the dollars they get back will buy more. For the economy as a whole, deflation ought to be a wash.”

    What has Ben Bernanke got wrong?
    He thinks banks are financial intermediaries.

    The creditors are the banks and the repayments go into the banks destroying money. It doesn’t go to creditors who then get the money to spend.

    Reply
    1. Johan Telstad

      Like Krugman. You have a detailed, complex model (e.g DGSE) built on seemingly logical axioms, and then empiry shows one of your axioms are, in fact, not true. A normal person would discard the model, but economists seem to insist that they are still “useful”. Whatever that means.

      None are so blind, as they who will not see.

      Reply
    2. notabanktoadie

      We are in the impoverished future, past prosperity came from. Sound of the Suburbs

      Why should this necessarily be the case when something similar to Steve Keen’s “A Modern Jubilee” can abolish much private debt without disadvantaging non-debtors – if combined with careful de-privileging of the banks (deflationary) to counter the (potentially inflationary) fiat distributions?

      Reply
  2. skippy

    Define the “Economy” and what its currant social imperative is least we [royal] all are just lint in the canister swirling around some Veblen social status multiplier [cleans floors too] so insecurity is a distant dream to the afflicted – “I” need to be better than others and receive the creators gifts so I know I did it right …

    amends …

    Reply
  3. Ignacio

    Being the economy less vivid than in the past, business cycles are no longer the same. I believe the saddest part of it is the increasing numbers of individuals that only marginally play a role in the economy. This occurs in the US and in other advanced economies. The longer this trend persists the less stable will be the system. After these come the vast majority of people stuck in a more or less unstable position of which many fear the possibility of joining the marginal crowd. I personally feel this risk, as my business has gone to zero during the last few months (Spain, not the US) even when the normative should be favouring my business (energy efficiency & renewables).

    Do Fed minutes ever say anything about participation rates or do they turn a blind eye to one of the most remarkable economic developments of the XXI century? Do they live in the past?

    Reply
  4. Jen

    On my annual trek to western Maine, I take note of the number of houses that look abandoned or on the verge of being so. There has been a notable uptick in the past 3 years. Also dollar stores cropping up like weeds.

    Meanwhile the houses near my office in my fancy college town are selling briskly for 1.5 – 2 million and each new owner seems to embark on extensive renovations.

    I think the economy is solid for a very select few.

    Reply
    1. Oh

      The Fed not only bailed out the Banksters but lowered interest rate down to a very low level. This grossly inflated real estate prices. Big corporations floated bond issues to use the proceeds to buy their own stock. Big money bought homes and apartments for rent revenue and inflated rents in all large cities. People with income less than $80 K cannot buy homes. Students are saddled with huge loans that they cannot pay back. Seniors are unable to get a regular income from savings accounts but have to turn to riskier investment.

      Other than the above the economy is really doing well.

      Reply
  5. Northeaster

    YMMV

    In Northeast Coastal Massachusetts, we’re setting another YoY year record in real estate. The wealthy have plenty of money and can pay cash for a $750K home. The market to the West of Cape Ann, The Merrimack Valley, is just as hot for homes under $400K. The Volume is $200 million MORE in one inner city community than the affluent coastal town. So it’s all relative on your local economy.

    Reply
      1. Scramjett

        If it’s anything like the Bay Area, then they live in apartments or houses with astronomical rents that leave hardly anything for knick knackie things like food, utilities, transportation…you know knick knack things that keep you alive. Either that, or they live in more affordable houses or apartments far away and suffer hours long commutes with no time for anything other than going to sleep and waking up the next day to start the insane process all over again.

        Reply
  6. John

    I teach in a private school and rent and apartment at the school, but live in an wealthy gated community. Sounds cool doesn’t it. I am not uncomfortable,as long as Social Security and Medicare are intact, for someone in their 80s and still working. But go outside the gate and look at the ever growing needs of the local food pantry and at the increasing number of children who have subsidized meals at the public school and the local small businesses that are in trouble. The economy is ‘just great’ as long as one has a narrow focus.

    Reply
  7. mamzer ben zonah

    I am seeing A LOT more fancy cars around here [Niagara Peninsula, Ontario], Maserattis, Lotus, Range Rover, Tesla, etc.

    I think this [and other examples of frivolous spending] are way over the top, and could indicate that the bubble is getting ready to burst.

    Reply
  8. timbers

    Not being in fly over country, but in the Northeast, here’s my thoughts.

    The folks I know in healthcare, seem to be doing fine, living the stereotypical American Dream. And there is a lot of that in Massachusetts.

    IMO, a decade or more of ultra low interest rates has changed things. Trade that benefits from almost free borrowing, has benefited and expanded. Those trades tend to have access to capital, like the financial industry and all that benefit from it. Not just higher stock indices, but hedge funds that buy Sears for example, and borrow money against Sear’s assets to the hilt so they cam pay themselves a huge payment and then declare bankruptcy. For basically doing nothing but adding harm to society.

    There is no value in that, and it is make possible/easier with near 0% interest rates.

    There used to be a poster at NC that was always giving stock index results, and advocating lower Fed rates. I disagreed with his assumption that lowering rates would “stimulate” the economy. We’ve had low rates for a very long time now, and the economy has performed well below normal. So low rates are not “working” in the sense the economy is not good from a historical view.

    I think the time has come for the Fed to raise not lower rates, to clear out the Zombie companies like the zero value hedge funds managers to wipe out Sears ahead of it’s time and default on their workers retirements so they give themselves huge bonuses and dividends, leaving us taxpayers to stuck with the bill. If the price of that is a minor recession, it would be well worth IMO.

    Reply
    1. p, fitzsimon

      In the corner of the NE where I live everything seems to be going full throttle. All summer workers have been adding additions to homes, excavating swimming pools that despite global warming are only useful for a minor part of the year, restaurants are always full and new ones are being added. I’m retired and I have many new neighbors. I don’t know what they do for a living. I suspect many do work in healthcare and finance but I don’t have a clue as to what is happening in the rest of the country.

      Reply
    2. rd

      Living in upstate NY, I think the economy in our area is largely how the Fed sees it in general.

      Our main economic damage was 30 years ago with the closure of large corporation manufacturing plants. The region spent the 90s and early 2000s recovering from that. We have a much more diversified economy now. in the GFC, we had a relatively mild recession and since house prices had not gone up, they didn’t go down. We didn’t have a lot of foreclosures in this area.

      Farming is still a big deal around here and we didn’t get hit by the big disasters this year, so the farmers should do ok. We have lots of universities in the small and large towns in the area, so there is a steady supply of educated professionals that help diversify the regional economy.

      Housing seems healthy. There are still very few houses for sale at prices over $400k and decent apartments can be rented for less than $1,000/month, so a middle class income provides middle class living. While house prices have not gone up much, they do move if you put them up for sale. NYS taxes are too high, but in general many of our costs are lower, so the area is still affordable. We also generally get services for those taxes but they need to do away with the various programs to provide business incentives as they just appear to be a tool for graft and corruption..

      There is still too much poverty in the inner city cores that were abandoned 50 years ago, but that is a pretty widespread problem in the area. That didn’t change in the previous boom times of the late 80s and 90s, so it will take a fundamental societal change to make a big difference, not just a better economy where wealth accrues to the already wealthy.

      I don’t think a Fed rate cut would change much around here. What would change things would be better fiscal policy and incentives for companies to locate facilities in the US instead of overseas. Right now, we just assume that much of our federal taxes get siphoned off to give tax cuts to the wealthy living in coastal cities and corporations sending jobs overseas.

      I suspect that there are a lot of areas in fly-over country like this.

      Reply
    3. eg

      The obsession with interest rates is a dead end because monetary policy is being exposed as the sideshow it is compared to fiscal policy.

      Reply
  9. Carl

    People who don’t have money don’t spend money. Years of declining wages and spiraling costs of necessities (shelter, health insurance, college tuition) have created this increasingly precarious existence for most people overall. This isn’t rocket science, or shouldn’t be.

    Reply
  10. the suck of sorrow

    The US economy is not fine.
    The waste of fresh water, the diminishing sources for raw materials, the lack of housing for a population that has doubled in my lifetime are facets of our economic existence unaccounted for by any metric published.
    Life in my rapidly gentrifying city is already too dificult to endure for the poor. Climate change and environmental degredation will soon have the rest of us sharing in the misery.

    Reply
    1. jrs

      I think much is just stuff that was ever thus and not new, there has always been a lot of poverty in the U.S.. Now that poverty may be creeping more into the middle class more and so becomes more noticeable, and homelessness has grown some places, but there was always much poverty.

      This economic system especially without even a measly safety net, will not ever eliminate poverty and share the wealth. And of course it’s going to destroy life on earth pretty soon if it keeps going.

      Local experience: people who have not had an easy time getting stable jobs or sometimes work at all even recently are getting some now. But there are still perfectly decent people that can’t find work.

      Reply
  11. ambrit

    Here in the North American Deep South, “things” are sliding slowly down that slippery slope.
    The “Street Signs” I see about me are signalling a growth in the population of the truly impoverished. People with their belongings carried about in backpacks are now a regular sight on our streets. Panhandlers abound on the street corners. So much so that the local City Council has just passed an ordinance practically outlawing the practice. One of the local salvage store outlets, of which we have four in this town now, representing three corporations, now has some regular parking lot and front door panhandlers. A store assistant manager told me that it was “too much of a hassle” to run the panhandlers off, so the store tolerates their presence. One of these panhandlers has a shtick of opening the front door to the store for customers with his hand out, as if he was a legitimate doorman. Five years ago, such now common sights were unknown around here.
    On the small business front, today is the last day for our friendly local small vitamin and health food shop. She has given up after thirteen years. She has said that the internet killed her business off. For the last two months she has been looking for work. With her business background, she has had no “legitimate” offers of employment to date.
    Another person who worked at the store while going to the local college just graduated with a Business and Communications major and minor. A sharp person, he told me two weeks ago before he went home to Gulfport to live with his parents again, he will be taking his little brother’s room since the little brother just joined the military, that all he has received in the way of job offers in six months of searching are “bulls–t job” offers, and one decent possibility over in Dallas. Even that job offer was on a recurring one year contract schedule. He would be a ‘job shopper.’
    I generally look at the faces of the people I pass by in shops and on the street to judge the tenor of the times. I have seen precious few smiling faces recently. Even the retail food workers are now surly and brusque. I actually walked out of a Popeyes chicken place last month over the treatment I received. I am usually extremely laid back concerning service, having done a lot of it over the years. Recently though, the service workers have become actively hostile, in several places. This low wage economy is finally having some deleterious effects on the society at large.

    Reply
    1. Elspeth

      On NC recently there’s been a lot of outlawing “Panhandlers”. I wonder if that’s the same as legally declaring the “poor” gone. Raptured to Mars to build badly needy Teslas for a good wage. More magical thinking.

      Reply
    2. Polar Donkey

      This sounds frivolous, but I just saw the first four episodes of the latest season of comedians in cars getting coffee. I noticed homelessness was mentioned in each of the episodes. It must be getting bad in New York and LA if the subject comes up that often on a comedy show.

      Reply
      1. ambrit

        True. The function of the Court Jester was supposedly to speak truth to the sovereign and court in non confrontational ways. ‘Modern’ comedians fulfill the same function today.

        Reply
        1. CarlH

          I agree with you in principal, but recent history has taught me that not all comedians fit this bill. Colbert, for instance, was a lion when the Bush admin. was in power, but is now nothing better than a propagandist and a partisan. Most of the comedians who ply their trade on late night TV have followed this same path. Many people I once highly respected have shown themselves to be unworthy of that respect. As has been noted here repeatedly, the 2016 election was mighty clarifying if nothing else.

          Reply
          1. sierra7

            I keep telling my “TV” friends that the late nite comedy shows are just for poking fun at the serious issues that are mortifying our country. “Trivializing” the serious. Nothing more.

            Reply
          2. Jack Parsons

            You cannot out-comedy our reality. That is their professional curse.

            When the President tosses out “I am the Chosen One” like Paul Muad-dib in the middle of a press conference, and nobody squawks, the funnyman is doomed.

            Reply
            1. J7915

              Same with fictional writing. How can John Grisham, Dave Baldacci et al, write sparkling what if plots, when we are all cast members in a reality show?

              Competing with MoscowMitch, the Donald, Bosonaros’ Brazil burning (20% off world O2 supplier up in smoke) etc etc. All would be subjects for world wide blockbuster sales figures.

              Reply
      1. JBird4049

        What in the World is a “business improvement district?” And why does any California cities especially the large ones like L.A., San Diego, San Jose, or San Francisco? The smaller towns especially out in the peripheral Red areas could certainly use some economic help, but really housing is the single biggest problem state-wide with the possible exception of water, but that’s only in long drought.

        If people had dependable affordable housing, business would pick up.

        Fricking BS neoliberal greed masquerading as public policy.

        Reply
        1. Acacia

          Having lived in California when anti-homeless laws were enacted, I had some familiarity with the practices of exclusion, but I’d also never heard of this BID phrase before.

          “Masquerading as public policy” sounds about right. It’s a business association exerting control over public space in order to attract a more affluent clientele. (Kind of like Facebook censoring ‘incorrect’ speech to make their platform ‘safe’ for the more “progressive” users FB wants to data mine.)

          Funny how it’s happening in putatively “liberal” places like Berkeley and San Francisco.

          Reply
          1. JBird4049

            Liberal San Francisco and crazypants leftist Berserkeley started to fade away about 1980 right after the working class got shiv’d in the back in the 60s-70s.

            Anyone from the Free Speech Movement of the 60s and early 70s today would be declared a heretic, blasphemer, or apostate given an auto-da-fe and then probably burnt at the stake.

            I think most of the Bay Area is still masquerading as is really died when AIDS did its merry little danse macabre.

            Reply
        2. ewmayer

          ‘What in the World is a “business improvement district?”’ — I believe it’s the class-warfare analog of a “free speech zone”.

          Reply
    3. ambrit

      An addendum to the small vitamin shop closing story.
      I stopped by to say goodbye to the proprietor of the store. She was selling most of her remaining stock off to old time customers at 90% off of retail. I dropped my last hundred, till Phyl’s SS check comes in in two weeks, on basic vitamins and stuff that helps Phyl with enduring the cancer. Stocked up for a few months, so it was rationalized as an exercise in pre-planning and provisioning.
      When I evinced an embarrassment at ‘taking advantage of her distressed condition,’ she replied that she didn’t mind in that she was keeping at her home a years worth and more of the vitamins that she uses.
      She said, “I would rather give it to people like you who were loyal customers during the rough times than some of the really sleazy salvage buyers that I have encountered recently.”
      Me: “Huh? They approached you?”
      Her: “Oh yes. They’re like vultures. They can smell the rot of a dying business from miles away.”
      Me: “When I worked for the salvage store, I wondered how the buyers managed their jobs.”
      Her: “I also encountered several people who, when I told them that I was closing up shop, asked me if I needed money. They were ready to find investment money for my business. Hey! Look closely! There is a reason why I’m throwing in the towel! Boy. Some people are either stupid or desperate for some way to use their cash to make a profit.”
      Me: “I know from personal experience that putting the money in a bank is not the way to even stay even with inflation.”
      Her: “Yeah, and try to get a loan from those crooks. The business loan interest rates are a lot higher than the deposit interest rates.”
      Me: “Well, happy trails.”
      Thus ended the last small, customer friendly and non exclusive class oriented vitamin store hereabouts.
      America is losing it’s soul.

      Reply
  12. ptb

    As another commenter said above, “fine” is a relative term.

    But I suppose this is in reference to this week’s news-media theme of discussing recession fears. Thus the “fine” we are talking about means a combination of prices in stocks and real estate, and annual performance of big firms.

    By that definition, the fears are a possibility, but just that. I mean the stock market is probably overvalued, but that isn’t a crisis, and with the FED easing, what the heck… they’ll be overvalued more.

    The bigger problem is the multi dimensional conflict with China. If its rate of acceleration is not brought down a lot, it will do some real damage to businesses who clean up by exploiting cheap and efficient Chinese industry while selling widgets into wealthy western markets. All such businesses, could get hurt, real bad (and their Chinese counterparts too). Will this happen? I think there will be warning shots. Huawei being the elephant in the room.

    An even worse scenario for the rest of the world (but not the US) is if efforts to contain China succeed, and growth of Chinese industry is halted. The non-US world will have to pay significantly more for pretty much everything, and therefore economy will grow slower. Will this happen? I don’t think so.

    As far as locally in this reader’s neck of the woods? I live in a locally wealthy college town, so kindof impossible to say from this vantage point, but I think things are actually going well. The place I work, a tiny scientific-industrial equipment maker in a very specialized niche, is looking at some of the bigger contracts we’ve had yet. My biggest fear in terms of external events is that we have an absolutely vital component supplier who is US-branded-made-in-China and a “dual-use” technology (we are the civilian use). That’s a risk. There are Japanese-branded-Chinese alternatives but the US-branded-Chinese one is more advanced, I suspect due to patent protection, which should fortunately expire in a few years (reckoning based on how long it’s been on the market).

    Reply
    1. a different chris

      >but I think things are actually going well.

      Well duh. Your college has been suctioning money out of the pockets of kids for the last couple decades or so at a rate that is multiples of the general growth rate. Which means most (probably all) of the wealth you see around you is a shift from elsewhere, not a creation of such.

      At best it is maybe repatriating some of the money going to Asia.

      Reply
      1. Ptb

        The uni. definitely employs most of the middle class at least in the county and drives up RE prices (ridiculously so w/in 15 miles). Where I work tho is international r&d, academic, and industrial clients.

        The Asian connection is interesting. They are prob in a big way helping bid up tuition and drive growth in student population and thus all the admin jobs. If that flow stopped it it would hurt.

        Reply
  13. Collin

    I’m in East Texas, in a county with ~24% poverty rate. Definition of ‘poverty’ IIRC is family income below 40k, so it’s not National Geographic poverty. But we have plenty of people who have <$500 saved up, but also don't cook, just buy fast food, are obese, buy cigarettes. But plenty of 'now hiring' signs at poultry plants & other jobs- hard work, but decent pay & health insurance.
    The immigrants with intact family structure (Central America, Mexico, Asians) do great, it's just like the American story 100-120 yrs ago for European immigrants – hard work, meager possessions but your kids thrive & the opportunities are there- & you go for it.
    Immigrant or home -grown, without that family support, it's more tread water than building a life. And if you get sick, life gets really marginal & risky.
    But honestly, the American dream is still achievable here- but it takes a lot more grit, family support, delayed gratification than it did a generation (30-40 yrs ) ago.
    Yves, you live in a representative 'real' city now. What do you observe?

    Reply
    1. pretzelattack

      i don’t know about decent pay and health insurance from working at a poultry plant. and working several jobs doesn’t leave one much time to cook, which means eating fast food, the cheapest fast food, for the calories.

      Reply
      1. ambrit

        Reports are that work in the chicken processing plants is some of the most dangerous and stressful to be found.
        Another canard is the “work hard so that your children can live better than you do later on.” Has the commenter not noticed that the present young generations are facing average standards of living that are lower than their parent’s? An immigrant a hundred years ago could dream that American dream. Now, the dream is moot because the upper classes have torn up the social contract that had supported that ‘upwardly mobile’ yearning.

        Reply
    2. jrs

      poor? You should have chosen your family better!

      (that’s exactly what all that stuff about family structure means)

      Reply
    3. Yves Smith Post author

      Birmingham is not representative. The University of Alabama-Birmingham has the best med school in the South and the health care industry is the biggest employer in the Birmingham.

      I also live in a highly non-representative pocket. Mountain Brook until the dot com era was one of the two most affluent communities in the US. I forget which way it went, but for two decades, Beverly Hills scored highest in the US on one measurement of affluence and Mountain Brook on the other (they were net worth per capita and income per capita). Mountain Brook looks like the better parts of Westchester County. And it also is in the top 100 zip codes in the US in terms of college degrees per capita.

      Having said that, the level of houses for sale is the highest I have seen since right after the crisis, and there are also a lot of price reductions. But local restaurants look busy (this is a foodie town).

      Reply
  14. Heraclitus

    I am also in the Deep South, but just barely. Our area is booming if you judge from the amount of construction taking place. However, there are loads more homeless people than there used to be, in a county that is hostile to them. It’s easy to wind up doing thirty days in jail if you show up in the wrong place, at the wrong time, with no money. I employ a homeless guy to do yard work. He has plenty of skills and works for others too, so money isn’t a problem, theoretically. However, he has found there are few rooms available where the homeowners do not have substance abuse problems. He’s been through four since I’ve been employing him–about nine months. He used to have a drinking problem, but no longer does, as far as I can tell. Life sobered him up. He has pointed out to me how many homes are unoccupied and falling down, and could be used to house people.

    Reply
    1. ambrit

      We have a similar problem with “abandoned/unsafe buildings.” The local response to this is to tear the buildings down. Salvable housing stock becomes empty lots, with the demolition bill sent to the last owner of record.
      Rentals for the really poor are difficult at best. Very few rooming houses here. Most house rental contracts around here prohibit co-renters. The main exceptions are the college student rentals, and many of them have premium rents, essentially, gouging the out of towners.
      Criminalizing poverty is an old and much honoured tradition.

      Reply
      1. Louis Fyne

        The entire country sorely needs more rooming houses—impossible nowadays, even in “liberal” towns, either because of land-construction prices or zoning or both.

        Reply
  15. William Hunter Duncan

    Economists this time around seem to be oblivious to the “everything” bubble, be it the stock market, fracking, those darling tech companies worth billions having never made a profit, housing, student debt, debt generally…

    They seem mostly oblivious to structural pathologies, like the unchecked growth of monopoly, gross income inequality, unchecked automation, unchecked AI, resource constraints, ecological blowback, systemic pollution, eternal privatized warprofiteering.

    This economy seems to me an epic disaster in the making. But I am a lowly manual laborer, so never mind me….

    Reply
    1. neo-realist

      Another structural pathology I would add is the lack of low income housing for the working poor: In Seattle, and I’m sure this problem is replicated in other medium sized and bigger cities across the country, e.g., NYC, LA., A lot of SRO’s and cheap apartments have been destroyed or bought up by developers and turned into expensive luxury apartments for high earning professionals. Much of the working poor ends up being stuck living in RV’s and tents in business districts and residential neighborhoods, and under bridges, as well as shelters all over the city. The pathology extends to our citizens as well – many believe they are nothing more than losers who didn’t prepare themselves for better careers, takers, drug addicts, alcoholics, and criminals. Much of that fed by 40 years of corporate elite and media brainwashing: If you are poor in America, you deserve to die in the gutter; It’s your fault.

      Reply
      1. DHG

        I walked away from corporate America at 26 was the best decision I ever made, they can have all their elite BS. Ran my own companies just enough to keep a roof over my head and do what I wanted to do. Still do what I want now that I am retired.

        Reply
  16. Mikerw0

    As others have said, define good and define economy. We continue to stress “capital” doing well and ignore “labor”. By that definition all is hunky dory until the pitchforks come out.

    Reply
  17. Don Cafferty

    In southern New Brunswick, Canada the number of homeless has become a problem that municipal officials have not been able to ignore because of the attention that the public and advocates have brought to it especially during the past winter. In one municipality, a current news item suggests that the number of homeless has doubled during the past year. Aside from homelessness, it is difficult to measure the local economy because people who don’t have money to spend are not visible.

    Reply
  18. Keith Newman

    I thought the quote from Business Insider that dole queues have been replaced by low paid part-time work was insightful. In a few words it explains why poor life conditions for many people are invisible. They are working somewhere not hanging around at street corners. It also explains how the situation may be just bearable for those with the low paid jobs since they do earn some income. It also explains why they don’t turn their difficult conditions into political demands for a better life. They don’t have the time as they are too busy and tired just surviving.

    Reply
    1. a different chris

      >It also explains why they don’t turn their difficult conditions into political demands for a better life.

      Yup. Thus the bourgeoisie drives all revolutions, not the poor.

      Reply
      1. J7915

        Not the wealthy either. The anti-war movement was driven by the bourgeosie, they and their kids dreams was at risk.

        The wealthy kids defended Padre Island or had to nurse bone spurs.

        The poor, well they are with you always and 3 squares a bunk everynight plus $100.00 a day twice a months was better than hardscrabble life in where ever.

        There was also the Real GI Bill that actually covered the cost of the key to the American Dream…if you survived, to claim it.

        Reply
  19. cm

    Food inflation hidden by reduced packaging size. Sugar, flour, coffee, ice cream all used to be sold by the pound. No more.

    1% interest on savings accounts.

    Fed reducing interest rates.

    Reply
    1. JEHR

      Yes, if only we kept all the old containers we would see that the contents of most food products are reduced in their packages, including, cereals, rice, pasta, cookies, etc. And companies think we don’t notice is what gets me fired up!

      Reply
    2. Jack Parsons

      The most surprising example I’ve found of short-weighting is Peet’s Coffee selling undersized paper filters as “for the slow coffee movement”. You have to hover over the the filter, pouring a little water in at a time, to avoid overflowing.

      Reply
    3. lordkoos

      I noticed recently that the smaller packaging scam has seemed to re-emerge after having leveled off in the last few years. Very odd package sizes now, whether measured in grams or ounces. There are no full liters or pounds to be found in many products.

      Reply
      1. J7915

        We should have stayed on the metric wagon with the end of the Carter era. Harder to cover a scam when the metrics stay constant. Smaller junk food packaging might be a blessing judging by the clientel at grocery stores. Less sugar ?

        Sorry for too much posting, breakfast is ready now

        Reply
    4. DHG

      Those food packages are fooling no one, I make mention of it all the time, the checkers think I am nuts… Let em. I complaint to the manufacturers all the time and get free coupons sent out after I threaten to never buy anything of theirs again.

      Reply
  20. Mike

    Pennsylvania checking in…

    The growing divide in economic well-being is not as obvious in certain neighborhoods. While wealthy area of the state SEEM to be smiling, underneath is a growing debt to support such “lifestyle”. Meanwhile, a household-by-household survey may be able to turn up factual evidence for this if only embarrassment could be avoided (snark, a little).

    Poverty rates in formerly industrial areas are much higher, with depopulation occurring in central PA and those industrial suburbs of Philadelphia and Pittsburgh as well as cities like Erie, Harrisburg, Scranton, Wilkes-Barre, etc. (most of these small towns live by pension money from retirees, as young move away). Cannot forget the central issue of a “commonwealth” budgetary system that has not led to any such “commonwealth” since the dawn of the Industrial Age. You see many trucks and service vehicles not owned or leased by major businesses, but rather operated by individuals with craft ability working as day laborers and contracted whenever they can beat out the competition, which is fierce. Trucks, of course, are loaded with loan indebtedness, mouths at the nest are upturned and open…

    Banks are doing well — of course, they loan and do business with pharmaceuticals, health providers, and out-of-state big actors with plenty of collateral or connections. Infrastructure erodes, public transportation is on its own and those few improvements where progressives have any influence are not income-related, thus leaving most with belief that Trump & cronies are fighting the fight against all this immiseration.

    What a world. Pretty much as it is elsewhere, I reckon.

    Reply
    1. JCC

      NY’s Southern Tier along the PA Border is just as bad. Cities like Binghamton and Elmira are falling apart at the seams, and every year is a little worse than the previous year. There has been no “recovery”.

      Reply
      1. Mike

        Indeed – and while all this reality is going on, the Fed and government agencies play with the numbers so they can’t look bad. Stock prices based on buybacks and the plunge team, unemployment that doesn’t count the unemployed, welfare recipients not counted as unemployed if they work 15 or so hours a week, baseless loans and Uber counted as positives to the GDP, highway repair that doesn’t last 4 years, if that, and, and,and… I could go on; it’s too bad the CIA doesn’t sell shares, since they seem to get money and make trouble just like Air B’n’B, FaceBook, Google, or Uber. Investors would thrive.

        Makes one want to engage in a Yucky Involutary Potential Energy Spill (apologies to George Carlin).

        Reply
      2. Angie Neer

        That’s my old stomping ground…haven’t been there in 20 years, but it was already sad at that time. I had gone back to visit a few old friends and see how the place was holding up. Checking in at a motel on route 17 in Horseheads, the clerk asked, “just the one night, then?” “No, I’ll be sticking around a few days,” says I. “Why?” he asked, clearly puzzled.

        Reply
  21. rjs

    a lot of fields around here didn’t get planted because of the wet May/June

    on the other hand, my trip to Middlefield (OH) revealed more than a dozen help wanted / ‘now hiring’ signs on a 2 mile stretch of RT 87 heading into town

    Reply
  22. Eclair

    Here in Western New York, in beautiful Chautauqua County, stretching from the shores of Lake Erie to the Pennsylvania border, the statistics are woeful. Population is declining, both median age and median income are in the low 40’s, and almost 20% of the population is under the poverty level. Unsurprisingly, the county ranks 59 (out of 62) in total ‘health outcomes.’ We have a lot of obesity, metabolic diseases, drug addiction and ‘early deaths.’

    At a meeting we attended this week, planning for an annual summer festival, the big ‘problem’ was diagnosed as the aging volunteer base. We have to hire people to do the heavy lifting of setting up, dismantling, etc., whereas 20 years ago the volunteers were young and hale enough to do it all. That, and only old people tend to come out for the festival.

    However, the countryside is beautiful, at least in spring, summer and fall, with rolling hills, hundreds of acres of abandoned farmland that is ‘reforesting,’ and no traffic problems. No traffic, actually. You have to watch for deer and Amish buggies.

    In the last few years, people have started ‘fixing up’ their houses. This spring I noticed a rash of new, big garages and outbuildings, for storing ‘toys’ such as ATV’s, second and third trucks, monstrous riding lawn mowers. Others are adding on porches; front porches facing the street have become newly fashionable. Compared to 10 years ago, houses for sale seem to be selling. Or at least, the “For Sale” signs are coming down. Some wooded house lots, of several acres each, sold. They had been for sale for at least 5 years.

    Downtown in the county’s biggest city, Jamestown, the old brick buildings are still crumbling and boarded up. SRO’s, better than tents, for sure, have filled the old hotels, and house people who would be homeless in Seattle. News releases touting the amazing success of the new National Comedy Center (heavily subsidized by State and local funds) are constant. There are more people about on Friday and Saturday evenings in downtown. And a new brewery just opened up.

    Shopping at the area’s three chain food markets, Wegman’s, Aldi’s and Top’s, one notices the sharp class divide. Summer people from the Chautauqua Institute or those who have second homes on the lakes, hang out at Wegman’s olive bar and extensive cheese counters. (But because this is a county with really really poor health outcomes, Wegman’s bulk food section is almost all candy.) The Amish frequent Aldi’s and the locals who are either carless or don’t drive far, go to Top’s.

    We have water … lots of water. We have natural gas wells, everywhere. Neighbors still get free gas, under decades old agreements with the producers. We have clean air (well, except when the gas pipelines spring a leak.) We have lots of land and timber (second or third growth.) We have old people who have inherited their grandfather’s old diary farm, 100, 200, 300 acres, and are still sitting on the land. Our 95 year old neighbor, for instance. He still mows all the pastures regularly. Shhhh!

    Reply
    1. inode_buddha

      Couple hours north of you, more than 70% of the permanent residents in Niagara Falls are on some form of public assistance… Basically it’s post apocalyptic up here.

      Reply
  23. Krystyn Walentka

    I measure the economy on how we treat the poor and destitute. So it is not good.

    Also, I have several “rich” friends who are struggling, no cash on hand, can’t take a vacation,etc. So again, not good. I have been warning them to cut back and sell their $750K houses, but they won’t listen. I mean would you take advice from a guy living in a van? :)

    Reply
  24. Tom Stone

    Home prices have reached a new high in Sonoma County according to my local paper…
    So have the number of price reductions.
    The contrast between those who are doing well and the majority who are hanging on by the skin of their teeth is stark.
    So, no, the economy here is not doing well, and the number of prime retail locations for rent and the large projects that have been cancelled ( 2nd buyer backet out of 71 acre Chanate rd deal, 400 units postponed in Rohnert Park, 60 room luxury hotel in Sebastopol was supposed to break ground last year, then this summer, not happening) or postponed recently make it clear that 2020 is gong to be an interesting year.

    Reply
  25. Fred

    Personally as a retiree I’m ok with the economy. Low inflation is great. Wish the stock market was more stable, but with a slow down on it’s way, not to mention an election, I can deal with it.

    Reply
      1. Fred

        Core inflation doesn’t include food or energy to eliminate seasonal changes. Overall inflation does include them. Often the press reports “inflation rate” without specifying. But you are right, my house is paid off, so I don’t care that much about housing prices for now, it’s mostly gas, food, utilities etc.

        Reply
        1. cm

          Core inflation doesn’t include food or energy to eliminate seasonal changes

          Must be nice to live in your world, where it simply isn’t possible to capture transaction information from a “credit card” into a “database” on a “computer”.

          We all know the price of hamburger cannot be recorded because it is too complicated. Maybe some day we will have the technology, but today is not that day.

          Reply
    1. Oh

      The Fed’s been looking out for you by controlling inflation. Yeah, right! The key components of inflation have been fiddled with to show little or no inflation.

      Reply
      1. Fred

        Off the top of my head my personal expenses haven’t changed much, agreeing with the Fed basically. I could work up a more detailed report, but it’s the weekend I have less important things to deal with.

        Reply
  26. Fledermaus

    It is ironic how practitioners of the “dismal science” have turned into a hybrid of Pollyanna and Dr Pangloss

    Reply
  27. Summer

    The Fed thinks the economy is fine?

    No way they can really think the economy is fine when there is so much begging for more low interest rates.
    The low interest rates are needed for bigger stock buybacks to prop up the overinflated housing and stock markets.
    Float those fantasies of fake wealth. It’s alll that’s left of their dystopian dream

    Reply
  28. Susan the other`

    The Fed is functioning from an 1800s-liberal playbook in a 2019 post-neoliberal world. One thing has been proven beyond denial and that is that neoliberalism doesn’t work. Infusions of money are still going to the rich, connected people mostly for frivolous justifications. Recession and ecological devastation plague the rest of us. We have become complacent about homelessness. Hard to imagine being so oblivious. How quickly we regress to a less informed century without even a twitch of guilt on our part. When Putin blamed the world’s dysfunction on liberal politics he wasn’t far off. My how times don’t change. If there is one thing we can look at and say, gee we really aren’t a very good society after all, it is homelessness. In every big city in America. And congress? It is almost completely incapable of governing. We might as well be a feudal state again.

    Reply
    1. tegnost

      Thanks, yes, the “nothing to see here” about homelessness, which is dramatically worse than at any time in my 60 ish years, is notable.

      Reply
  29. timbers

    Glancing at Powell comments today, it appears he and the Fed spend more time thinking and talking about the economic problems in China and Germany than he does here in America.

    That may explain a lot.

    Reply
  30. Badbisco

    Just south of Portland, Maine:

    Have been helping an in-law over the last 6 months find a house to move up here and got an interesting peek into the real estate market. Researched 80-100 different houses (3-4 BRs within 20 miles of Portland) and went to probably 30 open houses and personal showings.

    General takeaways:

    – The market has been weirdly hot, with three separate all-cash offers at full list price rejected for other offers that were over ask.
    – People have noticed and a lot of houses have come on the market with elevated list prices as people try to cash in
    – Our own home’s Zestimate on Zillow (no promise on how accurate this measure is) has increased almost 20% over the last year.
    – Tons of new houses built in last 2 years, typically of lower quality and on poor lots with houses close to each other and all trees removed
    – Quality of non-luxury or non-custom houses built from 1980’s to now is generally poor; good example of crapification. Houses built in large numbers in sub-divisions in particular seem to have bad trim and obviously deteriorating siding/roofs/general conditions.
    – While the in-law isn’t interested in a project, generally feel that solid older homes which can be relatively easily renovated would be the better long-term play.
    – Portland’s real estate market, after the litany of “best City” and “Best restaurants” awards over the last few years and the advent of AirBnB, is out of the reach of most people. This has driven up the demand and prices in outlying towns as people look for housing close to the job center

    Personally feel that the focus on dropping interest rates/protecting real estate values post the GFC has really hurt the country. Above and beyond favoring home-owners over younger people, the rising home prices increase property taxes that have to be paid and are hard to realize given selling your house requires buying a diff overpriced house. This is just leading to more and more debt being taken on to simply have a decent house.

    Reply
  31. Plenue

    One of the reliable signs that you’re approaching the West Coast is the increasing number of homeless. They really start to appear around Spokane, and by the time you reach the Liberal strip along the Seattle-Portland-San Francisco line the tents are everywhere. And it’s been this way for more than a decade. The real economy never recovered to begin with. Hard to be afraid of a new recession when you never left the old one.

    Reply
    1. Cal2

      Plenue,
      The other night we found lots of street parking in Hayes Valley, the most popular area with techbros and yuppies in San Francisco. For lack of business, tourist boats and tour buses are already on their winter schedule in the middle of the summer season along Fisherman’s Wharf. This has never happened before.

      Could it have to do with the recent example of a fun seeking family from Fresno that had just spent $50 on their French bread chowder bowls and were horrified to see a screaming pantless bum take a dump on the sidewalk outside the window where they sat then hurl feces on the glass? Fleeing for home, they got to pay ten bucks an hour to bail their out at the local garage.

      “Tourists, who needs them? We have our valuable homeless community.” So valuable, we hand out 4.4 million free drug injection needles per year, https://sf.curbed.com/2018/5/9/17336090/san-francisco-needles-syringes-exchange-numbers-sf
      plus have decriminalized vandalism, shoplifting, drug use and now, DRUM ROLL PLEASE, under the city’s new “person first” language guidelines, the words “felon,” “convict,” “addict,” “offender,” and “juvenile delinquent” are no-no’s. Instead, those who have paid their debt to society will be referred to as a “returning resident.” Those on parole will be known as ‘persons under supervision.’
      According to the San Francisco Chronicle. Drug addicts are now “a person with a history of substance abuse.”
      https://www.sfchronicle.com/bayarea/philmatier/article/SF-Board-of-Supervisors-sanitizes-language-of-14292255.php

      Inviting, sheltering and supporting the psychotic and drifters from around the western hemisphere to SF has not ended well.

      Reply
      1. Plenue

        Nice victim blaming. You aren’t sheltering or supporting them; you’re just decriminalizing them and sanitizing the language while not providing the help they actually need, particularly housing. It’s like the perfect encapsulation of the difference between left and liberal.

        Reply
        1. Dave Chapman

          Plenue,
          I am not sure that building/providing more low-income housing would work. This problem is a lot worse than that.

          Reply
          1. Yves Smith Post author

            Bullshit. Homelessness is almost entirely a function of lack of affordable housing. 40% to 60% of the homeless are estimated to be going in and out of employment which actually strikes me as an impressive number given that many employers won’t hire someone who can’t give them an address for credit and other checks and/or lacks a bank account, which is also typical for the homeless.

            Reply
    1. eg

      Anyone who uses MMT as a verb can be immediately dismissed as either macroeconomically illiterate, a shill for those who employ rent-a-hack economists to justify their oligarchy, or a rent-a-hack economist themselves.

      Reply
  32. Chris

    This is a fascinating conversation to have right now, and a useful one.

    The county where I live has just comitted to a program of forced busing to address issues of overcrowding and “equity” – and by equity they mean taking children from poor and mostly black families and moving them into schools on the opposite side of the county. They’re also moving the children of white and very affluent families to the still good based on national averages schools on the other side of the county, but not stellar first class schools that these people had expected their kids to go to. The biggest changes are coming at the highschool level.

    You could hear the howls of rage and the rending of garments from all over the wealthy side of the county when the plan dropped. People are fretting over how much their property values will drop because all the real estate ads around here come with “X and Y schools” attached. Also, the decision takes a lot of the 10% ers and places them into a HS where the drive is both farther away, has more traffic, and is less conveniently located with respect to grocery stores and such. There are private school options near by but they all cost a small fortune to attend. Median sale price in the area is 500k$+ for a 3 bedroom 2 bath starter home IF YOU CAN FIND ONE. Typical time on market for those is less than 1 week with multiple offers. More typical are 800k$+ new builds and new developments with homes starting in the 1.1 million $ range are also popping up.

    From the racially tinged commentary of my neighbors I would assume life is getting tough on the upper class folks around where I live with my family in a modest house that cost triple what I’d have paid for it anywhere else that we’ve lived. The not really a joke I’ve told people is my kids get a private school education but I had to buy granite counter tops to give it to them. I’m waiting for the calls to bring in charter schools because the wealthy aren’t getting what they want.

    But what was interesting about this whole process were the statistics the board of education shared about income, disability, school diversity, number of students on free and reduced meals, overall utilization, teacher to student ratio, etc. We had schools on the west side of the county where there were 10 HS students to 1 teacher and there were multiple sections of AP calculus. On the east side of the county there were Algebra classes with 45 HS students to 1 teacher and no math AP classes offered. On the west side of the county there were less than 5% disabled kids in the student body at most schools. On the east side of the county there were 20% or more in the student body. Same story with poverty, FARM participation, etc. Yes, this is a story about exclusionary zoning too (west side homes are on minimum 1 acre lots, no affordable multi-family housing, no busing options, everyone commutes to big cities, etc.) so all the poor people are clustered and have no options if they continue to live in the county and their kids attend school. Even knowing all that, I was shocked by the discrepancy between where I live and where people 30 minutes away from us live.

    Given all that I think we’re heading into times when we’ll see a lot of people who are presumed wealthy but are stark naked when the tide goes out and truths are revealed. I can see from the decisions my neighbors are being forced to make that they’re not doing well and they’re angry at the changes being forced upon them. They spent a lot of money on a house so that the school problem would handled godammit and now that’s one more bill they need to pay. And the poor children who are going to be shipped around to the wealthier schools, what is that going to be like? You’re on FARM and attending class with kids who go skiing in the Alps over Christmas break? Is that going to be good or bad? I don’t know.

    My feeling is that our economy is not doing well and we’re going to see that pain start heading further and further up the food chain. Interesting times ahead!

    Reply
  33. Jerry B

    IMO the US economy is a house of cards. What is the US economy currently? In my view it is the FIRE (Finance, IT, Real Estate, and Energy) sector, Education, and Health Care.

    My memory is failing me as to how Yves and Lambert described the Finance sector’s contribution to the overall economy but to me it is not really “productive” and mostly casino capitalism.

    The medium to large cities are living off of the FIRE sectors. If you travel to small cities and towns it seems that Rural America is surviving on Education(Universities) and Healthcare. Let’s tease that out a bit:

    Full disclosure: For the accuracy/facts police, I am trying to paint a picture in broad strokes here of how I see the US economy.

    Education (i.e. universities) and their employees are living off of the government (Pell Grants etc.), student loans, and the wealthy. Let’s pretend the government ends any educational assistance for college students and that student loans are no longer available. What happens to the University Industrial Complex? It seems that many universities would close or as they are doing now start marketing to foreign students.

    Healthcare seems heavily subsidized by the government i.e. Medicaid, Medicare, and ObamaCare and the wealthy. Yes many people have health insurance through their employer. And the US population is getting older and needing more healthcare. But when I look around what I see is an over expansion and oversupply of healthcare facilities. And hospitals do not look like hospitals anymore. They look like massive hotels. It seems the healthcare industrial complex and the university industrial complex are both bubbles that at some point will burst.

    What will happen to the healthcare industry when Single Payer/Medicare for All is started and there is significant cost controls?? I think the gravy train is going to end for many health systems.

    And what about college tuition? Sanders is talking about free college. I hope by that he means that the government will not be an open checkbook for universities and there will be cost controls as well?

    Lambert has talked about the US needing an industrial policy. In my view it can’t happen soon enough because relying on education, health care, and finance to sustain an economy is asking for trouble.

    Lastly the grift of the healthcare sector and education sector seem related to the Predatory Precarity excerpt from Water Cooler a couple of days ago.

    https://www.interfluidity.com/v2/7263.html

    Many people are living large at the expense of education and healthcare and have a vested interest in maintaining the status quo. What happens when the bubble bursts?? Many small cities are going to be ghost towns.

    The US economy is like a human body with no bones or decaying bones.

    Reply
    1. sharonsj

      When Sanders talks about free college he means the state university system, like he and I went through in New York City 50 years ago. My parents were lower middle class, as were all my friends, and we all went to city colleges for little or no money. He is not talking about Ivy League schools.

      Reply
      1. Jerry B

        ===When Sanders talks about free college he means the state university system===

        Yes I am aware of what Sanders means. Have you looked at the tuition for state universities recently??? It is also astronomical compared to 50 years ago. For example check out the tuition at University of Illinois and University of Wisconsin.

        In my late 20’s in the mid 1980’s I went to Illinois State University. My full time tuition for a semester was roughly $790. In Fall 2019 the tuition for a year at Illinois State is $14,000.

        It’s not just Ivy league schools that are charging exorbitant tuitions and need to cut their costs and stop turning college campuses into resorts.

        Reply
          1. J7915

            Privatize the athletic programs. Financialize ie. License the trademarked names.

            T BOONE PICKENS SPORTS LLC does not have to worry about OSU’s library anymore.

            Reply
  34. lordkoos

    The biggest city in our state (Seattle), is booming, so property values within a 75-100 mile radius have been increasing steadily for years. However Seattle also has thousands of homeless people, and things are definitely not booming for them.

    Anecdotally, where I live in central WA I know quite a few young people in their 30s and 20s who patch together various crummy jobs to make ends meet. None of them can afford a house and it’s hard to see much of a future for them other than endless part-time, low paying jobs. I know some others that are doing OK but most are just getting buy and I doubt they can amass any savings. The country kids around here with little education work agricultural jobs and deal drugs. A new thing around these parts is heroin, which 15 years ago was unheard of. The biggest employers in the area are local government and the university, and the student population helps some local businesses thrive.

    The county I live in has an official poverty rate of 14%, about 1 out of every 7 people, but I think the actual amount is higher. We have a lot of Mexican immigrant workers here who likely are not counted, and in any case the federal definition of poverty is not very realistic. Same applies to official inflation stats. I would say that things are mixed, but for many under 40 the future isn’t bright.

    Reply
  35. Chris

    Huh. Moderation ate my larger post re: central maryland. Short answer then – No. The productive and measured economy is not doing well. And the pain is going further up the food chain than before.

    Reply
    1. Chris

      Ok, that one went through, maybe this time the other one went will too. Sharing because it’s a topic that speaks to the question at hand and so many other issues discussed on this site…

      This is a fascinating conversation to have right now, and a useful one.

      The county where I live has just comitted to a program of forced busing to address issues of overcrowding and “equity” – and by equity they mean taking children from poor and mostly black families and moving them into schools on the opposite side of the county. They’re also moving the children of white and very affluent families to the still good based on national averages schools on the other side of the county, but not stellar first class schools that these people had expected their kids to go to. The biggest changes are coming at the highschool level.

      You could hear the howls of rage and the rending of garments from all over the wealthy side of the county when the plan dropped. People are fretting over how much their property values will drop because all the real estate ads around here come with “X and Y schools” attached. Also, the decision takes a lot of the 10% ers and places them into a HS where the drive is both farther away, has more traffic, and is less conveniently located with respect to grocery stores and such. There are private school options near by but they all cost a small fortune to attend. Median sale price in the area is 500k$+ for a 3 bedroom 2 bath starter home IF YOU CAN FIND ONE. Typical time on market for those is less than 1 week with multiple offers. More typical are 800k$+ new builds and new developments with homes starting in the 1.1 million $ range are also popping up.

      From the racially tinged commentary of my neighbors I would assume life is getting tough on the upper class folks around where I live with my family in a modest house that cost triple what I’d have paid for it anywhere else that we’ve lived. The not really a joke I’ve told people is my kids get a private school education but I had to buy granite counter tops to give it to them. I’m waiting for the calls to bring in charter schools because the wealthy aren’t getting what they want.

      But what was interesting about this whole process were the statistics the board of education shared about income, disability, school diversity, number of students on free and reduced meals, overall utilization, teacher to student ratio, etc. We had schools on the west side of the county where there were 10 HS students to 1 teacher and there were multiple sections of AP calculus. On the east side of the county there were Algebra classes with 45 HS students to 1 teacher and no math AP classes offered. On the west side of the county there were less than 5% disabled kids in the student body at most schools. On the east side of the county there were 20% or more in the student body. Same story with poverty, FARM participation, etc. Yes, this is a story about exclusionary zoning too (west side homes are on minimum 1 acre lots, no affordable multi-family housing, no busing options, everyone commutes to big cities, etc.) so all the poor people are clustered and have no options if they continue to live in the county and their kids attend school. Even knowing all that, I was shocked by the discrepancy between where I live and where people 30 minutes away from us live.

      Given all that I think we’re heading into times when we’ll see a lot of people who are presumed wealthy but are stark naked when the tide goes out and truths are revealed. I can see from the decisions my neighbors are being forced to make that they’re not doing well and they’re angry at the changes being forced upon them. They spent a lot of money on a house so that the school problem would handled godammit and now that’s one more bill they need to pay. And the poor children who are going to be shipped around to the wealthier schools, what is that going to be like? You’re on FARM and attending class with kids who go skiing in the Alps over Christmas break? Is that going to be good or bad? I don’t know.

      My feeling is that our economy is not doing well and we’re going to see that pain start heading further and further up the food chain. Interesting times ahead!

      Reply
  36. Anon

    This is an admittedly parochial view of economic indicators/trends, but I’ve owned stock in Newmont Mining (gold, predominately) for years, I have a favorite consumer food (avocado), and I’m near a college campus.

    Newmont is trending upward (an indicator of uncertainty?), avocado’s are down to $2 from $2.50 ea. (good for my/your pocketbook) and 15,000 students back in town creating an influx of new money (good for retailers/barista’s/Uber/etc?). So, I think the Fed got it right (although I thought the prior drop was unnecessary). But then the economy (to most) is like Politics; it’s local.

    Reply
      1. ambrit

        If you all are living in the North of the country, I can only assume that shipping is responsible for the high prices of your avocados. Here in the North American Deep South, avocados will run about $1.50 per, with the regular sale price of $.88 per. Right now these prices are for Hass avocados. We also will get the smooth skinned Florida or Dominican larger avocados for between $1.00 and $1.50 per.
        Curious how prices are set, ain’t it?

        Reply
  37. kareninca

    I remember 1980 in New England. I could only get two hours of work a week at McDonald’s (I was in high school), because they were saving the hours for people with families. So I think of a lack of jobs as being the very worst.

    Now, I’m in Silicon Valley. There are jobs everywhere; loads of jobs. But there is no housing.

    I eat out about twice a year, when relatives visit from out of state. It’s too expensive to do more often, and I’m not a food person. But a few months ago I decided to go to a fast food place to get a veggie burger (one of them still has them). As I stood in line, I looked at the people working behind the counter. And I suddenly realized that several of them did not appear to have bathed. And then I thought of my friend who lives in her car, and her lack of access to showers. And then I got out of line and left the restaurant. Now I’m sure it’s not just the fast food places; there is no way the “better” restaurants could pay enough for many of their workers to afford rent.

    So, it could be worse. No jobs is still worse. But this is terrible.

    Reply
  38. Fiery Hunt

    The view from a self-employed craftsman in the Bay Area:

    Local real estate is not dropping but there is a slight smell of realization that this might be the top o’ the bubble so sellers are sweating to get on the market.
    Less readily agreeable to spending money on custom work..say 3 months delaying/hemming and hawing vs. “yes, let’s do it.”

    My girl (who works in dental) …her office has lost 3 people in the last year and are struggling to replaced them. The 3 Drs make $400,000 + each and just gave remaining staff a $1/hour raise to $24/per hour in an attempt to keep them. Full bennies and 401k contributions keep her there.

    Future sis-in-law: works at a wholesale nursery up in Santa Rosa. Last couple of years they were working 6 days a week to keep up. This year? No longer working Saturdays and now Fridays have been cut. That’s a 30% reduction in hours…she’s now on the brink.

    So, how’s the economy? Depends who you are.

    Reply
  39. BoulderMike

    From just outside Boulder, CO: John Edwards said “there are two Americas”. I am thinking he was more than correct, but that it should be 4 Americas: the top ,1%, the rest of the top 10%, the people who were prudent and saved and are older who are suffering but still can afford to live, and the truly poor who can’t come up with $400 in an emergency, which would include the homeless. I am lucky in that I lived very frugally my whole life as I have always feared what was coming, and what in my opinion has now come. I am retired, and have been for over 4 years, but not by choice. Nobody here wants to hire an over 60 IT worker.
    I measure the “economy” and the it’s health by what I refer to as the “misery index”. It isn’t measured in numbers but rather in how one feels about their life and the world around them. For me, the misery index is High. I am lucky that I am not in danger of homelessness, but I have to be very careful about what I spend as prices keep going up and up and most things I consume. Meaning, food, utilities, taxes, etc. These days food doesn’t go up by cents, but rather usually a dollar at a time. Carrots at my local Costco just went from $6.99 to $7.99 for example.
    I think that for everyone but the top 10%, the Misery Index is High. But, around here, it is I believe one of the more affluent areas of the country. People are buying up $1.5 million dollar houses like crazy, and tearing down $1 million dollar old houses to build new custom houses. Tesla’s and Mercedes are everywhere. Google has taken over Boulder and the young Tech workers are numerous. My little town of about 10,000 people is building new homes on every square inch of available land. They are talking about another 500 new homes of close to a million dollars to well over a million dollars. Traffic is outrageous, and bad air pollution days seem to be more and more numerous these days.
    So, “it was the best of times, it was the worst of times”. Depends on who you are.
    I think though that we are in the midst of a class war. The racial issues we are experiencing are to distract people and divide people. Divide people on race, divide people on age, divide people on ideology. No matter what, just divide people so while the common “man” is fighting each other, the rich plunder more and more.
    Finally, from my perspective, as a student of history, especially Nazi Germany, and Russia under Stalin, I am more and more frightened each day by the acceptance of the Trump rhetoric. It is messianic and dangerous.

    Reply
    1. Tyronius

      Hey neighbor, I’m just up the road in Ft Collins. The food bank is very well stocked here, a good thing because there’s always a line out the door. More and more homeless in this affluent college town. Lots of building, lots of turnover. But none of that sheds much light on the underlying causes, which were- at least for me- well illustrated in the recent Federal Reserve report on incomes; the top 1% now take 31.1% of all the income, that’s up. The bottom 50% now make only 0.7%, that’s down from just over 1% of all income earned. But remember what the analyst from Goldman Sachs said; ‘the poor don’t matter anymore’. After all, we aren’t making enough to register in the economy. I would say that’s unsustainable but it has been sustained for a lot longer than I ever thought it could be. America is becoming the land of aristocrats and serfs our forebears risked long voyages in leaky wooden sailing ships to get away from. None of this will change until and unless people get involved, yet my local DSA chapter has 10 regular attendees…

      Reply
      1. BoulderMike

        Ft. Collins is a nice place. My cousin went to CSU and I spent time in Ft. Collins many decades ago. I remember driving from Ft. Collins to the mountains north of Vail to hike. We drove over Loveland Pass and ended up hiking up to the top of a well above timberline mountain where he worked as a Ranger one summer. This was way before I lived here, but I never forgot how beautiful it was. It is one of the reasons I am so sad now at the unchecked growth in development/population in the I-25 corridor. There is a growing divide here in Boulder County between the haves and have nots

        Reply
  40. Boris

    Reader from Europe here, so I can’t contribute, but I want to say thanks to all who posted in this thread—I find it has become a very fascinating, enlightening collage of snapshots from all over the US at this moment in time. Might give a clearer image of reality than we could get from heaps of statistics.

    Reply
  41. Harrison Bergeron

    I’m in a nice neighborhood in Chicago, grad degree biz working two jobs to stay afloat. Homeless everywhere there is decent panhandling. Lucky our landlord basically never raises rent so under $1k for a large 1bd with 2 people. Everyone I know is one of two groups. Scraping by or just rolling in $. The bars and restaurants are busy and condos are going up everywhere. 100+ units within a mile of me easily. A developer I used to work for has been cramming the idea of micro studios think under 300 sq ft down the throats of the hipsters and transplants. In Uptown they’re Builing like mad to rent these hovels put for $1500 / mo while the SRO are closed. The county can’t afford to keep people in jail so gun offenders are let out on recognizance bonds. Sandburg’s poem still rings true.

    Reply
  42. Collin

    As I previously mentioned, I’m in semi-rural East Texas, where it’s tough but
    achievable to live a very modest but respectable life- in part because housing is so cheap in these small towns. A good well built (ie, brick) 3 bedroom house with a carport sitting on half acre – $115,000. But you HAVE to have your game together- both parents working, sharing home workload, cooking (& often gardening) your own food both to save money as well as not slowly poison yourself & your kids. No Bad habits. And family and neighbors who look out for you and each other.
    That was fact; now comes opinion-
    Come to think of it, the same description applied to black working class neighborhoods from the last century when the family -or extended family – were intact & lived 2 blocks over. People knew you.
    It’s called culture; community. And yes, it’s harder & harder to achieve/maintain each decade. ‘Culture’ is definitely not the default mode in American society in 2019.
    Ok, back to facts- We live ~170 miles from the Dallas Forth Worth area. Every year scores of young people migrate there for jobs, housing is affordable, the economic growth & diversity – the sprawl & size- is unreal.
    The tax base there supports a robust public health system that is better than most private options in smaller cities. UT southwestern medical school, new 2 billion dollar Parkland hospital. Ideal if you’re poor & in the ghetto? Hardly. But a safety valve on a dysfunctional society? Definitely.
    Around here, ‘go west, young man/woman’ means go to DFW.

    Reply
  43. griffen

    Some worthwhile comments to skim through on a slower Saturday morning. I don’t have much to add, aside from minor anecdotes of the upstate region of SC. Not a long time resident, but this region on I 85 is just 1 hr+ south of Charlotte or 2 ish hours north of Atlanta metro. Location benefits from logistics and transport of goods, local plants like BMW seem solid enough. Health care and several finance companies are nearby as well.

    Could be a tenuous stretch on the way. Just my two cents, for the broader US. Trees don’t grow to the sky, or so it’s been said.

    Reply
  44. eg

    Labor wastage (un-and-underemployment) is an ongoing scandal across the West.

    The Fed’s refusal to fulfill their mandate with respect to employment is a disgrace.

    Reply
    1. Dave Chapman

      eg:
      The phony unemployment numbers don’t help.
      As far as I can see, the only people who believe the official unemployment numbers are the news media and the Fed.

      Reply
  45. Sol

    Human communication can be so borked. We do a funny thing when we hear stories. We suspend our sense of disbelief. We know the movie about pirates or the book about pixies with laser guns isn’t real, and we ignore this, and take away from the story essential truths about courage, or friendship.

    And then when we hear facts, we do a different thing. We compare the incoming facts against our own set of facts, and expect the incoming to conform to what is already Known Truth. If an incoming fact does not conform, we see it as a story. A lie. An unreal thing.

    People told stories can find truth, while people told the truth can call it a story. So I won’t try to state facts, as I’m not sure what everyone’s Known Truths are, which makes it challenging to offer facts that can be heard.

    Let me tell you a story.

    Once upon a time Notch flexed, Minecraft was born, and it was good. Its a decent economic analogy too. We start with dick-all. There’s that first push to grab together some super basics – dirt and wood – and figure out what kind of place in which we spawned.

    First house is crap. Sometimes just a hole in the dirt. Maybe you have a bed, maybe you have a torch, maybe you don’t. (Ugh.) That’s okay though, you use the super basics to make some super basic tools, and as soon as the sun rises the next day you’re off to the races!

    Its a great big ol grind from there. The hole in the dirt becomes a five-square dirt hut with a bed and chests. Then a medium-sized wood/cobblestone two-story house, complete with forge, library, a full kitchen and basement storage. Now that you’ve bought some breathing room, time to spit on your hands and really get to work. Massive statues of Super Mario characters. Castles that loom over the bay, with a coastal village. Horse breeding. The Nether. The End Dragon.

    See? Great economic analogy.

    Okay, now tweak the game a bit. We spawned into a server where we’re not allowed to break blocks. If we try to, then regardless of light level the game is coded to mass spawn aggressive mobs. Creepers, skeletons by the dozen, and they’re *angry*.

    The code can be turn off so we can break blocks. Just pay some blocks, that’s all.

    We can get hired by one of the few people doing big terraforming projects. They’ll temporarily drop the code during working hours so we can break dirt for them. We don’t get to keep the dirt – that belongs to our employer. We’ll be paid a portion of our dirt, sometime later.

    If we save up our dirt earnings, we can build a house, but we also can’t place blocks. Same code, same means of disabling the code. Dirt hole homes have been outlawed to protect property values and our superior way of life.

    We can work in someone’s mine if we supply our own tools. The pay is a bit better, except tools break a lot.

    People who spawned in with someone else who could supply the blocks needed to disable the no-break/no-place code have a hard time figuring out why some people can’t seem to get the hang of this game. Its fairly simple once one gets the idea and has a decent grind. Right?

    People who have mines and Princess Peach statues and medium houses with walk-out basement storage think the game’s economy works fine. The suicide rate is epidemic, homelessness is a travesty, and “crime and poverty will always be with us” is offered as a verbal shrug.

    Like that, guys. How’s our economy? Its like that.

    Reply
  46. pdxjoan

    After reading many of the comments, it brings to mind the Gross National Happiness (GNH) Index. No matter what data the Fed is looking at, it will never explain how people really feel about the economy. Here are the components of the GNH Index:
    Psychological Well-being, Health, Time Use (work/sleep), Education, Cultural Diversity and Resilience, Good Governance, Community Vitality, Ecological Diversity and Resilience, and Living Standards.

    Reply
  47. Wukchumni

    Aside from a much coveted full time position working in the National Park, there never was much hope of making a decent living here, a buncha $10 an hour jobs with no bennies was as good as it got, and those who moved here for quiet were rewarded with not much happening, in our first decade I met and memorized the faces & names of around 200 people who lived here, or about 10% of the population.

    I wouldn’t have a clue who is a local or not, as most people out and about now are transients, staying at a short term vacation rental.

    The vacation rental gig was many people’s chance to get in on the real estate bubble part trois, but in a whole different way, every man & woman a Hilton!

    Lotsa garage majals, turning tricks.

    Reply
  48. Dave Chapman

    I’d give the economy a 4 out of 10.
    It could be worse, and it could be a lot better.

    I do high-tech contract work, so I am always in the job market. While the fact that we are still in August could be distorting things, my assessment is that there are fewer jobs than two years ago, and that they are of lower quality. (A “lower quality” job means that the hiring managers are picky, or have unreasonable requirements for candidates, or are otherwise apparently not serious.)

    At the same time, immigration fraud continues to be a big problem, especially regarding H1-B visas and L-1 visas. Donald Trump talks a good game, but he has done nothing to fix this. The problem appears to be Washington group-think and Washington corruption. When Alexander “Unindicted Co-Conspirator” Acosta was named as Secretary of Labor, a lot of people knew that the fix was in.

    Rates and job availability are still around half of what they were in 2000, adjusted for inflation. Things are still a lot better than they were in 2003.

    – – – – –

    Having said that, I do not think that proposed Fed policies will make any difference. This is not a Fed problem.

    Reply

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