This is a common sentiment on Twitter. They think if they tell people there is great depression-level unemployment they will see the need to deport the 100 million illegals. Doesn't occur to them that people might blame *their guy* who's the President.
Statistics say whites have higher average income, higher educational attainment, and are less likely to be unemployed, on welfare, or in prison. The far right used to trumpet these statistics before it decided to turn into a movement for broke people who project their loserdom onto the entire white race. Even the way you talk about your group stinks of loserdom. White males? Try saying white MEN.
I'd like to see an "Enshittification: Much More Than You Wanted To Know" post. It's hard to know whether this is a real phenomenon or just another popular-but-wrong narrative.
I'm not sure whether it's well enough defined to put numbers on.
But I'm not sure how it could be false. Enshittification is just the result of people optimising things in line with their incentives. Over time we've got better at optimising things, and in recent years we've got much better at optimising things as every big company has built an enormous data science team to squeeze more performance out of everything.
If the consumer is truly happy, that's an inefficiency that can be removed. We need to charge them slightly more, or decrease the quality of the product, or find a new way to nickel-and-dime them or show them more ads, until the value they're getting is *just* above the threshold at which they go away.
I'm skeptical because if the quality of the product really is that bad, it seems that someone else can just not do those things and take away customers from their competitors.
Agreed that competition is the counteracting force that stops enshittification from immediately going to infinity.
Counteracting competition you've got collusion (formal or informal), monopoly power, imperfectly substitutable goods, and plain old short-sightedness that causes the enshittified players to get picked off by less-shit competitors eventually (but not _this_ quarter, which is what we care about right now).
My theory would be that improved analytics and modelling have not just given companies better ways of making things worse, but also *safer* ways of making things worse; ways that are less likely to lead to churn to competitors. They know that reducing the size of a Snickers from 50 grams to 40 grams will piss people off but reducing it to 43 grams won't be noticed.
In perfect competition, if your product gets slightly worse, then some (many) competitors' products get better than yours.
But if your product is e.g. 10% better than the product of the next competitor, there is an incentive to make it only 1% better, otherwise you are leaving money on the table.
Today I watched a video about how Duolingo decided to use AI to generate more language lessons, so now you have many exercises where the correct answers are marked as incorrect, etc. Where is the competitor I should switch to?
A week ago I talked with my friends about the professional tasters, i.e. people who get paid to taste various foods and compare which ones taste better. (Seems like a dream job, but those people have many limitations, e.g. can never smoke or eat spicy food because that would damage their abilities.) Someone asked whether those people get paid to help invent better tasting food. The answer was that sadly, they are typically paid to help companies figure out how to make a version of the same food from crappier ingredients in such way that it doesn't make the taste worse noticeably.
As a software developer I see it firsthand how companies do not care about quality of software, because the customers are willing to pay anyway. A developer who reads "Clean Code" is perceived by his superiors as an idiot who doesn't understand the business aspect.
In summary, there are many situations where high quality was just a positive externality that the producer didn't fully capture. We got better at finding and eliminating such waste.
EDIT: Also, Substack misses some trivial functionality, such as centering a line. They could add it, but realistically they probably never will. How many bloggers will they really lose because they can't center a line? If there is no financial incentive to provide a better service, why should they?
I'd like to see Scott write a "Much More Than You Wanted To Know: The Book", actually. Take all the currently trendy media concepts and do deep dives on em.
Except that stuff being cruddy and getting worse isn't recent. The breakup of Ma Bell in the 1980s led to buying your own phone, which was initially good, but quickly degraded to "phones are unreliable; you can pay extra but they will still suck". In theory, the value of a trusted brand is that they wouldn't do this, but ... Theory and practice differed. So I don't think this explains a _recent_ divergence between numbers and vibes.
Presidents really have to make incredibly outsized decisions to have a noticeable impact on inflation. Business cycles rarely care about presidents, and the inflation crisis of 2022-23 was partly due to supply-side inflationary shocks (irrespective of whatever the political class is doing) and partly due to the leftover excess savings from the pandemic-era stimulus (which was largely spent by Trump through the CARES Act but pretty much every single developed country had to do the same, so it can't really be attributed to him personally).
I agree that the persistence of inflation is a problem for vibes, most likely because the median person still has the actual inflationary shock fresh in their minds and also because inflation still remains about 1-1.5pp higher than during the 2010s.
Yes, outsized decisions that are inflationary such as the CARES Act of 2020 and the Tariffs of 2025 (which are a tax on US consumers/companies and, as such, inflationary by nature). It remains to be seen how much of the burden will be shared between companies and consumers, but the effect on the price level only goes one way.
It's getting the opposite of "built", instead we're losing. You link to a reply tweet showing that there were some negative periods under Biden, but they were mixed in with positive ones. With Trump it has been ALL negative since "Liberation Day".
My suggestion is that an inquiry about any trend involving young people that seems to have started in the mid or late 2010s should start with "it's the phones"
> If I apply to 1000 jobs and no one hires me, that's not because I have a phone with TikTok on it.
They at least share a common root - Tyler Cowen wrote about this in his book Talent. Broadly, we have used software and increased availability of computation to solve "search problems."
At the same time, a bigger world and "big data" means that the space over which you can seach is impossibly larger than even recently.
This ends with extremely customized and targeted feeds (Tik Tok) that are so strong they're literally infohazards, AND with employers having many more applicants AND many more potentially great candidates for any given job.
And it doesn't end there - in dating, it ends with high status people of both genders having ten thousand hotties waiting for them in the app (so why settle down?) whereas everyone else is kind of boned, because the top 78% of women are competing for the top 20% of men, and women (the choosers) only swipe right 5% of the time.
In Amazon, there are a thousand purveyors of basic stuff, all furiously competing for your dollars (good), but they do so via farmed fake reviews and paying for placement (bad).
As a person with a service or product, it's made it so the only channels to get in front of anybody are owned by the FaceGoog ad duopoly, which have used their thousands of Phd's to eat most of the arbitrage and make buying ads on their platforms a worse prospect than ever (the power of "platforms") - this is literally what they've built their trillion dollar companies on, this is the source of most of their revenue.
But during the early 2000's? None of this was true - there hadn't been the great aggregation that put most of the internet into the hands of the FAANGs. Even as early as the 2010's it wasn't true, because smart phones didn't exist at scale, "big data" was a thing for only a handful of companies, and most employers still had limited reach into the vast thronging milieu of potential employees.
But now it's the 2020's, and all this stuff is here and / or stronger than ever, and it's been a true step change in search problems, how people are matched to other people or jobs, and how businesses are put in front of consumers.
> Surely there's some better way to phrase this? Perhaps "The FAANGs hadn't sunk into the meat yet."
Nice, love it. :-)
Actually, I had seriously considered using "great aggregation that put most *eyeball-hours* into the hands of the FAANGs" (emphasis added for clarity) as slightly more accurate, but wasn't sure it would come across as clearly.
But I think you're right - I clearly missed an opportunity to say:
"this was before the FAANGs had sunk so deeply into everyone's collective eyeballs"
or maybe
"this was before everyone began heaping 4-9 eyeball-hours per day at the altar of the FAANGs".
Alas, we make our choices in the moment, and off they go, into that great eyeball-hour mill in the sky!
Last position I was involved in hiring for got 300 applicants; *many* of them were basically saying "it's easy to apply, why not?". It honestly made our search process harder as well - instead of having to choose the best of 30 candidates, we had to come up with arbitrary filtering to bring it down to a manageable number.
There aren't "so many" people applying. Rather, the people who *are* applying, are spamming every vaguely relevant job opening they can find, because we've made it really really easy to find and apply for open jobs.
Honestly, if your behavior in-person is even remotely like your behavior online, then the reason you can't find a job is almost entirely due to interpersonal skills. I hope you make progress on both your human interactions, and your ability to get work.
Taking open applications is the last choice if you don't have any other options. We got a new customer service rep a year or two ago and she is fantastic. She's related to someone else who works at the company.
We determined we needed a new sales rep. I reached out to some people I knew who had moved around just looking for referrals and one of them was unhappy where she was. A 45 minute phone call later and I was sharing her info with management and she was hired a month later. No application posting, no resume. I'm in sales and if for some reason I wanted to look for a different job in the same industry I wouldn't bother with job applications either period I would just be reaching out and get something through my network.
The people who struggle and get screwed by the systems are the ones who are just starting out and don't already have 300 people they know who they've worked with in one capacity or another over the last 10 years available to them on linkedin.
Is this the "all the inflation statistics are lies" theory that Scott addresses in the post, or do you have a different theory of why they don't show this?
Nothing in this article even mentions economic statistics. Since the statistics say the economy is good, if you say it's bad you have to explain why they're wrong. This is Scott's entire point.
"The economy has been bad since 2008 you fools" does nothing to explain the disconnect between sentiment and traditional macroeconomic indicators during this decade as economic sentiment was quite positive as recently as 2019. If this was all explained by the economy being bad along some other, more accurate indicator that the public senses better than traditional economic statistics do, then you wouldn't have this period of rosy sentiment leading into the pandemic.
If your explanation for positive sentiment during the period your own theory predicts unending negative sentiment is improvement in employment and pay among entry level, low paying job sectors, then that runs into the problem that the Biden period with the intense negative economic sentiment saw the strongest conditions for this group in the past 50 years. I sense there might be some political rooting in your comments here, so before you feel obligated to credit Biden for this, this is at least in significant part explainable by the fact that the pandemic created extremely high demand for these kind of jobs relative to the available supply.
I've been to drag races, I can say with high certainty that Burnout 3 from 2004 is significantly more exciting. Unfortuantely the vibecession in video games for the last 20 years means we have yet to top that game.
I don't know man, we just had three good racing games release back to back this year. Kirby Air Riders in particular has a very nice sense of speed to it. https://youtu.be/ayODEjFCI8E?si=V6ngQHmmgkrK8RXU
This also explains the drop in dating and fertility, which are no longer a relief from boredom but instead cost a lot for only marginally more reward than the dopamine drip.
An anecdote from my own life: during college, I moved into an apartment. For the first few days of this, there wasn't an internet connection in the apartment.
Feeling bored, I called a girl I knew and asked what she was doing, and she invited me to go bowling in a group.
This is absolutely true for me any many people I know. Phones (and the internet generally) also allow you to compare your life more directly with massive numbers of others, many of whom are likely to be doing better, or creating that perception effectively.
My dad says its driven by the continuing feminization of our culture because women are enraptured with complaining and love to be miserable, and society as a whole, men and women, were both much happier before we started taking women and their opinions seriously. He also thinks there is a shadow earth always on the other side of the sun from us, so we can't see it, and that's where Jesus came from, so his takes are often unreliable. He also loves complaining and being miserable. And sports betting.
Ya I think this is a really substantial factor that doesn’t get raised enough.
Media decentralization/getting more demand-driven post-phones also significant. There’s apparently a huge demand for griping & nostalgia, so that content gets produced even if the frustrations it’s latching onto are eternal or narrowly distributed. And it’s extremely difficult to compare eras in an un-mediated way (even if u were around, memories bad & your circumstances changed, rational ignorance) so media is particularly important on questions like this.
there has been a lot of attention paid to the question of the relationship between ubiquitous smartphone and modern social/algorithmic media use and various negative trends like increased rates of teen depression, negative trends in subjective measures of well being, etc., and positive trends such as reduced drug and alcohol use.
If you buy these technology/communication changes, and the changes to society particularly for young people that are downstream of these trends, as causal drivers in the context of mental health, for example, it would stand to reason they would also have an enormous impact on individuals' assessment of the national economy and their own place in society. (edit: there are any number of hypotheses you could identify as to *why* that might be such as the comment above re opportunity cost that offers one I wasn't even thinking of)
- Phones make people compare themselves financially to everyone in the country, because algorithms now put random strangers in front of your face for hours a day
- Phones feed them ragebait, which makes them think that the world sucks, thus, the economy must suck
- Phones make them aware of AI, which makes people fear unemployment/depression
The vibecession is much more than about the index of consumer sentiment. It reflects people's general outlook on the world (bad), which they then map onto the economy, because the economy is our generally-accepted measure of meaning.
Not just wealthier, but happier, more accomplished, more successful and attractive, etc.
In the domain of fitness, for instance, use of steroids has skyrocketed, because ordinary men pursuing strength and fitness are no longer comparing themselves to average people in their communities, but to other men using steroids. People with physiques they've spent years cultivating are frequently treated with mockery or dismissal on social media, because users are so used to seeing even more impressive physiques cultivated through steroids that they assume they must be trivial to attain.
This one caught be offguard after 15 years of home gym upon returning to a commercial gym. We always knew who the juicers were and that it was around, but guys shot up in their cars or the bathroom etc, and distributed the steriods similarly to other illegal drugs at the time: payphone, euphamisms, cash etc. Now they just inject right there on the bench, empties in sharps container in the bathroom etc. I've encountered a few youger guys <22 who weren't even aware that Tren is Steriods, a word that they associate with old, bad PEDs from the 90s or earlier, while to them Tren is new and safer and totally fine and its impossible to get the desired gains without it. It felt like a fever dream the first day.
Yes, add me to the "it's the phones" crowd. I think there are real considerations for the "I sacrificed my youth and am only marginally better off in a much more expensive home" aspect to it, but that's an elite consideration whereas the vibecession is much wider than that, either because of phones directly or the impacted elites spreading their misery.
Agreed. It seems like a combination of a few things, several of which seem linked to either social media or smartphones.
1) There’s been an increase in anxiety and depression disorders. There’s a lot of debate as to whether this is diagnostic inflation or an actual worsening of mental health (and also if it’s caused by social media or not). But if we assume that it’s real, then the vibecession could partly be function of anxiety. This would be the Jonathan Haidt explanation.
3) Many people really do need a bigger house these days as mentioned in the article. If you want two kids and both parents work from home, a two bedroom house is a nightmare. This changes things from “what’s the inflation adjusted price of a house” to “what’s the price of a house that you need.”
4) The gradual breakdown of community over the past century. I'm thinking of the analysis from the Bowling Alone book. It seemed like a longer term trend than social media, but does seem to be exacerbated by it
Basically, if you’re 25 and your social media feed has made you think you need 600k to be successful, and also you have no IRL friends, and a generalized anxiety disorder, and are living in cramped conditions working from home, then yeah, your vibes are gonna be bad.
This is the media-bias explanation, with the role of phones being to explain why media sentiment became so much more negative at this particular point in history. Briefly, phones shifted people's news consumption to social media (mostly Facebook), which left every outlet chasing the same clicks and made things more competitive. A lot of the good things people miss about older journalism (like at least some journalists making earnest attempts to keep things in perspective) were basically the result of the slack that came from a not-very-competitive media environment; with competition increased, you have to write whatever headlines get the most clicks, and because of human nature that means negative ones.
(Also, journalists themselves can legitimately complain that their economic standing has gotten worse in the smartphone era—they now have to work harder for more meager material rewards—and presumably this, too, affects the tone of coverage.)
This is under-noted. Digital media plus AI content has been a neutron bomb for journalism generally. So there are now a bunch of bitter journalists who view the world as awful. Couple with the algorithm favoring negativity and outrage for clicks, and the whole media environment broadcasts a negative message.
The other part of this that is just as, if not more significant is that that phones have shifted people's media diet towards social media where their sources of information are friends and influencers who do not have any professional journalistic goals or standards. It's not just that the attention economy made negative headlines more competitive for legacy media, but more people are learning about the world through (e.g.) TikTok videos about prices being out of control. This contributes to their sense of what is happening, which they in turn share with others in a networked chain of information about what's going on.
The main article doesn't mention it, but a very strong reason to think that the "vibecession" isn't caused by people grappling with personal economic struggles and this fact making it into aggregate numbers is that financial self-assessment survey data is more consistent with what you see in a fine to good economy, consumption behavior is consistent with what you see in a good economy, and people tend to rate their local economic conditions as quite good, but the national ones as poor. All of this suggests people have a sense that the national macroeconomic conditions are poor and that *contradicts* personal experience. How did they learn that? Probably the entire of milieu of information - from radio ads talking about "recession specials" to those TikTok videos, to the general tone and volume of headlines in sources like CNN and the NYT or right-wing media that had propagandistic reasons for portraying the economy in a negative light. The important thing to grasp is all of this contributes to what people are talking about, and what people get from their phones more than anything sense is a general sense of "what people are talking about."
Could be like this maybe? Everyone I know has a job and is doing pretty well. The only way I find out about people who aren't doing well is through my phone. When people in my phone say they're struggling to make ends meet, it's a dick move on my part to think, well, I'm doing fine, so on average everyone must be doing okay. Instead, I just kind of feel lucky that I've evaded a recession that I do perceive as real
b) If most people think that it is a dick move to brag while others are struggling, it could be the case that 90% of people are doing well and 10% are struggling, but the phone makes it seem like 99% are struggling, because the former will be quiet.
There is, if you can later redirect the people's anger into doing whatever you want them to do. Which is easy, as long as the thing you want them to do is to damage their own country, you don't care how specifically.
The money comes from the intelligence budget, and compared to other military expenses it is miraculously cheap. A few websites, dozen people designing and A/B testing the messages and memes, and a few thousand bots to paste them all over the internet, is all cheaper than a single modern missile, and can do more damage.
Parenting is similar here! If someone complains that their kid was up all night, it would be a dick move for me to pipe up and say "my kids slept fine last night", so childless people get an unrealistically negative image of children.
Remember that social media is international, and many people on it (for example on Twitter), are not from the US. English is the lingua franca. The US had a particularly strong recovery from pandemic restrictions relative to the world and some people contributing to the overall feeling of how things are going were from nations that were genuinely struggling. Great Britain's economy was legitimately terrible, and people from Great Britain were on Twitter joining in Americans about how bad things are going right now, not as bots but as people who project their local conditions onto others. They didn't caveat their posts as coming from Great Britain each time they did this. Think of this as the global sentiment affecting national sentiment hypothesis.
There is definitely something special about Great Britain.
I am from Slovakia, and when covid started, most people were okay with wearing the masks and other precautions (at least during the first few months, before the Russian propaganda finally decided between "covid is not real and Americans are trying to scare you" and "covid is real and Americans made it"), and whenever I saw someone post on Facebook in Slovak "resist the medical advice, don't wear the masks", it was some expat from London. So I am not really surprised to hear that covid hit them especially hard (or that they blame the precautions instead of themselves).
But you should not underestimate the numbers of bots. Yes, English is spoken by billions, so any message you see online in English, it is plausible that there are millions of people who sincerely believe it. However, seeing thousands of people write the same opinions in Slovak (especially when all of them have English sounding names, live in random places all over the world but mostly in Africa, and copy-paste the same messages in many groups) is definitely evidence of bots.
It's definitely not all just "phones", but I think there are some aspects related to phones (social media, alternative media, increasing polarization, etc) that should be examined. Some off the top:
1. social media exposed people to the lifestyles (whether real or fake) of people richer than them, which causes people to feel further behind than they would otherwise.
2. alternative sources of news are disproportionately negative compared to traditional mainstream media, and so people are spending more time submerged in media that reinforces the vibesession
3. social media and the internet in general increased political polarization, and extremely polarized people feel that vibes are much worse than they are when the opposite political party is in power. Tea party folks felt that the US was going to shit during the Obama era, lefties felt the entire world was falling apart under Trump's firs term, the right was convinced the US was on the brink of collapse during Biden and the COVID era (despite the economy doing quite well), and now the left is convinced that democracy is collapsing before our eyes and the nation is being sold piece by piece to the highest bidder amongst Trump's allies during this term.
I think 3 is particularly interesting. If I wanted to self-criticize a bit, I felt **much** better during the Biden years because I was convinced that we didn't have someone who was actively trying to sabotage our democracy. Since I felt good, I didn't pay as much attention to politics and actually got off social media for a while. For me, the Biden years were a peak in "vibes". We're now in Trump 2, and despite me being much better off financially than during the Biden years (for reasons entirely unrelated to which party is in power), I'm much more worried generally about the state of things and my personal vibe index is much worse.
The ubiquity of cell phones and specifically social media have enabled a countrywide game of "ain't it awful" as per the psychological Games People Play. And just as noted in the book it increases connection between people, but makes both people feel worse. Multiply times infinity.
I think the argument is that phones made young people think *everything* was bad. Sounds plausible, especially if there were the kernels of truth in the housing issue for the overall negativity to latch onto and really explode over.
If you spend your time looking at influencers having fabulous lives, or even your friends posting their very best experiences and pretending that that's normal for them, you might feel like you're very behind compared to everyone else.
This graph is all screen time and not segmented by age. But in 2014, phone screen time was ~2 hours a day, and that's up to ~4 hours a day today, and 7-9 hours a day in Zennials.
In general, the change in screen time by age is that basically everyone gets 10 hours of screen time, with older people biasing more towards TV and younger people towards phones - so the Nielson graph above is swamped by the demographic pyramid, but younger people are absolutely getting more algorithmically served hot 19yo millionaire's with abs in their feeds all the time, that's basically the median influencer.
So, I think it's a very plausible hypothesis in several ways.
I had never considered this before I read your unpacking because I'm of old material sort-of-left, but it started to grow like a stinky superstructure mushroom cloud of "representation" and (ahem, apologies for this) "mimetic desire" as I kept reading. It's kinda adjacent to Brooklyn Theory and it's almost entirely psychosocial.
The assessment of one's situation is almost always relative (unless we are in a "literally starving with frostbite on extremities and literal wolves at the flimsy door" situation). Constant exposure to globalised "content", much of it utter slop presented as real, a lot generated by (excuse language) "influencers" -- as per Liface's comment below: "reflects people's general outlook on the world (bad), which they then map onto the economy, because the economy is our generally-accepted measure of meaning.".
Old advertising was aspirational. This stuff is just depressing because it combines aspirational material and experiential promises with subtler implications: if only I had money for a 30-day chakra balancing retreat with emerald frequency focused yoni massage and a special appearance by a Master Optimiser Trained by Whatshisname Himself my life would be finally better, AND I AM ABSOLUTELY WORTH IT AND DESERVING, and if I can't get it I'm clearly not worth it, or have not been grinding hard enough. Insert your own psychosociodemographic version.
A massive mismatch between ambition/aspiration and what's possible. What's possible has gone up. But the aspirational level has gone beyond stratospheric in not always clearly measurable ways.
Crucially, not just aspirational has gone super high. I think what's seen as floor level minimum acceptable has gone massively up too.
That's my best hypothesis here, but it's entirely speculative, as so far I've not hunted any data to support it.
> I think what's seen as floor level minimum acceptable has gone massively up too.
Yes. And this isn't just a perceptions problem. All sorts of laws, customs, businesses, infrastructure etc are set up in a way that pushes the floor up.
By which I mean that no one is selling the cheapest gruel at $0.10 a bowl in most of the developed world.
This is Especially true for housing. But also many people feel they need to have a car and a smartphone, because the world isn't set up to accept that some people don't have these things.
This would not be the only area in which, for whatever reason (social media, media, "coddling", absolute worst case interpretation of society as mainstreamed ideology) the motto of the age seems to be: "Always be catastrophizing".
To add what others have said, the rise of influencers, who are the most visible of the new media. What is an influencer? Someone who has gained in popularity and prestige (and has made a lot of money as a result). What did they do to get there? In most situations, it wasn't anything that was visibly difficult, maybe it's saying something that resonates, or being hot, or being funny. Unlike the celebrities of yesteryear, sports stars or actors or getting a job working on AI at Google, it doesn't feel like influencers had to work hard (or grind for a long time) to achieve their success. All they're doing is making short form videos on TikTok, playing video games on twitch, or saying random shit on twitter (I'm not saying becoming an influencer isn't hard, I imagine it requires a lot of work, it's just not always clear that this is so). Or maybe they're literal lottery winners, e.g. Bitcoin millionaires.
This also explains the rapid rise in sports gambling, retail investing and cryptocurrency. It could also explain what I believe is a more recent obsession with home ownership. Growing up in the 1990s and 2000s, I did not see such a strong desire for home equity, renting in New York was just as viable, and in fact, in some circles seen as superior to buying a house out in the suburbs. But housing equity (especially the rapid rise in housing values the late 2010s) is also viewed as a "get rich quick (or at least without effort)" situation.
Phones increase negative sentiment generally because people spend more time doomscrolling (something not really possible with a literal newspaper or even a desktop news site from the 2000s.
Plus phones displace in-person socialisation which also drives negative sentiment.
When does the problem get bad enough that we start taking away people's smartphones, or at least regulating them heavily? At some point society decided cheap, over the counter heroin needed to be eliminated. (Don't get me wrong, I don't support our Draconian drug laws, but I also don't think heroin should be a cheap, over the counter drug. That genuinely had to go)
I have a very high prior against phones being a problem because this claim is invariably made about new tech and new art and it always ends up being wrong. I really think you need a smoking gun, not circumstantial evidence.
Changes in media technology have often had dramatic effects on society throughout time. Guttenberg's printing press probably helped kick off centuries of warfare and civil unrest through accelerating the diffusion of ideas and destabilizing established authorities- you know, like today. More prosaic examples include the invention of radio helping to spread demagoguery in the 30s. A technology can ultimately end up being neutral or positive, but society can certainly go through a rough patch while adapting. I do not think that 'this claim' 'always ends up being wrong'
I dont follow any "influencers" but I hear ppl get depressed by it. There were ppl to be envious of in the past, but their distance gave them some gravitas. Now ppl are envious of someone who is clearly a douche, and this makes them feel worse. This is related to ppl doing just as well but feeling they should be doing even better as Scott discussed in the post.
Also the complete collapse of good child-rearing practice, where it is now considered child abuse to teach your child any level of independence, emotional resilience, or growth whatsoever.
However, no one ever says anything to you about it if you do it. Maybe they are gossiping behind my back, I don't know. Everyone expresses jealousy when they find out my children do chores. Not sure what is stopping them?
Depends on what you mean. No idea about chores, but people have had the police called on them and had CPS threaten to take their children away for letting them play outside, walk to a neighbors house, walk to school, etc. Things that should be totally normal for an 8 year old are now relegated to late teen years.
This was my exact thought. I would say surge in internet use generally though.
Some sort of general negativity social contagion that effectively transmits through the tubes. It impacts a lot more than just ideas of the economy: environment, politics, etc.
"Speculatively, maybe people complain that they are not getting the level of success they expected based on their qualifications." That is Turchin's elite overproduction hypothesis in a nutshell. Since he called it in advance on empirical / historical grounds, and the vibecession seems to fit, maybe it's a hypothesis worth taking seriously.
Boy, if only we had some sort of index, across time, that tracked the prices which consumers pay... then we would know whether or not purchasing power has gone up or down over time, and whether or not the median income was or wasn't sufficient to afford household expenses...
The most obvious counterargument is, like Scott says, that the fit to the data is mediocre; vibecession complaints are different in content from elite overproduction complaints, and if you weren't specifically looking for a connection you probably wouldn't come up with that hypothesis.
Scott wrote: "The only problem with this theory is that it doesn’t entirely match people’s complaints. They don’t complain that it was too hard to achieve their success, they complain that they are not achieving success, or that it feels hopeless."
If your argument is that they are indeed locked out of success by elite overproduction even if they work hard, then you're back to the original question of why economic statistics don't reflect this.
Sure, but that leaves Scott's original question (where are the numbers?) unanswered. The section I quoted is dealing with the possibility that something elite-overproduction-like contributes to precarity even if the consumption numbers turn out the same in the end.
That statement by Scott was directed at the argument that the vibecession is because it is harder to achieve the same level of success. The elite overproduction argument is that they don't achieve the success that they believe their education etc entitles them too. That may well be higher than the old level of success, because every generation is more educated.
So this is the Wait But Why theory that the current up-and-coming generation is being given expectations that were never realistic? That could be happening, I suppose, but it's different from elite overproduction, which involves an actual per-capita contraction as more people compete for a fixed-size pie.
I think the fixed size pie is a status pie, not a money one.
Journalists who went to Columbia journalism School to be the next Woodward and Bernstein are oversupplied; they can either work at a prestigious outfit as an intern/precarious position for no money, low-status (and maybe low paying anyway) Internet "publication" doing clickbait and listicles, or in PR for some company they don't care about at all for much less status than being Woodward and Bernstein.
Aspiring scientists outnumber tenured academic faculty positions: they can either stay in their chosen high-status domain as eternal sessionals, or move to the (for them, at least) low status career of optimizing ad revenue for the same bland companies their aspiring-journalist peers are doing PR for.
Etc.
TBC, I am presenting a caricature version, and I'm not claiming to believe this myself, but it's something I think fits the "rising expectations/elite overproduction" bill and that feels at least not obviously false at a gut level to me.
I think (TBC this is a pretty "vibes"y feeling, I hold it with low confidence) if you look at the millennial doomer crowd it's a lot of people who wanted to go into prestigious positions in especially academia and journalism, but found to stay in that world they either had to effectively win a lottery, accept poorly remunerated precarious positions, or strike out in a lower status direction like Substacker/podcaster etc.
Most people didn't want that to begin with, and are fine working in data analysis/PR for boring companies, and they're doing fine, but there's a cohort of elites/aspiring elites who either are doing fine but in a lower status/less elite position than they'd envisioned, or are still chasing that higher status vision but less successfully.
That's not something to be found in economic statistics. "Elite" doesn't necessarily mean high-paid (as noted in this piece itself). If you go to Columbia for journalism, and end up a regional manager for Walmart, you are probably going to hate your life and the world you live in. (All moral judgment in the previous sentence directed at journalists, none at Walmart managers).
Fit to what data? Turchin is all about fitting theory to data, and the only valid frame of reference is, well, his own. To make an actual counterargument you'd have to demonstrate his framework fails to correspond to reality (either as measured by his own data of choice, or reality reality in the sense of his data failing to be a good map of the territory). You can't just take any random data and claim they somehow contradict him. (He literally called Scott out on this in his response to one of the articles you linked.)
And, look, his theory and "vibecession" are on a completely different epistemic levels. As in, again, his models have already shown predictive power. "Vibecession", on the other hand, appears to be an attempt to frame economic models' lack of predictive power as an [it's the kids who are wrong] issue. Which, perhaps true, but as of yet completely unproven - and quite ostensibly begging the question. "Specifically looking for a connection" is perhaps not the most helpful way to describe [fitting the issue into a framework with an actual proven track record].
No it's not. Turchin's "elite overproduction" is based on the notion of elites being non-productive, or at most performing functions with negligible marginal returns (say that you're lucky and your lord does indeed protect you from brigands and the enemy. Two lords don't make you twice as safe, but require twice the taxes to mantain). This *obviously* does not match today's definition of "elites", which mostly refers to educated workers whose compensation is agreed-upon and reflects at a minimum their economic contribution.
Even if there were an "overproduction" of educated workers (in the sense, their marginal contribution being lower than the cost of educating them), we would see their wages steadily declining, which they do not. If you go full schizoright-brained and posit that somehow office workers, through some mysterious mechanism, are indeed milling air and subtly extracting value created by those with "real jobs", well that would be very stupid for a variety of reasons but we would see the income of non-educated workers declining instead, which again we do not see.
It's not clear that Turchin's theory comports much with the facts even for an agrarian economy, but at least there it's internally consistent. If you try to stretch the definition of "elites" and apply it to a modern one, it does not even make sense on its own terms.
> This on its own can’t justify the entire vibecession, because most vibecessioneers are renters
A significant portion of the negative vibes is people complaining that they won't ever have the same opportunity to participate in the housing market that previous generations did. Those folk are renting, but crucially, they /don't want to be/; it is not rent but the cost of buying and owning property driving their vibes.
Yeah, I came to the comments to say this. A typical complaint in my social media feed is something like, "I'm 32 and have a Ph. D. and there's no way I will ever afford to own a house / apartment."
As Scott dryly says, the price of a house "may discourage people for whom homeownership was a big part of the American dream."
I'm pretty sure the gentleman I helped move into a bedroom he is renting in an HMO a little while back would see that as a huge improvement. I'll ask him, but frankly, /I'd/ take that over sharing a bathroom with complete strangers while paying off someone else's mortgage, so I don't see why he wouldn't. Oh, also he's not on minimum wage - pretty close to the median, in fact. That's just what the property market is like around here.
I'm unconvinced that "cheerfully" is the right adjective for that experience. One thing that kept me, for one, going was the knowledge that it was temporary.
Yeah, part of the reason why housing prices have increased is that the average house is a lot larger than in Ye Olden Times, so inflated expectations may be part of the reason for inflated costs. (At the same time, I believe government legislation now makes it literally illegal to pack a 1950s-size family into a home of that size, particularly with siblings of mixed sex.)
I think Scott is accurately indentifying the problem of top jobs being increasingly concentrated in the coastal cities where you also get the most housing inflation, even if housing prices in the US overall are a lot more reasonable. Also, the relative uptick in lower-class wages that Scott is citing only applies to the last decade or so, I think(?), and I imagine has a lot to do with both Trump and Biden working overtime to reshore manufacturing jobs and build out new infrastructure (along with various firms getting spooked about basing out of China.) Over longer timescales the Elephant Curve still applies.
I'm skeptical that child welfare regulations have much of an effect here; I don't think I've even heard of anyone getting in trouble for raising their kids in 1950s-typical density.
What I do believe, though, is that it's often illegal at the local level to *build* a 1950s-sized home, or to do so without buying a lot large enough to accommodate a much larger home.
Yeah, I might be getting this slightly wrong and the rules vary by state & country, but it does look like "statutory overcrowding" rules often apply to social housing, and landlords can also be fined for allowing similar conditions (which means they can legally refuse renters with large families.)
> What I do believe, though, is that it's often illegal at the local level to *build* a 1950s-sized home, or to do so without buying a lot large enough to accommodate a much larger home.
Those 1950s-sized homes were built on lots large enough to accommodate much larger homes as well.
There's no negative externality to me if my neighbours want to build a small home on their block, but there is a negative externality if they want to build five small homes on their block.
> Yeah, part of the reason why housing prices have increased is that the average house is a lot larger than in Ye Olden Times, so inflated expectations may be part of the reason for inflated costs.
Dunno about that. Even a shitbox condo in Toronto is unaffordable to huge swathes of people who would previously have been able to enjoy a "middle-class life". Yes, the new houses in the suburbs are huge, but the new "houses" downtown are condos averaging 500sq ft with absolutely abominable layouts that cost more than a bungalow would in 1950.
A lot of people would be thrilled to have a smaller house in a place they want to live. I think people believe there is some linear relationship between home size and folks' happiness in that home, and they can just treat a doubling of square footage as a doubling of value, but I doubt the relationship is that simple. (But none of this matters, because small homes aren't available in desirable places either.)
Plus, compromises between the standard "small homes" (apartments) and the standard "big homes" (suburbs), or for that matter between residential and commercial property, are also often outlawed even when apartments are legal.
1. I live in suburban Ohio, so not particularly desirable in the grand scheme of things. If I bought my current ~1000 square foot home today between rising valuation and higher interest rates my mortgage payments would be about three times what they are now. It's good I bought at the right time or homeownership would be a lot harder.
2. There's probably no good way to measure but there's a lot of homes that are technically affordable, in a nice neighborhood, etc., but are still not bargains. The houses are old and the person who owned them really let things go towards the end of their lives. They either need a moderate amount of money and a lot of time or a lot of money and a trustworthy handyman to make the house habitable in the long term.
3. A lot of the homes I see posted on social media to prove there's affordable homes out there aren't worth it, especially if you have kids. Some are in remote areas, and moving to West Bend, IA isn't a realistic option for most people. Others are technically affordable and in a safe enough neighborhood but the local public schools are garbage. You could send your kids to a Catholic school, but then you're not really saving money over living in a nice suburb.
They're all still mostly there around me. Between 1950 and 1960 a tremendous amount of 'starter' homes were built all over suburban and exurban america. The understanding being that these houses would exist for, at most, 25 years, before being torn down and replaced. One of the builders at the time literally called them 25 Year Houses when they sold them. I'm sure in more desireable parts of the country they were in fact demolished in the anticipated time frames. In the parts of the country that are no longer desireable, like the Rust Belt and other parts of the midwest, these houses are mostly all still there and have been constantly inhabited for the last 70+ years. I grew up in one in the 80s; all the floors sag in the center of the rooms, the walls tend to bow out, moisture is a contstant issue. The whole house was noticably crooked. It didn't seem odd at the time b/c they were everywhere. My house was surrounded by dozens of identical ones built at the same time, my friends lives in them etc. I didn't realize until college that pretty much everyone I knew growing up, compared to the national average, was pretty poor. In exurban Ohio is just seemed normal. There are many for sale, usually between 40-70k or so, if you're willing to move to the rust belt, appalachia, the South that isn't Atlanta or Nashville or Austin etc.
Seeing as these people are renting 350sq ft condos for more in real dollars than a mortgage on a 1000sq ft bungalow cost in 1950, yes, they very obviously would.
In places where houses are expensive, it's the land rather than the actual house that's expensive. A tiny 1950s house on a nice block in a desirable area doesn't cost all that much less than a bigger house.
The 1930s-1960s were a particularly good time for affordable land in desirable areas, because the car was opening up a huge ring of land surrounding every major city which had previously been too inconvenient to commute from. When a useful block of land is the equivalent of $25K in today's money then it makes sense to build a cheap house on it and move in at the age of 21. But this was a brief moment in history.
Very interesting point! I find it quite persuasive.
I wonder if widespread self-driving cars and a decrease in the need for car ownership might have a similar effect, once more town planners are taking account of it?
To my knowledge, this is a case of cost disease. Ask people if they would rather pay 1950s prices for a 1950s house or 2020s prices for a 2020s house. It's just that the option no longer exists.
Start taxing land value heavily enough to discourage speculative bets keeping vacant lots out of circulation, without taxing structure value at the same rate - or, ideally, at all. https://www.gameofrent.com
I actually did - my wife and I spent $50,000 on a single-wide manufactured home (2 bedrooms, 1 bath, a little under 1000 square feet in total) in a relatively upscale manufactured home community. Driving through, it looks like any other suburban development and not at all like the stereotype of a "trailer park" - and I get access to a nice community pool and don't have to mow the lawn.
Out of curiosity, do you own the land it's on? Sounds like probably not, so how does the land rent and/or HOA fee compare to what you'd pay in rent for a similar size apartment? $50k seems like a great deal even if it depreciates pretty quickly - if equivalent rent is around $1000/month then it pays for itself in under 5 years.
I'm sure many would, but far fewer 1000sqft single-family homes are being built than they were in the fifties. Unmet demand for small, cheap "starter homes" has meant that people have to spend more of their lives renting.
They'd probably happily buy it in someone was building them. But the lethal combo of zoning/minimum lot size + post-2008 banking regulations made developers shift to much bigger houses. In some places it's literally illegal to build 1950s houses, and where it's legal, the kind of person who might want one will never get a mortage anyway so there is no point.
That's the whole problem, we outlawed hamburgers and mandated everyone eat steak or starve, and the starving ones are legitimately pissed.
I think this is happening. However, it is partly a story of unrealistic expectations. Anecdotal experience and data (American Housing Survey, among others) suggest that people want larger houses than their parents had while having fewer children than their parents did. If you want that but simultaneously feel that owning a home is unattainable, it does seem like a problem of imagination rather than of real stuff.
Granted, there is definitely a dearth of small houses. They just don't exist in many places. I think this is partly a supply-side story (it's illegal to build them in many zoning districts, for example) but that can't be the whole story. In my experience most prospective homebuyers from the start rule out the possibility of buying a 900sqft townhouse, or even detached house. If people really wanted those, more would be built. But not that many are.
Indeed. It's a real shame, because as soon as you've lived in such a house, it's immediately apparent how livable it is.
My first house was nearly 3,000 sq. ft. I had two children at the time, with one on the way. I really thought we needed a big house.
My current house is just over half the size of my last one. I have five children now. We are perfectly comfortable, and I can barely imaging wanting a larger house ever again. What would be the point?
I think a major psychological barrier is the idea that each child needs their own room. I think that's quite a silly idea, but it is pervasive in America. Once you let it go, there is no reason you'd need more than three bedrooms, unless you have more than six children.
> oh, the poor widdle babies, listening to their parents having sex one futon away
There's a mid-20th-century Chinese film called A Beautiful Mistake depicting life in a village somewhere in China. The main plot is a tragedy involving a girl getting peeped in the bath.
But in a scene that has absolutely no plot relevance, we do see a husband and wife having sex while their son is asleep in the same bed. When he wakes up and goes off to do whatever his day involves, the wife scolds her husband for carelessness.
> "I think a major psychological barrier is the idea that each child needs their own room. I think that's quite a silly idea, but it is pervasive in America."
I'll push back against this - we were going insane until we separated our twins into two different rooms. It was impossible to ever put either of them back to sleep once one of them started crying, because Twin 1 would wake, cry, wake up Twin 2, Twin 2 would cry, and then we couldn't put Twin 1 back to sleep because Twin 2's crying was keeping him awake, and we couldn't put Twin 2 back to sleep for the same reason.
Fair enough, although most people don't have twins. Toddlers and infants don't share a room with other children all that well. Once they don't require soothing at night, sharing a room becomes much easier. I have generally moved my children into a shared room around the age of 4.
> If people really wanted those, more would be built.
This is not an accurate understanding of the housing market.
If it was _more profitable_ to build those, more would be built. But it's not.
What's profitable is large greenfield homes in suburbs, or tiny condos downtown, not because that's what people want per se, but because of the economics of development.
Most of the time, giving people what they want is also what is most profitable. That is obviously not an iron rule, but it's generally how all markets work.
And I'm fairly confident that it generally costs less to build a smaller home (and/or fit more units into the same sized apartment complex).
As I said, I agree that there are market distortions that artificially lower the supply of small housing units. But it's not all-or-nothing. At the margin, developers should still be sensitive to consumer preferences about home size. And my overwhelming experience as a homebuyer and talking to homebuyers is that within the housing market as it actually exists, people do value square footage and will choose the 2500sqft option over the 2000sqft option, even when it means paying a bit more or a less desirable location. That doesn't seem consistent with a story of massive pent-up demand for smaller houses that is stymied solely by the economics of development.
> Most of the time, giving people what they want is also what is most profitable. That is obviously not an iron rule, but it's generally how all markets work.
That's an extremely naive view of markets lol
> And I'm fairly confident that it generally costs less to build a smaller home (and/or fit more units into the same sized apartment complex).
Yes, ofc, but it's not necessarily more profitable. In some cases it is - which is why you see tiny condos getting built, where land value is extreme and it makes sense to try and split that up over as many units as possible.
> people do value square footage and will choose the 2500sqft option over the 2000sqft option
Which is why you see big homes get built in the suburbs.
> That doesn't seem consistent with a story of massive pent-up demand for smaller houses that is stymied solely by the economics of development.
It is. There's just nowhere to put them that makes economic sense to build, so they don't get built.
What you don't see is the "missing middle" getting built, the small townhouses, and so on. It's not profitable. As the developer, you're not saving enough on construction to make up for not maximizing the value of the land downtown (in fact you're paying more than you would for the shitbox condo building), and you're not desirable enough to make up for being far from the bright heart of the city in the suburbs.
It is a naive view in the sense that it's a simple concept, but it's also obviously true. If people really want something, they're willing to pay more to get it. That puts upward pressure on prices which encourages producers to make more of it (by increasing potential profit). That is literally how markets work.
I agree, big homes are being built in the suburbs. In some cases, land use restrictions don't allow smaller homes to be built. But in many other cases, there is nothing legally preventing the developer from making them a little smaller and a little closer together. They'd be able to put more homes on the same amount of land, which would definitely increase profits. The same logic applies to apartments, but they, too, are getting larger over time.
If people really, really wanted to save a little money by buying smaller dwellings, then it would behoove the developers to make them smaller. The only reason it wouldn't "make economic sense" to do that is that demand for those smaller units isn't high enough, which is just another way of saying that people really do want to live in larger homes.
>And I'm fairly confident that it generally costs less to build a smaller home
I'm an architect who works with homebuilders (in an expensive blue state), including helping them decide which house plan to build on a single-family lot. We look at bigger and smaller house options, the builder prices them out, the real estate broker estimates what they'd sell for, etc. So I have very intimate knowledge of this question.
My main takeaway from this process is that building a house - any house - entails large fixed costs, but increasing its size at the margin has substantially lower marginal costs.
For any house, even a small one, you have to buy the land, pay the transaction costs, pay for soft costs, do site work, pave a driveway, bring in all the utilities, install the heating system, electrical panel...etc.
But if you add another bedroom, you're basically just adding studs, drywall, a few windows...it costs more, but the total cost per square foot of the project trends down as you add square footage like that. But the extra space is valuable to people, so the sales price of the home goes up.
When we go through this exercise, we almost always find that a 3BR, 2.5 Bath house generates a higher return than a smaller "starter house". There is indeed demand for the smaller houses- even more than for the bigger ones. But they cost a lot to build, so the margins tend to be too small. And the builders are taking significant risk and often making less than you might think, so they need that extra bit of margin.
I think you're still barking up the wrong tree. The price of houses isn't the problem, it's the price of land. And land is the one thing you can't build more of (well, you can dump sand in the ocean but that doesn't get you far).
The general shape of solutions here is to build new cities, or rather, to encourage people to move to existing large towns with the potential to become new cities. All the good land within commuting distance of New York City is taken, but there's probably decent land near, say, Ithaca.
1) Haven't most of those fixed, per-home costs have been stable for a long time? A home in the 1970s also needs a driveway, site work, utilities, etc., regardless of size. If the size of homes has gone up steadily for several decades, what change in the fixed vs. variable costs would explain that?
2) It totally makes sense that, holding lot size constant, and on fairly large lots, there's not that much money to be saved by building a slightly smaller house. But for developers of major subdivisions, the cost of land is presumably non-trivial. If you're trying to fit as many houses into your overall parcel as possible, wouldn't the footprint of each home materially affect the amount of land each one requires, and thence the bottom line?
EDIT: As I think more about this, I consider that something like 25-30% of the value of newly build homes is from the land itself (cf. https://www.fhfa.gov/document/wp1901.pdf), it does seem like fitting more dwellings per acre of residential land would have a pretty large impact on the developer's bottom line. This may have as much to do with the size of backyards as the size of actual homes, but due to setbacks and minimum street frontage requirements, I think home size does matter.
It’s hard to say for sure without decades of granular price data, which I don’t have, but my guess is that what you say isn’t entirely true. My guess is that the fixed costs are higher now because of huge increases in the regulatory complexity of building over the past several generations. Here are some examples off the top of my head- depending on where exactly you live, these may or may not apply to you. But they give you a sense of the issue.
(a) Electric vehicle enthusiasts decide that all new homes should be EV-ready, and they persuade the electrical code writers to add a requirement that every house have a dedicated high-amperage circuit. This in turn increases the house’s overall electrical service size. This costs as much for small houses as for large ones- it doesn’t scale with floor area.
(b) In places without sewer on the street, houses need to handle sewage on-site. In your grandparents’ day, this would probably be handled with a cesspool, a relatively simple system that could be built by one or two semi-skilled laborers and that generally worked okay. Lots of them are still in use. But the new septic codes are far more restrictive and complicated, and for a new house you have to hire a civil engineer to do stamped technical drawings for the system, possibly go to a local health board hearing for a approval, do field testing, and then pay a site contractor with a special license to install the septic system. The leach field gets a little bigger if your house has more bedrooms, but that only costs a little more once you’ve gone through the whole process and mobilized everyone.
(c) Back in the day, there were no energy codes, and old houses often didn’t even have insulation. And the early code requirements were simple: you just had to add some fiberglass batts between the studs, which any high school kid could do. But now the energy codes are both extremely strict (requiring expensive materials and labor) and extremely confusing and complicated (increasingly requiring you to hire specialized energy modeling consultants to model every wall surface, R-value and U-value, mechanical equipment, etc and produce a thick report demonstrating energy code compliance. Then you have to get a “blower door” test during construction to prove envelope tightness. Etc. The material cost mostly scales with size, but the compliance complexity generates fixed costs.
Yes, shrinking the minimum lot size requirements would reduce the land cost per dwelling and make smaller houses more economically viable.
This has to be done on a large scale to work, because, at the margin, land price is largely a function of potential density. So, if the going rate for a house lot is $100,000 and the minimum frontage for a buildable lot is 100 feet, then a lot with 199’ of frontage would sell for $100,000…but the price would jump to $200,000 if the zoning board granted a rare variance to allow a lot with 99’ of frontage. So, at the margin, the gains from increased density accrue to the initial landowner rather than to the builder or homebuyer. But if you slashed the minimum frontage in half for the entire region, then the supply of buildable lots would increase relative to demand and their price would decline, somewhat reducing the prices of new homes.
Anecdotally, the real estate brokers will tell builders that a benefit of building a smaller house is that you're guaranteed to find a buyer at a lower price point. They'll tell you something like "there are tons of people priced out of the market now, and they'll jump at the chance to buy something that they can afford". So I don't think it's right that there's isn't a market for smaller houses that are substantially cheaper. On the contrary, those are the ones that sell the fastest.
The problem is that the smaller house actually needs to be *substantially* cheaper, not just a little cheaper, and it's difficult for builders to make that math work. If a new starter house is only slightly cheaper than a new house with an extra bedroom, bathroom, and den, buyers will very rationally pay up for the bigger house if they can. Why settle for less if you aren't even going to save very much by going smaller?
"Most of the time, giving people what they want is also what is most profitable"
Not when you have the power of the government behind you and you can make what they want illegal and replace it with something more profitable. See: cars (federal safety and emissions standards), houses (zoning restrictions)
No, legality is a big issue. Many towns and cities outright ban anything but single-family homes in much of their area, combined with quite large minimum lot sizes, parking requirements, and other restrictions.
> What's profitable is large greenfield homes in suburbs, or tiny condos downtown, not because that's what people want per se, but because of the economics of development.
Seems highly suspicious to me that the things that are banned just happen to be not profitable for entirely unrelated reasons. And if this is the case, why do we bother to ban them?
I'm all for zoning reform or elimination, planning reform, etc. It will have major positive effects on our built form.
It will not improve affordability, for a simple reason: if prices fall, development stops or slows until they recover, because that's what's most profitable for landowners. And you can't develop without landowners. Housing is fundamentally not like widgets. With widgets, your margin is my opportunity. With housing, your margin is my cost input.
There is no for-profit market solution to the housing crisis.
Yes, it will. Building more lowers prices, there's an enormous amount of economic research on this topic. All you are describing is *why* it is difficult to have reform. In fact each individual landowner could make more money by building more housing, they just make even more by banding together to prevent development. But that only works by lobbying the government.
Building more _would_ lower prices, if it happened long-term, but, as is observed, if prices fall, for-profit market building slows or stops. This is more or less an ironclad law of property prices in areas not experiencing population decline and a hard ratchet on prices.
At best, zoning reform will lead to a short-term increase in projects at the margin of profitability, but if that pushes prices down, that will stop and prices will return to "normal" and continue increasing.
Only not-for-profit building/ownership can lead to durable, long-term declines in housing prices. The market cannot and will not do so under any regulatory regime.
Edit to add: developers are the ones _most_ interested in planning and zoning reform. It's primarily homeowners who just want their neighbourhoods to stay the same that oppose it. If planning restrictions increased profits, developers would be for it. This is not observed.
The land owners aren't all working together. It's most profitable if nobody else sells the land but they do, so if nobody else sells and it drives up the price of land, they'll defect and sell. And if you make it legal to build more housing on less space, it will take fewer people defecting to drive down the price of land.
“There is no for-profit market solution to the housing crisis.”
Correct. It’s astonishing to me how few people recognize what ought to be obvious by now: “the markets” will NEVER build sufficient low income housing — there’s not enough money to be made in it! And the housing affordability crisis and the homelessness crisis are linked — another obvious connection that fails to be made.
And all in the country which gave the world Henry George, no less!
Markets have on occasion built low-income housing, particularly when they were allowed to build low-cost housing.
However, you're right that they find it much more profitable to build at least moderately-high-income housing, so that's what they mostly do.
Thing is, almost all mid- to high-income people already *have* housing, but except at the highest end of the scale most of them aren't going to be maintaining two simultaneous residences. So when the market builds a fancy new house and someone with lots of money moves in, their existing home goes on the market. Possibly as a rental property held by the original owner, but still. Another family moves in. Probably one with less money than the first, because the fancy new houses push the boring old ones down the stack in terms of "where rich people live",
And those people also weren't homeless and aren't going to maintain two simultaneous residences, so *their* old home now opens up to the market. Lather, rinse, repeat, until someone either does pay real money to hold on to an empty home that they're not living in, or the last home in the chain is made available to someone who previously didn't have a home of their own(*)
And claims that there are bignum empty houses being held off the market by Evil Greedy Capitalists, never quite seem to hold up when we dig into them. Mostly, markets build high-income housing and as a result increase the stock of low-income housing. Maybe it makes you feel virtuous to skip the step where the developer makes a nice profit and everybody else moves up to a slightly nicer home, but that's not actually helping the people who need low-income housing.
* That last home is probably a small apartment, and it's going to someone who was previously couch-surfing or living in their parents' basement rather than street-person homeless, but still.
What's profitable to build depends on how much it costs, and how much you can sell it for. I can't imagine it's cheaper to build a bigger house. They're doing it because they can sell them for more, and they only can because people are willing to pay more for them. Either that or building a small house in that area is illegal.
That may be true, depending on what area you're talking about. My point isn't that there are lots of small houses out there, or that there are affordable houses at any given income level. Clearly, that isn't true. Rather, I'm saying that, at the margin, many homebuyers could save money by purchasing a more modest dwelling, but choose not to because they feel they need the space. Anecdotally, many people in my social circles have a household income in the 80-150k range, and lots of people have homes that I feel are unnecessarily large, and I know with certainty that they had smaller, cheaper alternatives.
This is probably true. Unfortunately for me, I make an average salary for the work I do, and renting is my only option. I'm also aromantic, so I'm not really interested in marrying or coowning with anyone.
If I don't want to move, there are no houses available for me. I'm willing to buy something crappy, but unfortunately even the crappy houses are out of reach. I don't even live in a nice area. There is plenty of poverty here. The difference is that they inherited their houses, and I have to buy.
Housing is much more expensive when you live alone. That is a challenge. Roommates would go a long way to solving your problem! But I don't think it's the only way.
Are you particularly wedded to the idea of owning a detached home? Small condominiums are often quite a bit cheaper than houses, even as they are in more convenient locations nearer the downtown.
I live in a city whose size (about half a million in the urban area) and cost of living are pretty close to those of the median American. There are lots of 1 or 2 bedroom condos in the close-in suburbs for $250k or less. If you put 20% down your mortgage payment would be less than $1,800. That's a bit more than 30% of your gross income if you make $60,000, but it's certainly feasible.
Given that, I'm going to assume that you live in an area with significantly higher-than-average housing costs. It is totally possible that home ownership isn't on the cards for you unless you make more money, are willing to move, or share your home with someone else. In cities like mine, it is possible.
A 1300sqft 3/2 near our Sunnyvale office is currently listed for just under $2 million. In the Bay Area, if there is insufficient willingness to compromise, it is more on the public safety situation (Oakland is close and transit-connected, but also a failed state that doesn't routinely answer 911 calls anymore) and commute time (Tri-Valley communities like Pleasanton and San Ramon are still affordable to mid-career software engineers in elite tech, but 90+ minutes away from job centers at rush hour).
Yes, that is just about the most unaffordable place in the country for housing. Clearly something weird is going on in the Bay Area! Over here in middle America, things are pretty different.
Yeah I can't speak for anywhere else, but housing prices in Toronto are like 10-20x incomes. In the Boomer generation, it was considered imprudent to buy a house for more than maybe 5x your income, and there were plenty of options in the 2-5x range.
And that changed fast - most of the change came in the last twenty years.
edit: to "afford" a smallish (800-1200sq ft) in an ok neighbourhood well out of the core, basically a starter home in an inner suburb, you need a household income of about 300k+ CAD to qualify for a mortgage (plus 150-300k in savings for a downpayment). Median household income is 85k.
edit edit: and today's household income is two incomes, in the 50s it was one...
How about housing prices in Regina, Saskatchewan? Could middle class families in the 1950s afford living in the most expensive part of the most expensive city? Even if they could, that hardly seems like the most useful metric for housing affordability.
In the housing theory of everything is basically correct: we've had much worse house price inflation that the US (without even the house size inflation to justify it), and home ownership is even more culturally important (private housing stock is like 10x the value of NZ's stockmarket, whereas in the US the two are roughly equal)
House price inflation doesn't hurt those that are riding the wave upwards with their equity, but people who were renting & saving with an eye towards buying one day have been royally screwed in NZ, and now that mortgage rates have gone back up without house prices dropping, I imagine the same is true in the US.
But as Scott says, the average mortgage payment was at historic lows during the late 2010s, and that's when the vibecession started. Maybe it's the down payment that's screwing people?
Consider the owner-operator of https://slugboxstore.com/ who, despite many years of provably steady income and plenty of cash in hand - a resounding success by most reasonable standards - *can't qualify* for a mortgage because the bank's loan officer simply doesn't understand his business model... or at least can professionally claim not to, as cover for personal distaste.
It's certainly more difficult to qualify for a loan as the owner of a small business. They're going to look at things like how sustainable your business model is, and I'm not convinced that there's still going to be a market for... whatever this is... in thirty years.
There's been a market for bizarrely idealized artistic images of half-naked women for longer than any of us have been alive. Possibly even longer than there's been a market for writing, or bronze, or farm labor.
The superficial technical details (which, yes, an AI might be able to copy) aren't the critical part; he's cultivated a loyal fanbase, who collectively buy consistent amounts of whatever he personally offers for sale, so long as it maintains his customary quality standards.
I... genuinely don't understand how to interpret that. People were complaining about housing prices before they started complaining about housing prices...? Scott's entire article section on housing prices is wrong...? Some other thing?
I’m saying that people have been more and more priced out of housing for years before the “vibecession.” You can save the snark for somebody else— your point is correct but I don’t think saves the “it’s all housing” point.
housing prices spiked in 2020-2022 in a pretty unique way, and were driven by rising prices outside of the notoriously expensive metros of NYC/Boston/LA/etc.
You could be correct, but I’d have to look at the data. Looking at the All-Transactions House Price Index for Boise, you can see they jumped pretty high from 2020 to 2022 but the slope has been pretty steep from before that as well. Why no vibecession? Or a vibecession to a lesser extent?
No, not really. In the run-up to 2008, the problem is that people had to move to buy an house, but there were still enough empty land around some metropolitan areas (say, Phoenix) that you could get your suburban home within commuting distance of a place with office jobs. Then 2008 hit and the one problem people did not have were housing prices.
Now the economy is healthy enought that housing prices are picking up steam again, but we have little sprawl left to cover, so,,,
Yes, they complain about not being able to afford a house, but are going on some kind of expensive international vacation every year, cause that's just what you do these days. Our grandparents, while they were working to buy a house, probably never went on vacation, and our parents maybe to Yellowstone or some camping trip in the local woods. Same goes for eating out in a restaurant, when I was a kid, we did that only a few times a year, on birthdays etc. Those things were luxuries. I think the problem is that young people these days expect to be able to afford a house, and also maintain a lifestyle that was not realistic or expected by former generations - generations who lived basically to work, feed their kids and pay their mortgage and didn't need or expect more.
I mean, that's just false. It's the avocado toast theory, and it's thoroughly debunked.
For your theory to hold true, houses would still be 3-5x incomes, but in many areas they're more like 10-20x incomes.
What you're describing, to the extent it's true (which is not very), is a symptom, not a cause: people see (or at least believe) that the American/Canadian dream is out of reach, and so they seek other ways of making their lives meaningful/enjoyable.
In many areas in the 1950s, houses were 100-200x incomes. Expensive houses have always existed, and poor people have always existed, but the typical house is much more affordable. As Scott's plots show, the average mortgage payment is the same now as it was in 1985 when adjusted for inflation.
Yes. If you canʻt buy a home you aren’t building wealth, you don’t have any certainty about where youʻll live and build a family, you arenʻt participatinh in the American dream. Youʻre paying someone elseʻs mortage.
The vibecession is not (actually) about economic indicators, though it purports to be.
It's about (the lack of) community, which derives from rapidly-accelerating technology, which removes meaning and makes people lose hope for the future, which they then map onto the economy.
We are richer than ever, yet we are community-poor. We're not communing with friends, dancing, drinking, having sex and most people are now addicted to algorithms that feed them slop and ragebait all day.
We are richer than ever, but we are meaning-poor.
Untill we fix this, the vibecession will be neverending.
This is a fine theory, but not what people are saying. I think it's worth evaluating the claims people are making about not having enough money at face value.
At least for the younger generation, expectations are sky high. From the data referenced in the blog above about how much money each generation needs to feel financially successful:
* Gen Z: $588k income, $9.5 million net worth
* Millenials: $181k income, $5.6 million net worth
* Gen X: $212k income, $5.3 million net worth
* Baby boomers: $100k income, $1.0 million net worth
I'd agree with this. Expectation is based on exposure and exposure to wealthiness has way outstripped house prices.
Boomers aimed to be in the upper half of the wealth levels they saw around them in their communities, now we are all exposed constantly to the rich, and the super-rich.
I'm on the older side of Gen Z (22) and it's not really about that. I do think I'd need to make a ton of money to be comfortable, not because I actually need to spend anywhere near that much money, but because that's how much cushion I would need to have to feel like I wasn't on the edge of a crisis. I mean, to shop at a nice grocery store without worrying too much about prices you should probably be making at least 200k; that's a big part of my definition of financial success (in part because better food is one of the main 'rich people things' I am actually interested in).
I guess another difference is that boomers expected to keep their jobs for a long time, often until retirement, so they didn't feel like they needed more than paycheck to paycheck and some little reserve. If they had extra money, they spent them on a nice vacation.
My mother was always surprised by why I didn't immediately spend all the extra money I had. From my perspective, it was a decade of saving so that I could get a mortgage, then another decade of saving so that I could get a mortgage for a home large enough for a family, and another decade of saving in hope that maaaaaybe I could retire a few (not many) years earlier as I am starting to worry about potential age discrimination when hiring.
Why do you need to shop at a "nice" grocery store? I've shopped in grocery stores all over the world, including shitty ones in third world countries, and the food I get isn't any less delicious.
When I was making less than $40k as a grad student not that long ago, I ate out every day, which is at least twice as expensive as buying groceries at even the nicest grocery store. I had no money problems, even though I was living in one of the most expensive cities in America.
Maybe people are complaining about not having enough money these days because the amount of money it takes to produce a feeling of abundance is larger in the absence of community, sense of purpose, “my life matters” etc.
Common property and public goods are massive force multipler for societal wealth and America's common property is abysmal. If the UK was a US state it's GDP per capital would be lower than Vermont. But in Vermont we are ripping out the bus stops because we can't/won't stop homeless people from camping in them. Meanwhile the UK "feels" a lot richer because you can sit in bus stops and parks and not be hassled by addicts.
Relatedly, public goods mean you have to spend less, and hence earn less, in order to have a good quality of life. Having a big house and garden is less important if there are pleasant public spaces nearby; having a car is less important if there's safe and reliable public transport; having private health insurance is less important if there's a well-run public health service; etc.
Maybe kinda sorta related: the cost of child care and related services?
The lack of community is a problem that can be addressed by money. You dug into this topic yourself in "Should Strong Gods Bet On GDP?" People pay for nannies and house cleaners and other things now to make up for the lack of community. That stuff is really expensive now. (We all know the old line about "I couldn’t imagine being too poor to afford servants, nor so rich as to be able to afford a car.")
I don't have a fully baked theory here and this feels like a poor fit for explaining vibes for young people. But kids are just freaking expensive these days.
I do think the lack of community, and millennials and older gen Zs living in expensive areas far from their families, makes having children more expensive (for those who actually have them) or a more daunting prospect (for those who don't). When I was growing up in Florida, I knew a lot of kids being cared for at least part-time by grandparents or other extended family, now that I'm a parent in Los Angeles, I don't know anyone here who has a resource like that. In my friend group, not only are the grandparents far away, but because of later age of family formation, they're also a lot older. My mom is 78 and I'm largely supporting her, while raising two toddlers.
Why do young people choose to live in expensive areas where they’re miserable instead of living somewhere better and cheaper and working a remote-first job? (I know this is over-simplified, but I don’t understand it.)
Remote jobs aren't good for career advancement, because actual meatspace face time really does matter. For people well-established in their career (cough) they're fine, but probably not the best choice for a first job. And we're past the honeymoon period where people could imagine remote work was the New Normal with no costs whatsoever.
So, live in the Cool City where you're "miserable" in the sense of current personal economics but you're hanging out with the Cool People and you can hope that you will someday Have It Made. Or, live in the hicks in an affordable apartment with decent internet, and all the meatspace social opportunities Hicksville can provide, and know that's not going to get any better.
Or find a decent career that's physically located in Hicksville and comes with a premade social circle of people who share your class and interests, but that doesn't work for everyone - some careers, the pickings are genuinely slim outside the Cool Cities.
Lots of money helps to plug holes left by insufficient community. You can afford more childcare where before you might have used extended family or co-op babysitting. You don't know your neighbors but you can get to know your kids' travel sports parents. You don't spend your idle time at barbecues or potlucks but you can go on more trips with your nuclear family. You used to play basketball at the local park, now due to crime you have to pay for a private gym membership. It may not be perfect but if people perceive a lack of community-related amenities they may see the need for more money to buy substitutes.
"Players are great at identifying problems but terrible at coming up with solutions." This is from Mark Rosewater, the head designer of Magic: the Gathering. His point is that when playing a game, it's easy to tell that you aren't having fun, but not always so easy to know exactly why or how to fix it. And in my experience, it's very true--people will repeat platitudes they've heard from others about what makes a game fun or not fun, but the complaint manifestly does not apply to the situation they're describing. Or there's another situation which totally resolves the complaint but they're still not having fun.
I think the same principle applies more generally. People are unhappy, and they can easily determine that. But that doesn't mean they know what would change that fact. Money and material standard of living are easy to point to as things that would make life better, but my understanding of the research is that how much happier people think they will be after making more money is higher than how much happier they actually become. People in their 20s are now Gen Z, i.e. people who were raised after several generations of an increasing trend to shelter children and prevent them from having any independence, and who have been exposed to a constant stream of social media since middle school. One can debate whether these really are the problem, but I certainly wouldn't *expect* zoomers to say, "oh yeah, obviously I'm unhappy because I was protected from challenge as a child, had to be driven everywhere, was never allowed to practice being independent until after college, community life has been severely hampered, and I've been exposed to brain-rotting forms of media since I was old enough to read, in total contrast to my parents and every previous generation" even if that's true.
The life satisfaction angle makes sense. People are not optimizing GDP in their heads, they are tracking whether their life feels like it is going somewhere worth living.
Where I think Liface’s take overcorrects is in treating the economic complaints as if they are really about something else, like people confusing “meaning” with “money.” A lot of what people say they want in a meaningful life, even in very ordinary terms, sits on top of a few material thresholds: being able to form your own household in the place where your work and relationships exist, being able to have kids without feeling one bad month away from broke, being able to act as if a long term plan is something you can trust instead of a cosmic joke.
In a world where those thresholds were relatively easy to cross, it made sense to discount “I do not have enough money” as shorthand for “I do not know what I want.” But if the time to reach those thresholds stretches from saving four years for a down payment to saving ten or eleven (as the math works out for a lot of people in growing metros), the economic channel is not just about consumption anymore. It is about whether you can build the scaffolding that meaning work sits on.
That is what I think the vibecession is picking up. The flow variables you graphed look fine, and I agree that life satisfaction in the abstract tracks hope, connection, purpose. But thresholds for the basic “can I build a stable life here” layer have quietly moved in a way CPI and median income are not built to show. It is not that the meaning story is wrong. It is that for a lot of people, the meaning story and the economic story are now the same story at the point where it matters.
I would like to understand why virtually every customer-service experience I have is worse than the ones I had in 2019. E.g., why in 2019 many checkout lanes were routinely open in my supermarket (and now aren't) or why my CVS used to be able to stock its shelves, but now half are empty and half are locked, or why the price of a nice restaurant meal has doubled during a time when CPI inflation measures less than 30%, and a bunch of places have gone out of business (post pandemic). I guess this could be due to lack of community, but it feels like something is kind of broken in the real economy.
I could go on for hours about the dumb things the state of California has done. But my point stands. Life is better here now than twenty years ago, incomparably better than 75 years ago, and inconceivably better than 150 years ago.
Could it have been even better without the horse sense passed by Californians on themselves? Yes. Definitely.
Even your point about missing people kind of reinforces the point about improving conditions. In no prior era could millions of slackers drop out of the system to play games all day and sponge off their parents, girl friends or the welfare state. This isn’t a sign of declining living standards, but of good times making soft men.
> I would like to understand why virtually every customer-service experience I have is worse than the ones I had in 2019
Yes! Also why every hotel in the US used Covid as an excuse to stop doing everything - washing towels and sheets (now you have to request it), room service, and much more, and then *never went back* to the former level of service, and just stayed at the new, shittier equilibrium.
This only happened in America! All the rest of the world, hotels are fine and still do stuff!
I recently stayed in a hotel in Japan that by default didn't wash stuff, but their reasoning for that was being more eco-friendly. Which is fine, you can request it trivially - but not being able to set the A/C temp was not!
This sounds like, or maybe rhymes with, the "slack" hypothesis, i.e. that companies are optimizing everything until they give you the absolute worst thing you're willing to accept, at the absolute lowest marginal cost and highest profit.
Look at how the bottom quintile income has increased the most in past few years. This means the lowest paying, jobs (customer service) have become better paid relative to everything else.
If low end labor becomes more expensive businesses try to use less of it (stocking shelves) or pass it on to the consumer (restaurant prices go up). This is good, in that fewer people are doing lower productivity jobs like stocking shelves or being checkout cashiers, but it is kind of annoying for consumers.
This is my theory of vibecession, that if you were an upper middle class adult with a good job in the 2010s you benefitted from the slow recovery keeping the labor market slack and making certain services cheap. Now those services are very expensive and that feels bad to the upper middle class, even if it's a consequence of what everyone says would be a good thing (higher incomes for the poorest workers).
You seem to leave very low effort replies to basically every post in this thread. Your objection to my theory about why the quality of customer service declined is not clear and I don't have much interest in engaging with you unless you make it clear.
Not disagreeing, but offering another data point. I live in SoCal and things seem great. I think things are better now in more ways than any time in my life. Amazon deliveries with global competition for price and quality. Fast self check out and shorter lines. Better consumer devices. Streaming services with music and movie catalogs worth a fortune. Better cars. Better surfboards.
Yeah, things jacked up in price after Covid, but we are still the luckiest people to have ever lived. By a lot!
I dont know the macro reason here, but the micro seems exceedingly obvious
Its not economically worth it to offer a consumer service right now. Idk if mamdani's name is taken in a bad light here, but his halal flation talking point is intensely relevant. A food truck used to be an economic way to undercut real estate costs, but the bureaocracy caught up and now even that is expensive to run
As people start spending less and operating costs remain constant, margins start getting chopped, and the few consumers who still have the cash need to step up and pay higher prices for the same or worse service
Tbf, i noticed this as soon as i moved to california tho. Shit, i learned how to cook all the food i like because i didnt like getting scammed for it every time i bought it. It improved my life drastically but it cant be good for the graphs
I don't mean this dismissively, but did you consider you might be older and bit more cantakerous and impatient than you were before? I saw my dad go from being mostly satisfied with services to routinely berating employees, or at least making every inconvenience out to be some major disrespect, and it was not the service quality that had changed.
Another thing is that competition is creating lower price and quality tiers, and sometimes people who opt to get a much lower price for a somewhat lower quality consider the lower price a given and complain about the quality. That's what happened to airlines.
And finally yeah, a strong labor market inevitably means that you'll get worse employees doing the same thing, for better wages. The restaurant does not have the luxury to demand experience and skill for waiters, which means service will be worse. The post-2008 labor market meant that you had plenty of smart, capable people who could not get anything better than service work, and those less capable just could not find anything. That changed, thank god.
Scott have you read Mike Green’s viral post on this?
His main argument is that the poverty line is miscalculated, but in context of declining middle class sentiments—
The more interesting thesis is that there exists a “valley of death” where two parents in the workforce need a combined ~$140k salary otherwise the cumulative “participation costs” of a fast modern society (for example a phone plan or child care) make year-over-year capital accumulation near impossible.
To another commenter’s point, society is overall quite a bit more atomized from the internet, so buying a house in an affordable neighborhood doesn’t pay off the same way it used to— where the community was tight knit and people could feel life satisfaction despite modest social class. From my experience across the Texas metroplex— Most people in working-class neighborhoods don’t know their neighbors or have “strong communities” despite achieving the same suburban life as in the 1980s.
To find the ‘community’ you need to move to upper class neighborhoods, which requires a high income which requires moving to high COL areas (and if you are young and ambitious, this is also where you probably have to find your preferred social scene), ad infinitum. And then, you have to figure out how to have a few kids while you and your spouse work high-octane jobs.
To boil it down, i dont think macroeconomic trends will reveal the subtle causes:
-Partially the housing theory of everything
-Partially the fact that neighborhoods at the middle income level don’t provide the same social fulfillment anymore, and nobody wants to put in the effort to do so.
-Partially the fact that there are much more hidden “participation costs” to society like phone bills.
-Partially the fact that dual income households might succumb to the proverbial “valley of death”.
-Partially news bias.
To me this is the most convincing explanation and would probably be hard to tease out from data alone.
Mike Green's 140k calculation was very wrong, I recommend that you search and read some rebuttals to his post (e.g. Noah Smith's, Jerusalem Demsas's, Tyler Cowen's). TL;DR, he's using the wrong data in multiple ways (it should be closer to 80k), and it's also not the poverty line at all, it's the "average expenditure" line. He also confuses households with individuals and ignores how temporary childcare costs are.
His argument essentially was to tautologically define what people are spending at the median as the poverty line*, then note lots of people would struggle to afford the median lifestyle and therefore are in poverty. His definition has no connection whatsoever to what is necessary to afford a minimum basic lifestyle, even though he characterized it as the "survival" line. If you ain't keeping up with the Jones, you ain't surviving is more or less his argument. This was after he mislead people about how federal poverty metrics are calculated.
That this story spread like wildfire in social media and eventually picked up a lot of news aggregator style coverage and thus made it to a lot of eyeballs I think is a good example of the media hypothesis for why so many people might express sentiment more consistent with a severe recession. While his arguments are laughable, that isn't intuitively obvious to people and if sources they trust portray it as a good point, then people might just accept it as a good point.
*The reason that he gets to a number that's more than half of the country being in poverty even though he's *defining median consumption as poverty* is that in another baffling error he assumes peak temporary expenses are lifetime expenses. So every family is paying for relatively expensive child care for their entire lives instead of a narrow window. This allows him to shift the number up so like 70ish% of the country is in his version of "poverty."
I think Noah Smith, in his rebuttal, is the one who *overestimated* how temporary childcare costs are. Maybe it’s because he does not have children, but he somehow thinks that you don’t have to pay for childcare after a kid turns five years old, forgetting that children leave school at 3 PM, have numerous school days off, and are off the entire summer. Most places don’t have free aftercare for kids or free summer camps.
Completely different scale of expense. My two year old in Boston essentially costs $20-25k annually at minimum for full time center-based care (certain home daycare options might be cheaper by a bit); my seven year old in the public schools could have after school every day plus a full summer's schedule in the cheapest of his summer camps (as in, this is not some theoretical bare bones, it's something he actually goes to and likes) for a total of about $7,000, and in reality when you factor in times he's with parents or grandparents the total is under $5k.
Of course, these huge costs are front loaded in life, like trying to buy a house and paying off student debt. 40 and up are doing fine, but America is making it too hard for the young!
Strong communities are mostly a function of homemakers, who have traditionally been the primary community organizers, volunteers, kinkeepers, and socializers.
That's why fewer people know their neighbors now than in the 1980s: there are fewer neighbors around because they're all working.
I do have some hope that remote working from home could partially reverse that. If you're in your home office and you see your neighbor out walking his dog at 10am, you might think about him more, and maybe even text him right then to schedule a playdate with each others' kids.
We need to bite the bullet and heavily regulate consumer technology use, like they are starting to do in places like China and Australia. Obviously, Australia is the better example here, since they are restricting technology use in a nonpartisan way.
I wish we didn't have to do that. I prefer the non-coercive, libertarian solutions whenever possible. But we have to look at our track record and admit when something isn't working. Society has been looking for a libertarian solution to digital atomization for 20 years.
Society failed. Time to move on and take more drastic measures. How much more atomization and ennui can society take before everything falls apart?
When I talked about following China's example, I meant that maybe we should follow their example directionally, not EXACTLY. IOW, “maybe we should abandon our relatively laissez-faire attitude towards government regulation of consumer technology use.”
When it comes down to the nitty gritty details, China is almost certainly regulating consumer technology use in an imperfect way. In fact, their method of regulation might actually be CONTRIBUTING to the vibecession, not mitigating it.
After all, Chinese regulation is centered around protecting the ideology and rule of the CCP. That's a severely limiting factor, even if they have a tertiary goal to combat their vibecession.
Protecting the ideology and rule of the CCP IS combating the vibecession. The legitimacy of the CCP comes from the fast economic growth since Deng Xiaoping's reforms. What else can it come from? Even the CCP doesn't defend the horror show that was the Great Leap Forward or the Cultural Revolution.
The CCP likely has different ideas then us about its legitimacy. It likely has different ideas than us about how to preserve its rule.
Nor must it necessarily be wrong to have different ideas. Based on his track record, I don't trust that Xi has very CORRECT ideas about these things. But it is perfectly correct to have China-specific answers to the Chinese vibecession.
For starters, we have a lot of hard evidence that, under conditions of increasing or decreasing prosperity, the Chinese people are willing to submit to brute force and except CCP rule. Not ANY amount of force, and not indefinitely. But evidently, relying on brute force is more of an option for the CCP than it is for our own ruling elite.
That's one of many ways that the sociopolitical situation is different in China. This is going to change the appropriateness of various Chinese responses to their vibecession, whether actual or potential.
PS. Since Xi's official ideology is that Mao's policies were "70 percent right," and considering the fact that the CCP still sponsors statuary and celebrations in honor of Marx, it seems that they ARE willing to defend the legacy of Communism, if only tepidly.
People continually mistake economic metrics (the map) for life itself (the territory). The metrics alone show that I can afford unlimited flat screen TVs and avocado toast, but that doesn't make up for other things that may be less affordable. The economy is not that flexible, and life is not that flexible. The economy is defined as the flow of goods, services and currency. The actual pattern of that flow matters. Economic capital is not the only kind of capital. People need to get comfortable with thinking more directly in terms of value creation and micro economic patterns. Not this super wonky spreadsheet mentality, which has severe limitations.
If someone has diabetes we don't say "their metabolism is fine because they are in a positive energy balance" - When diabetes can literally cause tissues to be starved and die, despite the body having enough 'energy'. There are qualitative factors towards how goods and services are distributed in the biological realm, and in the social realm.
Balance sheet and consumer wealth is not enough to deliver a good life! Poverty is not necessarily the lack of wealth but a pattern of social and economic dysfunction - that's what we're dealing with at a larger scale.
You can't just give poor people massive cash payments and expect their communities to abruptly heal and become functional - and the same principle applies to other classes of society. This issue is in severe need of some common sense analysis.
Or we've effectively blocked off the traditional markers of "being on the right path", e.g. stable housing and employment, and it turns out those were serving as prerequisites to starting a family. Men's earnings still go way up once they have a family to support, but we've removed the bottom rungs of the ladder and many people are just opting out of climbing altogether.
I think I figured out something which explains it: if you disaggregate you find that what happened is that the medians/averages conceal massively uneven statistics.
Redistribution by the Democrats such that things got better for classes that benefitted from government spending (mainly those in NGO world, climate companies, government employees, teachers, small businesses eligible for grants which were disproportionately women/minorities, etc) and worse for everyone else. I suspect this was a big driver. Inflation was effectively a universal tax which was then redistributed by Democrat rescue packages to their constituencies. Which they in effect said: that they were targeting help at the vulnerable who were, for the most part, by historical disadvantage (ie, Democratic priorities) rather than needs based. They explicitly said they saw it as a way to reduce disparities. It doesn't help they got very indulgent with targeted giveaways even to their rich constituents (SALT, student debt).
This naturally upset everyone not on the receiving end of such largesse who saw real loss of purchasing power. The Democrats basically gave themselves credit for aggregate statistics and thought they could ignore the people who were losing from their policies because they were politically disfavored. This seems to be a common malady in their decision making which Bill Clinton and Obama have both commented on.
We're seeing a similar thing with Trump's policies right now, by the way. Different specifics but still.
Do you have any evidence for this? It looks to me like the story is the same for white people as for the population in general. For men with no college degree, income dropped throughout the 2000s, then started increasing again after 2012, which is the opposite of what your story would predict.
These are admittedly both just the first graph I could find on Google image search, not super confident in them.
But I also don't think your theory makes sense on its own terms. If the Democrats are funneling money from Group A to Group B, then either Group A is bigger, or Group B is bigger. If Group A was bigger, then this would look like falling median wages (instead of rising). If Group B was bigger, then this would look like better vibes (since this large group of people is now happy). I don't think mere redistribution can give you good economic statistics + bad vibes, unless you're redistributing from people with good media access to people with bad media access, which hardly sounds like the sort of thing the Democrats would do.
> It looks to me like the story is the same for white people as for the population in general. For men with no college degree, income dropped throughout the 2000s, then started increasing again after 2012, which is the opposite of what your story would predict.
That isn't what my argument would predict. You are making this into a broad racial argument when it's about what sector of the economy you participate in and where you live. A Black woman who works at a mid-sized business in Alabama is in the losers category. But you are reproducing the issue with Blue thinking that lead to the error in the first place. In fact my argument leads to an explanation for race depolarization as the effectively economic class based nature (which does not mean income but how you related to the economy) gave a common class interest to many groups.
> If the Democrats are funneling money from Group A to Group B, then either Group A is bigger, or Group B is bigger. If Group A was bigger, then this would look like falling median wages (instead of rising).
Median and average wages stagnated or declined slightly under Biden. Links to graphs below. My contention is that this concealed significant changes in who was where because inflation was a universal tax and then spending unevenly supported everyone. This is, if you take a less rosy view of it, what the Biden administration said they intended to do with rhetoric about racial equality or fighting inequality. To change the composition of wealth in the country. You may support that but naturally the losers of that process would be upset.
I suspect because your chart is a subset of workers rather than all workers or all people/households. The Democrats under the Biden administration did this a lot. During the pandemic, for example, I remember they released a stat showing basically real wages were up by limiting it to the durable goods sector which was then experiencing a boom. In your case, that chart still shows relatively flat growth during the Biden years. But also it excludes:
Government workers
Farm and rural workers (perhaps important to understand Trump?)
Self-employed people, contractors, and many small business owners
Private household employers
Retired and fixed income people
And potentially others but definitely those.
This is approximately a third of the workforce and an additional over 20% of the population that is retired etc and so not in the workforce. So in fact a slight majority or close to it.
(I will note, in the interest of completeness, that my theory does not predict "included in your graph/not included" as the relevant division.)
Real wages went up during the pandemic because pandemics cause labor shortages and because people who don't show up to work drop out of the labor force unless paid more to take on the risk. Additionally laptop jobs tend to be higher productivity and were less disrupted than low productivity stuff like restaurants. Compositional effects. I suspect that's why your chart shows it going down as well.
Scott the x axis on your graph says '$ per hour*Thous of persons' and the title 'Average hourly earnings of All employees'. I admit it is badly phrased and I'm not sure what they are averaging over (maybe day of the week or whether on overtime) but I think that number is scaled by the number of workers currently in employmnet, whereas Erusians is not. Assuming the number of people in employment plummeted in 2020 and this disproportionately fell on those with low hourly income that would explain both graphs.
This supports Erusian if what we care about is the income of the average person in employment, but your picture is more accurate if what we care about is the average person who would be in employment if they hadn't just been laid off.
Median real wages rose at a healthy clip under Biden. What's confusing you is a compositional effect from the mass job loss during the pandemic. A bunch of lower wage earners lost their jobs in 2020 in a sudden shock to the economy. This artificially rose the average median wage since far more lower earners were unemployed than high earners. As they were able to return to the workforce once vaccines became available, they pulled down the average. But that's all illusionary if you're just interested in what kinds of wages people are earning in equivalent jobs. If you care about that, you need to mentally discount that compositional spike. And if you do so, you can see a fairly rapid wage climb up roughly in line with the pre-pandemic trend of the post-Great Recession wage improvement.
I specifically called out compositional effects. So this is not actually a good counterargument because people did not return to the same mix of jobs pre and post-pandemic and payscales changed unevenly.
> If Group A was bigger, then this would look like falling median wages (instead of rising).
Devil's advocacy (in the sense that I don't agree with Erusian at the object level or think this is what's happening in his example; I do stand by everything I say below in the abstract):
You're thinking of a situation where the groups are stratified by the same measure that you're using to calculate the median. For example, your argument can rebut that idea that median economic stats were improved by making the rich better off while the middle class become worse off.
If the groups are intermixed under the measure, you can raise the median while making everyone in more than half the population worse off, by concentrating the losses in the upper end of Group A and/or concentrating the gains in the lower end of Group B. This is possible because improving the median just means that the number of people in Group B who move from below the median to above the median must exceed the number of people in Group A who move from above the median to below the median (assuming everyone in Group A is harmed and everyone in Group B is helped), but there's no particular limit to the number of people who stay on the same side of the median who are harmed or helped.
Trivial example of concept:
Suppose Austin is 51% men and has a population of 1 million.
Take $1000 from every man in Austin except Elon Musk, from whom you take $50 billion.
Give approximately $101,000 to every woman in Austin.
This will raise the median wealth of Austin under most pre-existing wealth distributions, although 51% will be worse off.
And this could obviously be adjusted to still work if men were 70% of the population, or 99% (because this example is so extreme).
The only way to raise the median by improving things for one group while everyone else is worse off is some combination of: (1) the improved group is more than half the population or (2) a portion of the improved group was previously below the median and is now above the median.
These don't seem particularly plausible for the groups you identified.
In other words, you can raise the median nominal income while everyone is worse off because real income declines for everyone. You could also raise the median nominal income while everyone is worse off because their bodies are infected with parasitic worms.
Look, I meant to be stating a general fact about medians, like:
"The only way to raise the median of a given quantity by increasing that quantity for one group while decreasing that quantity for everyone else..."
There is no reason, even without context, to believe I was stating something insane like, "There is no way to raise the median of any economic statistic while everyone is holistically worse off."
I never mentioned nominal income at all. That is entirely your straw man.
Don't nitpick based on unnatural interpretations of comments. Nobody likes that.
This is mathematically true. However, it's also irrelevant, as real wages did not improve but actually declined slightly. And I'm contending within that the composition of where people were along the rank ordering (which medians create) changed significantly through redistribution. Which logically you must accept if you accept Biden's programs worked to accomplish their stated goals.
Your first chart in your other comment shows what happened to real wages: They spiked during COVID, fell sharply, continued to fall for a couple years, started rising again, and as of the end of your chart in early 2024 are slightly higher than they were before COVID. They have continued to rise. Real wages are below where they would be if you extrapolate linearly without COVID, but they are still higher than pre-COVID.
> Which logically you must accept if you accept Biden's programs worked to accomplish their stated goals.
My baseline assumption is that programs like that don't have big effects and more generally that presidents have less of an effect on the economy than people think. In principle, it ought to be easier for a president to have a negative effect on the economy than a positive effect, since there is a wider gamut of bad things to do than good things, but I violated my own assumption by assuming the tariffs would be a bigger detriment than they have been so far, so I'm not really inclined to assume that Biden had big effects either.
I agree that the rank order is basically a zero-sum game. However, as such, when people talk about increasing the median of something, they aren't talking about increasing the rank order as such.
----
Personally, I believe that the main cause of the vibecession is housing costs, which are mostly caused by poor state and local government policies rather than federal policies. Secondary causes include things like social media (e.g., driving unrealistic expectations), and higher service costs as bottom quintile incomes increase (e.g., people complaining that they can't afford DoorDash). But these are just my guesses about the most important factors, not strongly-held beliefs.
Another chart shows them declining slightly. But fair point that I overstated. At any rate, I'll accept "roughly stagnated." Whether they grew slightly or declined slightly so long as they roughly stayed the same that's sufficient.
My baseline prediction is doubling the Federal budget in giveaways has macroeconomic effects. It may not have been good policy but the people who were given the money received the money and thus changed their income level. I agree that median is zero sum and this is my point: if the median stayed roughly the same and one group was given huge giveaways then in order for the median to stay the same other people have to decline.
I agree that housing costs drive all kinds of economic issues and people would have been happier with lower costs. However, I think this started prepandemic and so you can't explain the change by it. Permanent increase in service jobs pay, meanwhile, should have had effects we don't see. As to social media, I haven't looked into it but I'm default suspicious of blaming new media for social ills when we're in the grip of a panic about it. I acknowledge that's not a fully good reason but "you have it good, Instagram just makes you envious" strikes me as dismissive at best.
Normal evidence but to a higher standard such that it would not have given a false positive to a reasonable expert in the height of another moral panic. And while the boy who cried wolf doesn't remain silent a significant majority of the cries are false such that any individual call is likely false.
The redistributionist effects of the pandemic recovery economy were primarily shifted towards entry and service level workers who received substantial pay raises as a result of an extremely tight labor market. Unless you think McDonald's and your local grocery store is an NGO, this hypothesis is extremely not correct.
This was the Biden administration talking point. It was not, however, true. What the Biden admin claimed a few times is that by 2022-3 certain groups of bottom quartile workers had real higher wage growth than pre-pandemic trends (about double what the top quartile got). They were quite proud of the fact they avoided a recovery where the rich got an equal or greater share. This is evidence for my hypothesis.
The peak of inflation around 2022 saw real wage growth in the lowest earner cohorts with real wage decline among higher earners as inflation outpaced wage increases. Over time, what happened is that real wage gain gradually shifted up the earning curve until by 2024 there were broad real wage gains across the majority of the employed. People caught up and passed inflation, in other words. The redistributionist effects of this still were concentrated among lower earners because the tight labor market benefitted them most as you would expect based on the labor supply shock COVID caused. This is a story that exists in the economic data regardless of how you feel about political actors trying to make sense of it in a way that is favorable to them.
You might not like it if the more egalitarian party considers it a good thing that the economic recovery reduced income inequality and tries to boast about this, but it's neither here nor there to your false assertion that wage gains just redistributed to special interest groups like NGO's and weren't broadly felt in the economy.
One wrinkle to consider with using median household income measurements is that the formation and composition of households also changes over time in ways that are not straightforward to correct for (aging, changes in share of couples having children, timing of childbirth). I don't know that this would change the picture substantively, but I've also not seen analysis that really looks at it (if others have please share).
Imagine having to get up at 4 am every morning, drive an hour to work, and then run a meat shop singlehandedly--dealing with customers, slicing cuts of meat, dealing with all the behind the scenes stuff like rent and suppliers. You get home at 7 or 8 pm every night. You only rarely get to see your kids. You have a small house in a not-great neighborhood.
Your wife has to deal with five kids singlehandedly. Money is tight. Meat is a luxury. Your husband beats you on occasion, and no one cares.
That was the reality for my grandparents. Yes, my grandfather owned the business, but it was a really hard life by modern standards. Obviously living standards were rising rapidly which is not the case today, but none of the people complaining about how hard things are now would trade places to take on that life.
Bear in mind this was in the Midwest. I assume my grandparents wanted to live in the Catholic working class neighborhood in the city but the business opportunity happened to be in the suburbs. It does seem odd but my father also chose a long commute so who knows?
You are definitely taking an extreme "paint a rosy picture" view here. My grandfather rarely saw his kids. He never made it to a single baseball game or activity. I have worked enough customer service jobs to know how utterly draining they are, and I've known enough people who owned their own business to know how brutal that can be. My grandfather was a member of a church (which played a big part in his life; kids went to Catholic school, etc), but he definitely didn't have the time or money for the Elks club or volunteering.
Churches at that time definitely played a much bigger role in day to day life--there were certain opinions you simply couldn't have and things you couldn't do as a Catholic. As far as I can tell, the male-female dynamic was extremely different and each sex lived in very different worlds. The social changes of the Sixties were a big jolt for my family and caused at least one close family member to be disowned by my grandparents.
> and I've known enough people who owned their own business to know how brutal that can be.
Brutally difficult, sure, but the causal relationship between effort and results is unambiguous. When there's a conflict with a supplier or the health inspector, real object-level technical problems are involved, rather than drowning in new forms of synthetic misery invented by a soulless algorithm purely to extract value. You're cleaning the tools so they won't rust, sterilizing surfaces because rotten meat won't sell (or can make someone sick in ways that might later become your problem), not just killing time because the boss expects you to always look busy.
Fair enough. The thing is, there is nothing stopping most people from living a lifestyle just like Calvin's grandfather. You can totally get a job running a small business in a very rural area with all those things you describe. There is a butcher in a village near me who asks me, every time I see him, whether I have any interest in taking over his business when he retires. He hasn't shown me his books (although I'm sure he would if I asked), but he clearly makes well over $100,000/year. I have no relevant experience, so I'm sure if he asks me he is asking lots of other people. Nobody has taken him up on it (except the Amish, but he doesn't like them and doesn't want to sell to them).
Would young people today be happier if they chose that lifestyle? Very possible. But they don't want to, even if they can.
I think you're in violent agreement with Scott (though not with all of the commenters) that most Americans today are better off economically than they would have been in earlier times that they associate with better vibes.
I do want to better understand whether it's in fact the case that economic vibes depend more on the first derivative of income than on income itself (which would explain why the vibes were better in the 1950s, causing people today to overestimate how rich they were back then), and if so, why that should be. Hedonic treadmill, maybe?
Weird how unemployment in white men dropped heavily in that same time period, perhaps because there are other companies. (Also I only see any statistic remotely like that for 2021 specifically.)
"Fortune 500 companies have hired only 6% white males since 2020."
No they didn't. This is a lie. (You'd have to be extremely gullible to believe this. So frankly, I suspect you don't actually believe this, and are just lying to advance your politic agenda.)
It's probably easier to think of yourself as lucky and rich if you own a refrigerator and a TV at a time when 30 years prior even the richest people couldn't afford that, or (as in the case of my father and his generation who came of age in the sixties and seventies) when you are the first in your family to have a college education and an office job.
I suspect your typical vibecession posterchild would have a nervous breakdown if they had to live in a really nice big house with nothing but dial up internet and a Compaq Presario.
One other things I think should be considered when about 1950s, is that while middle class people is middle class in America, they're top class of THE WORLD. It's not just they're up, the others are down. I guess if we modify lots of these graphics but also compare it to the rest of the world, lots of those vibes will manifest and take shape.
That sounds pretty good to me: to own a house & be my own boss, I'd put up with the hours. Not sure much in that scenario is unique to the Before-Time—customer service still sucks, long hours are still usually necessary to make it, etc.—except perhaps for the reward.
E.g., I worked from 66 to 80 hours a week, in my old job, and it was great because I was the boss & made a lot of money—long hours are no hardship, in such a case!
Wish I had it back... (Wish a lot of things, really. But—no point in so doing, I s'pose; what's that old saying about shitting in one's hand?–)
It sounds like the scenario I mapped out is still possible then!
Bear in mind, my grandfather did not make much money. He could afford a small house, a car, and that's about it. Vacations were to a state park about 45 minutes from home and he didn't even take time off for them.
True—*that* part actually does kinda suck, by comparison. Lot of effort for maybe (much) less return... (and the fact that I *don't* own a small house of me own is due to my own stupid mistakes, far more than to any "The Times, They Real Bad" factor, heh).
I'm a little suspicious of the "paint a rosy picture" response because it's always given by people who didn't live through that time.
My grandparents lived through the 1950s and/or the first half of the 20th century, and they universally considered it the best time of their lives, *especially* the women.
My grandmother grew in Houston in the 1950s. As a teenager, she went to country dances every weekend, had a strong community at church, and married my grandfather in her early 20s, who supported her for the rest of her life. She wasn't jobless however-- she got a university education and worked a white-collar job for most of her life. One thing she says to me often, "Oh [Collisteru], life was great growin' up... I wish I could go back."
There are hardships in every age, but the good life people envision in early 20th century America DID exist.
Sure, some people rolled the dice well. The question is what were the odds, and how often you had to re-roll.
My grandma lost her father (much more common than today, medicine being what it was), got taken in by the nuns while my grandma was working, absolutely hated every second of it and became a lifelong church-hater, then became a nurse. Fortunately for her she was very beautiful and had many men courting her. She chose my granpa, a well-connected, well-paid office manager with his hand in about everything that mattered in their small town. For a while, she enjoyed long vacations, a big house, having a maid and a nanny and whatnot. Meanwhile her mother died, and her sister cheated her out of the inheritance (going to court over it was not an option, that's a part of the "family values" and "old time decency" we tend to forget). Then my granpa died (again, medicine being what it was), and she had to go back to nursing, except that she wasn't as young, doctors felt a bit embarrased ogling her now, she had not kept up with the certs or the state of the art (would have been improper for a lady), so now it was mostly changing catheters and feeding dying men. She would wake up every day before dawn and ride her bike in the cold to the house of some dying man whose family might or might try to stiff her on the money, make sexual advances on her, squeeze every ounce of work they could get from her, and whatnot. Then after my aunt finally got out of the house, she could finally stop as the life insurance payout she was getting was enough for the modest life she is living to this day (she's also getting SS now fortunately).
How do you evaluate such a life? It started bad, it went well as long as it went well, but the good part was a lot more precarious than it would be today, as it turned out. I consider her a very resourceful and practical woman, but a bit more girlbossism and some fewer scruples about propriety would have greatly helped. The supposed thigh-knit community everyone talks about, and which she very much was a part of, was not there when it mattered. The supposed decency of times begone did not stop plenty of obscene attempts on the part of the good townfolks, both when she was a maiden and when she was a widow. Yes, it's good to have it good, in every age, but maybe we should consider what happens when you have a bad roll.
The answer may be in your second paragraph. Are people out in the real world really saying these things, or is it just people (bots?) on Reddit and in the media? People love to complain on the internet while people who are doing fine sit the conversation out. I think we may just be seeing the complainers.
Im not convinced these are sufficiently different categories either
Who are these non-online consumers being spoken of?
Im not denying that people who are offline have probably had better vibes for a decade plus, but this is not some silent majority, its a few confusing holdouts that ought to be studied
I know a bunch of people in the real world saying things like "I now spend twice as much each week as I did before the pandemic, but my income has not increased at all"; things like "you can see what the house prices are; I will never be able to buy a house at anything like the age you did; I'll be forced to rent - that is, pay off someone else's mortgage - for at least a few decades"; things like "we can't afford to have one of us stay home, but the childcare cost eats most of the second person's salary, so it doesn't actually put us that far ahead"...
If someone were to tell them the problem is all vibes in their head and really they're better off than I was when I was their age, I would... not expect the response to be positive. Also, I am aware of roughly what they earn and where they shop, and house prices in the area are public knowledge; they do not appear to be lying.
I do not know how statistically representative the people I know IRL are, but if all you want is an existence proof, I absolutely can confirm that not only people out in the real world really saying these things, but also they are not demonstably wrong about their own experience.
Yes, I am in a city. You absolutely can buy property less than 1000 sq ft in size (the cheapest in the area right now is a 498 sq ft "studio flat").
The trend here, though, has been to take larger properties, split them into smaller apartments or individual rooms in HMOs, then rent them out. So almost the entire rental market is now properties of that nature.
You're nitpicking terms, but the people I'm talking about would be happy with a flat. My own first property was a two-bedroom flat, and I can confirm that no such flats are now available to buy here for anything like the graduate salary multiple I got it for back in the day. We're far from "oh, why must the poors complain so, don't they know how good they have it?" territory when discussing people shut out of the property market entirely.
I live in one of the most expensive counties in the US. Day-before-yesterday I was driving in a beautiful double wide mobile home community and saw two homes for sale. One was for $250k, the other (with a new “chef-inspired” kitchen) for $350k. Both had a site fee of about $1k per month.
I understand home prices in SoCal are getting outrageous. But there still seems to be reasonable options. Or do manufactured houses no longer count? If so, why?
Mine is a small city, but does have two trailer parks. Neither have property available for sale, or (quick check) have had in the last year. I guess it's maybe possible if one waits long enough eventually? I honestly hadn't needed to consider that option when I was buying my first flat after I graduated, so if that's what it takes to get something of your own now, that feels like a change.
The local council proudly announced a new community of little manufactured bedsits - not trailers, more like chalets - to help relieve housing pressure at the cheap end of the market a couple of years back. I actually don't know what happened to these, but it was around two dozen units in total so I'm sure that helped the folk who got lucky but the impact on the overall market would have been imperceptible otherwise.
I wonder if some of the problem is information overload. The economic data doesn't track what one particular person is buying, they a huge "basket" of goods from all over the country, and whatever basket they use is constantly changing. It also constantly adjusts its value for "hedonic regression" in some complex formula.
The average person just doesn't have the time to sift through every single consumer item for sale and find the best deals. They don't have the time to appreciate all the complexities of new electronics. They just want to keep buying the same stuff that they've been buying their whole life, for the same price. But that's not possible- you have to perform a complicated search and study process all the time to learn about new products and prices. Heaven help you if you fall for a scam like "extended warranty" or "10 year car loan." And you can't just "move somewhere cheaper" because moving is really difficult, and you have no idea whether the cheaper area is actually a good deal or cheaper for a good reason that makes it horrible to live there.
I'm in a high cost of living area; I don't know anyone in my age bracket who is marrying or buying a house, or planning to, or even talking like such a thing is possibly in the cards for them. I'm not surprised there are places where the norms are nicer, though. There are too many people around to generalize entirely.
Hopefully, that's what the statistics are for. I can't say for sure which of our anecdotes more faithfully represents the average young American, but we've got the Official Measure of Vibes to disambiguate, and (per Scott) it doesn't look great.
Ah yes, the avocado toast argument. You nailed it, the millenials would be able to buy houses (that are 20x their income) as easily as the boomers (who bought houses 3x their income) if they just laid off the avocado toast. Good analysis.
Huge differences regionally. People tend to forget that the USA is _massive_ and, for all intents and purposes, like twenty (or however many) different "countries". Being surprised that things are different in Idaho and NY is like being surprised things are different in France and Bulgaria.
This could be seen as a slightly more expansive version of the "Brooklyn Theory of Everything" - the Coastal Metropolitan Areas Theory of Everything? It might be true, but I keep hearing that the economic situation in Idaho-type parts of the US is *worse*, not better.
A key part of the "Brooklyn Theory" is that the media industry really is a total nightmare of endless layoffs, unpaid internships, city newspapers shutting down etc as Google et al. eat all the advertising revenue. They have been in an awful recession for decades and since they have the megaphones, they can spread their misery to everyone else.
Yeah, came into the comments to point this out. It's not just that the media is concentrated in an unusually expensive city; it's a deeply wounded, struggling industry concentrated in an unusually expensive city.
Thinking about it a little more, there are two separate issues, why do Zoomers/Millennials think they are doomed (longstanding issue, likely caused by what we are talking about) and why did consumer sentiment specifically tank in 2023-2024 (still partly this I think, partly people still being mad about high prices even after inflation shrank). At least that's how I see it.
Agree, after seeing how much media opinions on big tech changed overnight in 2016 I learned how much the opinions of journalists in NYC really changes the zeitgeist of discussion. The journalism industry is so miserable with people still looking to get college degrees in a field that pays terribly. Even the alternative media economy is primarily driven by wretched journalism majors.
A - Jake, who's active on social media, keeps seeing posts of rooftop bars, gallery openings, and interesting people living their best lives in NYC
B - Jake decides he needs to move to NYC. It just looks like the place to be.
C - Jake moves to NYC. His apartment is tiny, rent eats most of his paycheck, and the subway is a nightmare. He vents about it on social media, but his posts still feature skyline views, trendy coffee shops, and nights out in brooklyn.
D - Meanwhile, Sarah back in Ohio sees Jake's posts and thinks, "wow, I need to move to New York..."
Back in my day we didn't all want to move to New York City because of social media. We all wanted to move to New York City because of Sex and the City, and Friends, and Seinfeld.
But why were those shows in particular so influential? It's not like they were the only popular TV shows of the time. But they seem to be the only ones that influenced a generation to try to live that lifestyle. Nobody watched the Simpsons and thought: "I want to move to a generic suburb." Nobody watched That 70s Show and thought: "I want to move to a small town Wisconsin." Nobody watched Gilmore Girls and thought: "I want to move to a rustic small town in New England." Nobody watched the Drew Carey Show and thought: "I want to move to Cleveland."
For some reason there's something about living in NYC that really, really resonated with a lot of young Americans, and I don't think it's just because they showed it in a few TV shows.
Yes. Similarly, LLMs seem most ready to take the jobs (or at least undermine the already precarious living) of professional writers and maybe even content creators. And like you said they're the ones with the megaphone.
I know 2021 predates that, but it made it worse, anyways.
(That's a random web version, but there's a similar chart in the book "The Rise and Fall of American Growth"; that book blames TV.)
Although newspapers per household have decreased following a consistent linear trend since 1950, that trend would have *felt* much worse for journalists in the 2010-2020 period, when the *relative* decrease was almost 50%.
There was a decline in circulation, sure, almost certainly related to TV. And there was a related decline in the number of newspapers (evening newspapers, competing with evening newscasts, were especially hard-hit). And newspaper columnists would perennially wring their hands a bit about both trends.
But newspapers as a whole industry were doing just fine in the 1950 to 2000 time period; inflation-adjusted newspaper advertising revenue *trebled* despite the decline in circulation.
And then, between 2000 and 2012, US newspaper advertising revenue suddenly collapsed all the way back to 1950 levels. Internet advertising did what television couldn't -- it devastated the actual business newspapers were in.
There's no question that economic sentiment is poor. It's recently been about as poor as we've measured, including during the worst financial catastrophe since the Great Depression. The question is why that is the case when macroeconomic indicators are consistent more with what we see in relatively good circumstances that have historically predicted much better sentiment than we were measuring.
Part of this not mentioned in the article right off the top is that conservatives have become much more apt to answer whatever they think makes the Republican position look better in surveys* and this shows up in the economic survey data the same as it does in all manner of polling. There are a few theories for why that behavior has intensified more recently, but you can be agnostic about why that's happening and just accept that it is. But even if you correct for this partisan effect where intensely negative GOP sentiment pulled the numbers down, there is still a quite substantial gap in want of explanation.
*Democrats do the same thing in reverse, but the partisan effect is much more pronounced on the Republican side, often roughly twice as large where there are opportunities to measure a flip flop.
Based on your "Brooklyn theory of everything" analysis, this feels like a real life symptom of Peter Turchin's Elites overproduction hypothesis.
Also, this article from Oren Cass's substack feels like it's orbiting the same topic: https://www.commonplace.org/p/john-ehrett-young-men-refuse-to-fight. I like their theory---the vibes are bad because life feels more *random*, that there's less of a playbook on how hard work pays off. I will note that their analysis is crude and overly generalized.
when the above surveys measure household wealth, does that include adult children living with parents? my perception among my zoomer-millenial cusp cohort is that more people our age were living with our parents and for longer times than in the past, despite having jobs and so on. is this effect captured somewhere above?
From what I can tell, the main source is the Federal Reserve's Survey of Consumer Finances. It's not that clear whether they would count the wealth of an working adult child living at home toward the net worth of their parents. It might for some people, not for others. Appears to hinge on whether the child is "financially interdependent" with the parents. If they have their own bank accounts, auto loan, things like that, they may count as a separate person. Hard to tell without looking further.
In any case, while children do live at home more than they used to, I don't think this effect is large enough to drive the graph very far in either direction. Probably a modest effect.
I think she's saying the opposite: young people who would've counterfactually lived on their own and driven household income down (by virtue of being young and early career) instead share households with their parents driving household income up by composition, but feel worse in an abstract sense than if they were able to live on their own. I guess if instead of household incomes we looked at normalized household income (income/number of people in house ratio) this would show a downward trend.
Again, I have no data here and no idea how big this effect is.
This also feels related to the material from Warren's "Two Income Trap" book about the security derived from a non-wage-earning adult in the household who could probably get a job in a pinch to help make ends meet. If incomes are up in part because there are on average more wage earners per household in the same size household, that sense of security, of having wiggle room of a back up plan, would be down.
This would be compounded by the general opaqueness of many middle income job searches, if people are less confident they or their household members could get a new job quickly in a crisis.
Maybe it's all part of the difference between things feeling less good and things feeling less secure, as other commenters have said. A higher bank balance necessary to feel even kind of OK.
Similarly, a lot of (perhaps most of?) the gains in household income for decades have been from more women entering the workforce, meaning double-income households, not from individual wages rising.
But that's been happening for decades. I doubt it has accelerated over just the past few years.
Even the "tipping point" at which more women work than want to work, meaning the trend is now leading to unhappiness, happened years ago. So I don't think that can be a major cause of the recent vibecession as defined.
Maybe the trend of young adults having a job but living at home with their parents accelerated over the past few years? Did the rental market really get that much worse compared to the entry-level living wage market?
It's interesting to compare it to Europe as the control group. Unlike the US, whose economy muddled through just fine during the last decade, we are currently experiencing a massive economic decline that could soon turn into a full-blown collapse. And yet, outside of debates about immigration or foreign policy especially regarding Ukraine you don't really hear the same level of rancour about 'things being bad' in the local media.
Can't say for the rest of Europe, but the vibes are *terrible* in Finland (as is the status of the real economy, even in comparison to the rest of Europe), and have been for quite a while.
Is Europe struggling with populism, or are European populations struggling against governments that don't have their best interests in mind?
When I see complaints against populism from people who I assume generally favor representative government over some flavor of unfreedom, whether it's communism or a dictatorship or Socialism or whatever, I'm always puzzled. If not the population, who exactly do you think the government is supposed to work for?
I am an Italian currently living in the US. My main guesses would be:
* Right-wing parties control a supermajority of TV and print media. They have also been in the govt most of the time, which means they control the state TV and have an interest in presenting things as rosey. The much older population makes the internet less relevant for public sentiment. Even in the few years where they were at the opposition, they mostly focused on immigration and crime to rile up popular sentiment, I guess because the population is older, their voters even moreso, so they care more about that than about the economy
* The absolutely massive and unsustainable intergenerational transfers keep everyone somehow sedated. Maybe your wage is terrible, especially after taxes, maybe you're unemployed and it's hard to find a job, but grandma will be happy to help out her only grandchild. Most don't realize they're just getting their money back. This is bound to collapse soon but see the point above, the media really don't want you to think about it.
* It's a lot easier to feel like you're providing opportunities for your kids. The stereotypical rich-kid private uni is, even as a proportion of median income, still *a lot* cheaper than an Ivy and probably even an unremarkable liberal arts school. Unless you want to study business or law, there just aren't private unis (there is one for medicine but it's universally considered bad). Public uni is cheap and usually open access. If there is some kind of selection (eg medicine or architecture), it's a standardized test, so you don't have to worry about optimizing your kid's extracurriculars, you can just have them do what they like or what is important to you. You don't have to worry about living in a good school district because anyone can enroll in any public HS, and with very few exceptions private HSs are worse. If you are more aware about the state of the country than most of your connationals, and want to send your kid to study abroad, any other EU country is bound by treaty to treat them exactly like their own citizens, you just have to make sure they speak decent (not excellent, decent) English. The anxiety Americans have about setting up their kids for success is assuaged, partly because Italians are less ambitious but mostly because it's objectively much easier to do so.
* Related to the above point, but the EU ensures that in the worst countries there is a lot of evaporative cooling. The most ambitious Italians are not doomscrolling about how terrible the tech job market is in Italy, they're learning German or looking for a job in the Netherlands. And when they're there they complain even less than the locals because well, nobody like an ungrateful guest, they don't want to feel they uprooted their life for nothing, it's still much better than Italy, the usual reasons immigrants are much more appreciative than natives everywhere.
The last point obviously does not apply to the richest countries themselves (hence why populism in the Nordics, Germany and the Netherlands looks more like MAGA than the rest of the European right), but the first three do, mutatis mutandis. The second and the third one even moreso, opportunities are as equal as they can realistically be and the safety net really robust. Nobody is afraid they will end up destitute, and opportunities are as equalized as they can realistically be across the bottom 95% (maybe even 99%) of the kids. Once you take away those two sources of anxiety, people tend to be a lot more relaxed.
This is an absolutely fantastic comment. It really paints a picture and offer new insights (to me) on the vibes in Italy. And I love your use of the term “evaporative cooling”.
Relative decline would have been better phrasing, but the relative decline of (most) of Europe and Japan vis a vis US since 2008 is pretty substantial.
The bad economy narrative only becomes a thorny issue when so-called "right wing" parties are in power. Because the people in the media are moderate-left agitators who want to use their work as a vehicle for their politics.
To add to the "Brooklyn Theory of Everything" - is it likely that social media algorithms are biased in favor of SF/DC/NYC in some overt or subtle ways that bolster this problem?
Of course the social media algorithms are biased in favor of SF/DC/NYC, but so is over-the-air television (though in the opposite order among the 3). The hollowing of local media makes this worse, but that also seems like a matter of decades rather than recent changes. Is there any reason to think that the bias has suddenly gotten more intense?
I'm not sure what this would mean. I doubt it's actually hand-coded to boost things from those cities more, and I don't know what emergent dynamics would make this happen.
I think this post from Slow Boring (also published this morning) has some relevant information in it https://www.slowboring.com/p/you-can-afford-a-tradlife. It doesn't explain why the vibes are so far off now compared to 2010, but it explains why people feel things are so bad now compared to the bullseye of the "return to better American times" movements (the 1960s). TL;DR we're not comparing against a consistent baseline and people's memories of "how things were" during "better times" are incorrect.
Yeah, I think this must be a large part of it. Every so often I'll come across some piece of writing from the mid 20th c about what someone considered a luxury (e.g. bus fare or a car to get home from work) and I'm struck by how expectations have changed.
I think it's a form of survivorship bias. The nice, well-built houses from the 1940s are still here, while the cheap ones were bulldozed long ago. I think this happens in memory, too. People recall the best parts of the past and forget about the quotidian, mediocre, and disappointing ones.
Asking if the economic thermometer reads right or if the youth have it with their vibe check, you may be looking at the chasm between the map and the territory.
Job applications stopped being a signal of intent, and became a volume game, a metric to spam. Dashboard says low unemployment, but the job market has become a customer service loop from hell.
If metrics are similarly optimized over reality in the financial plumbing, then its more of a thermostat...
I think I was making a slightly spicier point, but I probably didn't articulated it well. The gap between the map and the territory could be the signal of a deeper, structurally critical system.
In this case, the core issue wouldn't appear on the graphs, as the substrate creating the data has transitioned in phase.
I gestured at this in my initial comment, with how job applications have changed. The employer can't trust resumes, applicants can't trust job postings, and the "price" and the "clearing rate" stop reflecting reality. Textbook market failure.
Similarly, securities used to be a claim on value generation, paid out via dividends. Now, the CEO's bonuses use the ticker price as a metric. The Agent is actively determining what the Principal of the shareholder uses as an indicator, by issuing buybacks. This transforms the security into a claim on price action.
What does this actually mean in a system where liquidity is more important than money or god, where APs and MMs transact with wide exemptions and special rules to maintain this liquidity? Add major shareholders collude with banks to get zero interest loans against collateral, explicitly because this avoids price discovery, and you've got quite the soup going.
The worst case is, the Vibecession is ground truth of the captured, living in an engineered, permanent gap between reported success and negative-sum extraction.
The cost of this transposition is a lack of trust. And if you can't trust the map, you stop using it to navigate the territory.
The "territory" is unknowable. You are looking at the gap between a map made carrying around an altimeter and fixing as many points as possible, to a map collaboratively drawn by millions of people who don't have to use it to navigate, just to like, express the vibe of a place and make a point and show the group that they have the right opinions.
Maybe there is something the former misses, but the latter is scarcely evidence of it.
Also, most people report *their* situation as being good, but the *economy* as being bad. Quite the interesting cartography you have there, where if you try to aggregate different maps, you get a mathematical impossibility!
You can report your state as positive while simultaneously feeling that the effort/cost of maintaining that state, the process, is unsustainable.
BLS shows 5.4% multiple job holders as of late 2024, but that number only captures people with two W-2s or formal arrangements. Sporadic gigs make the reality much higher, and most of these gigs do not yield similar benefits.
April 2019:
"I am doing good/excellent": 56%
"Economy is good/excellent": 50%
= 6 point gap.
April 2024:
"I am doing good/excellent:" 46%
"Economy is good/excellent": 24%
= 22 point gap.
As we see with the "Red Queen's Race", the link between the input/effort and the output/reward has become noisy and unreliable. When people stop trusting that link, they switch to high variance strategies.
With this lack of trust you also get "doom" spending; if you don't trust that your capital will ever grow, you might as well spend that money on now. That makes the economy look good, but it’s actually a result of nihilism, not that the core of tokenized trust is intact.
The RPM of the system remains high. Are the “vibes” a psycho-social artifact, or the sound of the metal screeching?
I'm surprised you didn't address one thing...but I guess it's just a different way of saying "vibes", still I think this connects to a lot of econ discourse and...frankly...I don't have a good solution and it honestly scares me a little:
So, when prices go up really fast, that's "the economy." It's a force external to me, and I'm mad that it's happening, cuz I sure as hell didn't do it.
When *my salary* goes up really fast, that's...just me, obviously, I deserve that. I'm happy it's happening, and I SURE AS HELL caused it.
In short: it's an outrage if eggs cost $10, and that's true even if I make $500,000 a year and made $250,000 the year before. That massive jump in my income was the result of my blood, sweat, and toil. I didn't do the egg thing.
My own read on the vibes of a lot of people my age (esp. who voted for trump) is that they actually expect *the real sticker price of commodities* to go down as the result of...some unspecified economic corrective policy...and if not, well, things will be bad for whoever is in charge, and this will be true no matter how much anyone makes.
Obviously, if you know economics, you know the cost of things going down would be bad, and that your own salary going up is due as much to economic forces as anything, but you can't fix sentiment errors like this by sitting the whole country down and having an economics lesson (indeed, I'd argue biden tried that).
I think that's a real effect, but doesn't explain the recent decline in sentiment. It's always been the case that people overattribute their wages to their own effort, so why didn't that make people mad in the second half of the 20th century, when inflation was way higher than has ever been in the 21st?
People were definitely mad about inflation in the 1970s, it was a massive political issue! And that is the only time in the second half of the 20th century with inflation higher than it has ever been in the 21st (treating the inflation in 1969, 1980, and 1981 as part of the 1970s inflation).
Inflation in 2021 and 2022 was higher than it has been since 1981, so even people who should have remembered how inflation works seem to have forgotten. Forty years is a huge gap.
yeah, the difference here is pretty sharp. I know my "explanation" is kind of basic, it's just "what's different is the inflation happened really fast", but it's the part of the dynamic that Scott didn't address that I think needs to be. I actually agree that the vibes have been "off" for a lot longer than the 2020s, and I think the loss-of-friction and elite overproduction hypothesis are at play there, but smarter people than I can address them. What I haven't seen is the sticker shock which is a big part of the effect, particularly for people like me, who are nominally very comfortable.
I have an acculturated sense of what $50 "ought to be able to buy" and I feel pressed when I spend $50 and get like, half a bag of groceries. That's true no matter how much I actually make, and that's because when my wages go up, that's a personal accomplishment...everything in our society has conditioned us to feel this way...so if my wages double over five years, it FEELS LIKE I should be able to buy twice as much stuff, but I can't, and that's an outrage, and I want someone's head on the block because of it.
I think that's a very strong point there, as far as explaining why the vibecession has been steeper over just the past few years.
Anecdotally, that feeling of outrage is also what living in California feels like. Why is my house so terrible when I make so much money? Everyone is confused and insecure about that. Contrast with Texas, where the vibes are the opposite. #blessed
I agree with everything you said. It just strikes me as hard to pin the whole phenomenon on two years of high inflation. It's been pretty close to its long-run average for the last two years (2.5%). It was well north of 3%, and often much higher, for almost all of the period 1967 - 1992. During the part of that that period we have data for, consumer sentiment (as measured by the statistic at the top of Scott's article) was pretty high, and the dips in correlate pretty well with recessions. This present one does not. '67 - '92 is also a large chunk of the supposed golden years that vibecessioneers pine for.
I guess your theory could be that 3-5% inflation doesn't trigger mass rage, but 6-8% does, but that seems a little contrived. It also fails to explain the phenomenon to the extent that you think it began before 2021 (which I would argue it did, although it's certainly accelerated since then).
I think that inflation is only one of several causes of the vibecession.
I think dissatisfaction with prices now is ironically because the recent inflation was brief and less severe than the 1970s. When that inflation ended, people were just happy to have prices stay the same - having them fall 90% was obviously never in the cards - whereas today people want the prices themselves to return to 2019 price levels, so the return to normal rates of inflation doesn't satisfy them.
I'm not sure why everyone is so convinced that the vibecession started before 2021. The graph of consumer sentiment to me looks like the vibes got way lower and stayed low after 2021. I don't see evidence for bad vibes from 2014-2020, in fact I see the opposite.
You're right that our consumer sentiment graph drops in 2020 and not before. And kvetching about cost of living, loss of opportunity, etc. is always going on at some level. You could argue these things were just garden-variety before 2020 and have only reached unusual levels since 2020.
I had an unusual life trajectory but the vibes have felt off for me since the great recession. I feel like people have been saying "in these uncertain economic times" or "a PERMANENT position? In this economy?" since around that time.
This is going to sound stupid, but I swear it's what I've heard (from Zvi, in particular).
What makes people get mad over inflation isn't the current inflation rate; it's the current price level. Hence, people being mad over inflation increases as inflation continues at the same rate, and then doesn't go back down for years after it ends (because the prices are still high; their idea of "low inflation" is a return to a low price level, which would require deflation).
I think in most cases with an inflation-wage spiral, there was either an obvious external cause for both (eg, war), or most people were close enough to subsistence to materially notice that yeah, I can buy more things. Also, the economy was a lot simpler, most workers were still selling mostly time and exertion rather than skill, so when market wages for the hired hands went up, it was pretty evident that it was not because they had all suddenly gotten better at shoveling coal or moving bricks.
Nowadays the attribution is much more difficult because we earn (and spend) so much more on so many things, and also the labor market is vastly more diversified. If I am working at Walmart and suddenly get a job at a fancy bar with good tips, is it that the service workers' market is tight in general? Or that cocktail bars are doing well bc or some fads (and thus I showed great foresight applying there)? Or that someone finally recognized my genial personality and can-do attitude? Well one might be tempted to pick the last or the second. We all live on Lucas islands now, the islands are multiplying, but unlike in the model, the islanders are not exactly perfect bayesian updaters.
by "cost" there I literally meant the sticker price of a good. Let's say eggs.
The "cost of a good" can go down in relative terms even if its cost stays the same, or increases slightly. If Eggs cost $5 on monday, and $10 on tuesday, that sucks...but what if your pay sextuples between monday and Tuesday. That's better! You'd prefer that situation probably, to one where they both stayed the same.
We had a period of pretty rapid inflation recently and my point is that the sticker price of commodities themselves simply won't be going down. Every economic solution will bring earnings UP so the relative increase of these goods won't matter as much, and in fact most of scott's charts demonstrated that actually happened...things aren't so bad. But what I'm saying is there's a lizardlike part of all our brains that just expects $100,000 to buy [x] lifestyle...so if you make $100,000 and don't have that lifestyle, you feel outraged that the market is off.
We're not lowering the actual cost of most goods anytime soon. It's not like someday we will wake up and the price of "stuff at the supermarket" will be "back to the way it was in 2019." If that were to occur, I submit something *bad*, not *good* would have happened in the economy.
Yes, I understand, but people's pay isn't changing. In aggregate, across the entire nation, maybe (dubious, imo, if it's even close to keeping pace with actual inflation). But one person's pay doesn't suddenly go up 20%, barring changing jobs or a big promotion. Most years, most workers are lucky to get a small 1-3% adjustment.
They eat the full cost of the sticker-price change.
And the sticker price of things falls all the time with nothing bad happening. A decent laptop cost $2000 twenty years ago, now you can get an objectively-better laptop for $500.
There's no reason that can't happen with food, except that the capitalist system will not allow it.
so, like, even if you're right, my point was kind of like that no actual tenable political position is going to return the cost of the stuff at supermarkets to pre-2020 prices. We're not instituting socialism next election cycle, nor are we like, implementing price ceilings or pegging the USD to some commodity like gold. So: whatever your solution is, it's not happening by ordinary politics, and that is what worries me: there is not a coherent, achievable solution to this problem I see, and it's durable, and bipartisan, so this resentment is going to keep getting worse and every party is going to come INTO power on a promise that they can make the vibes better, then got OUT of power being told that the country doesn't need an economics lesson, they need the vibes to be better.
We could implement a higher tax rate on land value and intellectual property, while broadly decriminalizing things like mining, riverine freight, home remodeling, educational excellence, and childhood.
I am *begging* people to learn what "real income" and "median" means.
The graphs in the article make it clear that (1) wages *are* keeping pace with inflation (that's what "real" means) and (2) it's a large portion of the population and not just a few outliers dragging up the average (that's what "median" means, and also there's a graph breaking it out by percentiles if you want to argue that actually it's some particular class that's doing badly).
Also, food as a fraction of a family's income has gone down - that was the basis for that silly "the poverty line is actually 140,000" article that made the rounds a few weeks ago. Their argument was that the poverty line is calculated based on the cost of food and therefore doesn't accurately track the costs of everything else a modern family needs.
My whole point was that you can say "real income is keeping pace with inflation because your salary has increased to a greater degree than inflation has' till your blue in the face but it's not going to change how people actually *feel* about prices. When my salary goes up, that's due to my hard work, blood, sweat, and toil, if i'm making 300,000, I have a mental model (formed circa 2012) of what 300,000 should buy, and when I can't buy that, it feels like someone else's "fault"
I realize this is *deeply* irrational, but I think that's the really awful problem here. Most people ARE irrational. I'm FULLY aware of how much my salary has grown relative to inflation. I've read about it a lot. It STILL feels raw when my salary can't buy what I IMAGINE it OUGHT to buy. I could be a millionaire, and if I had to buy 1 dozen eggs for $7.50, I'd be really, really mad
"There's no reason that can't happen with food, except that the capitalist system will not allow it."
Except food prices have fallen historically? And the capitalist system does allow it? If you read a book about American frontier farmer life and you'll see what I mean - wheat prices falling because of increased supply was occasionally a huge problem for farmers, although great for everyone else.
Food prices aren't falling now, sure, but that's mostly because we haven't seen recent huge improvements in food production or storage/shipping. If we suddenly found a way to grow and store large amounts of blueberries for much cheaper than before, you can bet your biscuits prices will fall. How do you think the average person came to be able to afford tropical fruits like oranges and pineapple, if not decreases in food price?
As someone who raises some of my own meat and sells a bit, and lives in a rural area where food production is a thing, unfortunately I disagree. Large parts of the American food production economy are propped up and manipulated by large-scale government intervention. The only way we're going to get out of the whole and make it so that farmers and ranchers can be truly self-supporting is for food prices to go up. Food is too cheap. Now good luck squaring the circle for how to make that all happen without major problems.
> You'd prefer that situation probably, to one where they both stayed the same.
Unless you'd worked all through the weekend, at that Monday rate, saving up to buy eggs for a meal you plan to cook Wednesday, and now you won't be getting paid for your Tuesday-rate work until at least Friday. Boss wants overtime again next weekend, well... what if prices get rug-pulled again? Or something even worse happens, now that the possibility is established? Such uncertainty has a massive impact on calculations of whether the extra effort seems worthwhile. Consider panels 5 and 6 here: https://clowncorps.net/comic/chapter-6-page-84/
Another issue that wages often do not rise to match inflation. In today's economy, in my experience, the only way to get a raise that matches inflation is to apply for and get a new position. This also tracks with worker/company loyalty (workers wanting to stay at the same place their whole career, companies trying to retain their good workers for their whole career).
yeah, I think a lot of this comes from the fact that *prices* can go up on just someone's say-so, but it generally takes a great deal of work to make your *wages* go up. It always feels like a personal event, and it always feels like something you *did* rather than something that merely happened.
How do we square the home ownership stuff with stats about the median age of the first time homebuyer? I saw a number of articles that all seem to be based on this report.
It suggests that despite the ongoing costs of a mortgage, the activation energy is too high. You have to be wealthy to take advantage of this form of wealth creation.
This is what we would expect to see if in fact there is a generational gap in access to home ownership.
Just make sure you save room for that home office, because your company isn't paying for office space anymore. Or maybe they're on a hybrid model, where they expect you to have a large enough home to include an office, but also still commute from time to time.
The problem isn't term length, but when you start paying it off. Buy a starter home, pay for 5 years before you use your equity to move up, repeat 1-2x. If you start that process at 20, your investment matures before retirement. If you start it at 40, your starter home had better be your last, because you don't have time to build equity and move up, or you'll be paying a mortgage throughout retirement.
This also addresses the question, "why are the vibes bad for younger generations, while the older folks aren't concerned?" If you're already in the home ownership game, you're fine.
I remember buying in '17 with an interest rate < 3%. In '21 my buddy was looking to buy, with my same budget, except he was looking at condos a third the sqft of my new construction house. At that point, I realized I'd lucked out and he'd been shafted, because I bought a few years earlier.
Exactly. There's so much encoded in the median age of first time homebuyers. Start a 30yr mortgage at 20, and watch your wealth build over time while your asset gets paid off well in advance of retirement, with plenty of time to save for your golden years.
Meanwhile, if you start at 40, on a 30yr mortgage, you're still paying off after retirement. Time is money in investing. Earlier the better. If Boomers started at 20 and Zoomers don't start until 40, it's not a linear loss of wealth-building capacity.
This is what I hear from the younger generation. "If I save for retirement, I can't save up a down payment. If I save for a down payment, I'm missing retirement savings. But it doesn't matter, because every year the savings goal for a down payment gets more out of reach. It feels like swimming against the current, financially"
Also health insurance costs a fortune, it covers nothing, and medical bills are insane regardless. Meanwhile seniors get a government ride on lower costs despite higher needs and more capacity to pay.
Plus higher education requirements don't just mean more work for the same achievement, as Scott suggests. That's the less interesting half of the story. They also mean sacrificing time working/earning for time training/borrowing. An undergraduate degree is taking at least a year longer to complete, now lots of people are finding they need a master's, then add an unpaid internship.
Compare a welder who got paid for his work/training from age 20, to someone who had to shell out 6 figures they didn't have before getting to the same point in their 30s as the welder of yesteryear. There's an extra 10 years of wage earning for the welder, and an extra 10 years of education-related debt accumulation for the Zoomer.
Maybe there's an inflection point where the confluence of factors reverse the sign from positive to negative. I think that's what the vibes are trying to tell us about the state of wealth accumulation for the rising generation.
Yep that’s it. The data is massaged in such a way that it’s meaningless. It is trying to to capture wildly different situations, average the outcomes and pretend everything is fine.
In practice, at any given level of lifestyle it has become much more difficult to attain.
We get boomer style arguments about not taking holidays or going to restaurants but this is categorically wrong. They didn’t make the same type of things but they did spend at least as much money on it if not more. It’s just that some consumer goods have gotten cheaper or benefited from technological improvements so your money goes further but at the same time the service is generally worse (air travel is a good example, much cheaper but also much shittier at the baseline).
It’s a trend that is happening in much of the Western world and I believe it is deeply linked to the financial system and monetary creation process.
They have basically tried to make a system that removes the reliance on children for financial security (retirement/end of life) and in the process they have killed the very thing it’s based on: making new children.
The naysayers are full of shit, they hand wave everything away by pointing at few meaningless indicators like a magician doing tricks with the other hand.
But things are not really fine, to realize that, look no further than the debt to GDP ratio, that has attained insane levels recently.
It looks like the boomers who created that debt aren’t too keen on reimbursing it.
But who is going to pay that debt ?
If you try to answer this question it becomes clearer why the vibes aren’t great.
Air travel is a great example. You can partly re-create coach air travel from 25-30 years ago, but it isn't today's coach. It's today's first class. You get a seat that is roomy enough (but not luxurious), a meal served on the plane (not gourmet but more than pretzels), drinks upon request. You can opt out of parts of security theater by paying more for your ticket and/or by paying for and jumping through hoops to get PreCheck, whereas in 1998 you'd just walk on. In a dozen ways air travel is worse, but if you pay enough, you can almost claw back to the quality of 30 years ago. But the charts say that a coach ticket is cheaper than ever! Apples to oranges.
This is a great point. The counter example is in technology, where a taxi is cheaper and more convenient (Uber), and a TV is nearly the same price for a product that's not nearly comparable to a modem flat screen. Netflix allows binge watching and content streaming beyond the wildest dreams of a 90s consumer. Plus you get a lot of 90s content from streaming services!
Someone once pointed out that the nature of competitive markets is the kind of improvements in process/quality we see in tech, and that if you study the logistics of making things like toothpaste that the comparative price of production over time should look kind of like electronics, just at a smaller magnitude. In other words, the natural trend isn't for prices to remain stagnant, but rather deflation is the natural trend in a competitive market.
So what gives? Why do prices keep going up, despite improvements across industries over decades that should drive prices down? I suspect this is the inflation cost everyone thinks should be there, but that never seems to show up in the statistics.
Fiscal conservatives are always going about predicting economic collapse "when the bill comes due for printing all this money". And I'm partial to those arguments. I've been hearing them for decades, and largely agree, except the collapse never comes. When there's a collapse everyone recognizes, "this isn't the Big One, but it's coming!"
At some point, you become suspicious that there will be no collapse, and indeed I think this is where fiscal conservatives lose people. It's a predictive failure of the theory: that inflationary spending gets 'hidden' somewhere, building a decades-old systemic risk that can never be proven.
Not that they're entirely wrong. Where's all the inflationary spending going? It can't stay hidden forever. This is where the natural deflation from competitive markets solves the issue. Without decades of inflation, toothpaste would be too cheap to meter. Socks would be disposable. The reason tech gets cheaper isn't because it's special. It's because it outpaces the deflation in other industries, so the offset after inflationary government spending is still net negative.
I suspect the answer is: into ever growing economic rents. But the distinction between earned and unearned income was buried by the neoclassical economic orthodoxy, so you’re going to have a bit of an archeological dig on your hands to get a grip on the concept and its implications …
Exactly. And most things are like that. Consumer appliances are technically cheaper but they are utter crap. To buy the level of quality that your grandma had, you need to go towards the high end and suddenly it’s much more expensive.
What it considered a baseline restaurant meal is basically fast food where you do half the work yourself, but previously the boomer could get a filling well made meal, served at your table for the same price corrected for inflation.
You can readily see that boomers are full of shit because in the same breath they’ll tell you much better it was before and then tell you how good the young have it.
Of course when they have to buy the level of quality they are used to, they complain that it is very expensive.
Also it might be different depending on countries but they have created a ton of laws and regulations that makes everything more expensive.
In my country a driving license would be a few hours with a teachers and you would be good to go. Now it cost a month of minimum salary because there is a legal minimum of training hours you have to pay the driving school before they allow you to take the exam. The car now has a mandatory biyearly check up that you have to pay regardless of the state of the car and its mileage.
Everything is like that.
The people saying it’s just the vibes are full of shit because they compare situations that are absolutely not comparable if you look at the details. Of course if you only look at money as an object and not as a tool that allows you to do stuff you’ll get a wrong answer.
CJL notes below that Bolhuis, Cramer, Schulz, and Summers (2024) argue that it’s the price of debt (which is not part of the CPI) that explains the vibes, and that this helps explain sentiment differences cross nationally as well: https://www.nber.org/papers/w32163
And presumably the price of debt is also connected to government accounts?
I’ll read that but at first sight it makes perfect sense.
Previous generations « got rich » by taking on debt, which is believe is what started the real estate inflation.
With high growth taking on debt is actually cheap. But now we have low real growth and mortgage rates are also high and it largely limit you debt capacity. This why the propose « solution » is to extend the mortgage time, which is a very bad deal.
So even with technically better paid jobs you can only access properties that are worse than you could have decades before.
Supposedly debt is created by private banks but it is definitely linked to governments accounts in a roundabout way. They benefit from the increased liquidity that allows them to borrow more.
I have not checked in details for every country but it doesn’t look like it’s only about vibes to me. At some point someone has to pay the debt or the market loose all credibility.
We can make the parallel to « investment » in cryptocurrencies that do not make sense on the surface: it has no real value, it is only artificial speculation, but if people think the financial system is fucked it makes sense as a storage of value that governments cannot control.
The main link that I see is that public debt crowds out private debt, raising interest rates for everyone. In other words, if the government hadn't issued so much debt, then investors would be forced to buy more private debt, driving down the price.
I feel like your "deadweight loss due to increased effort for same returns" explanation is perhaps the largest part of it (plus maybe a bit of Eric Fletcher's intriguing "now free time is way more fun to have" hypothesis).
E.g., I got the same degree that my mother & grandmother obtained—but it led to a steady lifetime career at Dow Chemical for the latter, and a succession of decent jobs for the former, and... absolutely nothin' for me. And I did better in terms of GPA than either of 'em!
Of course, this was always obviously going to happen—my /intended/ path was different; I had wanted to keep going & get a PhD in the field, but due to a variety of issues never could—so it's mostly my own stupid fault in the end. Still... it's kinda depressing.
(Same with the homeownership: "but most young people are renters" seems like it ought not really be a disqualifier, there, since they surely /want not to be/ renters.)
I have nothing to contribute, except to say I'm extremely grateful to have this subject tackled head-on by the ACX commentariat. Almost everyone I know is a vibecessioneer and the whole subject seems very confusing to me. Best of luck to all in the fruitful investigation of alternatives.
I might put more weight on the second derivative explanation. People in other eras seemed to have taken a lot of motivation from the idea that while their life may have been quite uncomfortable, their kids and grandkids would inherit a better future, and that made all the work worth it. People may rationally not feel that today.
I think the low friction of applications is a big driver of this (both in jobs, college, dating etc). I am in my final year of an Electrical Engineering degree and applied to ~500 full time jobs this fall. I am a reasonably economically minded person, I try to avoid pessimism know the stats on how everything has gotten better over time, pro capitalism etc. But even I was having trouble mentally reconciling what I knew about the numbers with my feeling from the inside of like being rejected over and over again while being in a pretty in demand field. Additionally my algorithms started to pick up on this and fed me content about how the sky was falling no one was getting hired etc. Things got pretty dark for me mentally for about a month. I’m mostly on the other side of it now, I got some offers (ones I probably won’t take and because they are in the wrong EE field) , and a lot of interviews scheduled etc. But I just don’t think humans are built to mentally understand “ You will have to be rejected multiple hundreds of times over a month or two to get a job”. Even if it’s relatively guaranteed if you put in that effort.
I'm in a similar situation but at the other end of my career. I'm 57 and have been unemployed for almost two years. Very occasionally I score an interview but it's like a 1 in 100 thing. In the past I was able to network my way into opportunities but that hasn't worked this time.
I'm not picky -- I've applied for positions that pay 1/3 what I could get in tech, but no luck. It could be age bias but that's impossible to really know.
I've never gotten a position via networking, and I'm currently experiencing the longest stretch of unemployment of my career so far. An enormous ratio of applications to even first-steps interviews, and always more applicants than slots there.
Probably a mix of a lot of factors, mentioned in your essay and in the comments. I really liked you mentioning that it takes way more « work » to get the same results.
A few additional factors:
1) The fact fast food and electronics got cheaper don’t matter. What truly matters is housing and this didn’t really improve.
2) Social status is important and zero sum at the same time. If everyone gets richer at the same pace, you are not increasing your status. And even if one is enlightened and realizes the futility of seeking status, friends and women don’t so you need to play the consumerist and social media game.
3) Loss of job stability. Few young people can expect to have a job and stable income. Lots White collar workers need to play the stupid LinkedIn game, update their resume and « advocate for their own jobs » or else they will have problems.
But even plumbers are not sure to keep their jobs long term. Everyone predicts that there will be no stability and hates it.
4) I imagine that a lot of people at the bottom quantile income (which apparently increased) is now just people on a mix of welfare and gig work so their status is low and they probably don’t like the economy.
5) I think some things might not be right in inflation and gdp calculations. Maybe check the recent palladium piece on GDP.
Housing has only worsened a little and is probably offset by the decreases in the prices of other things. People are still spending a lower overall fraction of their salary even if they're spending a bit more on rent. Maybe young people are mad because homeownership has become somewhat harder?
Agree with the points about status and job stability. Status is an under-appreciated aspect of human happiness and any attempt to assess why people are happy or sad without taking into account status is incomplete. The fact that much of life has become an endless grind for the same position in the status hierarchy certainly doesn't help either.
I think your point about food is very spot-on. The fact that we can now buy a cheeseburger at Wendy's for $3 doesn't make anyone feel rich, even though this cheeseburger probably cost 1/10th as much as a % of personal income as it did in 1960. It should be something we feel grateful for, but it's invisible to us.
Same with TVs. Nobody buys a $250 TV and thinks "wow, this would have cost $2,000 in 1980".
It's like another form of loss aversion (economic losses feel worse than economic gains feel good). Price inflation stings a lot, price deflation means next to nothing to us.
In fact you can also see examples of when price deflation gets significant, people interpret it negatively instead of positively. "Oh, so I'm supposed to feel good about getting $5 t-shirts from Amazon that are made with slave labor in China? From a delivery truck that spews greenhouse gases? No thanks."
Many people find it easy to make criticisms of predatory capitalism when prices are high (Blackstone bought all the single family homes) AND when prices are low (Jeff Bezos made $200B doing all these supposedly bad things). There is a persistent negative bias related to anything financial, and many can easily create just-so stories about whatever aspect of the economy they want to complain about.
Maybe this persistent negative bias related to anything financial is there a revealed preference of the masses, and since we live in a democracy, maybe we should change society to pander to those biases. This country belongs to the majority.
That's not what I meant. I'm using the same kind of definition used by OP when when said, “There is a persistent negative bias related to anything financial.”
If something is expensive, it's percieved as "unattainable" and a sign of a declining world.
If something is cheap, that low price is percieved as being "enabled by immoral exploitation" of the earth or other people (which is also a sign of a declining world).
I think he was claiming that people have a reflexive negative opinion whenever money comes up at all, in any context.
if this is what he meant, I don't think any specific preference is being revealed (except maybe "we should structure society so as to never talk about costs").
And this is why I'm disappointed this article just trusts the inflation number and goes no further. I guess this is not his expertise, but I'm kinda expecting more dive to what exactly are in those basket of goods.
Number 2: maybe some classes of people in society actually do deserve to have greater social status. Maybe it's not just a matter of "playing games." Maybe the 401(k) holders and long time homeowners have received unfair, unearned status advantages.with the help of a pliant government, and maybe these injustices should be reversed.
Hypothesis (somewhat, but not entirely covered): lifestyle creep in choice of cities, availability and quality of housing
As millennials and Gen Z grew up, they were used to the lifestyle afforded by boomers that were established over decades. Air conditioning. Newer cars. Living in nicer neighborhoods. Ignoring the fact that many boomer families once started in broken down houses in bad parts of town.
Lifestyle creep is further accentuated by the housing being made available. On housing, when you do get new units of housing, that housing stock is usually brand new, huge houses and expensive. Or apartments that are luxury and with dog walking floors and social spaces, when the boomers lived in a room with no windows in someone’s basement for 10 years.
But - the Brooklyn effect covers this slightly, but young people moving to ANY city makes them feel more poor / unable to afford housing. Their parents started up with a starter home in Toledo, Ohio, for $80k. That starter home is still there, and still costs the same (or less, with inflation) because no young person wants to live in Toledo, Ohio. They all move to Cincinnati, Minneapolis, and Chicago. Meanwhile the people that grew up in Chicago, Cincinnati, and Minneapolis all move to LA, Boston, and Brooklyn. The lifestyle creep of moving to expensive cities impacts all cities as ghost towns are created across the US.
So, while rent in Boston is $3,000 for a 1 bedroom apartment in Boston, that same $3,000 payment would get you a brand new $300,000 house in Michigan. They just don’t want it.
So… Why don’t they just move to Michigan and buy a new house? Because millennials and Gen Z would rather cut off their own ear than give up the lifestyle creep of living in a big city. They’ll list 100 reasons why cities are better, but also complain about bad economics.
If we took everyone that was complaining about housing and made them all move back to the dying ghost towns, the financial vibes issue would be over.
If I were to try to prove this with a chart, I would show a few things (yes, this data probably doesn’t exist):
Air Conditioning in housing chart by age, by generation. (I expect up, indicating nicer living conditions)
Average population density of primary residence, by age, by generation. (I expect younger generations moving to cities drives this much higher)
Square footage of new housing over time. (I expect always increasing)
% of high school graduates staying in city of high school, over time. (I expect lower over time as people increasingly go to far away colleges in nice cities where they stay).
This is a great article exploring the nicer homes themselves which accounts for 1/2 of this, and the other 1/2 is everyone generationally relocating to denser / more expensive cities.
It seems like housing prices really have gone up, because the same house in the same location in suburban Boston costs 4x what it did in 1970, adjusted for inflation.
The problem is that it's not the same location. That area is now much more valuable in terms of access to employment and amenities than it was in 1970. Back then, the house was far away from everything (car ownership was less common) and on the edge of the urban area. Today, the urban area completely surrounds it and it's quite a bit easier to get around. So at least some of the rise in real prices is explained by the rising real value of the land the house sits on.
In some ways, a better comparison would be a house on the new edge of the Boston urban area, several miles further out. I'm sure that one is more expensive in real terms, too, but the increase is going to be quite a bit smaller.
Alas, it would be over latgely because the lower pay would mean the numbers matched the vibes. Remote work changes this, but ... Nowhere in the US is super cheap, and I don't assume my town is in a Goldilocks position.
That’s true with many roles but not all. I moved from HCOL to LCOL and maintained the same salary. My wife as a nurse earns less. It definitely varies!
>If we took everyone that was complaining about housing and made them all move back to the dying ghost towns
It seems like you haven't considered the issue of what people would do for work in these dying ghost towns. How would they make money? The good-paying, high status jobs are concentrated in the cities that you mention. And no working remotely apparently isn't the answer either, as employers seem to be moving away from 100% remote
Young college graduates need to be where career opportunities for young college graduates are. The people who can truly just live anywhere - whose presence in the most desirable areas is in some sense extravagant - are retirees.
One piece that I would investigate is "stability": the sense that one's financial position is more precarious than in the past. I've seen a perception that jobs are less stable; one can't count on a "good job" to last for one's entire career in ways that it used to. If people are renting rather than buying their homes, there's the expectation that rents will go up, and the possibility that they'll get kicked out for random reasons like the owner selling. Healthcare costs are purportedly going up, and that is something that has very high variance. This has direct effects in that people are considering the cost of risk.
Also, I think you're downplaying the "30 years ago, people under 35% had 11% of the wealth; now it's 4%" statistic. That's a lot more than just demographic changes would account for. Your counterbalancing statistic only covers since 2019, and is also a relative change rather than an absolute one.
And, finally, I wonder if the average mortgage costs are accurately portraying the true average rather than just the cost for homeowners who haven't yet paid off their houses. Has the proportion of 30-year to 15-year mortgages gone up? Has the frequency of moves gone up, such that people are in their mortgages for longer? What does the average, including homeowners who have paid off their mortgages, look like?
Mortgages may be arduous at first but, unlike rents, over time they ease off due to inflation and salary rises. So there's the question of how far into their mortgages millennials are on average, especially since these days they may start them when older than their parents did.
Also, two other pieces of the housing picture that I think are worth considering. Buying a house means paying a down payment, and that's not accounted for in the mortgage payments. What are the median numbers for when people acquire sufficient liquid savings to pay a down payment? (I doubt this data is easy to get as such, but data on when people buy their first house may be an adequate proxy.)
And mortgages aren't the entirety of the ongoing cost. My impression is that the fraction of housing that comes with large HOA payments has gone up substantially, particularly in the critical category of "townhouses". That could add another 5-10% on top of the mortgage payments.
I think you are absolutely on the money when you talk about stability. Even if income and opportunity remain high, people have to "hustle" more to take advantage of that opportunity. People have to be more proactive, more imaginative. The economy is forcing people to be more entrepreneurial.
Apparently, the public hates it. They may be willing to give up GDP growth and personal income if it means greater life stability. I can't know that for sure, but there's no way for us to gather data about that, because the option is never on the table. The population is simply FORCED to accept a more efficient economy with lower personal stability, and then economists smugly say "Don't worry, if you were ever given what you say you want, you wouldn't like it."
I think this is partially what Scott was gesturing at with his Brenda example; the amount of effort required to get to even a better place feels disproportionate versus the stories I hear from the earlier generation (messing around until mid 20s then hopping into a job, staying there for life, gradually getting promoted). I think a lot of people would trade lower consumption for that stability, lower prerequisites, and cheaper housing.
I have personally just sacrificed economic considerations to move to an organisation with a reputation for stability and loyalty to employees. I have a mortgage and two kids and that's hugely valuable to me, much more so than e.g. an incremental overseas vacation.
Stress per dollar seems like an important metric. Scott's example about the person who had to wade through application sewage to get to $50,001 salary by 35 seems like a pretty obvious example that he then oddly says supports the opposite?
Niche topic but I wonder if this impacts the increasing standards for med school, my friends who went into medicine school for MD/DO seem to have met much higher standards than their parents before they were considered competitive. I’m curious if the high stability of medicine makes it relatively safe harbor of a storm and therefore very competitive.
I will be honest and my vibes are low entirely because of the mortgage increase. I had everything ready to buy a house in 2021, and the housing prices rose so much I can’t afford one. I’ve been living in rentals for 4 more years than I expected. Sure, my rent only increased by 10%, but now I have a 3 year old who wants to play outside in a yard that I own, and instead we are in a tiny apartment with no yard. I’ll probably figure out how to buy a house by 2027, but 6 extra years of rentals makes this a bad decade for me even if my income increased by 50% over this time.
I agree with this. I was forced to sell and rebuy because of a work relocation and my monthly bill went up 25% for a house that cost 25% less. You really do feel that interest rate! (Went from a 2021 2.75% to a 2023 5.99 interest rate, home price from $860k to $603k, mortgage from $4k to $5.3k… includes some higher property tax rates but lower insurance rates)
It’s crazy! While my overall vibes are up, even though I’m well on my housing journey I feel the housing vibes too.
Easy explanation: people dont like higher inflation, even if wages are keeping up. Relatedly, people really dont like visible inflation, like grocery or restaurant prices
To explain further: people probably think that their 20% increase in wages from 2022 to 2024 was the result of hard work and skill, but the price level overall increasing by 20% in the same time period is unrelated to their wages
If I go by newspaper headlines, everything is getting dearer in price. So even if wages are going up, cost of living is going up as well, and so things feel like they're not doing well. So the economists can say "but stocks are booming!" and I can still answer "that doesn't help me buy steak which is now so pricey, a celebrity chef advised to switch to venison instead":
Everything getting more expensive is the very thing that inflation indices measure. Unless you disbelieve inflation calculations (which you could, but probably shouldn't, see the section where Scott covers this in the post), wages are going up faster than prices.
Scott really covers nearly everything in these. When I hit "Inflation-adjusted rents have gone up 30% since 1985" I was ready to come in here and suggest that maybe there was some information being lost in averaging in rural flyover country together with major cities. But then I hit The Brooklyn Theory of Everything!
But... wait, I don't actually buy that city rents haven't gone crazy. We were renting in the inner-inner not-quite-suburbs of Boston for $1700 in 2021. When we checked back in 2024, it was at $2800. Pretty sure that's roughly in line with overall Boston rental price movement. Is NYC maybe not the best to look at because of all that rent control I always hear about? (This sounds so simplistic that it has to be wrong, and I know nothing about NYC, but I have to throw it out there).
I see that the final conclusion still lands on housing-in-cities anyways, but I think the argument for it is still even stronger than these sections suggest.
>But even if these three factors are really making things worse, so what? Have previous generations never had three factors making things worse?
I think housing is the single most important thing (if war and famine are safely out of the picture) to people's feeling of economic security. If two of those three factors are housing, that's gonna go a long way.
Good point on the rent control distortion. If most of those rent-controlled apartments are locked up by older people who will never give them up to the younglings short of death, well, the boomers mostly aren't dying yet, so the rents that matter to the "vibes" are the average of the non-rent-controlled apartments, not the average over all rents.
I second the recommendation of redoing that part of the analysis with "elite" cities that don't have much in the way of rent control.
If you look into the rents in Germany and Switzerland (the ones I know about), there are two very different measures of rents, even after adjusting for flat sizes etc:
1) The median rent of a person who lives in the city.
2) The median rent of a person who moves to the city.
I believe that the second one has absolutely skyrocketed in the last 20 years in all major German and Swiss cities, while the first one has only moderately increased. The reason is that rents are sticky. People who have lived in the same flat for 20 years have seen limited increase of their rents, whereas rates for new tenants have increased dramatically.
If you look into official statistics, as Scott did, they will probably measure 1), and see a moderate increase. But for young people, 2) is much more relevant.
I don't know whether it is the same for large US cities. The housing markets are different, for example in Germany (and Switzerland?) there are much fewer home owners than in the US. But on this side of the Atlantic, I think this is a very major factor for why many young people are struggling with their rents.
I'm a millennial, and I feel like my generation led the charge on the "everything sucks financially" front and I was a part of this cohort for a long time. Partially this was based around graduating from college around the Great Recession, which did feel like a particularly hellish time to be starting adult life. But even if it actually wasn't, maybe achieving financial consciousness at the exact moment that the economy cratered greater than any time in living memory changed the way we think about financial security forever. One of the big cultural differences between Gen Xers and Millennials (at least it seems to us millenials) is that Gen Xers struggle against boomers was always about not succumbing to the mailaise and spiritual blight of the steady office gig and the house with a white picket fence. Whereas for millenials, maybe its about finding any gig or housing situation that is secure enough that it can't be washed away by economic catastrophe. And that's a much higher bar!
Personally, even though I am doing okay, and have even reluctantly begun investing in the market as I have more liquidity, I find I have an anxious compulsion to check my bank account to make sure I have enough savings to pay rent and groceries for months if suddenly the market completely crashed (and I'm self employed!). This may be a unique psychological issue (I'm certainly working on it) but if you imagine some version of this anxiety hovering over everyone at all times, it might explain why the vibes always feel bad. It would certainly explain why it got so much more acute after Covid, which was, depending on your age, either the first or second major unprecedented economic disaster and period of mass uncertainty in everyone's living memory. Boomers lived under the fear of the bomb, we live under the fear of economic collapse.
Yeah, I don't know if you're trying to be optimistic or not, but this is definitely the sort of thing that contributes to the general vibe of doom and gloom.
To be clear, it's definitely legitimately the case that people who graduated into the Great Recession (including the years after the recession was officially declared over but while the labor market was still weak) had a much harder time finding jobs and earning money, and there's some research that suggests that these effects are sticky (because the amount you earn in your current job affects how much you can ask for in your next one). The problem is that, per Scott, the beginning of the vibecession coincided with the *end* of the Great Recession, not its beginning. Any Great-Recession-linked theory of what's going on has to somehow explain that.
"Vibes" probably lag the economic data, in part because they're based on memories of what one's finances were previously like and the tendency to distrust recent changes, and in part because they're based on savings (and housing, and etc.) from previous years. It seems entirely plausible to me that people went into the Great Recession with enough savings and stability and hope for the future to carry their "vibes" through most of it.
Could millennials entering the job market and hearing that the recession was officially "over" but not really feeling that for several years (in my case, almost a full decade after I graduated, but I admit I am an outlier) explain it? Everybody expects to be broke the first couple of years out, its seen as something of a rite of passage. But when you are closer to 30 than 20 and still only reliably making +- 20k a year, it quickly stops being romantic. It makes sense that it would hit around the time the median millennials were hitting the expected transition point from "young" adulthood to full fledged adult, where you are expected to be making enough to support a family. Suddenly that sense of doom that was abstract before feels a lot more acute.
>I have an anxious compulsion to check my bank account to make sure I have enough savings to pay rent and groceries for months if suddenly the market completely crashed
I thought "have 3-6 months of living expenses in savings in case you lose your job" was a pretty standard bit of financial advice. I wouldn't call that anxiety unless you're irrationally worried about losing your emergency fund.
Well it used to be a year-and-a-half, I've slowly been forcing myself to invest part of that so it grows over time. Although now I'm pretty sure the AI bubble is going to pop and take all of that with it, so I'm not super hopeful.
Thank you! Got the house, fortunately. I've heard silver recommended before, so maybe I'll look further into that. It's too bad I never got further than "looking into" I-bonds during the pandemic.
Something that gets hidden in the aggregate is that consumer sentiment among democrats is much higher than among republicans from 2021 until 2025, and then they switch. This seems relevant.
You use median values to account for potential skew form outliers, but can median values correctly account for bimodal distributions? Basically, I wonder if there are haves and have-nots and a large chasm between them, which could explain why the data appears fine but there’s still a vibecession.
This theory is frequently called the “k shaped economy” where the rich are doing much better (and propping up the trends) but the poor are doing much worse.
Scott tries to account for it with the splits by generation, which I think mostly covers it, unless boomers are equally K shaped as millennials/gen alpha.
I think it’s just lifestyle creep/higher expectations. We all grow up expecting to improve from how we were raised. That’s why young people think you have to be a multi millionaire to be considered successful.
Scott accounts for this in the "Fine, Let’s Talk More About Inequality" section, where we see that the lowest quartile increased its real wages by more than any other quartile from 2015 to 2025. Of course this is just about wages; the proportion of assets as parts of total wealth has probably boomed for the top quartile in that timeframe as they benefit the most from increases in asset values.
Even in high-inequality societies, the income distribution is still roughly unimodal. In the Census Bureau's household income data, they bin into 9 income levels, and the peak in the distribution is at 100k-149k, which is above the median. Unless you're arguing that the people in that category are the have-nots (as Mike Green recently, and incorrectly, did), it doesn't seem like that's the right story here.
What about the theory that the Great Recession caused the economy to perform under trend until 2015-6, when the housing market picked up and became unaffordable? More recently, the job market has felt frozen, as AI is funneling investment into asset prices with relatively low increases in hiring. Because of the vague nature of the claim, explanations can’t be dispatched individually by pointing to timelines.
Imagine you're a young college-educated worker in America.
Geopolitics says your labor will be devalued by China. Tech companies say your labor will be replaced by AI. Billionaires are building zombie apocalypse bunkers. America is clearly in a more heated political climate.
Young workers may have the same dollars in the bank. But, they're saving in anticipation of doom. Not all money is created equal.
You can root cause this anxiety to 'negative media', but quarterly reports and technology white papers aren't media. They're our best predictors of the future (as bad as they may be) and they're reinforcing the same negative narratives.
But young people aren't saying they're that worried about China or AI. There's a lot more talk of billionaires and immigrants and inflation than of either of those things. Maybe these things feed into a general sense of doom that makes people blame the politically convenient stuff?
Post-versailles Germany blamed their problems on the Jews. The average individual only feels pain and a general sense of dread. Few introspect on where their anxieties come from. Societies under stress find convenient scapegoats. Story as old as time.
This comment nails the issue, though not in how it intended. Every generation faced the threat of horrible doom. The Great Depression, Fascism, Communism, nuclear Armageddon, Vietnam, overpopulation, pollution, race riots, stagflation, global ice ages, global warming, Japanese imports, outsourcing, and so on.
The difference is back then we lived in the real world. All the threats were background noise that we simply ignored. We were busy living. Today, we are immersed 24/7 in social media fanning the flames of catastrophe and economic pessimism.
This is where lack of community really comes in. If you're spending time with real humans, that's a buffer against the constant onslaught of news. But also, our level of trust in institutions is rightfully in free fall and the fragmenting of meaning and shared narratives also doesn't help.
"it's the first derivative, stupid". Yes, people have much higher standards of living today than they ever did. What they don't have is a belief that tomorrow is going to be better than today.
Singularity is not going to add more real estate at the French Riviera.
But more importantly, singularity might increase overall and average productivity, but no one is promising that it will be equally-ish distributed. That's part of the issue with the computer revolution, the gains were not widely distributed. Those who were able to use it increased their standard of living manifold and those who weren't feel like they have been left behind
Inequality is not the problem; poverty is. Poverty is rapidly declining worldwide, and increasing productivity is a boon. Paul Graham said it better: https://www.paulgraham.com/ineq.html
I don't have statistics for any of these, but there are two additional forces that spring to my mind: the popularization of political and ideological beliefs that emphatically believe that good and ill flow from systems, not individuals, and, frankly, people being bad with money.
Parts of the heavily left-leaning internet political community are all-in on the idea that most problems are systemic, and require systemic solutions. Speaking in favor of individual-scale solutions loses you status. Of course, many problems in life are systemic, and it's useful for your model of the world to include this, but online left-leaning political culture can lead to a metastisized feeling of helplessness, as every Bad Thing becomes a Systemic Bad Thing, and therefore outside your ability to control. And then you get in-group status for echoing and reinforcing this notion.
The problem with the above theory is that I don't have numbers for it, and that I'm only really familiar with it in the context of left-leaning spaces. I feel like there may be some equivalent concepts in right-leaning spaces (deep state elites? Market effects of immigration?) but I don't think it's quite the same.
As for money... Lots of people are bad with it, but don't want to hear as much. I only have a small, anecdotal sample, but I absolutely know people who have made fairly typical hellworld claims about the state of the economy, but on further examination are actually buckling under very expensive rent/car/lifestyle choices. I want them to have it all - the comforts they enjoy, and enough surplus income to feel secure with them. But seeing this play out IRL definitely made me take online discourse about economic problems with a bit more salt.
If one person is bad with money, it's an individual problem, with an individual solution. If 10 million people are bad with money, it's a societal problem, with the societal solution.
The equivalent external locus of control narrative in right-leaning spaces is religion. And there, the external locus of control is positive, not negative: God will ultimately win and "all shall be well."
Speaking in favor of individual-scale solutions loses you status there too, at least in some circles. It's seen as trying to control things yourself instead of surrendering to God's will.
As for mapping that onto trends, maybe the decline in religion means fewer people now have the comfort of an optimistic external locus of control, but they never developed the agency necessary for whatever individual solutions might be available to them, and so are left with a pessimistic external locus of control?
A major contributor to the vibecession may be that millennials are reaching their late-30s and 40s—traditional ages for stable adulthood, homeownership, and family formation—yet many are still renting and have little accumulated wealth. Renting at 25 feels normal and temporary; renting at 38 with children feels insecure, stagnant, and far behind the life trajectory previous generations achieved. Even if rent-to-income ratios haven’t worsened dramatically in recent years, the psychological meaning of renting changes sharply with age, producing a sense of failure, instability, and blocked progress. This cohort-level disappointment aligns with the timing of the vibecession and generates widespread pessimism not captured by conventional economic metrics.
I’m sure that’s a contributing factor for those people that are successful, but many college graduates move to big cities just for vibes/politics/social reasons.
Subtracting hours worked from hours per life doesn't really measure "free time". What I've been noticing in my students' careers (not in USA) is that for the same hours on the clock, and the same dollars per hour, you need to spend more time actually working. Sometimes it's as direct as work responsibilities spilling over to free time, but often it is things like
1) They used to teach you on the job, on the clock. Now, you have to take classes outside of the job to stay competitive.
2) Commute hours raise dramatically, which is also unpaid time you spend for the job
3) Job is more stressful, requiring more time for basic recuperation (or even money for therapists) before you can actually spend time on what you want.
4) Worse working conditions means more workplace-related illnesses that take money to treat
5) They used to give you uniforms for free. Now, you have to buy them
Factors like this would look good on the lines on the graph (you spend more real post-inflation money on goods and services for every hour worked), but it is much more miserable life for you. You de-facto work more, and a lot of the money you spend is not 'discretionary income' for hobbies and hookers, but cures for the new disease that merely brings you back to neutral.
This was not in USA, so those observations directly might not apply, but maybe something like that is happening in the USA? "Shrinkflation" of labor?
Well, I specifically said that this is not about the US, and this list was intended to be just an illustrative example of the kind of thing I'm talking about
It's social media. "It's the phones" and "it's negative media bias" sit downstream of the impact of social media on the median mind. We figured out that pitting people against each other by increasing their negative emotions is the best way to generate engagement, and as social media reached critical mass this drastically changed the way people perceive the world around them. Then, regular media followed in their footsteps (which explains why your last graph shows the start of the decline in 2013). The one thing these two businesses have in common is that they live and die by ad revenue. Your best lever to increase ad revenue is to add users and then make them spend as much time as possible on your platform. In other words they've turned people into dopamine crackheads and amplified whatever latent obsessive tendency they had. It used to only be young people, but as older folks started using Facebook en masse, we started realizing just how easily they'd get radicalized.
Whenever you discuss the Vibecession, do you stop to wonder where people get their vibes from? Isn't it likely that they get them from what their algorithms are serving them on their phones, or from their 5 closest relationships (most of whom probably get their vibes from their phones)? To the average person, it doesn't matter that, factually, real wages are up since the end of the inflationary crisis of 2022-23. It also doesn't matter that the inflationary crisis is completely over by now. You'll still hear them talk about how much more expensive their lettuce is at the store than last year, and they'll feel validated by saying that kind of nonsense because everybody else is saying it. In your community, do you really want to be the only person who says "No actually it's highly likely that your grocery bill hasn't materially increased from last year"? I mean, go for it if you want to be thought of as a pest or some kind of bootlicker. Because that's how vibes work now: either you complain all the time, or you exist in a bubble of numbers that nobody should trust (except for the mostly made-up numbers that they see on social media).
Anyways. It's social media.
edit: I'm being cute by emphasizing social media as the only cause in my post, but of course it's a multi-faceted topic and you did a great job bringing together most (if not all?) of the potential contributors to the vibe crisis.
I've been wondering lately about this lettuce point. The Dems are hitting Republicans hard on affordability right now, and I see all of these replies to Scott Bessent's posts saying "clearly you haven't been to the grocery store lately, it's an apocalypse". But I really don't think it's wildly different in aggregate from last year? (besides certain things like coffee that were tariffed).
Good point on the coffee bit. Coffee and cocoa are two commodities that have skyrocketed in price over the past couple of years, including 2025, and they're closely linked to both daily life (coffee) and fun (cocoa/chocolate). They're highly visible items that people who care a lot about inflation might now over-index on.
I do think the housing analysis comes to a conclusion too quickly. All else equal, I imagine consumers are happier to buy a low-priced good on credit at a high interest rate than the reverse. Especially since you get the option to refinance your mortgage, which historically many Americans have taken for granted. In 1985 the 30y fix mortgage rate was 12%, and it fell basically in a straight line to half that over the following decades. So, all the people buying houses in 1985 with leverage saw immense capital gains over the course of their lives all while their financing cost constantly cheapened. Sounds pretty easy, right? Should also mention that from 1985-2025 the mean house price:income ratio has doubled, making it harder to get approved for any mortgage today.
Also, regarding the section about young people wanting to live in cities, I think this might be related to the confusion about how median real incomes have increased 33% over that time. What if the distribution of jobs has merely been shifting to higher cost-of-living areas e.g. Midwest manufacturing declining while big-city programming jobs are on the rise? In that case, although it would be true to point out that median income has outpaced the CPI index, it might not be true that the median individual has experienced income growth beyond their own inflation (as in your example if you move from Boston to NYC).
I think you were a little dismissive on the share of wealth by generation section which does demonstrate the issue. The complaint of not being able to own a home or general inequality is certainly based on wealth. The entire institution of law and law enforcement is based on ownership, protecting property rights. Rule of law and protection of property rights is a fundamental principle of investing/financial markets which is a massive driver of economic sentiment and GDP growth. You can show wages and prices all day long but in the long run those things are a drop in the bucket compared to ownership. A job can be taken away at any moment, property is protected (or at least prolonged) in the courts.
"But do you really compare your age cohort to other age cohorts? How do you even mentally calculate the total percent of wealth owned by old people?" These are excellent questions and do highlight that this would be difficult to measure, but that doesn't mean people aren't doing it. Boomers owning 23% compared to millennials owning 4% at the same age is a massive difference, especially because wealth grows on an exponential scale while every graph in this post on wage growth shows a linear increase. We are constantly comparing ourselves to one another, our parents, grandparents, etc. When people are upset by inequality they generally aren't pissed that a doctor has a nice house because while it may be unequal, it doesn't feel egregiously unfair. But when they see people in the tech sector with hundreds of billions that control politics, society, and a large chunk of our daily lives, it doesn't matter how much smarter or harder they worked, there's absolutely no way that can be fair.
Getting to the top is about ownership. It's been that way for hundreds of years. If you don't own things, then you both feel like and are actually at the bottom of the socioeconomic hierarchy. Even if you are better off with more money, more material goods, and better health outcomes than previous generations, in comparison to everyone else in society you are doing much worse.
He touched a bit about it by saying that boomers just have more people, but then lacks the follow up to calculate wealth share per capita per each generation. I think that trend will reveal something.
I was going to jump in and shout "No, that home price data isn't adjusted for the size of housing!" like I usually do, but luckily you used the Case-Shiller index, which looks at changes in the prices of individual homes over time, so we don't need to worry about that *too* much. There's still the problem of homes being renovated and expanded, but that shouldn't make much of a difference.
Using these, we can estimate that the median price per square foot in 1973 was $151.39 (in 2024 CPI adjusted dollars, https://fred.stlouisfed.org/series/CPIAUCSL#), and in 2024 it was $195.48. Not good. This appears to largely be explained by the decline in home size growth since 2015: if growth had kept up at the 1973-2015 rate, new homes would typically be 2,734 square feet, and the price per square foot would be $153.44, almost exactly what it was in 1973. Naturally there's also the question of "Has the price per square foot of a *rental unit* also gone up?" but I don't have the data for that.
It's not easy to reason about why this happened. Maybe restraints on supply got worse around 2015 (I think changes in zoning rules have been fairly gradual, so this seems implausible), so people were forced to turn to cheaper, smaller homes. Maybe preferences changed in some way. Maybe this was some weird, delayed effect of the Great Recession. Maybe the rise of single homeowners kicked in somehow, driven by lower marriage rates. I don't really have anything insightful to say on the "why" question at the moment.
The part about opportunities now requiring more effort to achieve thanks to reduced friction seems important to me. Today, you have to spend much more time applying on LinkedIn and padding your resume to get a job, swiping on apps to get a date, etc. There's more zero-sum competition for whoever can spend the most time doing these otherwise pointless activities because whoever does it the most gets the opportunity.
This is not equivalent to what people are saying, as you noted, but most people don't think all that deeply about anything and instead in terms of shallow associations. In this case, even if someone is not any less likely to get a job but they have to put in more effort to get it, they might feel like the job market has become worse which feeds into the feeling that the economy as a whole has become worse. When you add in negativity bias in the media, it's easy to see how such sentiments can become very popular even if the data doesn't agree.
1 - I think you're way too quick to take CPI as "correct". The task the BLS is given (to calculate the growth of the cost of living for everyone in America in a single number) is frankly impossible, although they do a really good job, setting the gold standard for government stats internationally.
In my mind, the main problem is that they are not accurately reflecting the cost of "participation" in society. According to the BLS, new car prices have gone up 20% in the last 30ish years (since 1990)--basically zero annualized. But this is because cars have improved so much--they are safer, air conditioned, you can play music in them, etc etc. In reality, a Honda Accord (middle class car) roughly doubled in price during that time, and a Ford Mustang tripled.
I don't think the BLS has done anything wrong--the product really is better. But there's a human psychology issue of, people want to participate in society, and all they feel is the cost of that. Yeah, the technology is better, but the feeling of buying a new car is pretty much the same as it was in the 90s--you don't want a new car without AC or safety features (not that it even exists really), you want to buy the car that everyone middle class buys.
2 - Relatedly, there is a huge issue of envy that exists only because of the internet and phones. It is now shoved into everyone's face how much money others have. Everyone with a meaningful following (podcasters, bloggers, influencers) is basically rich, and people have parasocial relationships with these figures in a way no one did in the past. So in 1990, you looked around, and saw your lifestyle compared to your friends and neighbors in your local area. In 2025, you open up Instagram and see the lifestyle of a jacked 27 year old "forex trader and crypto entrepreneur", and compare yourself to that. There's a great article (I forget if TLP or you or someone else wrote it) that argues this explains political polarization in America as well--different lifestyles in different regions are suddenly accessible to all, when they weren't 30 years ago.
A Honda accord is a Japanese car! I don’t have the stats for used cars (it’s tricky to think about the price of a used car over time), but in any case the price of vehicles has gone up a lot more than is reflected in CPI, because the technology has improved.
And speaking of the safety of SUVs, vehicles larger than the M4 Sherman tank, they might be safer for the driver, but they are disastrously more dangerous for everyone else: pedestrian deaths in the US are /up/, while in most of the rest of the world they keep dropping (and that's total deaths and not deaths per distance walked which paints over the scale of the problem - you wouldn't dare to walk on many American streets)!
Basically, the perverse incentives (for companies to sell SUVs, for individuals to buy them so as to be safer in the crashes with other SUVs) increase GDP, but decrease the quality of life both with their direct ("having to" choose a more expensive model of car, paying more for the gas because it consumes more) but I would say especially indirect (from "soccer moms" having to drive their kids to hobbies because the kids don't have independent mobility, and being unable to go to a bar with your friends to spend the evening because you can't walk home and you can't drive home drunk, to health consequences of not getting any exercise while commuting) effects.
The situation with cars is largely if not completely unique to the US - at local municipal level at least I am actually getting mostly good vibes in many places as the mistake of ever embracing the automobile is corrected and cities are becoming safer, greener, quieter, offering more nice human spaces, capable of enabling independent mobility for more people, making commute easier and cheaper - but looking at it from the outside, cars and SUVs in particular seem to be a gigantic drag for the welfare and personal economics of the Americans (as it represents a growing "mandatory cost for participating in the society" as the person upthread mentioned, and that cost affects less well-off disproportionately).
That being said, it's just one aspect of general trends of perverse incentives that affect the globalized economy (other commenters have brought up enshittification which exists almost as mathematical necessity, one even suggested most economical activity is actually negative-sum), and I would even say other aspects of human endeavour (like dating, or for some inane reason replacing books and notebooks and pencils with tablets in schools, which I personally expect to be bad for learning, but that Moloch wants us to do for some reason, like "wanting to appear modern" or whatever). In my country (Finland) it's definitely not just vibes with record unemployment and poverty, and being forecast to be the sole developed economy that does not grow (on account of the most right-wing government in our history trying to do Thatcherian economics just in case it happened to work on the 100th attempt), but I do feel the same sort of bad vibes as Americans are feeling.
Also, the article claims "bad economies are exactly when you would expect next year to be better (through mean reversion)", but this ignores the possibility for long-term trends that would override short-term fluctuations. For instance, the GDP growth of the last century has in large part been fuelled by burning of fossil fuels /while not pricing in the externalities/. Well, that bill was inevitably going to come due, and while I'm more optimistic than some others (for instance, I talked about good vibes regarding cities becoming less dependent on cars, and I believe this to be a win-win-win arrangement economically, environmentally, and in terms of quality of life for the growing number of people living in cities, or indeed generally reversing the trend of "enshittification" of everything, thus increasing QOL while at the same time putting the economy on more economically sustainable footing), of course things like these affect people's vibes about their future economic well-being.
Have you considered distributional effects of housing inflation? i.e. The cheapest rents are growing fast, but the average is moderated by the expensive rents growing very slowly?
Inflation is not the same for everyone, and trying to produce one number skews the picture a lot.
How do you calculate inflation?
Well, you see what people spent money on, and how much. For each product/category you look at the price increase relative to product improvement, if there is any, and that is how you get your inflation.
But in our economy, the top 10% drive 50% of consumer spending! They buy different things than the median household!
So inflation could be negative for top 10%, high for median household, and still the measured inflation could be low.
And indeed, we see much higher rent inflation in places with lower rents. And this is after we took into account that people are downgrading in order to afford those rents.
So someone who expected to live in a house has to rent an apartment, a person who expected to have an apartment have to get roommates, and one who expected to have roommates have to stay with his parents or doesn't get to live in that city at all.
How do the median rent/mortgage prices match up to what they're actually getting for that money? I can't remember the exact numbers, but talking with my grandparents and parents about what their first houses(considered small and cheap at the time, but detached single family homes in town with a small yard) cost compared to what you could get today for that after accounting for inflation was pretty stark. Would the median rent show if prices went up overall but the proportion of people in the cheapest options increased alongside, or are split between more roommates or something along those lines?
It seems difficult to argue that housing prices haven't increased significantly somehow when you look at what the last couple of generations actually bought at similar points in their life compared to the current ones, but I haven't seen any large scale numbers about it, it's possible I'm judging too much based on anecdotes.
I would also note that that detached single-family home didn't have a HOA payment, whereas the equivalent these days is a townhouse with (around here) several hundred dollars per month of HOA payment.
Although it's over ten years old now, so it may be ripe for an update or a follow-up if Scott were inclined to do so.
Related to this, one of economist Arnold Kling's often-repeated arguments is that there's a widespread pattern in modern public policy of subsidizing demand while simultaneously restricting supply. Which often seems to have the effect you'd naïvely expect from that combination: the stuff doesn't actually become all that much more accessible, but it does get a lot more expensive.
I think he first formulated that complaint about housing policy especially in the pre-2007 era, when the federal government tried to encourage home ownership by subsidizing mortgages while at the same time state and local governments were using restrictive zoning and planning approvals to limit the supply of houses to buy. Since then, he's also attributed the same pattern to higher education, health care, and a few other things.
I think you underrate the "Brooklyn Housing Theory Of Everything" due to rent control. Half of the apartments in NYC are rent controlled, and pretty much all of the public statistics lump together rent-controlled and non-rent-controlled apartments. So the aggregate stats don't look all that bad. But if you do not already have a rent-controlled apartment in NYC, statistics about rent-controlled prices don't affect your quality of life.
I suspect the rent control aspect of the "Brooklyn Housing Theory Of Everything" is also a contributing factor to the "all landlords are slumlords" meme. One of the hidden costs of rent control is that landlords of rent-controlled units in areas with housing shortages tend to be able to get away with being quite a bit shittier to their tenants than landlords where rent prices are at market-clearing levels, since if you move you lose your claim to your current rent controlled apartment and you're likely to have difficulty finding a new one.
There has been a graph floating around showing that Gen Zers now believe that $500k is the “minimum” needed to be financially successful. Expectations have risen faster than reality? And maybe that is caused by the internet always exposing us to the wealthier?
Good deep dive. Just one thing that struck me, though, about one of the bullet point takeaways is that even if you're a renter, Zillow and RedFin help keep you very informed on exactly how far away you are from being able to afford a decent home in your expensive metro. So....maybe that helps exacerbate the cost of living perception/reality disconnect.
The winners in the current economy are too busy winning to write about how they're wining.
Or, cultural leveling is lagging economic leveling.
To unpack that a little, the reduced friction for applying for opportunities means they are open to a wider range of people. Opportunities that used to go to well-connected people now go to grinders. But the well-connected people still wield cultural influence, which they use to complain that they aren't getting the same opportunities their parents did. Meanwhile, the people who are winning lack either the access or the inclination to share their stories.
This leans really hard on income levels and prices, but almost not at all on risk. Things like job stability, health-care tail risks, eviction risk, or how hard it is to get back into the middle class after a bad break (such as --- graduating into the GFC, getting laid off in your 50s, long-term unemployment) barely show up. You can be richer than your parents on a chart and still reasonably feel worse off if volatility is higher and the downside is harder to recover from. That seems like a big part of how people actually experience the economy, imo.
in my opinion it's due to the inevitable effects of late stage capitalism. the huge amount of student debt most college graduates are loaded down with - and for what? nobody cares about your college degree when hiring anymore -, the truly insane cost of healthcare and the cost-benefit analysis of how much bang for your buck you actually get for your healthcare dollar, shrinkflation, the Temu-ification of most products, all of this makes it feel like everything is getting shittier than it was in, say, the 90s. on the 80s cheap things were poorly made and expensive things were (usually) better made. now even expensive things are poorly made in China.
sure. but that's basically the same thing, meaning just having a degree is required to be considered for a job, but it's no guarantee of getting a "good" (well-paying) job. the difference between now and say, the 1960s/70s is getting a degree forces most people to take on crippling amounts of debt for predatory student loans. so this thing that's required but not helpful is the same thing that fucks you over for decades. can't win!
sure. but that's basically the same thing, meaning just having a degree is required to be considered for a job, but it's no guarantee of getting a "good" (well-paying) job. the difference between now and say, the 1960s/70s is getting a degree forces most people to take on crippling amounts of debt for predatory student loans. so this thing that's required but not helpful is the same thing that fucks you over for decades. can't win!
For a lot of people, homeownership is the way towards building equity and wealth. Being permanently locked out of homeownership is frustrating.
I bought my townhouse in 2015 and pay about $1,500 in mortgage. If I were renting instead Id be paying twice that and not building equity. Additionally, my house is worth double what it was 10 years ago. I suspect that homeownership in the 20-30age range has been steadily decreasing and its at all time low.
Additionally, I think the increasing age of marriage is really impactful here. The world is really designed for two income households. If you're unmarried you're in a very tough position to build wealth.
Maybe primates are wired to think things are going well when there are lots of healthy children running around, and the dramatic decline in that is killing the vibe no matter how big the numbers on your screen get?
Depression and desire for change are adaptive responses to not having children from an evolutionary POV, no?
Yes, I'm less of a Trekkie than I otherwise would be because the lack of children (and natural areas for them to play in) kills the spaceship utopia vibe for me.
One of the main issues that I think you missed is that the vibes are now ubiquitous - they occupy nearly every waking moment of our lives. Not to mention that young people (spending proportionally more of their time and a greater percentage of their lives on social media/online) have pathological FOMO. The aspirational messaging (ads, short form video) about what their lives should be like is ever-present and virtually unavoidable given the need to be EOL to keep up with culture. TikTok/IG will show you a million unobtainable ways to be glamorous and powerful and you only have one life with limited opportunities. Everywhere you look, people are grifting by making their lives look better than they are. Young people have fewer comparators to help them realize how much of that is total BS smoke and mirrors - as opposed to boomers and gen x who are not only older with more experience of the world, but have a clearer view of the actual percentage of exceptional people vs regular schmucks.
This will be a big part of it, and though I don't have direct experience (out of the dating pool for some years), I imagine the dating market reflects it as well: men and women expect certain standards of appearance and consumption from prospective partners, so that it is difficult to opt out to a cheaper standard of living.
I'd like to see the vibes graphs broken down by partisan affiliation, with markers indicating control of the White House.
Suppose partisans are more likely to claim the economy is bad when they see the Hated Other Side in control, independently of real conditions on the ground (I would be astonished if this were not the case); whereas, when the Virtuous Our Side is in control, they judge their circumstances "normally", roughly the same way unaffiliated voters would (I am less confident that this is the case but it seems plausible).
Suppose the effect is proportional to how much brainspace they spend on hating the Hated Other Side. If most of someone's time is spent tweeting about how Everything Is Terrible Because Them Them Them, well, the economy is part of everything, and that's going to be more salient when they're asked the question.
Suppose that for the last ten years or so, a larger and larger fraction of the public have been spending a larger and larger fraction of their time drinking from a hatehose.
When one party is out, the other is in, so you wouldn't see a jump in overall sentiment whenever the White House changes hands. But you *would* see a jump in the by-party version, and *that jump would be significantly larger today than it used to be*, dragging the total numbers down -- partly just because it's part of the average, partly because of knock-on effects on the mainstream narrative.
So that's my hypothesis: the vibes drop comes mostly from the mindkilled, of whom there are more today than there were ten years ago. I don't know if a consumer-sentiment-by-partisan-affiliation graph exists, but if it does, and if the hypothesis is correct, it should show up in that graph.
I wouldn't be so quick to dismiss the argument that inflation figures are wrong. Like you said, if inflation has historically actually been much higher it provides a very parsimonious explanation for all the other data.
CPI might do a good job measuring short term changes in inflation, say year to year, but it's very unclear that it can be used to make long term comparisons between different decades, as all figures in this post implicitly do.
I liked this post a lot about ways CPI figures can be systemically wrong stretched over time:
The metric which that post suggests as a more realistic measure of real incomes is how many hours of median wages are required for a 30 year old man to provide: A running car. A house. 2k calories of food daily.
I asked chat gpt's deep research to calculate an index for that basket of goods and the index has been on a secular decline since around 1970, and in 2025 was only about half the 1970 value (i.e. it takes twice as many working hours to provide those goods now.) https://chatgpt.com/share/6931e385-c8b8-800f-922f-cf2202485000
Also even if the CPI figures are right, the composition might still matter. Broadly, essential goods are more expensive now than in 1970 and consumer goods are much cheaper. Even if that looks like a wash in CPI figure it could still mean a loss in wellbeing for several reasons:
1.) Maybe consumer goods are more likely to be affected by hedonic adaptation or have negative externalities. By normal CPI measures a smartphone might be worth a million dollars in 1970, but what is the actual hedonic effect of smartphones? (maybe negative?) Having a "one million dollar" smartphone isn't going to make up for not having a £300k house.
2.) Maybe consumer goods have steeper diminishing marginal utility. The same way having three right shoes isn't better than one right and one left shoe, being able to afford twenty 50" tvs isn't as good as being able to afford one tv + a house to put it in.
Another thank you for saying this. He gives data for everything else and this gets a heuristic (read: assumption based on vibes from unnamed sources), even though it's VERY central to all the other arguments.
This post also seems to ignore that even though all the factors seem "pretty good" or easy to ignore one by one, things have a way of multiplying when they're combined. It's tempting to look for "one big cause" for such a big issue when there is no such thing.
I think the truth is that a lot of economic numbers come from things that don't affect people who are on the verge of poverty in the same way; if stocks are up, and house value increases, and groceries cost more, but the average person near poverty doesn't have stocks or a house, so it doesn't matter; they still can't afford groceries as easily as before, and there is no "offset." Therefore it really DOES matter how inflation is calculated, and what categories are inflating, because it affects every class differently.
Amazing write up. Intuitively it seems that the bad vibes are largely driven by algorithmic biases on social media towards (1) negativity/rage bait, and (2) negative social comparison (ie "look how many people are having more fun/getting more stuff/achieving more than me"). I think older generations, lacking social media, had lower expectations in life.
So it sounds like society was ruined by underbuilding in a few key cities causing urban elites to produce too many whiny op-eds that convinced rural americans they had the same problems that exist in reality nowhere but the few cities, which caused them to elect a brain damaged used car salesman president twice. So the responsibility is split between the nimby coalition and ISPs: rural internetization was a mistake, some people just can't handle it. I will not forget this...
In my local circle, I have noticed that people now are WAY more percarious than their parents, and they noticed. EG, my grandfather got back from the war, got a job at good year on the factory floor until his back went out, then the company found him a couple positions where he didn't have to use his back; security guard, shift planner, company union rep handler, etc.
He eventually retired on his company pension and lived frugally but comfortably until he died of a freak medical accident due to a totally unique allergy, whereafter his wife survived for another 20 years on her survivors benefits.
My parents respectively are an alcoholic dead beat/ ex-teacher who worked her ass off doing her job+an entire other full time job to get on the property ladder before it was too late, has a market based pension that is doing ok, and is generally doing alright through not needing assistance in her life and not spending any money.
I am doing good through never having had to rent a house, I either lived with family or couch surfed until I could afford to buy shares in a family property at cost. I have a STEM degree that gets me the same equivalent purchasing power as my grandfather job at the tire factory. I have never received a raise above inflation except by threatening to quit or actually quitting. I have never had and will never have a guaranteed pension. I am doing better than most other millennials because I hate gambling, drugs, getting drunk, loud events, spending money, cloths, social media, having fun, etc; and I love doing all my own plumbing/cooking/maintenance/etc.
Even though I have no debt and a deep savings account, my life is significantly more precarious than my grandparents or my parents, though I have a higher status, higher paying, and more prestigious job.
People notice that shit. I would feel betting making way less and knowing that if I eg. got a TBI I wouldn't lose all my money, my property, and then die in the street without the charity of those close to me.
>Even though I have no debt and a deep savings account, my life is significantly more precarious than my grandparents or my parents, though I have a higher status, higher paying, and more prestigious job.
This might be rude but is it possible the thing you're really lacking is marriage and children?
Not in that sense, I mean in the sense of if I get in a bad car accident or get disabled touching a computer somehow, my entire material safety net is capital I have accumulated and an utterly unreliable insurance system that will do it's best to kill me if I don't wrestle with it all the time or a lawsuit.
Kids are also time sinks; watching them takes a lot of time and does have highlights, even if you aren't spending money. The sort of people who set the narrative tend not to be introverts who happily entertained themselves for free before kids.
Depends on when he gets the hypothetical TBI. If it's while his kids are young, that's extra precarious. If it's when his kids are adults, that's less precarious because they can help take care of him.
I didn't see mention of the fact that many people feel forced to take on additional jobs or side hustles. Perhaps the extent to which incomes don't appear to have fallen is driven by an increase in working hours. A Red Queen scenario where people appear to be in the same place but they must run faster to stay there. Seems like that could tank a vibe for sure.
Thanks for the info. I speculate that the high-rent, "culture-making" cities in the US would have a multiple-jobs rate significantly over that national average of 5%. Even higher for residents in those areas who have not yet achieved superstar tech/ finance/ professional pay. Which is a lot of people. And as Scott said, the people in these locations disproportionately set the discourse.
Could part of the explanation be the inequality problem, but turned on its head? In other words, the people who are complaining the most and the loudest -- and being heard the most -- are members of the Shouting Class (tm Noah Smith) -- who are predominantly in the top 20% of the income distribution, which is the quintile that (as your chart shows) ARE worse off in 2025 compared to 2020.
I would actually say that top posts/comments on Reddit are more influential in spreading the negative vibes than any sort of mainstream media, and I think the ones making those posts are not generally in the top 20%.
I think the vibscession is multi-causal to an absurd degree, with the largest cause most likely being housing, but additional causes being less clear and therefore more up for debate, but probably all contributing in some capacity. Which will necessarily lead to endless possible discussion on the matter and difficulty in forming any consensus.
Further, I suspect these various causes are a mix of: true things with serious impact, minor things that nonetheless have serious impact due to human psychology (loss aversion, status seeking, etc.), minor things that are exaggerated or feel more impactful due to political feelings related to them (billionaires or immigrants existing, private equity or foreigners buying housing, healthcare costs, etc.), things that aren't real issues but are felt anyway (similar to the example of crime going down but people still feeling it's up), etc.
It's a huge morass of all these things put together, with different levels of impact for any individual person that all ends up feeling like it's harder to get by now than it was at some point in the past. So it's necessarily going to be hard to pinpoint how much each cause contributes overall, other than, as mentioned, the housing theory of everything is probably the strongest contributor.
Have to agree with this. There is clearly something going on that makes it difficult for people to 'thrive,' as in feel secure about their future and start a family etc. Yet in my own professional life I have seen coworkers on ~35k ordering door dash, and heard people on ~200k complain about how they'll never afford a house, when they just bought a brand new truck, their third vehicle for one guy.
One thing not mentioned in Scott's article is the cost of a down payment on a house, which should be mentioned somewhere alongside the cost of a mortgage payment.
My personal hypothesis is that we just have *more things to buy* than ever before, so while many things are cheaper, people are buying more things, or even think more things are non-negotiable "must haves" (e.g. food delivery, annual overseas vacations, larger vehicles). This plus goods like housing, education, and healthcare getting more expensive make people feel more squeezed.
The ludwig institute has some interesting alternative measures of inflation. https://www.lisep.org/tlc
Here are some of their criticisms of the CPI:
Medical Care
The portion of CPI for medical care largely ignores healthcare premiums — which make up the majority of a medical budget in most households. For the bottom 60% of American Households, health insurance premiums account for more than 70% of all medical costs. The CPI instead focuses on the prices paid by the insurance companies, which is irrelevant for Americans’ budgets and spending.
Housing
CPI’s housing portion allocates less than 25% of the cost to rent, thus assuming a majority of Americans own their home. But for the bottom 60% of the U.S. population by income, only about half were homeowners in 2020. Making the issue even worse, the housing CPI relies mostly on surveys of homeowners’ estimates of the value of their own home. Alternatively, the TLC uses actual rental prices.
Technology
CPI for technology does not account for the fact that technology has gone from being a luxury to a necessity. The CPI attempts to price, for example, the cost of checking email. But it doesn’t consider that Americans are now expected to be able to do this instantaneously, whereas this was not the case 20 years ago. This paradox is reflected in the fact that from 2007 to 2018, the newest iPhone release price went up 100% while the CPI for telephone hardware went down by more than 50%. The TLC index instead considers the minimal amount of technology that families need to function in society in any given year, and then prices this bundle throughout time.
Transportation
CPI for transportation accounts for all transportation-related goods, including boats, new cars, and airline fees, which are largely irrelevant to middle- and low-income families. The TLC Index takes into account the price of only the necessities, including gas, used car prices, and regular car maintenance.
Yes to all this though I will note on your description (I hope less of an issue with the underlying index) that you really don't need the latest iPhone to check email.
And so today, we learn that free press and economic mobility were a mistake. The problem will eventually solve itself one way or another. It'll be fun looking back and breaking down exactly how bad the societal management of this era was.
Some theories, all bad, and all depend on the cohort of relatively well-off suburbanites having outsized impact on the vibes:
The hardest to prove and the one I believe most is that old people aren't dying. By this age the elites who write think pieces about society should have inherited their engineer father's home and summer home. Instead they're still earning $50k a year in a well-located, but tiny apartment, and their parents pay for their phone and car. By the time the old man kicks it they'll be 60.
Next guess is medical costs are truly, stupidly insane. N=1, and I'm definitely not a victim of the vibecession. My life's pretty good. I also own a house and have a wife and kid. But I carry way more debt than I'd like because despite paying $700/month in insurance, it cost $6000 (my out of pocket maximum) for my wife to give birth to our kid, and another $4000 to pay for complications from the pregnancy. That's nuts. If I also had student loans and a less good job I'd be willing to believe I had it uniquely bad if someone said so convincingly.
Next up is the manner in which elites were raised. My parents did a better job with this than most, but that's honestly an indictment of boomer parenting generally. I was a bright kid with a lot of talents, so I was told to go to college and get a good office job, that, in the words of Community's Troy "Does nothing, or at least from a distance looks like doing nothing." It was assumed that was an end goal. There was very little suggestion that I would provide other people with value in exchange for money, except in some abstract sense. It would not have occurred to me that the reason to be a lawyer or an engineer was to provide someone with legal or engineering services.
Finally, I think the most likely is just that people don't expect to have it as good as their parents. They expect to have it better. And that's not (quite) as entitled as it sounds. Productivity *has* massively increased thanks to automation, reduction of friction, etc. It's not insane to think the median dude should capture some of it.
So what we end up with is a culture where cultural elites' "children" are now 40. They see some guy who just inexpertly gutted the national government getting a trillion dollars. They grew up expecting to just get fabulously wealthy for being smart and following the rules. (They'd say they don't want this, that they just want to be "secure" but the amount of money needed to feel "secure" is actually infinite). The support systems that invisibly helped their parents like inheritance aren't functioning. And they just got a $10,000 hospital bill.
Why does the chart on percentage of wealth owned by generation start with the Silent Generation? Surely the Greatest Generation owned a significant portion of the wealth in 1990
Good post. Your list of hypotheses inspired me to think of a couple of other potential ones...
1. Aspatial Brooklyn effect. In the UK with rising minimum wage (*no bad thing*) there is now if I recall correctly, a smaller gap between minimum wage and professional wages. So if the vibes are set by the professional rather than minimum wage band this could add to the "I expected more for all this investment" effect?
2. Imperfect inflation measures. I agree that the experts will have thought about this, but I'd be surprised if it's not still an area of ongoing debate among the experts. Is weighting the hypothetical basket by spending proportion really enough? Or does that miss e.g. when essential goods such as food and housing+commute go up in price, that has a bigger impact, because what matters isn't the proportion of wages people spend on them but the proportion they *expected* to spend on them. Also when people have to settle for lower quality food and accommodation then does it show up in the stats?
"But can people notice this? Sure, you compare yourself to your friends, neighbors, etc. But do you really compare your age cohort to other age cohorts? How do you even mentally calculate the total percent of wealth owned by old people? Aren’t most old people hidden away in retirement communities where young people don’t see them?"
While per capita measures are probably more pertinent, I would totally ignore this. You could think of it as the amount of money 'sloshing around' the social spaces in which you would participate with your age-group peers.
One additional thing on the 'more work to stay in the same place' -- having a bunch of people applying for the same roles leads to lower quality signal in traditional application sources like resume pools.
The result is that hiring across the board is significantly more likely to favor more nepotistic sources. Think: a friend of a friend, someones son, someone that has a referral from someone else that you trust. That in turn means that increasingly high paying jobs skew heavily towards people who are already in the 'in-group'. A different form of wealth inequality, if you will.
Yeah, this is really annoying. I intentionally read posts in my email so I can avoid Substack's dysfunctional site, I don't want them to nudge me for more engagement.
I suspect they don't that on purpose to increase engagement -- the limit is quite long for most people who are not Scott.
Also, they don't get money for your visiting the website, but from subscription that people pay either way, so they don't have much of an incentive.
I imagine there could be some technical limitations in some e-mail servers. Or maybe it's sheer technical incompetence, that is also likely with Substack.
> But most people judge crime rates by what they hear on TV. Vanishing economic opportunity is much more personal. Can people really be wrong about something so close to their own lives?
I think the answer to this is basically "yes". As Krugman notes here:
... based on survey results, people generally reported that THEY were doing as well as before over the last few years, but the local/national economy was doing much worse than before.
This is more or less equivalent to saying that people's personal experiences diverged from their views about how things are going in general.
(Although to your original phrasing, I guess they're not literally wrong about something close to their own lives.)
1) manufacturing was relabeled supply chain unbeknownst to most of rhe world - supply chain consumes 85%-90% of company cost. Guess where the money is.
2) first year students I’ve worked with get 6-figure starting salaries
3) all the old-timers who GTD are retiring and not being taken over by AI - task modeling is barely possible
4) Numeracy positioned skills are snapped up fast.
5) if you could hire someone who can get boxes to customers vs marketing, guess who wins
6) Lack of talent has been a screaming crisis for now at least a decade.
7) 99% of People don’t realize how things get to them.
8) Software people are a dime a dozen.
9) My GPA is bigger than yours is bullshit and everyone knows it, Gradw inflation is a joke with hiring managers, believe me.
10) People who can conceptualise the planned purchasing, logistics, operations for a $1B data center, $10B chip fab, anything that scale at all I can count on one hand. And they’re retiring.
For young adults in particular, I don't think the bad vibes are at all new. My go-to illustration is the first verse of the theme song for Friends, which started airing in 1994:
"So no one told you life was gonna be this way / Your job's a joke, you're broke, your love life's D.O.A., / It's like you're always stuck in second gear / When it hasn't been your day, your week / Your month, or even your year"
Consumer sentiment is a lot lower now than it was in 1994 (55-ish vs 80-ish), so this isn't the whole explanation. I think the other half is that Covid and recent trends in national politics have combined to massively shake people's faith in institutions. Consumer sentiment took big and lasting hits after 9/11 and the 2007 financial crisis, too. These are also visible in Scott's slightly shorter slice of the series, of course. And further back (see https://fred.stlouisfed.org/series/UMCSENT), the index was down around 2020-2025 levels c. 1977-1982, which is generally attributed to a combination of the oil embargo, monetary policy shenanigans (first high inflation and then very high interest rates to bring inflation under control), and cultural hangover from Vietnam and Watergate.
Yes, I think the Covid hit to institutional trust is big. When you feel like you're all in it together, you can put up with more financial uncertainty than when you think everyone is trying to put one over on you.
Tentatively, people's incomes might not be too bad, but the likelihood of keeping a job is lower and (you mentioned) the difficulty of getting a new job is much higher.
Maybe already mentionned but the quality of what you get for the same amount of money may have got dramatically down and it would be impossible to notice.
When I compare my life to my father's at my age I'm not like "Oh, he earned that much with this qualification and I make less than him, therefore the economy is collapsing"
It's more like getting anecdotes from him riding a cool motorbike while the only one I can afford is a cheap chinese one that will break if I go too hard on it.
Then there are the non-monetary services that have disappeared and were never accounted for but perhaps increased material comfort, like homegrown food or off the book services
The thing is it seems super hard to quantify these
And yet he predicted exactly the phenomenon that Scott is here trying so hard to understand by applying the same analytical tools that produced the unhappiness he hopes to analyze
Didn't he protect that profit would decline, and the proletarian majority would be both deprived and concentrated to the point they would develop class consciousness and overthrow capitalism? He might have thought that plausible... in the "good old days" https://entitledtoanopinion.wordpress.com/2011/05/23/the-good-old-days/
I think people are also just WAY less patient these days. Everyone expects immediate gratification, and that includes success. Even people who are on track to an eventual promotion or saving up for a home feel that the system is broken when they see through their warped social media feed the many enjoyoors living the good life around them. They see the entrep-influencers on linkIn giving talks at conferences and the bro-fluencers bragging about their 7 businesses generating passive monthly income.
Boomers grew up in a simpler and less stimulating time, where often they enjoyed an evening reading a book, or listening to a record. Many of them worked very boring office jobs where there was no option to tune out via a quick glance at instagram or twitter. The brains of our current generations are short-circuited by everything designed to give immediate dopamine hits with minimal friction. If only the track to success could be the same.
So, how to sum this up... I think the expected payoff in gratification with any pursuit (be that financial, artistic, even spiritual), has dramatically shortened, most likely due to the prevalence of media (did it all start with Lifestyles of the Rich and Famous? MTV Cribs?) and social media (what was it Rene Gerard said about memetic desire?)
And when I'm done typing this response, I admit I expect a thoughtful reply almost immediately (please) :)
In addition, I think that people are perceiving more randomness in wealth and status. It used to be that doctors or lawyers or businessmen would earn rewards by doing something visible or (theoretically) repeatable. Nowadays it looks like some idiot going viral for inscrutable reasons. People perceive more chance for advancement when the pathway is legible, rather than all the visible top earners being, essentially, lottery winners. The first suggests "I should (and can) do this, it could be me." The second suggests "This sucks, it could (should) have been me, but it isn't and that's unfair."
Some more questions I think we need to ask ourselves:
- Are young people seeking different jobs than previous generations, and are those jobs concentrated in cities with higher cost of living?
- How do average mortgage / rent costs compare within the 20-35 demographic with what that demographic paid in the 80s? Are old people dragging median mortgage / rents down?
- Are there different expectations as to what kinds of jobs young people want? Is it true that most boomers were happy being local firefighters, while most young people want to be Googlers? Do certain average jobs seem less prestigious or fulfilling, perhaps due to how these jobs have changed? Is there an increase in social mobility that precipitated this ("if some of my peers are Googlers, I want to be a Googler too")? Perhaps contact with distant / former peers through social media? If a classmate moved to NYC in the 80s, you wouldn't see much of them, whereas now, you see their prestigious lifestyle through social media?; does this affect life satisfaction? Do influencers create unrealistic expectations?
- Is the belief in the vibecession correlated with social media use? Mainstream media use? Political camp, even if on same side (e.g. traditional / liberal left vs. "cancel all the things" left)?
I think the vibes are bad because they represent a break in the implicit social contract that says if you Learn to Code then you won't have to worry about social status precarity.
One thing you got close to but never nailed was the perception of unfairness and overburden facing young professionals these days (the vibecession only applies to middle class people in their 20s, not the actually not well off).
We might make more than our grandparents did at our age, but at least they knew they had it best at the time; there was no social safety net for the poor, there were far fewer aging retirees going on cruising, the country was on the up. Meanwhile, we know that while we are technically doing a bit better, so much of our excess productivity is being redistributed to massive strata of the population that used to get far less of a share of middle class young professional productivity.
If the poor and the elderly had the same consumption patterns now that they did in 1950, young middle class people would be massively better off, and we know it.
Yes, the "but look at the gold" people are lunatics and wackos, but inflation _is_ chronically and intentionally understated. While the methodologies and data central banks use are secret, we know enough to know that it's preeeetty bullshitty and they can, to an extent, get out whatever number they want. And they want to get out a number that shows they're not completely shit at their jobs, and that things are good, because if they get out a number showing they're shit at their jobs and the economy has been contracting in real terms, people freak out, they get fired, and the economy tanks even harder.
(Obviously made-up numbers to illustrate the point)
One of the methods used to fudge inflation numbers is including a term for "quality". So if TVs get twice as expensive, but the inflation-adjuster can justify to themselves that TVs got 4x as good, then they put in -50% for that term.
Another is when things get more expensive, they just take those things out of the basket so the basket doesn't look as bad. If beef and chicken go up 100%, then just take out beef and chicken and substitute lentils or eggs or whatever.
(Roughly accurate numbers from the top of my head, not literally correct but correct-ish).
We've had years in Canada where housing costs went up 30% (nominally 30% of a household budget, roughly), and food also went up, sometimes a lot (10-20%+), and economists will say with a straight face that headline inflation was 5%. Sorry, but that's just patently absurd.
Speaking again for Canada, you cannot convince me that people are better off in real terms than 20 or 40 years ago. An hour of work buys less food, less housing, less education, maybe a little more clothing (but of substantially inferior quality), less gas/energy. Every single thing is less affordable.
You seem to be guilty of some motivated reasoning, because your conclusion (that inflation is understated due to technological change) is the opposite of what almost all thoughtful researchers have concluded. I sometimes wonder why people come to such strong conclusions without apparently having looked at extant research at all.
I have a half-baked theory about downwards mobility that I haven't really examined and am not totally sure how to examine.
Some segment of people grew up in affluent upper middle class households. They went to college, they got degrees from prestigious universities in the humanities, they entered the workforce. But they entered into one of the fields that doesn't really pay well now (ie not software/finance/law). They make a cross-generational comparison to how they grow up and are struck by how much worse off they are than their parents were.
My general theory is that this segment of downwardly mobile people from upper-middle class backgrounds with lower-middle class incomes are disproportionately vocal (in part because one of the professions that has become worse to work in is the media). On the counter, the people who are making high incomes in many of these fields are disproportionately immigrants or the children of immigrants. Moreover, people who are doing well attribute their success to themselves, those who are doing poorly attribute it to society.
Of course the shape of this isn't necessarily knew: fathers making solid incomes as longshoremen and their descendants making bad incomes as longshoremen is such a good concept they made a season of the wire about it! But what's perhaps new is for this downwards mobility be happening to people in what were historically high status jobs, and to people with the capacity to be publicly vocal.
I think it would be interesting to look at changes in wage levels by occupation, especially historically high prestige white collar professions. I also think it would be interesting to look at non-transfer income vs parental income and see if it has explicatory value.
I do think this somewhat ties in with your theory about people feeling that they put in a lot more work just to get to the same place.
Related to this, I suspect that a lot of people feel downwardly mobile as young adults even if they aren't actually downwardly mobile, because of subconsciously underestimating or overlooking that people just starting out as adults tend to have lower income and much lower wealth than people who are mid-career. If you're a fresh college graduate with upper-middle-class parents, then even if you're on an upper-middle-class career trajectory you're likely to feel poor compared to your parents because you have only observed your parents' lifestyle and financial situation when they were probably quite a bit older than you yourself are now.
The contrast is going to be sharper if you stumble a little out of the gate and it takes you a few years to get onto an upper-middle-class career path. And it will be sharper still if you're actually downwardly mobile and never get onto a career path that matchs or surpasses that of your parents.
Every explanation for the vibecession that does not attempt to explain why there is a huge drop in 2021 specifically and persistently lower vibes for the following years should be disregarded. I think the best explanation is just inflation: this is what is most different in 2021-2024 compared to previous time periods, but you can also blame the shift to remote work, or higher housing prices. Examples of bad explanations would be "phones bad", "media bad", or "inequality bad" without explaining why they became worse in 2021.
There are a lot of comments here about the lack of job security, the need to network, the number of applications, etc weighing on people. And that is probably true to a degree--I am going through a job search right now as my current company prepares to lay people off. It's not fun!
However, I have actually worked at one of those old fashioned, work-there-for-life companies. This was around 2010--it was a very old financial services company that had started in life insurance and branched out from there. Almost everyone who worked there had worked there for decades, there was a pension, lots of benefits based around the idea that people would be basing their careers around this one company. And it kind of sucked! All decisions were made by the cadre of old white guys at the top, decision making was extremely slow, promotions could be had but you had to wait your turn. The company was proud of no layoffs ever, but the salaries were not great and initiative was not rewarded (better to let the folks at the top make the decisions). There was a decent amount of sexism (even by the time I worked there, women who had kids were looked at with a certain degree of disapproval), and racism (I have never heard a high-ranking executive use the phrase "jew them down a little" in front of a whole division of the company). There was very little push by anyone to make things better or improve processes and things were extremely inefficient on every level.
I know that wasn't exactly how every old time company worked, but I'd suggest that the type of companies the "Company Man" used to work for were more like this than most modern companies. Competition can be frustrating but it also has benefits.
They're not. First, CPI is pretty bad and all of those graphs you made should be re-based using PCE inflation instead. The difference between CPI and PE inflation tends to be small month to month, but the difference compound over time and become substantial. The overall effect is that deflating CPI over time leads to over-deflation (it's well-known and is usually even taught to undergrads that CPI overstates inflation) and a downward bias in real measurements. Again, these differences are not trivial, e.g. https://fred.stlouisfed.org/graph/?g=1I5eB
Second, a thought experiment. Suppose you could go back in time 30 years and take your smart phone with all of its capabilities with you. The technology would be considered miraculous, the single most valuable object on Earth, and you'd be the wealthiest person on Earth for owning it. Today that same phone is such a commonality that it's taken for granted; kids have them, homeless people have them. So in what way does it make sense to compare this kind of wealth over time? Or the basket of goods that one dollar can purchase? That isn't a rhetorical question: it *doesn't* make sense. The problem with inflation as measured by a basket of goods is that the basket of goods changes in ways that fundamentally cannot be quantified when you have an economy with rapid technological change and a long enough period of time. If the period of time is short enough, you can try to do hedonic adjustments (and they do), but that has limits to its applicability.
To be sure, the "shadow inflation" people are cranks. And measured inflation is still useful in shorter time intervals since the error won't compound so much (e.g. most macro models use inflation to calculate period-specific real quantities like this month's change in nominal wage minus this month's inflation). But these long-term comparisons of real measurements are such nonsense.
Hi! I’m the person who coined and first published this term. I’ve been studying this phenomenon for the past four years, so forgive the rather long comment! A quick factual clarification: the Vibecession began in 2022 as the sentiment–data divergence that opened up that summer is the real starting point. The decade before didn’t have the same shape of malaise, which you can see in the sentiment data you included. People who’ve also been working on this topic tend to focus on the same pressures you outlined like housing, education, measurement problems which are absolutely part of the story. Maybe this is what you meant by smoking gun, but the Vibecession has crossed into somewhat of a meaning-making crisis which shows up in collapsing trust and inconsistent reactions to the data. Every generation has one of these, but ours is flattened across all ages due to social media and those tighter economic constraints. Expectations around future stability collapsed at the same time institutions lost credibility, and that combination changes how people interpret even good data. Also the post-2020 political environment runs on performance and constant identity signaling, and economic sentiment gets lost in those dynamics, which is why the usual models don’t fully explain what’s going on. Finally, we really aren't in one right now, as the economic data has deteriorated meaningfully and the negative sentiment is warranted at this point.
One thing I thought when I came across the ‘vibecesion’ meme is that, in France specifically, we’ve been having one since at least the 80s (I’m a Gen X).
I don’t know enough about the USA over that time but moving from Paris to London in the late 90s, that was one thing I noticed - Londoners were freer with their money and felt less grumpy and unhappy…
Paris eventually recovered and/or London eventually lost its swagger so I don’t think it’s true anymore but, still - most of my life, people have constantly complained everything was always getting worse.
In France/Europe, I feel this is due to the high unemployment and underemployment/ the end of the post war boom. It seems we never recovered.
The USA does seem significantly more perplexing given how the post 70s-80s period does have decades of good economic environment (the 90s notably).
Could it be a steady rise in background fear/anxiety? In the 2000s, you had a stock market crash, 9/11, a recession in 02-03, the GFC in 08/09, a slow uneven recovery for 10 years, a pandemic in 2020, inflation in 2022 and now AI is going to kill us all or take all the jobs and women don’t want to fuck anymore…
So even though one may have navigated through all that ultimately well enough, it may sure feel uncomfortable and unstable?
The Boomers may have to contend with their own series of crises but job security & family formation weren’t in doubt?
Prof Galloway statistics may be cherry picked but it does feel like something is rotten beyond just ‘vibes’?
Good points you’ve raised but one point of disagreement - women definitely still want to fuck, lol. Maybe you meant they don’t want pregnancy quite as much as they used to because of the opportunity cost?
But, yes. Though before babies, I would worry about marriage rates. It seems to have dropped in a way that is not explained just by more people pursuing higher education.
> Could it be a steady rise in background fear/anxiety? In the 2000s, you had a stock market crash, 9/11, a recession in 02-03, the GFC in 08/09, a slow uneven recovery for 10 years, a pandemic in 2020, inflation in 2022 and now AI is going to kill us all or take all the jobs and women don’t want to fuck anymore…
This (in addition to home-ownership and job security) is what I tend to emphasize in my headcanon. Zoomers have known nothing but back-to-back crisis, and yet boomers are surprised that the youngins are all completely blackpilled on their future economic prospects.
I think what’s missed here and in other attempts to explain/understand the “vibecession” is how first mass and then, even more forcefully, social media has moved expectations/perceptions. Millennials and subsequent generations have been more exposed to extreme wealth and power than any previous generation, so, while they may technically be doing better than Boomers at the same point in life, they are comparing themselves to who they see on TikTok, Instagram, etc., not their peers and predecessors. I think Kyla’s discussion of the Attention Economy and increasingly casino-esque nature of markets gets at this, but I think the extent of interconnections here are only just coming into focus.
Essentially, I think the vibecession is a case of missed expectations much more than the economic anemia of “real” recessions. But missed expectations can produce learned helplessness and defection, which is what then produces converts felt bad vibes to actual downward slides.
I think it’s the phones, again. Every generation has had winners and losers, and average people, financially, but in previous generations you heard from the winners, as they got famous and influential, and you heard fron the average people, as they were the peers. You didn’t hear from the losers. With the internet, you disproportionately hear from people with a chip on their shoulder and a lot of free time.
I don’t remember the exact wording of the question, but I remember a survey stating that while yes, people thought the economy was in the dumps, they thought they themselves were doing fine. They were just reporting that their impression was that things were bad out there. If you picture of the word is shaped by reddit and twitter, that makes sense even if the people posting there aren’t a representative sample of the population.
How does this square with the idea that social media tended to show our peers lives better than they are and this makes us depressed? Do we get depressed when we see people better off and when we see people worse off?
"We know of other cases where the public believes things are worsening even as they get better: crime rates are the classic example.
But most people judge crime rates by what they hear on TV. Vanishing economic opportunity is much more personal. Can people really be wrong about something so close to their own lives?"
Well, people only live within one generation. They know about their own lives, but they have no benchmark regarding what things were like growing up in a different era. So when people complain about the present relative to the past, we have no basis on which to defer to their judgments.
I appreciate the desire to be fair, but this piece bends over backwards too much to avoid the simple conclusion that things aren't that bad, and people have just gotten a lot more neurotic. There's a long term trend of news getting more negative, phones have added to the problem, and anxious and miserable people just see everything in their lives as worse.
And this explains the drop in consumer sentiment in 2021 and a persistently lower level how? I'm open to the idea that covid made people more neurotic, but if you mean that you should say it explicitly.
One aspect of the “vibecession” discussion that can't be shown in charts is the increase in number of expenses that are considered “necessary”. If you compare the number of line items on my budget to my parents or grandparents, the difference is stark, and I consider myself much more frugal than my peers. A few examples: financing cars was far less common for boomers than it is now; radio and television were largely free; eating takeout was far less common; internet bills didn't exist; etc. An anecdote that really struck me highlighting this comes from Stephen King's book On Writing. In it he writes that he had to take the call letting him know that his first book, Carrie, was getting a very lucrative advance from his neighbors house because he didn't have a phone in his house! Compare that to now, where every household member has their own phone (and associated bill) and you can see how different things were for older generations. The inflation numbers (whose accuracy is much more suspect than you are letting on) may show that wages have kept up with existing costs, but those numbers won't account for new costs that didn't exist before and are now considered normal.
I lean heavily towards the "ivory tower High Modernist metric" AKA GDP explanation, with new expenses being a huge part of my narrative. I want to emphasize insurance, childcare, healthcare and government general.
Measuring median income presupposes that people want the things they're buying, including government expenses purchased with dollars that never reach the income earner's account, products that the purchaser only bought because some regulation said they had to, and products that were only purchased because they were heavily subsidized.
One thing that this post doesn't quite address is that there seems to be a discrete shift associated with COVID in what economic indicators contribute to the vibe (this is not my thesis, I got it off Twitter, but it informs how I think about the "vibecession" quite a bit): https://x.com/quantian1/status/1688398356303826944
Between 1981-2019, consumer sentiment could be predicted from a basket of pretty normal economic indicators (inflation rate, change in inflation rate, unemployment rate, change in unemployment rate, housing prices, strength of the dollar, interest rates, and stock prices). This feels kind of "just so" to me, but the thread asserts that, since you get the same fit and divergence training the data on fractions of the 1981-2019 period, it's not overfit (I feel like I don't know enough statistics to judge this). After COVID, three attitudes change, of which the third change is the most significant: the unemployment rate seems to matter a lot less now, people prefer housing prices to fall rather than rise, but most significantly it seems like interest rates now matter a lot and people HATE when they are high. (Speculatively, a lot of the relatively good 2010s economy ran on ZIRP -- https://www.readmargins.com/p/zirp-explains-the-world -- and when that stopped being possible the vibes became bad.)
That said, I'm not sure I have a clear-cut answer for why interest rates would abruptly become much more important to consumer sentiment when COVID happened in such a discrete way. The biggest shift in ordinary people's experience of the economy is indeed mortgage payments, but we don't think of the vibecession bad vibes as being primarily a homeowner phenomenon, and many of your points stretch back into the 2010s (eg, the Brenda Boomer vs. Martha Millennial comparison), whereas actually there was an abrupt change in 2020 in what economic indicators matter for the vibes.
~~
(Much more speculatively, I think there are a *lot* of trends in American public life that point in a certain direction until 2020 and then reverse, even besides "what economic indicators are important". The two I'm most confident about are LGBT acceptance/support for gay marriage, which rose steadily for decades, peaked in 2020, and is now declining; and evangelical self-identification -- not church attendance or belief, self-identification -- which peaked in 2020 and is now declining. There are several others that I think turn around this time but where I'm less confident COVID is the peak, and I think that you could tell a coherent story where it's downstream effects from the collapse of Venezuelan state capacity, since most of Latin America sees similar trends -- but it's not obvious to me why that would cause a huge shift in the US and I don't think this is the cause of American changes. But there's a pattern where the evolution of public opinion on many issues pointed in a particular direction consistently from 1991-2020, and since then has reversed. I don't know what caused this, because I don't necessarily have a good theory for what caused shifts in social attitudes between 1991-2020, but I think COVID interrupted *a lot* of how people make sense of the world around them.)
I guess when all you have is a hammer, everything looks like a nail. But even though this was another great post, and a brilliantly conceived analysis; whenever I read something about how Things Are Actually Great, part of me can't help but thinking "another few thousand words written by a homeowner to try to prevent infill development."
And the thing is, I get it. If I suddenly on the home, I might find myself waffling on the issue... But I'm not there yet and I don't have to struggle with that bias. The cost of housing, especially for renters, is massively damaging quality of life and I think it's poisoning the vibes.
Even if your income has gone up and your overall cost of living hasn't changed, the secular increase in housing costs as a proportion of your income is going to be demoralizing.
Love this! This dynamic has been driving me nuts for a while now and I am happy to see another person address it, especially at this length.
A couple of additional thoughts come to mind:
- While the CPI ownership/rent equivalent might not be perfect for tracking the increase in housing prices as you note, CPI does place a 35% weight on that cost which is actually quite a bit higher than actual median income share spent on a mortgage (to say nothing of median rent, which is even lower).
- It's obviously still possible, as you note, that housing cost increases, which are a very real issue, are carrying a disproportionate burden of "the vibes". However, I think it's worth noting that ~70% of Americans are homeowners. So those rising prices actually make the majority of people wealthier. Also, the homeownership rate for Millennials isn't tracking much behind that for the Boomer at the same ages (a couple percentage points). Yes, the younger generation is paying more, inflation adjusted, for those houses. That's not ideal. But also it can't really be said they are getting negative vibes from being locked out of homeownership or something.
- There was one item I was surprised wasn't mentioned: all the polling that shows people say their personal finances/economic situation/etc. are good but the same for the country is bad. I wonder how you think that fits in to all this? Like, are the vibes not actually an individually felt phenomena, but a projection? That would seemingly add weight to the "it's the media!" explanation. Or is it this a "punditry bias" thing?
This is a good article, but the claim, "Mortgages have gone up 100% since 2021. But this doesn’t fully explain the vibecession, because it seems to have started before that, and even non-mortgage-holders are angry."
Non-mortgage holders are likely angry at that because the high cost of a mortgage for many precludes them from getting on in the first place.
I think the best theory is that phones and the loss of social capital have made folks depressed.
You're much happier with a ton of friends and social events, and folks don't do those as much now, so as mentioned, they feel they need to be in the top 1% to be happy, when they'd probably be happier with more friends and meaning than more income, but they always think more income is the elixir.
Thanks for a compliment and dispassionate overview of the vibecesssion. Allow me to attract attention to a piece of data that goes with the very large increase in the number of university graduates documented in your piece. A highly publicised study has recently reached the conclusion that the average IQ of the vastly expanded body of university graduate has become close to that of the average population. This may result in a widespread reaction of dissatisfaction among the young similar to that observed among the general population in the recent inflation episode: each individual feels robbed of his hard-earned fruits of his salary increase (university education) while failing to recognise that without the general inflation he would not have been able to gain the salary increase/university education in the first place. At the same time it is probably true that selective universities have been resuiring heavier entrance credentials thereby increasing the deadweight losses associated with the competition for entry.
I have not been able to find data to assess this, but my pet theory is that the basket of consumption middle class people are chasing as "normal" has changed.
Anecdotally, I see this on:
1) expected square footage per person in housing (e.g. kids sharing bedrooms seems much less universal than it used to be)
2) vehicle space per household member. Meaning both size and number of vehicles. My perception is also that "cars as status goods" has made its way further down the socioeconomic ladder than it used to be but that's wild speculation.
3) frequency, duration, and distance of vacations: I blame this one, perhaps unfairly, on the prevalence of travel vloggers. Here there is some data: https://ourworldindata.org/tourism
Basically: while people have gotten wealthier over time, the standard of living they're pursuing has increased even more, which can come out as feeling poorer on net.
"1) expected square footage per person in housing (e.g. kids sharing bedrooms seems much less universal than it used to be)"
Definitely, this was a discussion over on TheMotte and some of us (me) shared our experiences growing up where it was normal for kids to share rooms, and the OP (who apparently thinks it's inhumane third world conditions if there were two kids in bunk beds in one room) finally snapped and snarked at me about my shitty childhood. Fun times! At least I wasn't the only dinosaur relating how "sharing a bedroom used to be normal, my friend".
So definitely there is the expectation "I will have two children at the very mostest and they must each have their own room from the second they are delivered and of course I and my co-living domestic partner need a bedroom of our own and maybe a guest room and and and", which costs a lot of money now if you're looking for a house, and if that is your minimum acceptable standard of living to not give your spawn shitty childhoods, well then yeah. Things look dark and bleak and terrible because only a billionaire can afford all that, right?
Though I do think cost of living in general has genuinely gone up as well.
I think that the media emphasize bad economic news because that is what people, especially young people, want to hear. I see the vibecession as just one of those social contagions, like teenagers deciding that they are all queer. (I'm a Boomer and an economist, in case you were wondering.)
This doesn't seem to explain the steep drop in consumer sentiment in 2021 and a new persistently lower level of average consumer sentiment, unless media companies weren't emphasizing bad economic news prior to 2021.
If you admit the possibility that people suck at attributing why they are unhappy, then you should be open to the possibility that non-economic concerns might drive responses to economic survey questions.
We are stalled out on climate, education, automation, representative democracy, social connection... and many other issues of legitimate concern. Not everything important gets picked up in economic measures, but some non-economic things that are important might get picked up in economic vibes.
Regarding the vibes portion: there is a potential that the reduced attention spans are a correlate for reduced patience and immediate gratification, such that the younger generations are not achieving boomer-level success in their 20s and 30s, but having not seen boomers work through their 20s and 30s, they don't understand the years of slogging through hard work to achieve the success they expect.
Combine impatience with higher educational attainment, wherein a boomer may have needed a bachelor's to achieve a certain job, but now a master's degree is required for the same job. This is because of a few factors: grade inflation means the bachelor's doesn't have the same credibility it used to, bachelor's is more prevalent so not as much of a signal, and bachelor's-level work has been automated so to provide value you need more education.
So a Gen z hears stories about a boomer who gets a job from a bachelor's, and is able to buy a home and support a family. That same Gen z needs a master's to achieve the bachelor's-level success, and doesn't have the patience to do that, so vibes take a hit.
A lot of debate here is about how we perceive present conditions. People may feel it’s hard to cover rent or find a stable career, and I can’t argue with how someone feels about their situation. But implicit in this is a comparison to a counterfactual of what their life could be or should be; maybe idealization of the past is the problem?
When people think back to the good old days of 1995 or whatever when we were happy and free, what do they base this image on? Mass media from the era shows wealthy nuclear families in spacious suburban houses. Your lived experience was a childhood where your parents were near the age of peak lifetime earnings. A pretty nice fantasy! But not what life was like for the equivalent 90s version of yourself at the time.
What people need to hear is: your struggles are real, but people in the past also had these struggles, and then even more so.
Michael Green posits that it's a combination of (1) the cost to participate in society has risen, even if the goods being procured are less expensive (2) inflation disproportionately affects necessities like housing - see point 1; even if the housing is better, it's vastly more expensive (3) the marginal gain in quality of life per dollar of income is very bad at certain thresholds, and in fact negative at crucial points.
Scott says that housing costs have only gone up 10% as a proportion of one's income. And that that isn't enough to explain bad vibes.
But that's kind of assuming that the housing-cost-ratio was reasonable before it went up 10%. If the ratio was already on the cusp of being unreasonable, could 10% be enough to break the camel's back?
House prices are a large enough fraction of income that, as prices go up, we might expect people to mostly pay the same for worse housing, as opposed to paying more for the same quality of housing.
Sure. In which case I would rephrase my question this way, "Is it possible that in the past few years, non-affluent people have seen their housing downgraded to the point where we have crossed a significant threshold of soured vibes?"
An additional consideration: I've often seen it claimed that the rise of remote working has motivated people to value larger, more comfortable homes. The more time you spend at home, the more you will be motivated to care about the less ideal attributes of your home.
Yes, but they have other good qualities, like maybe they are unusually attractive or charming. If you are median or below in those qualities then you need an 80th percentile income to be reasonably confident of finding a wife.
31% of the U.S. is single. If half of those are male, and 90% of that group is straight, at most 14% or 15% of the population may have this as a meaningful potential contributor to The Vibes.
I obviously don’t stand behind those specific figures, which are illustrative/rhetorical and tbh look hella low to me. But I shake my head a little when comments on a forum
of generally high quality appear to assume that the discussion is entirely by and for straight men, as if nobody else is reading — no, worse than that: as if nobody else in the population at large is affected by or contributing to the “vibes.”
On the Brooklyn theory. If media sentiment was the main factor wouldn't you expect it to vary in English speaking vs non-English speaking countries? Whereas, you get the same phenomena in all the developed countries as far as I know.
One thing I'm curious of is if the cost of raw goods is only slightly higher, but what counts as the baseline version of that good has changed, something like 'lifestyle inflation':
Examples:
pre-covid: spend $12 on dinner
post-covid: spend $40 to doordash dinner, even if the raw ingredients are only slightly more
pre-covid: go to irl spots to date
post-covid: subscribe to multiple dating apps to date
pre-covid: time split between office+home
post-covid: more time at home, higher expectations of space+quality, fewer amenities provided
Most of these seem like longer-term trends which covid accelerated.
It's hard to know the right way to measure this, but if we look at the revenue from all of these consumer companies (e.g. all delivery services, all streaming services, I even subscribe to chat apps and social media now, neither of which I did prior to covid..) over the last decade, it's a large figure and has to be coming from somewhere.
Generational inequality can become very noticeable, though, if you think about differences in consumption patterns. Think about how much of the economy is geared towards producing for which cohort. Older people living in suburban homes have very different consumption patterns from younger folk renting in urban areas. A lot of lawnmowers are being produced, but not enough matcha lattes because the older folk now have a lot more relative economic heft than they used to.
Even CPI wouldn't necessarily capture this difference. The basket of goods will also be biased towards the more numerous Boomers' consumption patterns. So one would have to look at cohort-wise CPI adjustments to rule out this story.
From an economist's perspective, there could be another explanation: if people are rationale, they may be taking their lifetime disposable income into account. When social security is bankrupt, and deficits remain high, and the only way to preserve benefits is to continue to increase the future tax burden on millennials and gen Z, then perhaps some deep pessimism is totally rationale. I don't say I believe that story, but it is one potential explanation from economists.
The catch is that expected death of Social Security isn't new either. 35 years ago, I assumed it would be bankrupt by now. My grandfather told me that he had expected social security to be bankrupt before his own retirement in the 1970s.
This doesn’t fit chronologically too well, but rates of obesity, diabetes, and chronic pain have shot up dramatically since the 90’s at least, with a related surge in unemployment and disability. Youth pre-diabetes is skyrocketing too.
I can’t help thinking that all these miserable people are dragging down the vibes for themselves, their family and friends.
A sense in which I gather "the vibes are bad these days" which was only tangentially addressed here: the vibes are that old people have too much power and sacrificing us for their benefit:
1. Elected officials are really old these days, because increasing life expectancy has decreased a significant source of turnover.
2. Old people are a larger fraction of the population, so their votes have more influence (this is true, as you addressed)
3. Old people have a higher share of wealth (true, as discussed here) so their campaign contributions have an outsized influence (do they actually donate to campaigns proportional to this wealth? idk)
4. It often takes a long time for the government to bring about change when it wants to do something with infrastructure (see e.g. LA's Measure M, passed in 2016 to build out more public transit, but which is still working on delivering it's projects, or California High Speed Rail, which was passed before then and still not connecting any cities with high speed trains), so in many senses it matters how old the people who were voters/electeds a decade or more ago are, making this worse (the vibes are that programs like that are getting worse/slower, making this aspect worse, but idk how true this is).
5. Old people disproportionately run the businesses we have to work for (unless you want to run your own business, which I don't) due to it taking a long time to work up the hierarchy, giving another axis of influence (is this getting worse? idk), and they make decisions to enrich themselves at our expense (which is maybe unfair to lump in a small group of people as "boomers" more generally, but vibes don't care about details like that).
What does it cost to buy future stability? Can it be done?
We've got climate change eating at the idea that institutions or countries can continue without shocking alterations. We've got AI eating at the idea that skills will allow you to earn a living. We've got inequality eating at the idea that changes will benefit instead of harm you. And we've got the decreased friction that makes it feel like everyone hates you, personally.
Problem is that the people pushing that line have never admitted it was a problem to begin with. And we can all see it is, just from the cost of natural disaster numbers.
>For another thing, the loudest complaints come from young people who don’t have mortgages anyway.
>This on its own can’t justify the entire vibecession, because most vibecessioneers are renters,
This feels to me like saying 'People have proposed that the recent turmoil comes from the increasingly high price of bread, but most of the complaining actually comes from very poor people who can't even afford to buy bread in the first place, so that can't possibly be the problem.'
People who want a home and can't afford one are exactly who you should expect to be complaining the most about high home prices!
>No. As we see here, over the past decade, the bottom quintile has done (relatively) best of all:
I feel like the 'relatively' is doing too much work, here...
Imagine the thought experiment where the lowest quartile started off making $10,000 and went up 5%, and the highest quartile started at $500,000 and went up 1%.
That means the bottom quartile is making an additional $500, and the top quartile is making an additional $5,000
There's a narrow syntactic definition by which you could call this 'decreasing inequality', but I don't think any of the bottom quartile people would experience rich people's income going up 10x more than theirs in real dollars as 'decreasing inequality', and celebrate this great victory.
Furthermore, things like houses and pizzas are bought in real absolute dollars, not in percents of income. If rich people and poor people are competing to buy those things in a market, the determinant of who gets what is how many real dollars everyone has, not by what percent their relative incomes have changed over time.
I think what young people are really complaining about is a lack of mobility. Sure you may make the same money as your colleague, but at the end of the day you may feel stuck due to the class you were born into. Let's call them Person A and Person B, who are both 25 and make $60k.
Person A:
- Born into upper-middle class
- Got mediocre grades but passed
- Great healthcare/dental their entire life, checkups cost very little
- Parents paid phone bills, medical bills during student years
- Assisted or paid for their education in it's entirely
- Helped with a down payment on their first home
- Stand to inherit some portion of the family home/money when parents pass
Person B:
- Grew up middle-lower class
- Busted ass to get top grades since they were told it's the way out of the life they've known growing up, but ultimately wound up in the same job as Person A
- Accumulating health/dental issues due to not being able to afford them earlier in life, gets hit by them now that they have a "real " job
- Saddled with student debt that eats at every pay check
- No money to pay for a mortgage after other expenses come out
- Parents leaving little-to-no inheritance, so they need to save aggressively for later in life
Even if Person B's top grades and perseverance land them a job earning twice as much as Person A, there's a real chance that they're still stuck in the class they were born into.
The more any quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.
the data the economists use has been campbelled to meaningless
and on the other side
Spengler disease :
people with no real material problems like to complain A LOT
as society gets richer , more and more people get to complain
there is also a possibility of the entire system degrading as a whole (though I don't believe that it is the right explanation). but in theory, it could be that "the same set of people" is no more "competing for the same set of results", but instead, for a "some smaller set of results". e.g. "all the good paying jobs have suddenly moved to China".
It's very important to distinguish between household income and personal income because the number of earners per household has been shrinking. Real median household income is up only 38.5% in the trailing 40 years, but real median personal income is up 60.75% (source: https://fred.stlouisfed.org/series/MEPAINUSA672N) That's almost a doubling of the gains in income, if you look at individuals instead of households. H/t Thomas Sowell who raises this point in several of his books. No one should ever quote household income figures for purposes of evaluating the state of the labor market -- it's extremely confounded by social changes in household size.
Can you explain this? I would have expected household income to go up more, because now more women are in the workforce. Who is leaving the workforce? Were people's live-at-home children working 40 years ago?
Almost all the increase in female labor force participation happened more than 40 years ago. The trend plateaued in 1988 at 83%, vs 65% in 1948. Almost all the increase in single parent households also happened more than 40 years ago so I’m stumped as to why the figures diverge so much. Fewer children pooling their earnings into the household total?
CPI is fine, but AFAIK the basket of goods does not factor in changes to the quality of the goods. While shirts and pants are about the same price or cheaper than they used to be, they're also made of plastic, baggy and stretchy, and are often tossed after just a few wears. They suck, yet consumers pay about the same price as they used to. TVs on the other hand are like *the* example of a consumer good getting better and cheaper simultaneously. And then, how different can a carton of milk possibly be year over year? Could it be that a basket of goods seems relatively price-stable and yet the overall consumer perception is, this stuff is turning to cheap crap?
Thank you for your analysis but this smells like one of those many, many things in America that makes zero sense until you break it down by race, or at the very least, tribe.
Arguably could be less of an “elites driving the national conversation -> vibecession” and more of a “people with X type of job drive the national conversation -> vibecession.” I haven’t looked at the data, but looking at the jobs that have gained the most and lost the most employment since 2022 would be interesting
the past 20 years of journalism moving online has been particularly bad for jobs in journalism. That seems like an obvious explanation of the increasing negativity in media. Also people got on social media and went crazy because of algorithms that optimize for eyeball-time instead of endorsement-upon-reflection.
The wealth accumulation graph is interesting. Seems like GenX accumulated wealth at greater rate than millennials in their young professional years (20s-30s). Which isn’t explained by the population pyramid since there are more millennials than Xers.
I think the vibecession started in the mid-2010s because that's when all the social media sites changed their algorithms to optimize engagement instead of explicit likes. On the margin that increases the reward for producing and the probability of spreading everything that the better angels of your nature don't want you to see, and that caused most of what's wrong with twitter. An increase in fakery, combativeness, negativity, intellectual laziness, etc.
I think you gave up on the housing explanation too quickly. Kevin Erdmann has shown that rent increases have hit the lower end of the income distribution especially hard, and in a recent post (https://kevinerdmann.substack.com/p/im-afraid-the-economy-isnt-improving) he notes that rent-adjusted income growth for the bottom third of households was basically negative from 2015–2022. If there’s a non-cyclical driver behind the change in “economic vibes,” my strong prior is that it’s coming from housing or health care.
For the first time, this is less than I wanted to know, very specifically regarding inflation measurements and how we adjust for it in wages.
Specifically, I can remember around 2013 when there was a proposal that Social Security COLA adjustments (annual cost of living increases) be tied to Chained CPI, rather than CPI. And the AARP seemed very, very convinced that minor changes to how inflation was calculated would dramatically impact real people’s Social Security checks (1). I’ve seen calculations that chained CPI is 0.25-0.3% (5) lower than CPI. Which is small overall but large relative to overall inflation, roughly 2%, and compounding.
I don’t want to argue here that the goldbugs are right and the purchasing power of the US dollar has dropped by 80%. But it does seem plausible that different inflation measures, even if both equally valid, could dramatically alter the real median wage over this period.
For example, from FRED’s “Real Median Household Income” series (2), from 2000-2024, income grew from $71,790 to $83,730. That’s about a 16.6% increase over 24 years. That’s roughly a 0.6% annual growth rate. If the difference between Chained CPI and CPI is roughly 0.3%/year and real median income growth is ~0.6%/year, then how we measure inflation has a pretty significant impact on how we calculate real income, as well as every inflation adjusted measure we looked at.
And I’m pretty confident that chained CPI is valid, because in the “Real Median Household Income” data from FRED, under notes, it says “Income in 2024 C-CPI-U (2000-2024) and R-CPI-U-RS (pre-2000) adjusted dollars.” Which looks like the pre-2000 numbers are calculated using traditional CPI and the post-2000 numbers are calculated using chained CPI. This is buttressed by the fact that FRED’s chained CPI data only goes back to 2000 (3)
So, briefly, I don’t like the “Miscalculation Of Inflation” section and I wish it dove into more detail because:
#1 There are multiple valid inflation metrics. I have nothing against CPI, it’s a solid metric and we have the data going back to the 60’s, and I have nothing against chained CPI, which is the current standard FRED uses and also makes more sense (4). However, there are more inflation metrics beyond Chained CPI; Penn State lists 5 here alone (6)
#2 The impact of different inflation metrics is large enough to significantly alter the increase in real median wages, say up or down 50%.
#3 I don’t understand how the decision to use different inflation measures affects all our other inflation adjusted metrics. To make this specific, I don’t know what the real median household income would be for 2019 if we calculated it with CPI (the way we did in 1999) vs with chained CPI.
#4 The response from economists here feels…dismissive. Which would be fine if there really was a single consistent inflation metric everyone was confident in, and maybe there is, but there seems to be a lot more complexity and value judgment to inflation metrics than “just CPI”. Especially when there’s such a gap between consumer sentiment/vibes and official statistics which would be significantly impacted by different inflation measures.
#5 Which is worse, because…I cannot help but note that the kind of guys who post things like the “US Wages in Gold” or “The Fiat Crisis” (7) are disproportionately multimillionaire crypto bros who…On the one hand they all sounds like salesmen at best and scammers at worst and constantly predict a US fiscal and monetary collapse but…they did go act on those beliefs and built the entire crypto ecosystem worth at least half a trillion. Anyone who’s financial/economic philosophy directly leads to them inventing their own ridiculously lucrative alternative financial system deserves to be taken at least somewhat seriously.
To clarify, I don’t think the impacts of different inflation measures are large enough for a decline narrative but they could be for a stagnation narrative.
Real Income growth of 16% from 2000-2024 sounds like slow, solid but uninteresting growth. 6-7% total growth over that same period “feels” like stagnation.
Inflation-adjusted rents going up 40% vs 30%.
An average mortgage payment of $3.3k vs $3k compared to an average mortgage payment of $2k in 2000.
I would appreciate any insight anyone else has, as this is a subject I know worse than nothing about, I know a little. And I wish I knew more.
(4) As far as I can tell, chained CPI just attempts to adjust the basket of goods by how consumers vary their purchases as prices change. Pretend I buy 4 pounds of beef a week. The price of beef doubles. I stop buying beef and start buying chicken. CPI measures as if I still buy 4 pounds of beef. Chained CPI tries to capture my change to chicken, which is hard.
I think Scott has his fingers all over it: credentialing, job hunting, dating, house hunting, etc. have all become Red Queen’s Races. Martha Millennial has to work much harder to get to the same place that Brenda Boomer did because the race *for everyone* is harder. Everybody needs more internships, more networking, more degrees so we all have the same or slightly better economy. But it feels terrible because it is terrible. If Martha has to apply to a 1000 jobs when Brenda only applied to 10, Martha is genuinely worse off, even if their jobs are basically the same. (Also: why is GenX once again forgotten!?)
"Elites have basically rigged all of society so that, increasingly, one must deploy the cognitive skills possessed by elites to successfully navigate the social world. (Try opening a bank account, renting an apartment, or obtaining a tax refund, without engaging in analytical processing.) "
I'm here ~450 comments too late so I have no doubt this comment will be ignored, but I think there is an economic measure that *does* explain the vibecession: labor market tightness. Or put another way, how easy is it for you to shift jobs and get a raise.
When people are asked "how do you feel about the economy?" they don't interpret that as "how are you doing today?" but rather "what are your prospects for the (short term) future?".
And since 2023 they've been bad! People over hired during COVID, when it was easy to get a 20% raise changing jobs, and the job market has been bad or flat ever since.
People felt good about the economy in 2019, because the job market was good! People even felt good about it in COVID because the economy was overstimulated. And growth gives people hope.
Where is the hope now? Gone. People feel lucky to keep their job and know the market is tough.
My prediction is that the vibecession will end when the labor market tightens again and people start getting raises again, or feeling that they could get one if they tried.
I would recommend reading Kevin Erdmann’s work. He argues that the housing shortage is now national- not confined to “superstar cities.” I think psychologically this is an important piece of the puzzle.
I have only partly read the post + comments, but is the following point considered: "The bottom quintiles have greater voice now -- due to lower absolute poverty and due to social media -- so their frustrations are heard better."
Perhaps the vibes were killed by a sense of instability. If you feel you can never truly achieve/get success because it can't be held, that would hard skew your perspective. The pandemic lockdowns were a big wrench for most people. Unlike a national tragedy like 9/11, this was personally felt by most young people. Unlike a burden like WW2, there's was no ticker tape headline "It's over! We won and we're back!" Those vibes just linger, everything could fall apart at any moment and there's nothing you can do..
"youth-specific unemployment rate was near historic lows"
Worth pointing out that unemployment traditionally doesn't include people who aren't seeking work (as another commenter pointed out) in addition to not including people employed in potentially less desirable gig work
If the income data includes these people then this is partially accounted for with the caveat that a situation where the bottom and the top diverge with the top incidentally including the 49th percent would still show this data with this split caused by something like a K-shaped recovery
You mention individual debt, but no mention of government debt? The extremely high government debt ratios which young people are going to be expected to payback should be part of the story here.
If individual debt is the same while simultaneously the government debt is at post WW2 levels across the whole developed world, and that is before factoring in the real crunch that will hit government finances as the boomers continue to age out of the workforce and start drawing on heavily-politically protected and completely financially insolvent pension systems.
Anecdotally, I don't know a single person who seriously expects to receive any sort of pension in old age while we will still have to pay/service the debt we had relatively little to do with running up.
Is government debt related to the cost of consumer debt? CJL notes below that Bolhuis, Cramer, Schulz, and Summers (2024) argue that it’s the price of debt (which is not part of the CPI) that explains the vibes, and that this helps explain sentiment differences cross nationally as well: https://www.nber.org/papers/w32163
> There is one anomaly, which is that I remember people complaining about the bad economy and the Boomers and hellworld since well before 2020 (consider the Trump and Sanders campaigns), but the official vibes didn’t crash until COVID. Is my memory faulty?
my memory is the same, and I'm now asking the same question.
every chart in this post seems to support, or at least not contradict, the following story:
- 2008: Subprime mortgage crisis. economy is bad. vibes are bad
- 2021-present: economy is... complicated? stocks are good. wages briefly shot up, then slowly declined, and are now rising again. recent grad unemployment is rising. vibes are improving, but still bad in absolute sense.
> even though bad economies are exactly when you would expect next year to be better
This feels like Gambler's Fallacy. Historically speaking, when people have felt like things are bad, the next year has generally been worse. There's no iron law that things will get better just because they've been bad for a while, and just as good things compound, bad things (or absences of good things) also compound.
Things have been bad and gotten better at times, but this tends to take heroic effort that is only later treated as inevitable.
Charts 1, 2, and 4 use "real income" or something similar as their metric, and show it consistently going up. The natural counterargument is that their methods for calculating inflation are faulty, and they underestimate the degree to which the dollar has deprecated. Anchoring to food or housing costs would've been better. Big Mac Index isn't perfect, but it definitely paints a different picture.
Chart 3 shows "employment rate" which has, for the last decade and then some, been goosed by filtering out people who have given up and stopped looking for work. This (https://www.bls.gov/charts/employment-situation/civilian-labor-force-participation-rate.htm) is the real employment rate graph, courtesy of BLS.gov. It has steadily gone down until 2016, gone up for about four years, plummeted with the Coronavirus, and then stagnated well below pre-2021 levels.
To touch a bit more on the "more effort for same results" portion - the interview process has grown more and more bloated/performative, and in some cases has become an arms race (recruiters using AI to filter applications, appliers using AI to generate cover letters / modify resumes to get past filters).
When I was about to graduate college (good grades, CS + math degree in 2017 before the job market declined, etc) I applied to 10+ jobs a day with not even an interview or non-automated reply. Then a professor told me about an opening with a company he works with, and I instantly got an interview and then the job. Within a month I had several recruiters reach out to try and hire me for the exact same role at different companies. Anecdotally, many of my friends have similar experiences - I think only one of them has actually gotten a job without being expedited through the process by a connection, and that was because he was truly uniquely qualified for the role.
Maybe this experience is different for 'stand-out' candidates, but that just brings us back to the original issue: more effort, same results. In the 60s/70s, my dad learned programming from discarded punch cards and got a job in the field after dropping out of college. Nowadays kids are getting 4.0+ GPAs and extracurriculars to get into good colleges, dropping tens to hundreds of thousands on tuition to get bachelors and masters, and then still struggling to find jobs - likely at similar rates to before college was necessary.
This world needs more factcharts, datagraphs and exploration of *multiple* hypotheses! You've even got more than two hypotheses here! Bravo! 👏👏👏 (it's worth *at least* three claps 🎉)
The one thing I'd have looked for is: isn't there a survey on *how* people perceive things as bad? Seems like an obvious starting point for hypothesis generation, unless no such survey exists. Back in the days of reporters, they'd actually go around with microphones asking people.
> they’ve done no worse than the US average.
*Studio apartments* going up by well over $1000/month in NYC is no small change. Most Manhattan studio apartments are over $3000/month? Maybe nbd for a man of your eliteness, but I find this absurd. That's more than I spend on everything in a typical month (I own a 3-bedroom house, and am supporting at least three other people).
I think it'd take longer to properly explore this than the space of this comment (honestly, if I really wanted to explore my own position on this properly, I think it'd take more than the space of this blog post.) But as someone whose impressions of society are generally not much driven by news media, my feeling is that there have always been people saying that things are getting worse with time, regardless of what economic indicators say. But since around... maybe twelve years or so, give or take? My impression has been that people pretty much everywhere I go genuinely do seem to be getting less happy and less satisfied with their lives over time. I think this is a real reaction to changing circumstances (people are not simply becoming less happy because news media are telling them that things are bad and they should be upset,) people are correctly noticing things are getting worse in ways that substantially affect their life satisfaction, and economic measures are badly geared towards capturing these changes.
In theory, when economic measures are improving, people should be better off overall, because economic progress tracks the production of value, broadly "things people want," and as long as it goes up, people should b getting happier. In practice this simply isn't true, the axioms of economic theory depart from reality in some essential ways, and it's entirely possible for economic measures to improve while people are becoming worse and worse off overall.
One thing I might look to is not a basic basket of necessities, but a basket of luxuries and near-luxuries.
Specific to the upper midwest, there are a lot of people whose parents had a "nice" car, a cabin "up north", some family vacations to X, etc. Consider the current price point of boats, small aircraft, offroad equipment, and other luxury goods. There's an old joke about how you could tell how the auto industry was doing by the size of the shrimp cocktail at the Detroit Auto Show. And flying sucks post-deregulation (even though we can do it much more at lower prices!)
I wonder if there's a simultaneous mixing of perceived quality dramatically decreasing* while a certain basket of aspirational luxury goods relevant to some socio-political sect of tastemakers has dramatically increased in price?
*flying. Or most home goods and many consumer goods. There's no "nice lower upper middle" segmentation anymore, there's Ikea, and there's $5k Amish hand built footstools.
I wonder if you're underrating overt corruption as a primary cause.
Empirically, the economy is all about dollars and cents and relative wages. But in terms of vibes and narrative, the economy is a story. "People are paid according to the jobs they do and the worth of those jobs. If you work really hard, stay in your job, and be honest, you can be successful and build a great life. The harder you work, the more successful you can be!"
This was always just a story on some level, but I don't think its ever been as obvious of a lie as it is now. The President isn't the hardest worker, but a mob-boss who's primary skills are grifting, bullying, and abusing the legal system. The most successful billionaires you hear about are often just people who played the right casino or happened to find themselves at the top of a technology stack during the moment that technology went big. The richest man in the world doesn't even pretend to be a hard-working Tony Stark anymore, he's clearly an aging fat racist obsessed with winning imaginary culture wars on X. We all can watch Elon score a trillion-dollar pay package while his social-media-addled brain crashes his company's sales into the ground. And when we see things like this, we lose faith in the economy's ability to allocate resources with any kind of fairness or sanity.
Add all this up, and you get a world where working hard is for suckers and losers. The real success stories come out of the casinos, from scammers and liars and the lucky. Real success is the content creator who's 30-second game video randomly goes viral on YouTube. The crypto billionaire who bought the right memecoin in the right second, the latest silicon valley startup that monetizes destruction of the social contract. The ultra-rich don't even bother to pretend it's any other way, they build themselves gilded ballrooms and livestream the lavish parties where they laugh at the poor hard-working fools they're depriving. Their incomprehensible wealth built on the backs of all the people stupid enough to go into work.
For people who aren't successful influencers or grifters, I think this state of affairs is just hard on the soul. It's hard to feel good about an economy increasingly built on crypto scams and predatory betting markets and gilded-age cruelty, even if it's making the lines go up. It's hard to have faith in a system that seems to live and die on the whims of meme-brained investors caught in the throes of incomprehensible tech-religions. I think when people try to measure "the economy", they aren't just thinking about the numbers but also how those numbers make them feel. If you're a good person, something you want from the economy is a feeling that it organizes society in a way that feels at least vaguely moral. You want the wicked to be punished and the virtuous to be rewarded. Our economy has become exceptionally bad at delivering on this, and it always feels to me like a core reason for the negative vibes in every person I talk to.
Yeah, I agree that Donald Trump's corruption relative to that of other US politicians is exaggerated; US politics is pretty clearly corrupt, and has been for a long time.
That said, I do think there's an increasingly pervasive sense that there's no longer any reliable connection between working hard and doing well, in both the economic and the personal spheres. Some of it's because bad things are getting noticed more (e.g., Donald Trump and his corruption), some of it's because of past events (COVID lockdowns -- if the government can just shut down the country indefinitely with little to no warning, how secure can your plans for the future really be?), some of it's because of increased competition (degree inflation, dating) and some of it's because a lot of stuff is genuinely more random and opaque than before (algorithms auto-rejecting your job application because your CV didn't have one of the precise key words the company was filtering for).
Yes. But at the same time the memecoin crypto scam economy is booming, the practical economy, building houses and factories, is in the doldrums. Fewer houses are being built. Fewer tons of steel are being produced.
The economy looks good, in part because the economy is becoming increasingly detached from reality.
Could the poll results reflect increased political polarization? I.e. there's now no longer a group of people in the middle whose opinions reflect the actual economic situation of them and people they know, who would prop up economic polls when the economy is actually doing well? (Also Trump is highly polarizing, which could also skew the poll results)
Unlike the 2021 flip where you can say there was a lot of other factors going on due to covid, the 2025 flip is fun because nothing of note really happened to the economy in that time.
The 2025 flip is also interesting because it seems like the first time the flip is actually similar in size between Democrats and Republicans. In 2017 Dems don't move, in 2021 their jump is about half as big as Republican drop, but in 2025 they're both between 30 and 35 points.
Wouldn't high house prices affect those who didn't own homes the most? after all if you own a home already, you're set. It's those who are currently renting and want to own a home and are realizing it ain't gonna happen that are thinking "this economy sucks now; my parents own a home"
To the extent you believe the large consumer confidence surveys (Conference Board and UMich) accurately measure sentiment, there are dozens of subindices which shed light on the actual reasons people feel bad.
A few things to note - there's no obvious differentiation by either age or income, so any hypothesis relying on things being especially bad for young/poor/middle class is not showing up in this data. The subindices on labor markets, income, and the stock market are strong (as they should be). The subindices that are weak are related to inflation, buying conditions for durables (inflation again), buying conditions for homes, and vibier questions like expectations for retirement, expectations for future income, etc.
The OECD also produces consumer confidence surveys and the US is pretty middle of the pack compared to other advanced countries for the last three years - US, Australia, western europe, UK, japan, are all in the -1 to -1.5 z score range historically. China is the worst, around -2 z scores. Interestingly, Mexico is one of the few places with high consumer confidence right now.
So for me, the synthesis should be any explanation is pretty global and pretty widespread across demographic groups. That suggests inflation and media negativity.
I was a doomer when I graduated in 2014 because that's what my parents and literally every single media outlet and professor were preaching to me, then I got a job right out of a college with a mediocre (3.6) GPA from a state school and went to work as an analyst at a midsized regional bank, got promoted internally a few times and lived very frugally with my wife (met at work), now I'm able to be a stay at home dad with our kid while she works from home. We live in Oklahoma; we bought new construction last year for $200k with some spare cash I had laying around in a brokerage account. So I am pretty fully cured of the doomerism, success is trivial. My bosses and coworkers constantly praised the fact that I approached my job with gratitude and focused on identifying the goals and achieving them efficiently and optimally from 9-5 every day. That's it. No late hours, no connections or networking or anything else fancy.
I have a stoner friend from college, he's had 5 jobs in ten years (gets fired or laid off every couple of years due to bad/entitled attitude at work - including from a job at my bank I helped him get before he graduated). No gf, due to terrible attitude toward women and insane standards he doesn't himself meet. Smokes weed and plays video games and puts in minimum effort at work, then complains the billionaires are keeping him down. Most recently he was making more than our state's median household income while saying this. My theory is it's 100% media and cultural degeneration/bad memes.
Thanks for posting that! It's all worth reading, but this quote stuck out for me:
"One can argue that, by the preferences revealed in America's historical suburbanization, our contemporary sprawling life is better than the more compact urban life that preceded it, and actually commuters are gaining welfare roughly in proportion to the vast expansion of transportation miles purchased. One can argue that America's suburbanization reflects political, economic, and social factors beyond individual preference, that are in any case locked into the built environment in ways now exempt from personal choice, and that in fact suburban life is alienating and undesirable, as revealed by the very high cost of housing in compact urban areas that offer similar levels of safety and amenity under a pedestrian lifestyle."
People have a bias towards predictability. If you get fired from your job in 2025, you are likely to find paying work, but maybe it is some high paid remote job stationed in Maryland that you have never heard of. In comparison, if you get fired in 1990, maybe there are four to five companies in your field in the city, they all hire only locally, and you are friends with someone who works at each one, and you know that someone at one can probably convince management to squeeze you in.
Modern economic life feels very unpredictable. The prices and how they change feel unpredictable. Where you are going to work in five years is unpredictable. Neurotic people equate unpredictability with badness.
As a Boomer born in 1955 I can tell you what part of the Problem is, people do not look back far enough. The Modern/Post War US was created by the Greatest Generation which came home from WWII with the elan that they could do anything. Prior Generational Elites had Kowtowed to Europe but these Guys had rescued the British, Put the French in their Place, Pacified the Germans, Stood down the Soviets & Nuked the Japanese. They then created the Greatest(at least until then) Boom in US history 1946 - 1971. Things fell apart Economically for the next 20 years until Boomers took over with Bill Clinton skipping the Silent Generation who were Children during WWII but made up the bulk of the Korean War Vets always the third Wheel behind the WWII Vets & the Boomer Vietnam Vets & for awhile eclipsed by WWI Vets.
Zoomers especially don't realize that when the Vietnam War was on there were 550,000 US troops in Vietnam. That number was drawn down after 1970 but they still were Drafting 20 year olds for all of 1971. All those Men(Pre Coed Military) being released into the Workforce with 10 Veterans points instead of 5 like today seriously blocked opportunities for many 2nd half Boomers. BUT we still had cheap College Tuition. I paid $741/yr to attend UC Berkeley in 1980/81($2914 in 2025) & received a $900/yr($3539 in 2025) Pell Grant to pay for it. We sucked it up, survived & parented the Millennials.
I actually agree it's the Phones & but also Dating Sites plus the Centrality of NYC(SF to an extent but limited by the 3 Hour Time Difference). These proliferations along with COVID shutdowns killed nightlife which hasn't returned Post Pandemic. Therefore their are no real places to meet people organically so everything is driven by the feed on your phone/device. It has also caused declines in the Beverage/Food Sector sector where young people find employment & actually might be behind the decline in the Alcoholic Beverage sector because people don't consume as much at home. It also factors into the Retail Real Estate Sector decline.
(a) The graph for average mortgage payments is for *new* mortgages, but for any given year's new mortgages (and adjustable rate mortgages) only make up a small fraction of all mortgages. A graph of average mortgage payments would show much smaller changes.
(It rose since 2016; it's below the Bush era pre-recession peak; it's above pre-1996 levels; none of these changes have been large.)
(c) The most important thing about the homeownership rate: it's ~65%, so a majority. So (ignoring that some people would like to move out), increasing home prices are good or neutral, not bad, for the median American household. (But the homeownership rate in Brooklyn is <30%.)
(2) The section on media vibes didn't consider the cause; but the source of the negative media vibes is pretty clear: the number of journalism jobs dropped by >50% since 2000, due to competition from the internet. There is in fact mass unemployment among journalists; journalists are being paid worse, probably can't afford a house, etc.
Higher housing prices are only good when you cash out. If you intend to live here for the foreseeable future, higher value doesn't matter much, and may even be bad, due to property taxes.
Maybe the median hourly wages trend is pretty flat and increased median household income is largely attributable to women working longer hours (outside the home)? That might account for some sense of stagnation.
Idk man. My wages aren’t higher than six years ago for my profession. (Big tech in SV) Homes have definitely gone up in price here too. The homes in Palo Alto were unattainable then too but then the rest of the neighboring areas got even more expensive. Now, if you want to live close to work you need to be bringing home around $600k/yr reliably. That’s hard to do for one engineer. Again, it wasn’t easy before either but if you weren’t lucky to be a part of some stock boom… you’re cooked.
And it’s been years of this. It hasn’t gotten better. Prices never stayed down. Just blips and blips in the market also usually mean your job security isn’t too good either.
Dating is bad too. The ratio here only gets worse and worse every year as all the other professions are priced out and people’s kids keep moving away. What happened to women joining tech? It’s never gotten past 20% and looks like it never will grow past it.
Idk Scott. I do think for some Americans it’s not too bad. But shit, the overachievers in these competitive cities aren’t doing well.
I often wonder what the point of doing all this insane work and grinding to beat millions was worth. All I get is an old 1950s 1 bedroom rental that doesn’t even have insulation. Yet, the weather is more adverse than ever before. It’s not the 1950s anymore and I’m certainly working harder than they did then. If you were living in this in the 1950s it was because you were a failure and a drunk - not the top 1% of your cohort.
Imagine graduating a top university, beating everyone to the most competitive positions in the world, and on a national and worldwide scale being in the top 1% to be living like some fucked up alcoholic who can’t even keep a job consistently in the 1950s did.
Seems like the vibes aren’t just off for the people who are actually pushing hard. The economics are fucked for them too.
I wrote of a concept called the Success Water Line that tries to explain this. In short, technological advances eliminate simpler jobs, raising the bar needed to contribute. You need to be smarter than before to be valuable.
Not the greatest time to be citing Larry Summers, but just wanted to point out that Bolhuis, Cramer, Schulz, and Summers (2024) take on this question exactly as of 2024 and argue that it’s not the debt but the price of debt (which is not part of the CPI) that explains the vibes, and that this helps explain sentiment differences cross nationally as well: https://www.nber.org/papers/w32163
This seems like a really strong hypothesis, which is not really in the discourse much at all. Maybe because debt is supposed to be bad, so we shouldn't feel sad if there's less of it. It's also a way of operationalizing concerns that the vibecession is connected to government debt.
>My heuristic is that when the mainstream consensus refuses to engage with a critique and hem and haw about it being “problematic”, they are usually wrong. But when they explicitly declare “This is incorrect” and write papers explaining their reasoning, they are usually right.
This heuristic appears very vulnerable to confidently spouted bullshit. As in, at the very least you still need to verify whether someone's confidently explained reasoning actually engages with the arguments it's claiming to refute. Otherwise, you'll interpret as the latter case something that should properly be classified as the former.
For an example particularly relevant to this post, I posit the recent pundit reaction to https://www.yesigiveafig.com/p/part-1-my-life-is-a-lie . Yeah, I get pundit opinion pieces are not scientific papers, but they're arguably even better for the narrow purpose of demonstrating the mechanics at play, and I found the unwillingness (or perhaps outright inability, e.g. Noah Smith plausibly genuinely doesn't comprehend what he should be arguing about) to engage with the argument really striking, and telling.
I don't know why this is happening, but it'll burn itself out over the next couple of years, or sooner. Just like all the other mass sentiments of the last decade. It's just mimetic. It might even be peaking now, given all the pushback from thought leaders.
You seem to consistently mistake "people who aren't on the property ladder" as people who aren't affected by / contributing to the vibecession, because the mortage rates don't affect them". Paraphrasing, not quoting.
As a homeowner as of 2025, my mid 30s, in the UK, in my experience the loudest plaintiffs are those who can't afford to buy a home ("... and never will!")
For obvious reasons, the prospect of never owning a home is massively bad for vibes. The more people there are who agree they won't own one, the worse the vibecession.
A bit off topic, but I'm curious why you are bothered by "Another reason not to trust it is that they changed the survey methodology in 2024" but you are not bothered by the fact that CPI's methodology is to literally change the survey every every year?
You indicated that you had read the papers by economists and were convinced it is fine, and I would like to hear more about what convinced you that it is fine for economists to change the survey every year but bad for a sentiment survey to change once in a decade?
I am genuinely very confused when I see rich Americans try to postulate that "the economy" has anything to do with "human flourishing" (even a stunned definition thereof as would be given by Marxist materialism)
My basic assumption is something like:
- Most money generating practices increase human misery and are negative-sum (even politically-neutral-status + high-status professions like doctor, pilot or high-end chef)
- Given that we personally benefit from this (even though collectively we suffer), it pays dividends to make-belief this is otherwise
- The alternative is figuring out how to prompt systemic change which is hard and will lead to a lot of immediate personal suffering (even if for trivial reasons, like having less money and people liking you less); So we don't do it
---
I'm not saying this is obvious, I think it's non-obvious and ultimately hard to prove either which way. A fair treatment of the topic would be a 50-page long debate about ethics and causal chains.
I just want to point out that it's fascinating, to me.
---
I think a better frame of analysis here would be to take actions (rather than professions or sectors) on which money is being spent.
Not "high level" things like "flying from LA to SF" but as granular as possible
Paying $300 to workers and $3,000 equipment cost to extract hydrocarbons and refine them into ATF, paying $20 gas cost + $320 equipment cost + $500 worker wages + $120 company profits for fuelling plane with ATF, paying $120 weighted license for self-check-in kiosk software ... etc
I think this sort of analysis would be hard (and one would be tempted to use LLMs, which do a very poor job at this sort of task) - but if you covered actions people pay for, selected somewhat "at random" and covered even 10% of GDP now compares to 2010 or 1990, I think it would quickly become obvious why this is the case.
My intuition about "Oh yeah, obviously things are getting worst" stems from something like this understanding of economics (vs thinking in high level abstractions like sectors).
I too have an intuitive sense that we're all fucked. However I am currently taking citalopram and undergoing treatment for depression, which I strongly suspect I have suffered from my whole life. If I always trusted the "we're all fucked" voice I would definitely be fucked. Scott is very different to me but I like his approach because there's a willingness to go where the data nudges you, and even if you don't end up with something perfectly true it's probably more reliable than the scared adolescent in my brain. I wrote my first draft of reality when I didn't really have a clue. I'm here trying to write the second.
You included a chart showing that the vibes got bad specifically after the pandemic, then said, "I remember them being bad before that" and based your analysis of the various theories on the latter instead of the former.
I'm also skeptical about the rent chart and would like to see the source data. I've seen plenty of articles stating that, for example, the average post-pandemic rent increase in the largest US metro areas -- housing half the population and probably significantly more than half of the younger set -- is something like 50% (my rough calculation from https://www.cbsnews.com/news/rent-apartments-cities-near-me-biggest-increases/ ). This has to be inflation-adjusted, but I think if you say "most urban young people saw their rent increase by 50% in 3 years" it takes on a much different flavor than the "this is a New York problem" theory. (Side note: It is actually very funny that you chose Boston, a now notoriously expensive city to rent/buy in, as the hypothetical move-from location!)
When all's said and done, I think the housing theory has the most legs. Ezra Klein talked about this, along with a few other things (gas prices & cost of college education come to mind) in a June 2024 episode of his podcast: "The Economic Theory That Explains Why Americans Are So Mad." Part of the reason that I'm sympathetic is that I feel it it myself: I was vaguely mad about inequality before, but then the price of every house in the neighborhood where I live basically doubled, and the situation now seems hopeless in a very personal way. It feels like a major piece of the American Dream that I once held as attainable has all but vaporized since the pandemic.
I agree. When I read „There is one anomaly […] the official vibes didn’t crash until COVID. Is my memory faulty?“, my subjective impression was that this was a tangential remark with no further role to play in the essay, so I was surprised that it was then invoked to discount the obvious explanation, mortgage prices, younger people can‘t afford to buy their own home any more.
What if we are comparing ourselves more frequently to people we should never even know about via social media (insta, tiktok, but even linkedin). What if this comparison is driving the feeling that we are not succeeding?
> There is one anomaly, which is that I remember people complaining about the bad economy and the Boomers and hellworld since well before 2020 (consider the Trump and Sanders campaigns), but the official vibes didn’t crash until COVID. Is my memory faulty?
Back then the vibes about the state of the world *in general* (including/especially abroad) were indeed already bad https://x.com/SweetestCyanide/status/752831763269967872, but those specifically about the economy and specifically about things in the respondents' own country cratered with COVID, I think.
I wonder how far the post-COVID vibes crash is due to direct economic (after-)effects of the pandemic, and how far it's due to the precedent of entire countries being shut down with very little warning. Once you've experienced that, it's hard not to have a nagging sense in the back of your head that "This current situation is only provisional, things might be upended again, nothing is certain anymore," and uncertainty is generally very bad for economic confidence.
I'm not from the US (Israel), and we have similar dissatisfaction here that seamingly contradicts the classic economic indicators.
I think an important indictor that isn't measured (or widly published) is what percentage of population is worse off *then their own parents*. I would expect this to be high when GDP groth is low (the "second derivative"), and when social mobility is high.
Messy. I agree with the factors listed, but I would add:
1. Depression/Anxiety - lots of reporting suggests this is rising. I have depression too, whilst it's possible we are just snowflakes, thawing out takes time. Interpreting ambiguous, okay data as "I'm so fucked" is basically what anyone with a "mild/moderate" mental health problem is fighting against. I expect some negativity will come via the media BUT it's also possible that people who are vulnerable to negativity go into the media. The media has always been predicated on constant vigilance against corruption in authority, all the way back to the Reformation. That's our culture, especially in the english-speaking world but it is exhausting. Compulsory CBT for anyone wanting to write for a living please!
2. The decrease in the rate of GDP Growth may be hard to gauge for the average person quantitatively, but qualitatively? I absolutely think people are sensitive to "what's new". What else is there to talk about after you say hello? I used to talk about movies and now I basically don't go to the flicks. Age up to a point but this has happened faster than I would have expected if it was just grumpiness. I loved Barbie, Oppenheimer, the French Dispatch - I had some critiques, but that's art for you. The trends Scott describes in the Singularity is Cancelled can absolutely be felt by consumers. Whether it's sustainable to have a high rate of GDP growth in order to overcome a negative bias is another matter.
I do not understand the two figures under the heading "(Briefly) Declining Real Wages". One seems to show a jump in real wages and a decline until mid 2023. If I understand correctly what you write around it, the other should show the same data but for a longer time period, but shows a drop in the variable in question and then a below-pandemic upward trend. The text below the second figure says that only the 2023-4 period saw falling real wages. I do not see that in either of the figures. Noah Smith writes with respect to rhe first figure that "real hourly earnings halted after summer 2022".
As a mid-millenial, I'd like to add a few vibe datapoints. Some have been mentioned in the post or the thread as well, but I'll still list them explicitly for suport;
Achieving the same level of wealth/comfort compared to previous generations, esp boomers requires significantly more complex effort, as the post somewhat outlines. Sometimes I feel like I live in a world where there is such a huge amount of dumb "I just barely finished highschool" wealth, it's hard to fathom. This is also the tone of many "boomer memes" on various platforms, so I think there is something to it.
The world, work and life, have become a lot more complex and fast-paced, for the same reward, and thus more stressful.
Somewhat related to above; the basics of life seem complex now (because they maybe are?), like dating, and maybe with time settling down into a house. And there is not really any plan B/alternative bright future ahead it seems.
We are overwhelmed, over- and under-informed, like knowing more about psychology and health than ever before, but at the same time maybe oblivious to other strifes. At the same time we might not be psychologically actually healthier, just more sensitive, which can lead to worse outcomes I guess.
Generations feel more isolated than ever and nobody learn from each other, maybe that's echo-chambers, maybe it's erosion of shared spaces and discourse culture
Everything seems to be eating its tail, fake reviews, extreme targeting, enshittification of the web, politics etc.
I guess I could continue for a while, but maybe interesting enough as quick sketch.
This is a case where I'd like to see an explanation of the graph.
(Actually, I'd like to see that in almost all cases. I can't believe how common it is for essays to look like "I believe X. Look at this graph:
[graph with no labels]
As you can see, this unlabeled graph proves the correctness of my position.")
What is an "average mortgage payment"? Is it the payment that is calculated by assuming a 30-year fixed-rate mortgage after making a 20% down payment on a house that cost the average price of a house that year?
Is it the amount of money people spent making mortgage payments that year divided by the number of mortgage payments that occurred that year?
Is it some other quantity?
The graph is actually titled "Average mortgage payment: adjusted for inflation and the 30-year mortgage rate". It sounds like adjusting for the 30-year mortgage rate would make this graph completely invalid as to the question "are the bad vibes driven by interest rates?" But I don't know whether that's true, because all I have to go on is the subtitle.
> does this prove that the root cause of rising college prices was government loans all along?
Years ago I read something that outlined the following argument:
- College tuition has gone to outrageous levels.
- Some people say this is because the cost of operating a college keeps going up.
- Some people say this is because the government will give anyone a bunch of free money if they promise to spend it on college.
- Everyone seems to agree that it's a complex issue and there's no real way to tell these two theories apart.
- Theory #1 represents a reduction in supply.
- Theory #2 represents an increase in demand.
- These should be easy to tell apart; with rising demand, prices will increase at the same time that quantity sold increases, whereas with falling supply, prices will increase while quantity sold decreases.
Yes, there is a mechanism by which free money from the government can cause the cost of operating a college to go up. But that mechanism relies on the free money increasing the college's revenue; they can't get any extra money themselves without making a sale to a customer.
This effect cannot result in quantity sold going up. And really, it shouldn't be able to affect the tuition figure one way or the other - the model goes:
1. There is a certain amount of demand for college attendance;
2. Colleges set their tuition at a rate that maximizes total revenue¹, given the level of demand;
3. University staff set their wage demands at a level that colleges can support, given their revenue.
An influx of free money to customers can increase the revenue-maximizing tuition rate, and this gives room for staff to demand more wages. But if causation runs the other way, from more demanding staff to higher tuition (to cover the staff), quantity sold will drop.
¹ I've assumed here that revenue comes from tuition. This is not necessarily the case; alumni donation might be a significant source of revenue. We'll just ignore colleges where that is true.
> Speculatively, maybe people complain that they are not getting the level of success they expected based on their qualifications. That is, the same average-talent person is getting the same average-salary job they would have forty years ago. But since they have a masters’ degree and five internships and 12,000 LinkedIn contacts, they expected to get a better-than-average job. When they don’t, it feels like success slipping away.
I sometimes mention the book Pre-Industrial Societies: Anatomy of the Pre-Modern World.
It had a treatment of education that I found very interesting. In the highly stylized model of the book, the purpose of pre-modern education is to acculturate the elite class of a geographically expansive culture such that two of them can recognize one another even if they've never met. This is necessary because the elites sometimes have to move around.
The book notes that in modernity, pre-modern educational systems were expanded to everyone, using a curriculum that was essentially unchanged from the pre-modern elites-only curriculum. This is what a "liberal arts" education means: it's an education that would keep you from embarrassing yourself in your career as a French count. That's the purpose.
But (the book doesn't note, as far as I can remember) that goal seems like it would be of limited value to the student who is unlikely to become a count.
And my uncharitable spin on this might sound a little too cute, except it's an eerily exact match for all the official messaging around college: if you go to college, and study anything at all, you will be buoyed into the life of an aristocrat.
-----
It's probably worth noting that a complaint very similar to this is (or was recently) dominating the vibes in China, where they refer to 内卷, which is supposed to be "the opposite of evolution". When a friend decided to mention the concept to me, something I mentioned while looking for analogies was the Red Queen's Race, motivated by the quote from Lewis Carroll's Red Queen: "It takes all the running you can do, just to stay in the same place". [This is slightly mangled from the original text.] My friend immediately declared that that sentence perfectly captured the concept of 内卷.
The stereotypical response to 内卷 is 躺平, "not trying" (literally "lying flat"). So it's not obvious to me that the theory "this is too difficult" is a bad match for the complaint "I'm not getting anywhere".
> Although this can’t lower the average society-wide success level (because there are still the same set of people competing for the same opportunities, so by definition average success will be the same), it can inflict deadweight loss on contenders
I don't understand this. Suppose you're in an Amish community where whenever anyone gets married the community assembles and builds them a free barn.
Then suppose the community modernizes and, instead of giving each new couple a barn, they offer the option to have a barn built if you take on a very large debt to certain other community members. You have to pay this debt back.
Then, because it's still the same people doing the same work, everyone gets exactly the jobs they would have before, and everyone earns exactly what they would have before.
So now, by construction, we have the same society, but new entrants are all saddled with large lump sum losses. (Old entrants get some benefit from no longer providing free barn construction labor.)
Our new entrants are getting the same opportunities with "only" a large loss. How does that not lower their average success level? It seems clear to me that their average success level is 𝘸𝘢𝘺 𝘥𝘰𝘸𝘯 compared to before. At a systems level, we've moved from each household receiving a big windfall early in their lives and then paying it back gradually (by participating in the construction of new barns) as they get more established, to each household receiving a big loss early in their lives and then making it back gradually. At any point in their lifecycle, the same household appears to be worse off under the new system than they would have been under the old one.
Then there are knock-on effects; under the "marrying gets you a free barn" system, you're going to see much earlier marriages than you do under the "marrying means you have to pay for a barn" system. That's 𝗮𝗹𝘀𝗼 a huge drop in everyone's success levels.
Kudos for thorough investigation of US economy, I’ve learned things, but at the same time, when looking at your second graph (one from Gallup), which you take to be the correct measure of vibes, I feel mystery completely vanishes?
Like, it shows that vibes had fallen of a cliff in 2020 (no explanation needed for this one), but they actually never really got as bad as in 2008, and they started to steadily improve after 2022, which was the year of inflationary spike, after which the economy got better?
So the last datapoint from 2024 shows vibes at the level of 2012, which was four years after the Crash; this seems roughly where I'd expect them to be two years after the smaller disaster of 2020 to 2022?
As for 2025, which is not on the graph, there are of course new completely non-mysterious reasons why vibes might go downhill. Not looking it up, but in the spirit of accountability, I expect, with, let's say, 70% confidence, that Liberation Day will be visible in the future updated version of that Gallup chart.
Granted this might not explain all of the vibecession (unless inflation measured differently shows that inflation is still growing in excess of the Federal Reserve's target) but it is likely to explain a good chunk of it.
More people having access to phones and the internet also means more visibility on people with less. People who /are/ actually struggling might make up the same share, but you hear more from them than before since we're all on the same internet. People have also always idolized and wanted to be like celebrities and wealthy people, but social media elides the differences in background and makes everyone seem like peers, making ones own position feel more precarious and austere.
One possible version of 'More Work To Stay In The Same Place' is that it's a lifestyle issue. That is, you have to accept to sacrifice an ever larger share of your preferences to stay in the same place, for the kind of preferences that don't show up in economic data : moral values, family life, etc. It might not be the amount of effort itself which is the problem, but rather the amount of other things that you fell like you need to lose to have as much comfort (or maybe to be in the same percentile of comfort). That seems like this could result in an impression that the economy is doing worse without any visible explanation in economic data.
A factor that I'm not seeing discussed much is quality of works/quality of jobs. That is, from what I observe, work is a lot more awful now than it used to be. We've pushed hard enough on "ivory tower High Modernist metrics" AKA GDP, that we've Goodharted jobs into maximizing income at the expense of working conditions.
In particular, it used to be that employers basically trusted employees, and ate the expense from a few defectors who abused that system, lowering everyone's wages. Now, there's a firm adversarial relation between employer and employee, as increases wages at the price of a much more stressful work environment.
The true minimum wage, that is, the minimum expense for an employer to have an employee, is much higher than it used to be, and those extra wages, and lawsuits and paperwork and etc, have to come out of benefits like trusting employees not to defraud their employer by taking unnecessary bathroom breaks, or letting them bring leftover food with them back home trusting that they won't intentionally fail to sell the product so as to harvest more leftovers, or etc.
Much of the article compares "people doing the same jobs" but this is actually "people producing the same product". Work is very materially different for Americans today, and jobs aren't what they used to be, particularly at low incomes where minimum wage policies have the most impact.
I think when looking at it long term there is an aspect of change in how we consume that makes both the inflation measure inaccurate and more so perceived wealth worse. According to CPI cost of clothing has gone down dramatically, but declining quality due to a shift to fast fashion isn't really accounted for. Same goes for many consumer items. In the past consumers were forced to buy good quality stuff that lasts a long time and feels good, which is probably still the better decision today, but people act imperfectly. People also used to be forced to buy much more whole foods and cook from scratch and eat less meat. The prices of these items might have declined, but people instead shift to ultra processed foods that have also gotten cheaper, but lead to much worse outcomes and still cost more. There are also other aspects where inflation does not track perceived wealth. The biggest one being that we are much sicker today and spending much more on healthcare because of it. We also live alone more commonly and earlier. I don't think this is the main driver, but I think it's part of the story.
These, "Why don’t these poor idiots understand how great the economy is?" takes grind my gears. Economists point to the fact that, survey respondents aren’t reliable because they tend to include non-economic factors in their evaluation of the overall economy. They’re blaming people for being bad at economics rather than being humble about the limitations of economics. This idea that you can point to aggregated nationwide statistics and ask, “hunh, why are people so mad? My chart looks beautiful?” Maybe people aren’t reducible to one, or even a dozen charts. Maybe there are different reasons why different groups are miserable, and they vary by place, by class, by age cohort, by gender, and by a billion other different factors. If you just wave away problems that can't be cleanly worked into your model as "non-economic factors," it doesn't mean you're being scientific, it means your model is worthless. The real take away from "the Vibesession" conundrum should be, maybe economics actually sucks, and is bad at describing reality.
Are the “how many sprockets to make” guys really doing a good job right now? The past 5 years has been all pandemics, black swans, supply shocks, and other outlier events that aren’t predicted by, or easily modeled by economists. The only companies that have grown consistently are data center related.
The essence of rational discourse is the giving of reasons. Raw, unreasoned claims don't really belong there (although they might be useful for rhetorical effect / emoting / coalition building / etc).
If you don't like someone's reasoning, you can give reasons why it should be rejected. If you have reasons for believing an alternate conclusion, you can give those too.
If you respond to a reason-giving attempt at rational discourse with a universal unreasoned rejection, you're responding on a different plane. Which is totally fine!
Your argument (that no analysis that doesn't describe the truth of all social reality is bad) and the negative emotional valence have both been noted.
It’s tiresome, isn’t it? They’ll go right on claiming that the economy is great even as political volatility and instability clearly indicate otherwise.
Of course, they’ve either forgotten (or never knew) that their subject was originally called political economy. It’s still the correct term whether they like (or admit) it or not.
The biggest issue with the CPI is that it's not measuring 'how much does lifestyle X cost now vs then' but measuring 'how much are people spending on things' -- the basket of goods is weighted by actual expenditure.
For example, I can't afford to move to a bigger house, so I'll buy a new phone, a new TV, or go on a fancy holiday. In consumption terms, I am spending more than ever, even as the things I would really like to buy, a single earner family, a family home, and more children, become ever more unaffordable.
I’d go with a hand grinder and an aeropress— no one in a flat share wants to leave a $1000 espresso machine out on the shared kitchen counter ! Plus you can take it with you to work.
I think the average person could save 6k a year by living like a monk; this is a drop in the bucket compared to the size of the 65k deposit needed to buy the modest suburban home I grew up in.
I only know one person who managed to save a down payment solo— and she lived with her parents for five years after graduating college, paying them no rent.
The zoomer/millennial strategy of “live well right now and wait for the whole thing to collapse” is not the most irrational thing in the world.
Yeah, in the UK 10% down is standard, and we don't have a percentage property tax keeping prices closer to incomes. Getting by without a car is slightly easier in the UK than the US, especially if you can use a cargo e-bike, but in either place it becomes much harder if you add kids to the mix or move out of the city.
Man I'm out of touch though. I thought 6k seemed a lot for a vacation and so I looked it up and apparently Gen Z spend $11k _per trip_ which seems insanely high.
> , so I'll buy a new phone, a new TV, or go on a fancy holiday. In consumption terms, I am spending more than ever, even as the things I would really like to buy, a single earner family, a family home, and more children, become ever more unaffordable.
Yes. And then the economists come along and say "10 years ago, a TV of that quality would be worth an absolute fortune, look how rich you are".
> Mortgages have gone up 100% since 2021. But this doesn’t fully explain the vibecession, because it seems to have started before that, and even non-mortgage-holders are angry.
Non-mortgage holders may *be* non-mortgage holders because they've been priced out, and their anger would be credibly explained by this.
What if you compare the real earnings of boomers and millennials at the same age stratified by educational attainment? This might just be another way of saying that you have to work harder to get to the same place, but on the other hand, if you need a 4-year degree to get 20% more than your parents but in the meantime have lost 4 years of income and been saddled with $100,000 of debt, you might in effect be poorer.
Imagine a toy example, where every year there is a fancy TV that costs $1000, and a cheapo TV that costs $500.
Every year, the cost of everything else goes up by $500. But, every year, last years fancy TV becomes this years cheapo TV as TV tech improves. So each year, overall, inflation is 0. Sure you spend $500 more on everything else, but you save $500 by switching from a fancy TV to the now equally good cheapo TV.
And for any particular year, if you got a fancy TV last year, this is true.
But over 20 years, everything else goes up by $10,000. Oh and all the TV's are much better.
In other words, if there is something that is getting rapidly cheaper, and is included in the typical basket of goods, it can have an outsized influence.
I have not noticed a perception that housing costs have increased in New York, but when I was younger, most young people expected that they would have to find some roommates to afford a place. Now many people expect to have a place of their own - in New York City! Wondering if that is a symptom of a general rise in expectations driving the vibecession.
My initial thought is just that all of life’s meaning has been recast relatively recently in individual economic and credentialed terms for status-seeking American young people. So when reality bites and normal unremarkable economic and academic outcomes shake out for most people in their late twenties and beyond, it just hurts a lot more. As opposed to the counterfactual world in which life’s meaning was still traced in thick family relations, religious significance, and national warmaking projects. Maybe a related claim would be that young people are unhappy for all the red-coded reasons that now seem obvious (atomized social ties), but the only high-status way to express that angst among the elite or elite-seeking is in an economic framing. Life definitely feels like it is set up wrong - easier to make sense of that or say it out loud in Brooklyn as a Marxist signal than as an illiberal one. The bill for two centuries of classical liberalism come due intelligized in classical liberal terms.
Why mess around with debating inflation. Just find unadjusted hourly wage and price of good that is unadjusted (sometimes harder to find than adjusted values).
1980 Minimum Wage $3.35 Beef Price 2.34
Hours to work Minimum wage to get 1lb of beef in 1980: 0.7 hours
2024 $7.25 8.34
Hours to work Minimum wage to get 1lb of beef in 2024: 1.15 hours
From nationalchickencouncil.
For houses find wages for that area and houses for that area (not comparing median city wage to median rural house).
Agreed. The more I look into it, the more it seems that adjusting for inflation on time spans longer than a decade is meaningless for the stories we want to tell.
Unfortunately, this beef thought experiment is commonly brought up as an instance of substitution bias in price indices:
If there is a cheaper substitute, such as chicken, then consumers will prefer that, reducing the demand for the original good, thus raising its price. If the basket isn't updated, then inflation will be overstated.
I suspect that no one actually cares about the economy, but can't admit it because they cannot articulate the real things they care about: social stability and in-group well-being. It's just like crime; except TV never had much to do with that. Instead, people use "fear of crime" as a *psychological proxy* for fear of chaos: people think crime rates are high when they see vandalism, litter, or people they don't know hanging around public spaces. It's fear of disorder, not crime.
Similarly, people perceive the economy as doing better after the election of a president they voted for. Democrats thought the economy was doing fine under Obama, Republicans thought it sucked. During Trump's first term, republicans thought the economy was doing fine, democrats thought it sucked. The pandemic threw a wrench into this relationship, but it's reasserting itself now. Democrats think the economy sucks because Trump is in charge, meanwhile, republicans think the economy sucks because Trump promised the moon, but appears to be making things worse.
This is mostly, though not entirely young people because most, but not all older people know better. My own memory goes back to Carter, so I've seen enough to know that the guy in the White House doesn't control very much. But this idea, that no one is in control, is extremely anxiety producing for certain types of people--the center never held? Then how can any of us plan to improve our lives?
If I'm right, then I predict that news media bias tracks presidential election performance. Right wing news will be positive during right wing administrations, and vice versa left wing.
The next guy who can make real economics sound like populist common sense is going to sweep the election.
This is a common sentiment on Twitter. They think if they tell people there is great depression-level unemployment they will see the need to deport the 100 million illegals. Doesn't occur to them that people might blame *their guy* who's the President.
>that there is great depression level unemployment?
Youth unemployment is lower than it was throughout most of the Bush Presidency.
https://fred.stlouisfed.org/series/LNS14024887
Statistics say whites have higher average income, higher educational attainment, and are less likely to be unemployed, on welfare, or in prison. The far right used to trumpet these statistics before it decided to turn into a movement for broke people who project their loserdom onto the entire white race. Even the way you talk about your group stinks of loserdom. White males? Try saying white MEN.
Unemployment does not seem particularly high for white men? It's much lower than for e.g. Black women.
https://fred.stlouisfed.org/series/LNS14000028
https://fred.stlouisfed.org/series/LNS14000032
Do you think that federal statistics are completely made-up, as opposed to meerly flawed?
Do you have any better statistics?
It is both a job and employment. Do the parents need the space for something else? Who gets the house when the parents die?
I'd like to see an "Enshittification: Much More Than You Wanted To Know" post. It's hard to know whether this is a real phenomenon or just another popular-but-wrong narrative.
Valve releases very little, but they do also have Half Life Alyx. I haven't heard any really bad words about it.
I'm not sure whether it's well enough defined to put numbers on.
But I'm not sure how it could be false. Enshittification is just the result of people optimising things in line with their incentives. Over time we've got better at optimising things, and in recent years we've got much better at optimising things as every big company has built an enormous data science team to squeeze more performance out of everything.
If the consumer is truly happy, that's an inefficiency that can be removed. We need to charge them slightly more, or decrease the quality of the product, or find a new way to nickel-and-dime them or show them more ads, until the value they're getting is *just* above the threshold at which they go away.
I'm skeptical because if the quality of the product really is that bad, it seems that someone else can just not do those things and take away customers from their competitors.
Certainly this is true of Canada’s oligopoly dominated economy and stock market — which is why I own stocks in all 3 telcos and the 5 big banks.
Agreed that competition is the counteracting force that stops enshittification from immediately going to infinity.
Counteracting competition you've got collusion (formal or informal), monopoly power, imperfectly substitutable goods, and plain old short-sightedness that causes the enshittified players to get picked off by less-shit competitors eventually (but not _this_ quarter, which is what we care about right now).
My theory would be that improved analytics and modelling have not just given companies better ways of making things worse, but also *safer* ways of making things worse; ways that are less likely to lead to churn to competitors. They know that reducing the size of a Snickers from 50 grams to 40 grams will piss people off but reducing it to 43 grams won't be noticed.
In perfect competition, if your product gets slightly worse, then some (many) competitors' products get better than yours.
But if your product is e.g. 10% better than the product of the next competitor, there is an incentive to make it only 1% better, otherwise you are leaving money on the table.
Today I watched a video about how Duolingo decided to use AI to generate more language lessons, so now you have many exercises where the correct answers are marked as incorrect, etc. Where is the competitor I should switch to?
A week ago I talked with my friends about the professional tasters, i.e. people who get paid to taste various foods and compare which ones taste better. (Seems like a dream job, but those people have many limitations, e.g. can never smoke or eat spicy food because that would damage their abilities.) Someone asked whether those people get paid to help invent better tasting food. The answer was that sadly, they are typically paid to help companies figure out how to make a version of the same food from crappier ingredients in such way that it doesn't make the taste worse noticeably.
As a software developer I see it firsthand how companies do not care about quality of software, because the customers are willing to pay anyway. A developer who reads "Clean Code" is perceived by his superiors as an idiot who doesn't understand the business aspect.
In summary, there are many situations where high quality was just a positive externality that the producer didn't fully capture. We got better at finding and eliminating such waste.
EDIT: Also, Substack misses some trivial functionality, such as centering a line. They could add it, but realistically they probably never will. How many bloggers will they really lose because they can't center a line? If there is no financial incentive to provide a better service, why should they?
I'd like to see Scott write a "Much More Than You Wanted To Know: The Book", actually. Take all the currently trendy media concepts and do deep dives on em.
Except that stuff being cruddy and getting worse isn't recent. The breakup of Ma Bell in the 1980s led to buying your own phone, which was initially good, but quickly degraded to "phones are unreliable; you can pay extra but they will still suck". In theory, the value of a trusted brand is that they wouldn't do this, but ... Theory and practice differed. So I don't think this explains a _recent_ divergence between numbers and vibes.
I believe old games are better because we were kids back then.
Presidents really have to make incredibly outsized decisions to have a noticeable impact on inflation. Business cycles rarely care about presidents, and the inflation crisis of 2022-23 was partly due to supply-side inflationary shocks (irrespective of whatever the political class is doing) and partly due to the leftover excess savings from the pandemic-era stimulus (which was largely spent by Trump through the CARES Act but pretty much every single developed country had to do the same, so it can't really be attributed to him personally).
I agree that the persistence of inflation is a problem for vibes, most likely because the median person still has the actual inflationary shock fresh in their minds and also because inflation still remains about 1-1.5pp higher than during the 2010s.
Trump ended Pax Americana, not Biden. Or maybe we should say that Putin did.
Yes, outsized decisions that are inflationary such as the CARES Act of 2020 and the Tariffs of 2025 (which are a tax on US consumers/companies and, as such, inflationary by nature). It remains to be seen how much of the burden will be shared between companies and consumers, but the effect on the price level only goes one way.
I doubt manufacturing is going to shift in a single year. It takes a long time to build a new factory, for example.
And in the meantime I would expect it to raise prices since it's a tax on basically everything that contains foreign products anywhere in its inputs.
Prediction markets predict SCOTUS will side in favor of the plaintiffs against his tariffs https://polymarket.com/event/will-the-supreme-court-rule-in-favor-of-trumps-tariffs?tid=1764896482974
Manufacturing is DOWN because of the tariffs https://x.com/joelgriffith/status/1988732110203678944 Your hope is completely misplaced.
It's getting the opposite of "built", instead we're losing. You link to a reply tweet showing that there were some negative periods under Biden, but they were mixed in with positive ones. With Trump it has been ALL negative since "Liberation Day".
His tariffs are not "a fine job". They are lousy and the economy perks up when he scales them back.
Of course evidence does indeed show that https://apnews.com/article/stocks-markets-tariffs-trump-721a3a5971f1b254981d32f4acb9eb17
Nvidia is doing well, making chips for AI companies and with their imported semiconductors carved out as exempt from tariffs https://www.cnbc.com/2025/04/03/nvidia-positioned-to-weather-trump-tariffs-says-altimeters-gerstner.html and AI companies are doing well. But other manufacturers are not.
Banned for this comment.
Trump is increasing inflation with his tariffs
My suggestion is that an inquiry about any trend involving young people that seems to have started in the mid or late 2010s should start with "it's the phones"
> If I apply to 1000 jobs and no one hires me, that's not because I have a phone with TikTok on it.
They at least share a common root - Tyler Cowen wrote about this in his book Talent. Broadly, we have used software and increased availability of computation to solve "search problems."
At the same time, a bigger world and "big data" means that the space over which you can seach is impossibly larger than even recently.
This ends with extremely customized and targeted feeds (Tik Tok) that are so strong they're literally infohazards, AND with employers having many more applicants AND many more potentially great candidates for any given job.
And it doesn't end there - in dating, it ends with high status people of both genders having ten thousand hotties waiting for them in the app (so why settle down?) whereas everyone else is kind of boned, because the top 78% of women are competing for the top 20% of men, and women (the choosers) only swipe right 5% of the time.
In Amazon, there are a thousand purveyors of basic stuff, all furiously competing for your dollars (good), but they do so via farmed fake reviews and paying for placement (bad).
As a person with a service or product, it's made it so the only channels to get in front of anybody are owned by the FaceGoog ad duopoly, which have used their thousands of Phd's to eat most of the arbitrage and make buying ads on their platforms a worse prospect than ever (the power of "platforms") - this is literally what they've built their trillion dollar companies on, this is the source of most of their revenue.
But during the early 2000's? None of this was true - there hadn't been the great aggregation that put most of the internet into the hands of the FAANGs. Even as early as the 2010's it wasn't true, because smart phones didn't exist at scale, "big data" was a thing for only a handful of companies, and most employers still had limited reach into the vast thronging milieu of potential employees.
But now it's the 2020's, and all this stuff is here and / or stronger than ever, and it's been a true step change in search problems, how people are matched to other people or jobs, and how businesses are put in front of consumers.
> great aggregation that put most of the internet into the hands of the FAANGs
Surely there's some better way to phrase this? Perhaps "The FAANGs hadn't sunk into the meat yet."
> Surely there's some better way to phrase this? Perhaps "The FAANGs hadn't sunk into the meat yet."
Nice, love it. :-)
Actually, I had seriously considered using "great aggregation that put most *eyeball-hours* into the hands of the FAANGs" (emphasis added for clarity) as slightly more accurate, but wasn't sure it would come across as clearly.
But I think you're right - I clearly missed an opportunity to say:
"this was before the FAANGs had sunk so deeply into everyone's collective eyeballs"
or maybe
"this was before everyone began heaping 4-9 eyeball-hours per day at the altar of the FAANGs".
Alas, we make our choices in the moment, and off they go, into that great eyeball-hour mill in the sky!
Last position I was involved in hiring for got 300 applicants; *many* of them were basically saying "it's easy to apply, why not?". It honestly made our search process harder as well - instead of having to choose the best of 30 candidates, we had to come up with arbitrary filtering to bring it down to a manageable number.
There aren't "so many" people applying. Rather, the people who *are* applying, are spamming every vaguely relevant job opening they can find, because we've made it really really easy to find and apply for open jobs.
See also college applications.
Honestly, if your behavior in-person is even remotely like your behavior online, then the reason you can't find a job is almost entirely due to interpersonal skills. I hope you make progress on both your human interactions, and your ability to get work.
Taking open applications is the last choice if you don't have any other options. We got a new customer service rep a year or two ago and she is fantastic. She's related to someone else who works at the company.
We determined we needed a new sales rep. I reached out to some people I knew who had moved around just looking for referrals and one of them was unhappy where she was. A 45 minute phone call later and I was sharing her info with management and she was hired a month later. No application posting, no resume. I'm in sales and if for some reason I wanted to look for a different job in the same industry I wouldn't bother with job applications either period I would just be reaching out and get something through my network.
The people who struggle and get screwed by the systems are the ones who are just starting out and don't already have 300 people they know who they've worked with in one capacity or another over the last 10 years available to them on linkedin.
Phones made people think the economy was bad when actually it was good? Can you explain more?
Is this the "all the inflation statistics are lies" theory that Scott addresses in the post, or do you have a different theory of why they don't show this?
Nothing in this article even mentions economic statistics. Since the statistics say the economy is good, if you say it's bad you have to explain why they're wrong. This is Scott's entire point.
"The economy has been bad since 2008 you fools" does nothing to explain the disconnect between sentiment and traditional macroeconomic indicators during this decade as economic sentiment was quite positive as recently as 2019. If this was all explained by the economy being bad along some other, more accurate indicator that the public senses better than traditional economic statistics do, then you wouldn't have this period of rosy sentiment leading into the pandemic.
If your explanation for positive sentiment during the period your own theory predicts unending negative sentiment is improvement in employment and pay among entry level, low paying job sectors, then that runs into the problem that the Biden period with the intense negative economic sentiment saw the strongest conditions for this group in the past 50 years. I sense there might be some political rooting in your comments here, so before you feel obligated to credit Biden for this, this is at least in significant part explainable by the fact that the pandemic created extremely high demand for these kind of jobs relative to the available supply.
1950: work is dull, home life is simple, boredom is endemic
2025: work is dull, home life is a constant dopamine drip of excitement (phones and/or video games)
People now feel underpaid due to the greater opportunity cost of thier time.
The 1950s had drag racing and gang fighting, if you wanted excitement.
I've been to drag races, I can say with high certainty that Burnout 3 from 2004 is significantly more exciting. Unfortuantely the vibecession in video games for the last 20 years means we have yet to top that game.
Both games are awesome classics
God, I played that this morning.
I don't know man, we just had three good racing games release back to back this year. Kirby Air Riders in particular has a very nice sense of speed to it. https://youtu.be/ayODEjFCI8E?si=V6ngQHmmgkrK8RXU
This is true for me. Life at home is paradisical if I am not stressed about work.
This also explains the drop in dating and fertility, which are no longer a relief from boredom but instead cost a lot for only marginally more reward than the dopamine drip.
An anecdote from my own life: during college, I moved into an apartment. For the first few days of this, there wasn't an internet connection in the apartment.
Feeling bored, I called a girl I knew and asked what she was doing, and she invited me to go bowling in a group.
This is absolutely true for me any many people I know. Phones (and the internet generally) also allow you to compare your life more directly with massive numbers of others, many of whom are likely to be doing better, or creating that perception effectively.
My dad says its driven by the continuing feminization of our culture because women are enraptured with complaining and love to be miserable, and society as a whole, men and women, were both much happier before we started taking women and their opinions seriously. He also thinks there is a shadow earth always on the other side of the sun from us, so we can't see it, and that's where Jesus came from, so his takes are often unreliable. He also loves complaining and being miserable. And sports betting.
Yes, opportunity costs. And relatively
Ya I think this is a really substantial factor that doesn’t get raised enough.
Media decentralization/getting more demand-driven post-phones also significant. There’s apparently a huge demand for griping & nostalgia, so that content gets produced even if the frustrations it’s latching onto are eternal or narrowly distributed. And it’s extremely difficult to compare eras in an un-mediated way (even if u were around, memories bad & your circumstances changed, rational ignorance) so media is particularly important on questions like this.
there has been a lot of attention paid to the question of the relationship between ubiquitous smartphone and modern social/algorithmic media use and various negative trends like increased rates of teen depression, negative trends in subjective measures of well being, etc., and positive trends such as reduced drug and alcohol use.
If you buy these technology/communication changes, and the changes to society particularly for young people that are downstream of these trends, as causal drivers in the context of mental health, for example, it would stand to reason they would also have an enormous impact on individuals' assessment of the national economy and their own place in society. (edit: there are any number of hypotheses you could identify as to *why* that might be such as the comment above re opportunity cost that offers one I wasn't even thinking of)
Going off the consumer sentiment questions here: https://data.sca.isr.umich.edu/fetchdoc.php?docid=24770
- Phones make people compare themselves financially to everyone in the country, because algorithms now put random strangers in front of your face for hours a day
- Phones feed them ragebait, which makes them think that the world sucks, thus, the economy must suck
- Phones make them aware of AI, which makes people fear unemployment/depression
The vibecession is much more than about the index of consumer sentiment. It reflects people's general outlook on the world (bad), which they then map onto the economy, because the economy is our generally-accepted measure of meaning.
Yes.
It's not just seeing the wealth of random strangers, there's a whole ecosystem for people to appear wealthier than they are.
Yes!
Not just wealthier, but happier, more accomplished, more successful and attractive, etc.
In the domain of fitness, for instance, use of steroids has skyrocketed, because ordinary men pursuing strength and fitness are no longer comparing themselves to average people in their communities, but to other men using steroids. People with physiques they've spent years cultivating are frequently treated with mockery or dismissal on social media, because users are so used to seeing even more impressive physiques cultivated through steroids that they assume they must be trivial to attain.
This one caught be offguard after 15 years of home gym upon returning to a commercial gym. We always knew who the juicers were and that it was around, but guys shot up in their cars or the bathroom etc, and distributed the steriods similarly to other illegal drugs at the time: payphone, euphamisms, cash etc. Now they just inject right there on the bench, empties in sharps container in the bathroom etc. I've encountered a few youger guys <22 who weren't even aware that Tren is Steriods, a word that they associate with old, bad PEDs from the 90s or earlier, while to them Tren is new and safer and totally fine and its impossible to get the desired gains without it. It felt like a fever dream the first day.
Yes, add me to the "it's the phones" crowd. I think there are real considerations for the "I sacrificed my youth and am only marginally better off in a much more expensive home" aspect to it, but that's an elite consideration whereas the vibecession is much wider than that, either because of phones directly or the impacted elites spreading their misery.
Agreed. It seems like a combination of a few things, several of which seem linked to either social media or smartphones.
1) There’s been an increase in anxiety and depression disorders. There’s a lot of debate as to whether this is diagnostic inflation or an actual worsening of mental health (and also if it’s caused by social media or not). But if we assume that it’s real, then the vibecession could partly be function of anxiety. This would be the Jonathan Haidt explanation.
2) Additionally, social media has created an unrealistic expectation of what success looks like. Zoomers think they need 600k per year to be financially successful [https://www.forbes.com/sites/jackkelly/2024/12/04/gen-zs-benchmark-for-financial-success-is-a-600k-salary/]
3) Many people really do need a bigger house these days as mentioned in the article. If you want two kids and both parents work from home, a two bedroom house is a nightmare. This changes things from “what’s the inflation adjusted price of a house” to “what’s the price of a house that you need.”
4) The gradual breakdown of community over the past century. I'm thinking of the analysis from the Bowling Alone book. It seemed like a longer term trend than social media, but does seem to be exacerbated by it
Basically, if you’re 25 and your social media feed has made you think you need 600k to be successful, and also you have no IRL friends, and a generalized anxiety disorder, and are living in cramped conditions working from home, then yeah, your vibes are gonna be bad.
This is the media-bias explanation, with the role of phones being to explain why media sentiment became so much more negative at this particular point in history. Briefly, phones shifted people's news consumption to social media (mostly Facebook), which left every outlet chasing the same clicks and made things more competitive. A lot of the good things people miss about older journalism (like at least some journalists making earnest attempts to keep things in perspective) were basically the result of the slack that came from a not-very-competitive media environment; with competition increased, you have to write whatever headlines get the most clicks, and because of human nature that means negative ones.
(Also, journalists themselves can legitimately complain that their economic standing has gotten worse in the smartphone era—they now have to work harder for more meager material rewards—and presumably this, too, affects the tone of coverage.)
This is under-noted. Digital media plus AI content has been a neutron bomb for journalism generally. So there are now a bunch of bitter journalists who view the world as awful. Couple with the algorithm favoring negativity and outrage for clicks, and the whole media environment broadcasts a negative message.
I had never considered this before, but now that you mention it, it seems really important.
The other part of this that is just as, if not more significant is that that phones have shifted people's media diet towards social media where their sources of information are friends and influencers who do not have any professional journalistic goals or standards. It's not just that the attention economy made negative headlines more competitive for legacy media, but more people are learning about the world through (e.g.) TikTok videos about prices being out of control. This contributes to their sense of what is happening, which they in turn share with others in a networked chain of information about what's going on.
The main article doesn't mention it, but a very strong reason to think that the "vibecession" isn't caused by people grappling with personal economic struggles and this fact making it into aggregate numbers is that financial self-assessment survey data is more consistent with what you see in a fine to good economy, consumption behavior is consistent with what you see in a good economy, and people tend to rate their local economic conditions as quite good, but the national ones as poor. All of this suggests people have a sense that the national macroeconomic conditions are poor and that *contradicts* personal experience. How did they learn that? Probably the entire of milieu of information - from radio ads talking about "recession specials" to those TikTok videos, to the general tone and volume of headlines in sources like CNN and the NYT or right-wing media that had propagandistic reasons for portraying the economy in a negative light. The important thing to grasp is all of this contributes to what people are talking about, and what people get from their phones more than anything sense is a general sense of "what people are talking about."
Could be like this maybe? Everyone I know has a job and is doing pretty well. The only way I find out about people who aren't doing well is through my phone. When people in my phone say they're struggling to make ends meet, it's a dick move on my part to think, well, I'm doing fine, so on average everyone must be doing okay. Instead, I just kind of feel lucky that I've evaded a recession that I do perceive as real
a) How many of those complaining people are bots?
b) If most people think that it is a dick move to brag while others are struggling, it could be the case that 90% of people are doing well and 10% are struggling, but the phone makes it seem like 99% are struggling, because the former will be quiet.
> There's no money in "complaining people"
There is, if you can later redirect the people's anger into doing whatever you want them to do. Which is easy, as long as the thing you want them to do is to damage their own country, you don't care how specifically.
The money comes from the intelligence budget, and compared to other military expenses it is miraculously cheap. A few websites, dozen people designing and A/B testing the messages and memes, and a few thousand bots to paste them all over the internet, is all cheaper than a single modern missile, and can do more damage.
Parenting is similar here! If someone complains that their kid was up all night, it would be a dick move for me to pipe up and say "my kids slept fine last night", so childless people get an unrealistically negative image of children.
Remember that social media is international, and many people on it (for example on Twitter), are not from the US. English is the lingua franca. The US had a particularly strong recovery from pandemic restrictions relative to the world and some people contributing to the overall feeling of how things are going were from nations that were genuinely struggling. Great Britain's economy was legitimately terrible, and people from Great Britain were on Twitter joining in Americans about how bad things are going right now, not as bots but as people who project their local conditions onto others. They didn't caveat their posts as coming from Great Britain each time they did this. Think of this as the global sentiment affecting national sentiment hypothesis.
There is definitely something special about Great Britain.
I am from Slovakia, and when covid started, most people were okay with wearing the masks and other precautions (at least during the first few months, before the Russian propaganda finally decided between "covid is not real and Americans are trying to scare you" and "covid is real and Americans made it"), and whenever I saw someone post on Facebook in Slovak "resist the medical advice, don't wear the masks", it was some expat from London. So I am not really surprised to hear that covid hit them especially hard (or that they blame the precautions instead of themselves).
But you should not underestimate the numbers of bots. Yes, English is spoken by billions, so any message you see online in English, it is plausible that there are millions of people who sincerely believe it. However, seeing thousands of people write the same opinions in Slovak (especially when all of them have English sounding names, live in random places all over the world but mostly in Africa, and copy-paste the same messages in many groups) is definitely evidence of bots.
It's definitely not all just "phones", but I think there are some aspects related to phones (social media, alternative media, increasing polarization, etc) that should be examined. Some off the top:
1. social media exposed people to the lifestyles (whether real or fake) of people richer than them, which causes people to feel further behind than they would otherwise.
2. alternative sources of news are disproportionately negative compared to traditional mainstream media, and so people are spending more time submerged in media that reinforces the vibesession
3. social media and the internet in general increased political polarization, and extremely polarized people feel that vibes are much worse than they are when the opposite political party is in power. Tea party folks felt that the US was going to shit during the Obama era, lefties felt the entire world was falling apart under Trump's firs term, the right was convinced the US was on the brink of collapse during Biden and the COVID era (despite the economy doing quite well), and now the left is convinced that democracy is collapsing before our eyes and the nation is being sold piece by piece to the highest bidder amongst Trump's allies during this term.
I think 3 is particularly interesting. If I wanted to self-criticize a bit, I felt **much** better during the Biden years because I was convinced that we didn't have someone who was actively trying to sabotage our democracy. Since I felt good, I didn't pay as much attention to politics and actually got off social media for a while. For me, the Biden years were a peak in "vibes". We're now in Trump 2, and despite me being much better off financially than during the Biden years (for reasons entirely unrelated to which party is in power), I'm much more worried generally about the state of things and my personal vibe index is much worse.
The ubiquity of cell phones and specifically social media have enabled a countrywide game of "ain't it awful" as per the psychological Games People Play. And just as noted in the book it increases connection between people, but makes both people feel worse. Multiply times infinity.
I think the argument is that phones made young people think *everything* was bad. Sounds plausible, especially if there were the kernels of truth in the housing issue for the overall negativity to latch onto and really explode over.
If you spend your time looking at influencers having fabulous lives, or even your friends posting their very best experiences and pretending that that's normal for them, you might feel like you're very behind compared to everyone else.
> Phones made people think the economy was bad when actually it was good? Can you explain more?
Everyone young is now comparing themselves to hot 19 year old millionaires with abs, 7-11 hours of the day:
https://imgur.com/uSQIthV
This graph is all screen time and not segmented by age. But in 2014, phone screen time was ~2 hours a day, and that's up to ~4 hours a day today, and 7-9 hours a day in Zennials.
In general, the change in screen time by age is that basically everyone gets 10 hours of screen time, with older people biasing more towards TV and younger people towards phones - so the Nielson graph above is swamped by the demographic pyramid, but younger people are absolutely getting more algorithmically served hot 19yo millionaire's with abs in their feeds all the time, that's basically the median influencer.
Yes this.
So, I think it's a very plausible hypothesis in several ways.
I had never considered this before I read your unpacking because I'm of old material sort-of-left, but it started to grow like a stinky superstructure mushroom cloud of "representation" and (ahem, apologies for this) "mimetic desire" as I kept reading. It's kinda adjacent to Brooklyn Theory and it's almost entirely psychosocial.
The assessment of one's situation is almost always relative (unless we are in a "literally starving with frostbite on extremities and literal wolves at the flimsy door" situation). Constant exposure to globalised "content", much of it utter slop presented as real, a lot generated by (excuse language) "influencers" -- as per Liface's comment below: "reflects people's general outlook on the world (bad), which they then map onto the economy, because the economy is our generally-accepted measure of meaning.".
Old advertising was aspirational. This stuff is just depressing because it combines aspirational material and experiential promises with subtler implications: if only I had money for a 30-day chakra balancing retreat with emerald frequency focused yoni massage and a special appearance by a Master Optimiser Trained by Whatshisname Himself my life would be finally better, AND I AM ABSOLUTELY WORTH IT AND DESERVING, and if I can't get it I'm clearly not worth it, or have not been grinding hard enough. Insert your own psychosociodemographic version.
A massive mismatch between ambition/aspiration and what's possible. What's possible has gone up. But the aspirational level has gone beyond stratospheric in not always clearly measurable ways.
Crucially, not just aspirational has gone super high. I think what's seen as floor level minimum acceptable has gone massively up too.
That's my best hypothesis here, but it's entirely speculative, as so far I've not hunted any data to support it.
> I think what's seen as floor level minimum acceptable has gone massively up too.
Yes. And this isn't just a perceptions problem. All sorts of laws, customs, businesses, infrastructure etc are set up in a way that pushes the floor up.
By which I mean that no one is selling the cheapest gruel at $0.10 a bowl in most of the developed world.
This is Especially true for housing. But also many people feel they need to have a car and a smartphone, because the world isn't set up to accept that some people don't have these things.
This would not be the only area in which, for whatever reason (social media, media, "coddling", absolute worst case interpretation of society as mainstreamed ideology) the motto of the age seems to be: "Always be catastrophizing".
To add what others have said, the rise of influencers, who are the most visible of the new media. What is an influencer? Someone who has gained in popularity and prestige (and has made a lot of money as a result). What did they do to get there? In most situations, it wasn't anything that was visibly difficult, maybe it's saying something that resonates, or being hot, or being funny. Unlike the celebrities of yesteryear, sports stars or actors or getting a job working on AI at Google, it doesn't feel like influencers had to work hard (or grind for a long time) to achieve their success. All they're doing is making short form videos on TikTok, playing video games on twitch, or saying random shit on twitter (I'm not saying becoming an influencer isn't hard, I imagine it requires a lot of work, it's just not always clear that this is so). Or maybe they're literal lottery winners, e.g. Bitcoin millionaires.
This also explains the rapid rise in sports gambling, retail investing and cryptocurrency. It could also explain what I believe is a more recent obsession with home ownership. Growing up in the 1990s and 2000s, I did not see such a strong desire for home equity, renting in New York was just as viable, and in fact, in some circles seen as superior to buying a house out in the suburbs. But housing equity (especially the rapid rise in housing values the late 2010s) is also viewed as a "get rich quick (or at least without effort)" situation.
phones are at least a mechanism by which one would be able to more frequently and omnipresently absorb negative media coverage
Because they're being exposed to a constant stream of bad news, designed to grab their attention and evoke strong negative emotions?
Phones increase negative sentiment generally because people spend more time doomscrolling (something not really possible with a literal newspaper or even a desktop news site from the 2000s.
Plus phones displace in-person socialisation which also drives negative sentiment.
That would be my interpretation.
When does the problem get bad enough that we start taking away people's smartphones, or at least regulating them heavily? At some point society decided cheap, over the counter heroin needed to be eliminated. (Don't get me wrong, I don't support our Draconian drug laws, but I also don't think heroin should be a cheap, over the counter drug. That genuinely had to go)
I have a very high prior against phones being a problem because this claim is invariably made about new tech and new art and it always ends up being wrong. I really think you need a smoking gun, not circumstantial evidence.
>it always ends up being wrong
Changes in media technology have often had dramatic effects on society throughout time. Guttenberg's printing press probably helped kick off centuries of warfare and civil unrest through accelerating the diffusion of ideas and destabilizing established authorities- you know, like today. More prosaic examples include the invention of radio helping to spread demagoguery in the 30s. A technology can ultimately end up being neutral or positive, but society can certainly go through a rough patch while adapting. I do not think that 'this claim' 'always ends up being wrong'
The Rwandan genocide was massively coordinated through hateful radio broadcasts as well.
To say nothing of various addictive drugs, or invasive species like tumbleweeds, kudzu, and feral hogs, or literal guns.
I dont follow any "influencers" but I hear ppl get depressed by it. There were ppl to be envious of in the past, but their distance gave them some gravitas. Now ppl are envious of someone who is clearly a douche, and this makes them feel worse. This is related to ppl doing just as well but feeling they should be doing even better as Scott discussed in the post.
Also the complete collapse of good child-rearing practice, where it is now considered child abuse to teach your child any level of independence, emotional resilience, or growth whatsoever.
However, no one ever says anything to you about it if you do it. Maybe they are gossiping behind my back, I don't know. Everyone expresses jealousy when they find out my children do chores. Not sure what is stopping them?
Depends on what you mean. No idea about chores, but people have had the police called on them and had CPS threaten to take their children away for letting them play outside, walk to a neighbors house, walk to school, etc. Things that should be totally normal for an 8 year old are now relegated to late teen years.
This was my exact thought. I would say surge in internet use generally though.
Some sort of general negativity social contagion that effectively transmits through the tubes. It impacts a lot more than just ideas of the economy: environment, politics, etc.
"Speculatively, maybe people complain that they are not getting the level of success they expected based on their qualifications." That is Turchin's elite overproduction hypothesis in a nutshell. Since he called it in advance on empirical / historical grounds, and the vibecession seems to fit, maybe it's a hypothesis worth taking seriously.
1 would show up in the unemployment rate.
2 would show in the real median income.
But apparently they do not.
> Median income is already insufficient to afford household expenses.
What do you even mean by that? Median income households... just go broke? What are all these households doing if not affording expenses?
Boy, if only we had some sort of index, across time, that tracked the prices which consumers pay... then we would know whether or not purchasing power has gone up or down over time, and whether or not the median income was or wasn't sufficient to afford household expenses...
Oh, wait:
https://www.clevelandfed.org/indicators-and-data/median-cpi
Perhaps you believe you are a deep thinker, but in fact you have fallen into a rabbit hole of conspiracy theories?
Scott has written about Turchin before: https://slatestarcodex.com/2019/08/12/book-review-secular-cycles/, https://slatestarcodex.com/2019/09/02/book-review-ages-of-discord/, https://slatestarcodex.com/2019/09/04/list-of-passages-i-highlighted-in-my-copy-of-ages-of-discord/
The most obvious counterargument is, like Scott says, that the fit to the data is mediocre; vibecession complaints are different in content from elite overproduction complaints, and if you weren't specifically looking for a connection you probably wouldn't come up with that hypothesis.
In what sense are vibecession complaints different in content from elite overproduction complaints?
Scott wrote: "The only problem with this theory is that it doesn’t entirely match people’s complaints. They don’t complain that it was too hard to achieve their success, they complain that they are not achieving success, or that it feels hopeless."
If your argument is that they are indeed locked out of success by elite overproduction even if they work hard, then you're back to the original question of why economic statistics don't reflect this.
This seems a little strange to me. Wouldn't you expect that if achieving success gets harder, more people would report that it feels hopeless?
Sure, but that leaves Scott's original question (where are the numbers?) unanswered. The section I quoted is dealing with the possibility that something elite-overproduction-like contributes to precarity even if the consumption numbers turn out the same in the end.
That statement by Scott was directed at the argument that the vibecession is because it is harder to achieve the same level of success. The elite overproduction argument is that they don't achieve the success that they believe their education etc entitles them too. That may well be higher than the old level of success, because every generation is more educated.
So this is the Wait But Why theory that the current up-and-coming generation is being given expectations that were never realistic? That could be happening, I suppose, but it's different from elite overproduction, which involves an actual per-capita contraction as more people compete for a fixed-size pie.
I think the fixed size pie is a status pie, not a money one.
Journalists who went to Columbia journalism School to be the next Woodward and Bernstein are oversupplied; they can either work at a prestigious outfit as an intern/precarious position for no money, low-status (and maybe low paying anyway) Internet "publication" doing clickbait and listicles, or in PR for some company they don't care about at all for much less status than being Woodward and Bernstein.
Aspiring scientists outnumber tenured academic faculty positions: they can either stay in their chosen high-status domain as eternal sessionals, or move to the (for them, at least) low status career of optimizing ad revenue for the same bland companies their aspiring-journalist peers are doing PR for.
Etc.
TBC, I am presenting a caricature version, and I'm not claiming to believe this myself, but it's something I think fits the "rising expectations/elite overproduction" bill and that feels at least not obviously false at a gut level to me.
I think (TBC this is a pretty "vibes"y feeling, I hold it with low confidence) if you look at the millennial doomer crowd it's a lot of people who wanted to go into prestigious positions in especially academia and journalism, but found to stay in that world they either had to effectively win a lottery, accept poorly remunerated precarious positions, or strike out in a lower status direction like Substacker/podcaster etc.
Most people didn't want that to begin with, and are fine working in data analysis/PR for boring companies, and they're doing fine, but there's a cohort of elites/aspiring elites who either are doing fine but in a lower status/less elite position than they'd envisioned, or are still chasing that higher status vision but less successfully.
That's not something to be found in economic statistics. "Elite" doesn't necessarily mean high-paid (as noted in this piece itself). If you go to Columbia for journalism, and end up a regional manager for Walmart, you are probably going to hate your life and the world you live in. (All moral judgment in the previous sentence directed at journalists, none at Walmart managers).
Fit to what data? Turchin is all about fitting theory to data, and the only valid frame of reference is, well, his own. To make an actual counterargument you'd have to demonstrate his framework fails to correspond to reality (either as measured by his own data of choice, or reality reality in the sense of his data failing to be a good map of the territory). You can't just take any random data and claim they somehow contradict him. (He literally called Scott out on this in his response to one of the articles you linked.)
And, look, his theory and "vibecession" are on a completely different epistemic levels. As in, again, his models have already shown predictive power. "Vibecession", on the other hand, appears to be an attempt to frame economic models' lack of predictive power as an [it's the kids who are wrong] issue. Which, perhaps true, but as of yet completely unproven - and quite ostensibly begging the question. "Specifically looking for a connection" is perhaps not the most helpful way to describe [fitting the issue into a framework with an actual proven track record].
No it's not. Turchin's "elite overproduction" is based on the notion of elites being non-productive, or at most performing functions with negligible marginal returns (say that you're lucky and your lord does indeed protect you from brigands and the enemy. Two lords don't make you twice as safe, but require twice the taxes to mantain). This *obviously* does not match today's definition of "elites", which mostly refers to educated workers whose compensation is agreed-upon and reflects at a minimum their economic contribution.
Even if there were an "overproduction" of educated workers (in the sense, their marginal contribution being lower than the cost of educating them), we would see their wages steadily declining, which they do not. If you go full schizoright-brained and posit that somehow office workers, through some mysterious mechanism, are indeed milling air and subtly extracting value created by those with "real jobs", well that would be very stupid for a variety of reasons but we would see the income of non-educated workers declining instead, which again we do not see.
It's not clear that Turchin's theory comports much with the facts even for an agrarian economy, but at least there it's internally consistent. If you try to stretch the definition of "elites" and apply it to a modern one, it does not even make sense on its own terms.
> This on its own can’t justify the entire vibecession, because most vibecessioneers are renters
A significant portion of the negative vibes is people complaining that they won't ever have the same opportunity to participate in the housing market that previous generations did. Those folk are renting, but crucially, they /don't want to be/; it is not rent but the cost of buying and owning property driving their vibes.
Yeah, I came to the comments to say this. A typical complaint in my social media feed is something like, "I'm 32 and have a Ph. D. and there's no way I will ever afford to own a house / apartment."
As Scott dryly says, the price of a house "may discourage people for whom homeownership was a big part of the American dream."
I'm pretty sure the gentleman I helped move into a bedroom he is renting in an HMO a little while back would see that as a huge improvement. I'll ask him, but frankly, /I'd/ take that over sharing a bathroom with complete strangers while paying off someone else's mortgage, so I don't see why he wouldn't. Oh, also he's not on minimum wage - pretty close to the median, in fact. That's just what the property market is like around here.
I'm unconvinced that "cheerfully" is the right adjective for that experience. One thing that kept me, for one, going was the knowledge that it was temporary.
Yeah, part of the reason why housing prices have increased is that the average house is a lot larger than in Ye Olden Times, so inflated expectations may be part of the reason for inflated costs. (At the same time, I believe government legislation now makes it literally illegal to pack a 1950s-size family into a home of that size, particularly with siblings of mixed sex.)
I think Scott is accurately indentifying the problem of top jobs being increasingly concentrated in the coastal cities where you also get the most housing inflation, even if housing prices in the US overall are a lot more reasonable. Also, the relative uptick in lower-class wages that Scott is citing only applies to the last decade or so, I think(?), and I imagine has a lot to do with both Trump and Biden working overtime to reshore manufacturing jobs and build out new infrastructure (along with various firms getting spooked about basing out of China.) Over longer timescales the Elephant Curve still applies.
I'm skeptical that child welfare regulations have much of an effect here; I don't think I've even heard of anyone getting in trouble for raising their kids in 1950s-typical density.
What I do believe, though, is that it's often illegal at the local level to *build* a 1950s-sized home, or to do so without buying a lot large enough to accommodate a much larger home.
Yeah, I might be getting this slightly wrong and the rules vary by state & country, but it does look like "statutory overcrowding" rules often apply to social housing, and landlords can also be fined for allowing similar conditions (which means they can legally refuse renters with large families.)
https://www.netmums.com/life/what-age-can-children-legally-share-a-bedroom-until-the-rules-for-council-houses-and-private-homes
https://bedroomzz.com/is-it-legal-to-have-4-kids-in-one-bedroom/
https://www.reddit.com/r/ireland/comments/153ewbn/legally_allowed_for_3_person_to_be_living_in_1/
> What I do believe, though, is that it's often illegal at the local level to *build* a 1950s-sized home, or to do so without buying a lot large enough to accommodate a much larger home.
Those 1950s-sized homes were built on lots large enough to accommodate much larger homes as well.
There's no negative externality to me if my neighbours want to build a small home on their block, but there is a negative externality if they want to build five small homes on their block.
> Yeah, part of the reason why housing prices have increased is that the average house is a lot larger than in Ye Olden Times, so inflated expectations may be part of the reason for inflated costs.
Dunno about that. Even a shitbox condo in Toronto is unaffordable to huge swathes of people who would previously have been able to enjoy a "middle-class life". Yes, the new houses in the suburbs are huge, but the new "houses" downtown are condos averaging 500sq ft with absolutely abominable layouts that cost more than a bungalow would in 1950.
A lot of people would be thrilled to have a smaller house in a place they want to live. I think people believe there is some linear relationship between home size and folks' happiness in that home, and they can just treat a doubling of square footage as a doubling of value, but I doubt the relationship is that simple. (But none of this matters, because small homes aren't available in desirable places either.)
> (But none of this matters, because small homes aren't available in desirable places either.)
Desirable places are full of small homes, they're called apartments.
Nobody builds small homes on their own blocks of land in desirable areas because that doesn't make economic sense, the land is too expensive.
Well there's your problem, it doesn't make economic sense but quite often zoning enforces it anyway.
Plus, compromises between the standard "small homes" (apartments) and the standard "big homes" (suburbs), or for that matter between residential and commercial property, are also often outlawed even when apartments are legal.
1. I live in suburban Ohio, so not particularly desirable in the grand scheme of things. If I bought my current ~1000 square foot home today between rising valuation and higher interest rates my mortgage payments would be about three times what they are now. It's good I bought at the right time or homeownership would be a lot harder.
2. There's probably no good way to measure but there's a lot of homes that are technically affordable, in a nice neighborhood, etc., but are still not bargains. The houses are old and the person who owned them really let things go towards the end of their lives. They either need a moderate amount of money and a lot of time or a lot of money and a trustworthy handyman to make the house habitable in the long term.
3. A lot of the homes I see posted on social media to prove there's affordable homes out there aren't worth it, especially if you have kids. Some are in remote areas, and moving to West Bend, IA isn't a realistic option for most people. Others are technically affordable and in a safe enough neighborhood but the local public schools are garbage. You could send your kids to a Catholic school, but then you're not really saving money over living in a nice suburb.
What do you think happened to all the houses that got built in the 1950s?
They're all still mostly there around me. Between 1950 and 1960 a tremendous amount of 'starter' homes were built all over suburban and exurban america. The understanding being that these houses would exist for, at most, 25 years, before being torn down and replaced. One of the builders at the time literally called them 25 Year Houses when they sold them. I'm sure in more desireable parts of the country they were in fact demolished in the anticipated time frames. In the parts of the country that are no longer desireable, like the Rust Belt and other parts of the midwest, these houses are mostly all still there and have been constantly inhabited for the last 70+ years. I grew up in one in the 80s; all the floors sag in the center of the rooms, the walls tend to bow out, moisture is a contstant issue. The whole house was noticably crooked. It didn't seem odd at the time b/c they were everywhere. My house was surrounded by dozens of identical ones built at the same time, my friends lives in them etc. I didn't realize until college that pretty much everyone I knew growing up, compared to the national average, was pretty poor. In exurban Ohio is just seemed normal. There are many for sale, usually between 40-70k or so, if you're willing to move to the rust belt, appalachia, the South that isn't Atlanta or Nashville or Austin etc.
Seeing as these people are renting 350sq ft condos for more in real dollars than a mortgage on a 1000sq ft bungalow cost in 1950, yes, they very obviously would.
In places where houses are expensive, it's the land rather than the actual house that's expensive. A tiny 1950s house on a nice block in a desirable area doesn't cost all that much less than a bigger house.
The 1930s-1960s were a particularly good time for affordable land in desirable areas, because the car was opening up a huge ring of land surrounding every major city which had previously been too inconvenient to commute from. When a useful block of land is the equivalent of $25K in today's money then it makes sense to build a cheap house on it and move in at the age of 21. But this was a brief moment in history.
Very interesting point! I find it quite persuasive.
I wonder if widespread self-driving cars and a decrease in the need for car ownership might have a similar effect, once more town planners are taking account of it?
Excellent point
My impression is that small but good houses are much harder to find than they used to be.
To my knowledge, this is a case of cost disease. Ask people if they would rather pay 1950s prices for a 1950s house or 2020s prices for a 2020s house. It's just that the option no longer exists.
> (or remove barriers)
Start taxing land value heavily enough to discourage speculative bets keeping vacant lots out of circulation, without taxing structure value at the same rate - or, ideally, at all. https://www.gameofrent.com
I actually did - my wife and I spent $50,000 on a single-wide manufactured home (2 bedrooms, 1 bath, a little under 1000 square feet in total) in a relatively upscale manufactured home community. Driving through, it looks like any other suburban development and not at all like the stereotype of a "trailer park" - and I get access to a nice community pool and don't have to mow the lawn.
Out of curiosity, do you own the land it's on? Sounds like probably not, so how does the land rent and/or HOA fee compare to what you'd pay in rent for a similar size apartment? $50k seems like a great deal even if it depreciates pretty quickly - if equivalent rent is around $1000/month then it pays for itself in under 5 years.
I'm sure many would, but far fewer 1000sqft single-family homes are being built than they were in the fifties. Unmet demand for small, cheap "starter homes" has meant that people have to spend more of their lives renting.
They'd probably happily buy it in someone was building them. But the lethal combo of zoning/minimum lot size + post-2008 banking regulations made developers shift to much bigger houses. In some places it's literally illegal to build 1950s houses, and where it's legal, the kind of person who might want one will never get a mortage anyway so there is no point.
That's the whole problem, we outlawed hamburgers and mandated everyone eat steak or starve, and the starving ones are legitimately pissed.
I think this is happening. However, it is partly a story of unrealistic expectations. Anecdotal experience and data (American Housing Survey, among others) suggest that people want larger houses than their parents had while having fewer children than their parents did. If you want that but simultaneously feel that owning a home is unattainable, it does seem like a problem of imagination rather than of real stuff.
Granted, there is definitely a dearth of small houses. They just don't exist in many places. I think this is partly a supply-side story (it's illegal to build them in many zoning districts, for example) but that can't be the whole story. In my experience most prospective homebuyers from the start rule out the possibility of buying a 900sqft townhouse, or even detached house. If people really wanted those, more would be built. But not that many are.
Indeed. It's a real shame, because as soon as you've lived in such a house, it's immediately apparent how livable it is.
My first house was nearly 3,000 sq. ft. I had two children at the time, with one on the way. I really thought we needed a big house.
My current house is just over half the size of my last one. I have five children now. We are perfectly comfortable, and I can barely imaging wanting a larger house ever again. What would be the point?
I think a major psychological barrier is the idea that each child needs their own room. I think that's quite a silly idea, but it is pervasive in America. Once you let it go, there is no reason you'd need more than three bedrooms, unless you have more than six children.
> oh, the poor widdle babies, listening to their parents having sex one futon away
There's a mid-20th-century Chinese film called A Beautiful Mistake depicting life in a village somewhere in China. The main plot is a tragedy involving a girl getting peeped in the bath.
But in a scene that has absolutely no plot relevance, we do see a husband and wife having sex while their son is asleep in the same bed. When he wakes up and goes off to do whatever his day involves, the wife scolds her husband for carelessness.
> "I think a major psychological barrier is the idea that each child needs their own room. I think that's quite a silly idea, but it is pervasive in America."
I'll push back against this - we were going insane until we separated our twins into two different rooms. It was impossible to ever put either of them back to sleep once one of them started crying, because Twin 1 would wake, cry, wake up Twin 2, Twin 2 would cry, and then we couldn't put Twin 1 back to sleep because Twin 2's crying was keeping him awake, and we couldn't put Twin 2 back to sleep for the same reason.
Fair enough, although most people don't have twins. Toddlers and infants don't share a room with other children all that well. Once they don't require soothing at night, sharing a room becomes much easier. I have generally moved my children into a shared room around the age of 4.
> If people really wanted those, more would be built.
This is not an accurate understanding of the housing market.
If it was _more profitable_ to build those, more would be built. But it's not.
What's profitable is large greenfield homes in suburbs, or tiny condos downtown, not because that's what people want per se, but because of the economics of development.
Most of the time, giving people what they want is also what is most profitable. That is obviously not an iron rule, but it's generally how all markets work.
And I'm fairly confident that it generally costs less to build a smaller home (and/or fit more units into the same sized apartment complex).
As I said, I agree that there are market distortions that artificially lower the supply of small housing units. But it's not all-or-nothing. At the margin, developers should still be sensitive to consumer preferences about home size. And my overwhelming experience as a homebuyer and talking to homebuyers is that within the housing market as it actually exists, people do value square footage and will choose the 2500sqft option over the 2000sqft option, even when it means paying a bit more or a less desirable location. That doesn't seem consistent with a story of massive pent-up demand for smaller houses that is stymied solely by the economics of development.
> Most of the time, giving people what they want is also what is most profitable. That is obviously not an iron rule, but it's generally how all markets work.
That's an extremely naive view of markets lol
> And I'm fairly confident that it generally costs less to build a smaller home (and/or fit more units into the same sized apartment complex).
Yes, ofc, but it's not necessarily more profitable. In some cases it is - which is why you see tiny condos getting built, where land value is extreme and it makes sense to try and split that up over as many units as possible.
> people do value square footage and will choose the 2500sqft option over the 2000sqft option
Which is why you see big homes get built in the suburbs.
> That doesn't seem consistent with a story of massive pent-up demand for smaller houses that is stymied solely by the economics of development.
It is. There's just nowhere to put them that makes economic sense to build, so they don't get built.
What you don't see is the "missing middle" getting built, the small townhouses, and so on. It's not profitable. As the developer, you're not saving enough on construction to make up for not maximizing the value of the land downtown (in fact you're paying more than you would for the shitbox condo building), and you're not desirable enough to make up for being far from the bright heart of the city in the suburbs.
It is a naive view in the sense that it's a simple concept, but it's also obviously true. If people really want something, they're willing to pay more to get it. That puts upward pressure on prices which encourages producers to make more of it (by increasing potential profit). That is literally how markets work.
I agree, big homes are being built in the suburbs. In some cases, land use restrictions don't allow smaller homes to be built. But in many other cases, there is nothing legally preventing the developer from making them a little smaller and a little closer together. They'd be able to put more homes on the same amount of land, which would definitely increase profits. The same logic applies to apartments, but they, too, are getting larger over time.
If people really, really wanted to save a little money by buying smaller dwellings, then it would behoove the developers to make them smaller. The only reason it wouldn't "make economic sense" to do that is that demand for those smaller units isn't high enough, which is just another way of saying that people really do want to live in larger homes.
It's naive in the sense that it's naive, not simple. You have a childlike faith in markets that is not borne out by reality.
edit: also, housing markets are very much not like widget markets, even if widget markets worked in that extremely simple way you conceive of.
>And I'm fairly confident that it generally costs less to build a smaller home
I'm an architect who works with homebuilders (in an expensive blue state), including helping them decide which house plan to build on a single-family lot. We look at bigger and smaller house options, the builder prices them out, the real estate broker estimates what they'd sell for, etc. So I have very intimate knowledge of this question.
My main takeaway from this process is that building a house - any house - entails large fixed costs, but increasing its size at the margin has substantially lower marginal costs.
For any house, even a small one, you have to buy the land, pay the transaction costs, pay for soft costs, do site work, pave a driveway, bring in all the utilities, install the heating system, electrical panel...etc.
But if you add another bedroom, you're basically just adding studs, drywall, a few windows...it costs more, but the total cost per square foot of the project trends down as you add square footage like that. But the extra space is valuable to people, so the sales price of the home goes up.
When we go through this exercise, we almost always find that a 3BR, 2.5 Bath house generates a higher return than a smaller "starter house". There is indeed demand for the smaller houses- even more than for the bigger ones. But they cost a lot to build, so the margins tend to be too small. And the builders are taking significant risk and often making less than you might think, so they need that extra bit of margin.
I think you're still barking up the wrong tree. The price of houses isn't the problem, it's the price of land. And land is the one thing you can't build more of (well, you can dump sand in the ocean but that doesn't get you far).
The general shape of solutions here is to build new cities, or rather, to encourage people to move to existing large towns with the potential to become new cities. All the good land within commuting distance of New York City is taken, but there's probably decent land near, say, Ithaca.
Thanks for weighing in!
What you say makes sense. Two questions arise:
1) Haven't most of those fixed, per-home costs have been stable for a long time? A home in the 1970s also needs a driveway, site work, utilities, etc., regardless of size. If the size of homes has gone up steadily for several decades, what change in the fixed vs. variable costs would explain that?
2) It totally makes sense that, holding lot size constant, and on fairly large lots, there's not that much money to be saved by building a slightly smaller house. But for developers of major subdivisions, the cost of land is presumably non-trivial. If you're trying to fit as many houses into your overall parcel as possible, wouldn't the footprint of each home materially affect the amount of land each one requires, and thence the bottom line?
EDIT: As I think more about this, I consider that something like 25-30% of the value of newly build homes is from the land itself (cf. https://www.fhfa.gov/document/wp1901.pdf), it does seem like fitting more dwellings per acre of residential land would have a pretty large impact on the developer's bottom line. This may have as much to do with the size of backyards as the size of actual homes, but due to setbacks and minimum street frontage requirements, I think home size does matter.
Re (1):
It’s hard to say for sure without decades of granular price data, which I don’t have, but my guess is that what you say isn’t entirely true. My guess is that the fixed costs are higher now because of huge increases in the regulatory complexity of building over the past several generations. Here are some examples off the top of my head- depending on where exactly you live, these may or may not apply to you. But they give you a sense of the issue.
(a) Electric vehicle enthusiasts decide that all new homes should be EV-ready, and they persuade the electrical code writers to add a requirement that every house have a dedicated high-amperage circuit. This in turn increases the house’s overall electrical service size. This costs as much for small houses as for large ones- it doesn’t scale with floor area.
(b) In places without sewer on the street, houses need to handle sewage on-site. In your grandparents’ day, this would probably be handled with a cesspool, a relatively simple system that could be built by one or two semi-skilled laborers and that generally worked okay. Lots of them are still in use. But the new septic codes are far more restrictive and complicated, and for a new house you have to hire a civil engineer to do stamped technical drawings for the system, possibly go to a local health board hearing for a approval, do field testing, and then pay a site contractor with a special license to install the septic system. The leach field gets a little bigger if your house has more bedrooms, but that only costs a little more once you’ve gone through the whole process and mobilized everyone.
(c) Back in the day, there were no energy codes, and old houses often didn’t even have insulation. And the early code requirements were simple: you just had to add some fiberglass batts between the studs, which any high school kid could do. But now the energy codes are both extremely strict (requiring expensive materials and labor) and extremely confusing and complicated (increasingly requiring you to hire specialized energy modeling consultants to model every wall surface, R-value and U-value, mechanical equipment, etc and produce a thick report demonstrating energy code compliance. Then you have to get a “blower door” test during construction to prove envelope tightness. Etc. The material cost mostly scales with size, but the compliance complexity generates fixed costs.
I could go on and on in this vein…
Re (2):
Yes, shrinking the minimum lot size requirements would reduce the land cost per dwelling and make smaller houses more economically viable.
This has to be done on a large scale to work, because, at the margin, land price is largely a function of potential density. So, if the going rate for a house lot is $100,000 and the minimum frontage for a buildable lot is 100 feet, then a lot with 199’ of frontage would sell for $100,000…but the price would jump to $200,000 if the zoning board granted a rare variance to allow a lot with 99’ of frontage. So, at the margin, the gains from increased density accrue to the initial landowner rather than to the builder or homebuyer. But if you slashed the minimum frontage in half for the entire region, then the supply of buildable lots would increase relative to demand and their price would decline, somewhat reducing the prices of new homes.
Anecdotally, the real estate brokers will tell builders that a benefit of building a smaller house is that you're guaranteed to find a buyer at a lower price point. They'll tell you something like "there are tons of people priced out of the market now, and they'll jump at the chance to buy something that they can afford". So I don't think it's right that there's isn't a market for smaller houses that are substantially cheaper. On the contrary, those are the ones that sell the fastest.
The problem is that the smaller house actually needs to be *substantially* cheaper, not just a little cheaper, and it's difficult for builders to make that math work. If a new starter house is only slightly cheaper than a new house with an extra bedroom, bathroom, and den, buyers will very rationally pay up for the bigger house if they can. Why settle for less if you aren't even going to save very much by going smaller?
"Most of the time, giving people what they want is also what is most profitable"
Not when you have the power of the government behind you and you can make what they want illegal and replace it with something more profitable. See: cars (federal safety and emissions standards), houses (zoning restrictions)
No, legality is a big issue. Many towns and cities outright ban anything but single-family homes in much of their area, combined with quite large minimum lot sizes, parking requirements, and other restrictions.
> What's profitable is large greenfield homes in suburbs, or tiny condos downtown, not because that's what people want per se, but because of the economics of development.
Seems highly suspicious to me that the things that are banned just happen to be not profitable for entirely unrelated reasons. And if this is the case, why do we bother to ban them?
I'm all for zoning reform or elimination, planning reform, etc. It will have major positive effects on our built form.
It will not improve affordability, for a simple reason: if prices fall, development stops or slows until they recover, because that's what's most profitable for landowners. And you can't develop without landowners. Housing is fundamentally not like widgets. With widgets, your margin is my opportunity. With housing, your margin is my cost input.
There is no for-profit market solution to the housing crisis.
> It will not improve affordability
Yes, it will. Building more lowers prices, there's an enormous amount of economic research on this topic. All you are describing is *why* it is difficult to have reform. In fact each individual landowner could make more money by building more housing, they just make even more by banding together to prevent development. But that only works by lobbying the government.
Building more _would_ lower prices, if it happened long-term, but, as is observed, if prices fall, for-profit market building slows or stops. This is more or less an ironclad law of property prices in areas not experiencing population decline and a hard ratchet on prices.
At best, zoning reform will lead to a short-term increase in projects at the margin of profitability, but if that pushes prices down, that will stop and prices will return to "normal" and continue increasing.
Only not-for-profit building/ownership can lead to durable, long-term declines in housing prices. The market cannot and will not do so under any regulatory regime.
Edit to add: developers are the ones _most_ interested in planning and zoning reform. It's primarily homeowners who just want their neighbourhoods to stay the same that oppose it. If planning restrictions increased profits, developers would be for it. This is not observed.
The land owners aren't all working together. It's most profitable if nobody else sells the land but they do, so if nobody else sells and it drives up the price of land, they'll defect and sell. And if you make it legal to build more housing on less space, it will take fewer people defecting to drive down the price of land.
“There is no for-profit market solution to the housing crisis.”
Correct. It’s astonishing to me how few people recognize what ought to be obvious by now: “the markets” will NEVER build sufficient low income housing — there’s not enough money to be made in it! And the housing affordability crisis and the homelessness crisis are linked — another obvious connection that fails to be made.
And all in the country which gave the world Henry George, no less!
Markets have on occasion built low-income housing, particularly when they were allowed to build low-cost housing.
However, you're right that they find it much more profitable to build at least moderately-high-income housing, so that's what they mostly do.
Thing is, almost all mid- to high-income people already *have* housing, but except at the highest end of the scale most of them aren't going to be maintaining two simultaneous residences. So when the market builds a fancy new house and someone with lots of money moves in, their existing home goes on the market. Possibly as a rental property held by the original owner, but still. Another family moves in. Probably one with less money than the first, because the fancy new houses push the boring old ones down the stack in terms of "where rich people live",
And those people also weren't homeless and aren't going to maintain two simultaneous residences, so *their* old home now opens up to the market. Lather, rinse, repeat, until someone either does pay real money to hold on to an empty home that they're not living in, or the last home in the chain is made available to someone who previously didn't have a home of their own(*)
And claims that there are bignum empty houses being held off the market by Evil Greedy Capitalists, never quite seem to hold up when we dig into them. Mostly, markets build high-income housing and as a result increase the stock of low-income housing. Maybe it makes you feel virtuous to skip the step where the developer makes a nice profit and everybody else moves up to a slightly nicer home, but that's not actually helping the people who need low-income housing.
* That last home is probably a small apartment, and it's going to someone who was previously couch-surfing or living in their parents' basement rather than street-person homeless, but still.
https://www.betonit.ai/p/reverse-musical-chairs
What's profitable to build depends on how much it costs, and how much you can sell it for. I can't imagine it's cheaper to build a bigger house. They're doing it because they can sell them for more, and they only can because people are willing to pay more for them. Either that or building a small house in that area is illegal.
Blaming market failures for the effects of regulation may be an error.
I think that this is somewhat out of touch. Affordable houses for a single person making 50 to 60k are extremely rare.
That may be true, depending on what area you're talking about. My point isn't that there are lots of small houses out there, or that there are affordable houses at any given income level. Clearly, that isn't true. Rather, I'm saying that, at the margin, many homebuyers could save money by purchasing a more modest dwelling, but choose not to because they feel they need the space. Anecdotally, many people in my social circles have a household income in the 80-150k range, and lots of people have homes that I feel are unnecessarily large, and I know with certainty that they had smaller, cheaper alternatives.
This is probably true. Unfortunately for me, I make an average salary for the work I do, and renting is my only option. I'm also aromantic, so I'm not really interested in marrying or coowning with anyone.
If I don't want to move, there are no houses available for me. I'm willing to buy something crappy, but unfortunately even the crappy houses are out of reach. I don't even live in a nice area. There is plenty of poverty here. The difference is that they inherited their houses, and I have to buy.
Housing is much more expensive when you live alone. That is a challenge. Roommates would go a long way to solving your problem! But I don't think it's the only way.
Are you particularly wedded to the idea of owning a detached home? Small condominiums are often quite a bit cheaper than houses, even as they are in more convenient locations nearer the downtown.
I live in a city whose size (about half a million in the urban area) and cost of living are pretty close to those of the median American. There are lots of 1 or 2 bedroom condos in the close-in suburbs for $250k or less. If you put 20% down your mortgage payment would be less than $1,800. That's a bit more than 30% of your gross income if you make $60,000, but it's certainly feasible.
Given that, I'm going to assume that you live in an area with significantly higher-than-average housing costs. It is totally possible that home ownership isn't on the cards for you unless you make more money, are willing to move, or share your home with someone else. In cities like mine, it is possible.
Used single-wides are still pretty cheap.
A 1300sqft 3/2 near our Sunnyvale office is currently listed for just under $2 million. In the Bay Area, if there is insufficient willingness to compromise, it is more on the public safety situation (Oakland is close and transit-connected, but also a failed state that doesn't routinely answer 911 calls anymore) and commute time (Tri-Valley communities like Pleasanton and San Ramon are still affordable to mid-career software engineers in elite tech, but 90+ minutes away from job centers at rush hour).
Yes, that is just about the most unaffordable place in the country for housing. Clearly something weird is going on in the Bay Area! Over here in middle America, things are pretty different.
Absolutely. It's like the silliness of leaving people who have given up looking for work out of unemployment numbers.
Excellent point
Yeah I think Scott massively hand waves away what is in my mind one of the biggest contributing factors in my personal experience.
Yeah I can't speak for anywhere else, but housing prices in Toronto are like 10-20x incomes. In the Boomer generation, it was considered imprudent to buy a house for more than maybe 5x your income, and there were plenty of options in the 2-5x range.
And that changed fast - most of the change came in the last twenty years.
edit: to "afford" a smallish (800-1200sq ft) in an ok neighbourhood well out of the core, basically a starter home in an inner suburb, you need a household income of about 300k+ CAD to qualify for a mortgage (plus 150-300k in savings for a downpayment). Median household income is 85k.
edit edit: and today's household income is two incomes, in the 50s it was one...
How about housing prices in Regina, Saskatchewan? Could middle class families in the 1950s afford living in the most expensive part of the most expensive city? Even if they could, that hardly seems like the most useful metric for housing affordability.
I came here to write something similar.
In the housing theory of everything is basically correct: we've had much worse house price inflation that the US (without even the house size inflation to justify it), and home ownership is even more culturally important (private housing stock is like 10x the value of NZ's stockmarket, whereas in the US the two are roughly equal)
House price inflation doesn't hurt those that are riding the wave upwards with their equity, but people who were renting & saving with an eye towards buying one day have been royally screwed in NZ, and now that mortgage rates have gone back up without house prices dropping, I imagine the same is true in the US.
But as Scott says, the average mortgage payment was at historic lows during the late 2010s, and that's when the vibecession started. Maybe it's the down payment that's screwing people?
Consider the owner-operator of https://slugboxstore.com/ who, despite many years of provably steady income and plenty of cash in hand - a resounding success by most reasonable standards - *can't qualify* for a mortgage because the bank's loan officer simply doesn't understand his business model... or at least can professionally claim not to, as cover for personal distaste.
It's certainly more difficult to qualify for a loan as the owner of a small business. They're going to look at things like how sustainable your business model is, and I'm not convinced that there's still going to be a market for... whatever this is... in thirty years.
There's been a market for bizarrely idealized artistic images of half-naked women for longer than any of us have been alive. Possibly even longer than there's been a market for writing, or bronze, or farm labor.
The superficial technical details (which, yes, an AI might be able to copy) aren't the critical part; he's cultivated a loyal fanbase, who collectively buy consistent amounts of whatever he personally offers for sale, so long as it maintains his customary quality standards.
But this has been the case for how long now— certainly before the “vibecession”
I... genuinely don't understand how to interpret that. People were complaining about housing prices before they started complaining about housing prices...? Scott's entire article section on housing prices is wrong...? Some other thing?
I’m saying that people have been more and more priced out of housing for years before the “vibecession.” You can save the snark for somebody else— your point is correct but I don’t think saves the “it’s all housing” point.
housing prices spiked in 2020-2022 in a pretty unique way, and were driven by rising prices outside of the notoriously expensive metros of NYC/Boston/LA/etc.
Look at Boise, for example: https://www.zillow.com/home-values/3737/boise-id/
$240k in 2017, spiking over $520k in 2022!
You could be correct, but I’d have to look at the data. Looking at the All-Transactions House Price Index for Boise, you can see they jumped pretty high from 2020 to 2022 but the slope has been pretty steep from before that as well. Why no vibecession? Or a vibecession to a lesser extent?
No, not really. In the run-up to 2008, the problem is that people had to move to buy an house, but there were still enough empty land around some metropolitan areas (say, Phoenix) that you could get your suburban home within commuting distance of a place with office jobs. Then 2008 hit and the one problem people did not have were housing prices.
Now the economy is healthy enought that housing prices are picking up steam again, but we have little sprawl left to cover, so,,,
I mean, we’re all talking about basically a decade after 2008, this doesn’t really matter.
Yes, they complain about not being able to afford a house, but are going on some kind of expensive international vacation every year, cause that's just what you do these days. Our grandparents, while they were working to buy a house, probably never went on vacation, and our parents maybe to Yellowstone or some camping trip in the local woods. Same goes for eating out in a restaurant, when I was a kid, we did that only a few times a year, on birthdays etc. Those things were luxuries. I think the problem is that young people these days expect to be able to afford a house, and also maintain a lifestyle that was not realistic or expected by former generations - generations who lived basically to work, feed their kids and pay their mortgage and didn't need or expect more.
I mean, that's just false. It's the avocado toast theory, and it's thoroughly debunked.
For your theory to hold true, houses would still be 3-5x incomes, but in many areas they're more like 10-20x incomes.
What you're describing, to the extent it's true (which is not very), is a symptom, not a cause: people see (or at least believe) that the American/Canadian dream is out of reach, and so they seek other ways of making their lives meaningful/enjoyable.
In many areas in the 1950s, houses were 100-200x incomes. Expensive houses have always existed, and poor people have always existed, but the typical house is much more affordable. As Scott's plots show, the average mortgage payment is the same now as it was in 1985 when adjusted for inflation.
Yes. If you canʻt buy a home you aren’t building wealth, you don’t have any certainty about where youʻll live and build a family, you arenʻt participatinh in the American dream. Youʻre paying someone elseʻs mortage.
The vibecession is not (actually) about economic indicators, though it purports to be.
It's about (the lack of) community, which derives from rapidly-accelerating technology, which removes meaning and makes people lose hope for the future, which they then map onto the economy.
We are richer than ever, yet we are community-poor. We're not communing with friends, dancing, drinking, having sex and most people are now addicted to algorithms that feed them slop and ragebait all day.
We are richer than ever, but we are meaning-poor.
Untill we fix this, the vibecession will be neverending.
This is a fine theory, but not what people are saying. I think it's worth evaluating the claims people are making about not having enough money at face value.
I've heard people say:
Happiness = Reality - Expectations
At least for the younger generation, expectations are sky high. From the data referenced in the blog above about how much money each generation needs to feel financially successful:
* Gen Z: $588k income, $9.5 million net worth
* Millenials: $181k income, $5.6 million net worth
* Gen X: $212k income, $5.3 million net worth
* Baby boomers: $100k income, $1.0 million net worth
Original source: https://www.empower.com/the-currency/money/secret-success-research
It would be interesting to see a breakdown of vibes by generation and by social media usage.
I'd agree with this. Expectation is based on exposure and exposure to wealthiness has way outstripped house prices.
Boomers aimed to be in the upper half of the wealth levels they saw around them in their communities, now we are all exposed constantly to the rich, and the super-rich.
I'm on the older side of Gen Z (22) and it's not really about that. I do think I'd need to make a ton of money to be comfortable, not because I actually need to spend anywhere near that much money, but because that's how much cushion I would need to have to feel like I wasn't on the edge of a crisis. I mean, to shop at a nice grocery store without worrying too much about prices you should probably be making at least 200k; that's a big part of my definition of financial success (in part because better food is one of the main 'rich people things' I am actually interested in).
> that's how much cushion I would need to have
I guess another difference is that boomers expected to keep their jobs for a long time, often until retirement, so they didn't feel like they needed more than paycheck to paycheck and some little reserve. If they had extra money, they spent them on a nice vacation.
My mother was always surprised by why I didn't immediately spend all the extra money I had. From my perspective, it was a decade of saving so that I could get a mortgage, then another decade of saving so that I could get a mortgage for a home large enough for a family, and another decade of saving in hope that maaaaaybe I could retire a few (not many) years earlier as I am starting to worry about potential age discrimination when hiring.
Why do you need to shop at a "nice" grocery store? I've shopped in grocery stores all over the world, including shitty ones in third world countries, and the food I get isn't any less delicious.
When I was making less than $40k as a grad student not that long ago, I ate out every day, which is at least twice as expensive as buying groceries at even the nicest grocery store. I had no money problems, even though I was living in one of the most expensive cities in America.
Maybe people are complaining about not having enough money these days because the amount of money it takes to produce a feeling of abundance is larger in the absence of community, sense of purpose, “my life matters” etc.
Common property and public goods are massive force multipler for societal wealth and America's common property is abysmal. If the UK was a US state it's GDP per capital would be lower than Vermont. But in Vermont we are ripping out the bus stops because we can't/won't stop homeless people from camping in them. Meanwhile the UK "feels" a lot richer because you can sit in bus stops and parks and not be hassled by addicts.
Relatedly, public goods mean you have to spend less, and hence earn less, in order to have a good quality of life. Having a big house and garden is less important if there are pleasant public spaces nearby; having a car is less important if there's safe and reliable public transport; having private health insurance is less important if there's a well-run public health service; etc.
Maybe kinda sorta related: the cost of child care and related services?
The lack of community is a problem that can be addressed by money. You dug into this topic yourself in "Should Strong Gods Bet On GDP?" People pay for nannies and house cleaners and other things now to make up for the lack of community. That stuff is really expensive now. (We all know the old line about "I couldn’t imagine being too poor to afford servants, nor so rich as to be able to afford a car.")
I don't have a fully baked theory here and this feels like a poor fit for explaining vibes for young people. But kids are just freaking expensive these days.
I do think the lack of community, and millennials and older gen Zs living in expensive areas far from their families, makes having children more expensive (for those who actually have them) or a more daunting prospect (for those who don't). When I was growing up in Florida, I knew a lot of kids being cared for at least part-time by grandparents or other extended family, now that I'm a parent in Los Angeles, I don't know anyone here who has a resource like that. In my friend group, not only are the grandparents far away, but because of later age of family formation, they're also a lot older. My mom is 78 and I'm largely supporting her, while raising two toddlers.
Why do young people choose to live in expensive areas where they’re miserable instead of living somewhere better and cheaper and working a remote-first job? (I know this is over-simplified, but I don’t understand it.)
Remote jobs aren't good for career advancement, because actual meatspace face time really does matter. For people well-established in their career (cough) they're fine, but probably not the best choice for a first job. And we're past the honeymoon period where people could imagine remote work was the New Normal with no costs whatsoever.
So, live in the Cool City where you're "miserable" in the sense of current personal economics but you're hanging out with the Cool People and you can hope that you will someday Have It Made. Or, live in the hicks in an affordable apartment with decent internet, and all the meatspace social opportunities Hicksville can provide, and know that's not going to get any better.
Or find a decent career that's physically located in Hicksville and comes with a premade social circle of people who share your class and interests, but that doesn't work for everyone - some careers, the pickings are genuinely slim outside the Cool Cities.
As a psychologist, do you not think that people are very rarely complaining about the thing they think they’re complaining about?
I think he answered this one as "no".
https://slatestarcodex.com/2016/02/24/two-attitudes-in-psychiatry/
Interesting, thanks for sharing!
Lots of money helps to plug holes left by insufficient community. You can afford more childcare where before you might have used extended family or co-op babysitting. You don't know your neighbors but you can get to know your kids' travel sports parents. You don't spend your idle time at barbecues or potlucks but you can go on more trips with your nuclear family. You used to play basketball at the local park, now due to crime you have to pay for a private gym membership. It may not be perfect but if people perceive a lack of community-related amenities they may see the need for more money to buy substitutes.
"Players are great at identifying problems but terrible at coming up with solutions." This is from Mark Rosewater, the head designer of Magic: the Gathering. His point is that when playing a game, it's easy to tell that you aren't having fun, but not always so easy to know exactly why or how to fix it. And in my experience, it's very true--people will repeat platitudes they've heard from others about what makes a game fun or not fun, but the complaint manifestly does not apply to the situation they're describing. Or there's another situation which totally resolves the complaint but they're still not having fun.
I think the same principle applies more generally. People are unhappy, and they can easily determine that. But that doesn't mean they know what would change that fact. Money and material standard of living are easy to point to as things that would make life better, but my understanding of the research is that how much happier people think they will be after making more money is higher than how much happier they actually become. People in their 20s are now Gen Z, i.e. people who were raised after several generations of an increasing trend to shelter children and prevent them from having any independence, and who have been exposed to a constant stream of social media since middle school. One can debate whether these really are the problem, but I certainly wouldn't *expect* zoomers to say, "oh yeah, obviously I'm unhappy because I was protected from challenge as a child, had to be driven everywhere, was never allowed to practice being independent until after college, community life has been severely hampered, and I've been exposed to brain-rotting forms of media since I was old enough to read, in total contrast to my parents and every previous generation" even if that's true.
As I always say, people who think younger generations lack the inner strength to handle adversity has never tried playing Dark Souls.
I think it's more usefully described as practice than strength.
The life satisfaction angle makes sense. People are not optimizing GDP in their heads, they are tracking whether their life feels like it is going somewhere worth living.
Where I think Liface’s take overcorrects is in treating the economic complaints as if they are really about something else, like people confusing “meaning” with “money.” A lot of what people say they want in a meaningful life, even in very ordinary terms, sits on top of a few material thresholds: being able to form your own household in the place where your work and relationships exist, being able to have kids without feeling one bad month away from broke, being able to act as if a long term plan is something you can trust instead of a cosmic joke.
In a world where those thresholds were relatively easy to cross, it made sense to discount “I do not have enough money” as shorthand for “I do not know what I want.” But if the time to reach those thresholds stretches from saving four years for a down payment to saving ten or eleven (as the math works out for a lot of people in growing metros), the economic channel is not just about consumption anymore. It is about whether you can build the scaffolding that meaning work sits on.
That is what I think the vibecession is picking up. The flow variables you graphed look fine, and I agree that life satisfaction in the abstract tracks hope, connection, purpose. But thresholds for the basic “can I build a stable life here” layer have quietly moved in a way CPI and median income are not built to show. It is not that the meaning story is wrong. It is that for a lot of people, the meaning story and the economic story are now the same story at the point where it matters.
I would like to understand why virtually every customer-service experience I have is worse than the ones I had in 2019. E.g., why in 2019 many checkout lanes were routinely open in my supermarket (and now aren't) or why my CVS used to be able to stock its shelves, but now half are empty and half are locked, or why the price of a nice restaurant meal has doubled during a time when CPI inflation measures less than 30%, and a bunch of places have gone out of business (post pandemic). I guess this could be due to lack of community, but it feels like something is kind of broken in the real economy.
I could go on for hours about the dumb things the state of California has done. But my point stands. Life is better here now than twenty years ago, incomparably better than 75 years ago, and inconceivably better than 150 years ago.
Could it have been even better without the horse sense passed by Californians on themselves? Yes. Definitely.
Even your point about missing people kind of reinforces the point about improving conditions. In no prior era could millions of slackers drop out of the system to play games all day and sponge off their parents, girl friends or the welfare state. This isn’t a sign of declining living standards, but of good times making soft men.
Ill how?
Soft men? I beg to differ. Anyone who thinks that younger generations lack the strength to handle adversity has never tried playing Dark Souls.
> I would like to understand why virtually every customer-service experience I have is worse than the ones I had in 2019
Yes! Also why every hotel in the US used Covid as an excuse to stop doing everything - washing towels and sheets (now you have to request it), room service, and much more, and then *never went back* to the former level of service, and just stayed at the new, shittier equilibrium.
This only happened in America! All the rest of the world, hotels are fine and still do stuff!
I recently stayed in a hotel in Japan that by default didn't wash stuff, but their reasoning for that was being more eco-friendly. Which is fine, you can request it trivially - but not being able to set the A/C temp was not!
This sounds like, or maybe rhymes with, the "slack" hypothesis, i.e. that companies are optimizing everything until they give you the absolute worst thing you're willing to accept, at the absolute lowest marginal cost and highest profit.
Look at how the bottom quintile income has increased the most in past few years. This means the lowest paying, jobs (customer service) have become better paid relative to everything else.
If low end labor becomes more expensive businesses try to use less of it (stocking shelves) or pass it on to the consumer (restaurant prices go up). This is good, in that fewer people are doing lower productivity jobs like stocking shelves or being checkout cashiers, but it is kind of annoying for consumers.
This is my theory of vibecession, that if you were an upper middle class adult with a good job in the 2010s you benefitted from the slow recovery keeping the labor market slack and making certain services cheap. Now those services are very expensive and that feels bad to the upper middle class, even if it's a consequence of what everyone says would be a good thing (higher incomes for the poorest workers).
Huh? Are you saying that 20% of workers in America are slaves?
Also prisoners, who in theory are not slaves, but in practice, they are in chains and have to work for food and shelter.
The average H1B salary is $170k per year: https://www.ziprecruiter.com/Salaries/H1B-Salary
Even if it's significantly below market wage for these jobs, that's hardly slave labor.
You seem to leave very low effort replies to basically every post in this thread. Your objection to my theory about why the quality of customer service declined is not clear and I don't have much interest in engaging with you unless you make it clear.
Not disagreeing, but offering another data point. I live in SoCal and things seem great. I think things are better now in more ways than any time in my life. Amazon deliveries with global competition for price and quality. Fast self check out and shorter lines. Better consumer devices. Streaming services with music and movie catalogs worth a fortune. Better cars. Better surfboards.
Yeah, things jacked up in price after Covid, but we are still the luckiest people to have ever lived. By a lot!
I don’t get the complaining.
One reason you don’t get the complaining: You live in SoCal. 🙃
I dont know the macro reason here, but the micro seems exceedingly obvious
Its not economically worth it to offer a consumer service right now. Idk if mamdani's name is taken in a bad light here, but his halal flation talking point is intensely relevant. A food truck used to be an economic way to undercut real estate costs, but the bureaocracy caught up and now even that is expensive to run
As people start spending less and operating costs remain constant, margins start getting chopped, and the few consumers who still have the cash need to step up and pay higher prices for the same or worse service
Tbf, i noticed this as soon as i moved to california tho. Shit, i learned how to cook all the food i like because i didnt like getting scammed for it every time i bought it. It improved my life drastically but it cant be good for the graphs
I don't mean this dismissively, but did you consider you might be older and bit more cantakerous and impatient than you were before? I saw my dad go from being mostly satisfied with services to routinely berating employees, or at least making every inconvenience out to be some major disrespect, and it was not the service quality that had changed.
Another thing is that competition is creating lower price and quality tiers, and sometimes people who opt to get a much lower price for a somewhat lower quality consider the lower price a given and complain about the quality. That's what happened to airlines.
And finally yeah, a strong labor market inevitably means that you'll get worse employees doing the same thing, for better wages. The restaurant does not have the luxury to demand experience and skill for waiters, which means service will be worse. The post-2008 labor market meant that you had plenty of smart, capable people who could not get anything better than service work, and those less capable just could not find anything. That changed, thank god.
Scott have you read Mike Green’s viral post on this?
His main argument is that the poverty line is miscalculated, but in context of declining middle class sentiments—
The more interesting thesis is that there exists a “valley of death” where two parents in the workforce need a combined ~$140k salary otherwise the cumulative “participation costs” of a fast modern society (for example a phone plan or child care) make year-over-year capital accumulation near impossible.
To another commenter’s point, society is overall quite a bit more atomized from the internet, so buying a house in an affordable neighborhood doesn’t pay off the same way it used to— where the community was tight knit and people could feel life satisfaction despite modest social class. From my experience across the Texas metroplex— Most people in working-class neighborhoods don’t know their neighbors or have “strong communities” despite achieving the same suburban life as in the 1980s.
To find the ‘community’ you need to move to upper class neighborhoods, which requires a high income which requires moving to high COL areas (and if you are young and ambitious, this is also where you probably have to find your preferred social scene), ad infinitum. And then, you have to figure out how to have a few kids while you and your spouse work high-octane jobs.
To boil it down, i dont think macroeconomic trends will reveal the subtle causes:
-Partially the housing theory of everything
-Partially the fact that neighborhoods at the middle income level don’t provide the same social fulfillment anymore, and nobody wants to put in the effort to do so.
-Partially the fact that there are much more hidden “participation costs” to society like phone bills.
-Partially the fact that dual income households might succumb to the proverbial “valley of death”.
-Partially news bias.
To me this is the most convincing explanation and would probably be hard to tease out from data alone.
Mike Green's 140k calculation was very wrong, I recommend that you search and read some rebuttals to his post (e.g. Noah Smith's, Jerusalem Demsas's, Tyler Cowen's). TL;DR, he's using the wrong data in multiple ways (it should be closer to 80k), and it's also not the poverty line at all, it's the "average expenditure" line. He also confuses households with individuals and ignores how temporary childcare costs are.
So I’ve heard, I still think even with flawed numbers though he’s picking at something real. Noah Smiths argument was deeply unconvincing to me.
You are not alone where your assessment of the quality of Noah Smith’s work is concerned.
His argument essentially was to tautologically define what people are spending at the median as the poverty line*, then note lots of people would struggle to afford the median lifestyle and therefore are in poverty. His definition has no connection whatsoever to what is necessary to afford a minimum basic lifestyle, even though he characterized it as the "survival" line. If you ain't keeping up with the Jones, you ain't surviving is more or less his argument. This was after he mislead people about how federal poverty metrics are calculated.
That this story spread like wildfire in social media and eventually picked up a lot of news aggregator style coverage and thus made it to a lot of eyeballs I think is a good example of the media hypothesis for why so many people might express sentiment more consistent with a severe recession. While his arguments are laughable, that isn't intuitively obvious to people and if sources they trust portray it as a good point, then people might just accept it as a good point.
*The reason that he gets to a number that's more than half of the country being in poverty even though he's *defining median consumption as poverty* is that in another baffling error he assumes peak temporary expenses are lifetime expenses. So every family is paying for relatively expensive child care for their entire lives instead of a narrow window. This allows him to shift the number up so like 70ish% of the country is in his version of "poverty."
I think Noah Smith, in his rebuttal, is the one who *overestimated* how temporary childcare costs are. Maybe it’s because he does not have children, but he somehow thinks that you don’t have to pay for childcare after a kid turns five years old, forgetting that children leave school at 3 PM, have numerous school days off, and are off the entire summer. Most places don’t have free aftercare for kids or free summer camps.
Completely different scale of expense. My two year old in Boston essentially costs $20-25k annually at minimum for full time center-based care (certain home daycare options might be cheaper by a bit); my seven year old in the public schools could have after school every day plus a full summer's schedule in the cheapest of his summer camps (as in, this is not some theoretical bare bones, it's something he actually goes to and likes) for a total of about $7,000, and in reality when you factor in times he's with parents or grandparents the total is under $5k.
Of course, these huge costs are front loaded in life, like trying to buy a house and paying off student debt. 40 and up are doing fine, but America is making it too hard for the young!
Even 80k makes the math terrible enough to cause significant political upheaval
why would an 80k average of expenses for americans cause upheaval? it's what people are spending right now (77,280 for example).
Look around you at the political scene -- does it look stable to you?
These are excellent points. So many other explanatory variables
Strong communities are mostly a function of homemakers, who have traditionally been the primary community organizers, volunteers, kinkeepers, and socializers.
That's why fewer people know their neighbors now than in the 1980s: there are fewer neighbors around because they're all working.
I do have some hope that remote working from home could partially reverse that. If you're in your home office and you see your neighbor out walking his dog at 10am, you might think about him more, and maybe even text him right then to schedule a playdate with each others' kids.
We need to bite the bullet and heavily regulate consumer technology use, like they are starting to do in places like China and Australia. Obviously, Australia is the better example here, since they are restricting technology use in a nonpartisan way.
I wish we didn't have to do that. I prefer the non-coercive, libertarian solutions whenever possible. But we have to look at our track record and admit when something isn't working. Society has been looking for a libertarian solution to digital atomization for 20 years.
Society failed. Time to move on and take more drastic measures. How much more atomization and ennui can society take before everything falls apart?
Did you know that China also has a vibecession? https://www.nytimes.com/2025/09/16/business/china-young-people-boom.html
If even China can't regulate social media heavily enough to prevent this phenomenon, how can any liberal society possibly hope to?
When I talked about following China's example, I meant that maybe we should follow their example directionally, not EXACTLY. IOW, “maybe we should abandon our relatively laissez-faire attitude towards government regulation of consumer technology use.”
When it comes down to the nitty gritty details, China is almost certainly regulating consumer technology use in an imperfect way. In fact, their method of regulation might actually be CONTRIBUTING to the vibecession, not mitigating it.
After all, Chinese regulation is centered around protecting the ideology and rule of the CCP. That's a severely limiting factor, even if they have a tertiary goal to combat their vibecession.
Protecting the ideology and rule of the CCP IS combating the vibecession. The legitimacy of the CCP comes from the fast economic growth since Deng Xiaoping's reforms. What else can it come from? Even the CCP doesn't defend the horror show that was the Great Leap Forward or the Cultural Revolution.
The CCP likely has different ideas then us about its legitimacy. It likely has different ideas than us about how to preserve its rule.
Nor must it necessarily be wrong to have different ideas. Based on his track record, I don't trust that Xi has very CORRECT ideas about these things. But it is perfectly correct to have China-specific answers to the Chinese vibecession.
For starters, we have a lot of hard evidence that, under conditions of increasing or decreasing prosperity, the Chinese people are willing to submit to brute force and except CCP rule. Not ANY amount of force, and not indefinitely. But evidently, relying on brute force is more of an option for the CCP than it is for our own ruling elite.
That's one of many ways that the sociopolitical situation is different in China. This is going to change the appropriateness of various Chinese responses to their vibecession, whether actual or potential.
PS. Since Xi's official ideology is that Mao's policies were "70 percent right," and considering the fact that the CCP still sponsors statuary and celebrations in honor of Marx, it seems that they ARE willing to defend the legacy of Communism, if only tepidly.
*accept brute force
True. Its universal
From what I can tell, China's "vibecession" is a lot more directly connected to real economic problems than the one in the US was.
This.
People continually mistake economic metrics (the map) for life itself (the territory). The metrics alone show that I can afford unlimited flat screen TVs and avocado toast, but that doesn't make up for other things that may be less affordable. The economy is not that flexible, and life is not that flexible. The economy is defined as the flow of goods, services and currency. The actual pattern of that flow matters. Economic capital is not the only kind of capital. People need to get comfortable with thinking more directly in terms of value creation and micro economic patterns. Not this super wonky spreadsheet mentality, which has severe limitations.
If someone has diabetes we don't say "their metabolism is fine because they are in a positive energy balance" - When diabetes can literally cause tissues to be starved and die, despite the body having enough 'energy'. There are qualitative factors towards how goods and services are distributed in the biological realm, and in the social realm.
Balance sheet and consumer wealth is not enough to deliver a good life! Poverty is not necessarily the lack of wealth but a pattern of social and economic dysfunction - that's what we're dealing with at a larger scale.
You can't just give poor people massive cash payments and expect their communities to abruptly heal and become functional - and the same principle applies to other classes of society. This issue is in severe need of some common sense analysis.
Very much agree! It goes beyond just community though, it's a full blown spiritual poverty. The meaning crisis, etc etc.
Or we've effectively blocked off the traditional markers of "being on the right path", e.g. stable housing and employment, and it turns out those were serving as prerequisites to starting a family. Men's earnings still go way up once they have a family to support, but we've removed the bottom rungs of the ladder and many people are just opting out of climbing altogether.
I think I figured out something which explains it: if you disaggregate you find that what happened is that the medians/averages conceal massively uneven statistics.
Redistribution by the Democrats such that things got better for classes that benefitted from government spending (mainly those in NGO world, climate companies, government employees, teachers, small businesses eligible for grants which were disproportionately women/minorities, etc) and worse for everyone else. I suspect this was a big driver. Inflation was effectively a universal tax which was then redistributed by Democrat rescue packages to their constituencies. Which they in effect said: that they were targeting help at the vulnerable who were, for the most part, by historical disadvantage (ie, Democratic priorities) rather than needs based. They explicitly said they saw it as a way to reduce disparities. It doesn't help they got very indulgent with targeted giveaways even to their rich constituents (SALT, student debt).
This naturally upset everyone not on the receiving end of such largesse who saw real loss of purchasing power. The Democrats basically gave themselves credit for aggregate statistics and thought they could ignore the people who were losing from their policies because they were politically disfavored. This seems to be a common malady in their decision making which Bill Clinton and Obama have both commented on.
We're seeing a similar thing with Trump's policies right now, by the way. Different specifics but still.
Do you have any evidence for this? It looks to me like the story is the same for white people as for the population in general. For men with no college degree, income dropped throughout the 2000s, then started increasing again after 2012, which is the opposite of what your story would predict.
https://www.reddit.com/r/dataisbeautiful/comments/1i09w8h/oc_the_median_real_annual_earnings_of_men_without/
https://www.reddit.com/r/dataisbeautiful/comments/1ddn0z9/average_income_by_ethnicity_us_20102022_oc/
These are admittedly both just the first graph I could find on Google image search, not super confident in them.
But I also don't think your theory makes sense on its own terms. If the Democrats are funneling money from Group A to Group B, then either Group A is bigger, or Group B is bigger. If Group A was bigger, then this would look like falling median wages (instead of rising). If Group B was bigger, then this would look like better vibes (since this large group of people is now happy). I don't think mere redistribution can give you good economic statistics + bad vibes, unless you're redistributing from people with good media access to people with bad media access, which hardly sounds like the sort of thing the Democrats would do.
> It looks to me like the story is the same for white people as for the population in general. For men with no college degree, income dropped throughout the 2000s, then started increasing again after 2012, which is the opposite of what your story would predict.
That isn't what my argument would predict. You are making this into a broad racial argument when it's about what sector of the economy you participate in and where you live. A Black woman who works at a mid-sized business in Alabama is in the losers category. But you are reproducing the issue with Blue thinking that lead to the error in the first place. In fact my argument leads to an explanation for race depolarization as the effectively economic class based nature (which does not mean income but how you related to the economy) gave a common class interest to many groups.
> If the Democrats are funneling money from Group A to Group B, then either Group A is bigger, or Group B is bigger. If Group A was bigger, then this would look like falling median wages (instead of rising).
Median and average wages stagnated or declined slightly under Biden. Links to graphs below. My contention is that this concealed significant changes in who was where because inflation was a universal tax and then spending unevenly supported everyone. This is, if you take a less rosy view of it, what the Biden administration said they intended to do with rhetoric about racial equality or fighting inequality. To change the composition of wealth in the country. You may support that but naturally the losers of that process would be upset.
https://cdn.factcheck.org/UploadedFiles/image-22-593x355.png
https://cdn.statcdn.com/Infographic/images/normal/33790.jpeg
https://epicforamerica.org/wp-content/uploads/2024/10/Real-Wages-Graph.png
Do you understand why your graphs look so much different from mine at https://substackcdn.com/image/fetch/$s_!6flf!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F1ba053b8-edf0-4cf4-aee6-8e83e31bf9ac_1337x553.png ? In particular, why does yours show real wages going way up during the height of the pandemic?
I suspect because your chart is a subset of workers rather than all workers or all people/households. The Democrats under the Biden administration did this a lot. During the pandemic, for example, I remember they released a stat showing basically real wages were up by limiting it to the durable goods sector which was then experiencing a boom. In your case, that chart still shows relatively flat growth during the Biden years. But also it excludes:
Government workers
Farm and rural workers (perhaps important to understand Trump?)
Self-employed people, contractors, and many small business owners
Private household employers
Retired and fixed income people
And potentially others but definitely those.
This is approximately a third of the workforce and an additional over 20% of the population that is retired etc and so not in the workforce. So in fact a slight majority or close to it.
(I will note, in the interest of completeness, that my theory does not predict "included in your graph/not included" as the relevant division.)
Real wages went up during the pandemic because pandemics cause labor shortages and because people who don't show up to work drop out of the labor force unless paid more to take on the risk. Additionally laptop jobs tend to be higher productivity and were less disrupted than low productivity stuff like restaurants. Compositional effects. I suspect that's why your chart shows it going down as well.
Scott the x axis on your graph says '$ per hour*Thous of persons' and the title 'Average hourly earnings of All employees'. I admit it is badly phrased and I'm not sure what they are averaging over (maybe day of the week or whether on overtime) but I think that number is scaled by the number of workers currently in employmnet, whereas Erusians is not. Assuming the number of people in employment plummeted in 2020 and this disproportionately fell on those with low hourly income that would explain both graphs.
This supports Erusian if what we care about is the income of the average person in employment, but your picture is more accurate if what we care about is the average person who would be in employment if they hadn't just been laid off.
Median real wages rose at a healthy clip under Biden. What's confusing you is a compositional effect from the mass job loss during the pandemic. A bunch of lower wage earners lost their jobs in 2020 in a sudden shock to the economy. This artificially rose the average median wage since far more lower earners were unemployed than high earners. As they were able to return to the workforce once vaccines became available, they pulled down the average. But that's all illusionary if you're just interested in what kinds of wages people are earning in equivalent jobs. If you care about that, you need to mentally discount that compositional spike. And if you do so, you can see a fairly rapid wage climb up roughly in line with the pre-pandemic trend of the post-Great Recession wage improvement.
I specifically called out compositional effects. So this is not actually a good counterargument because people did not return to the same mix of jobs pre and post-pandemic and payscales changed unevenly.
> If Group A was bigger, then this would look like falling median wages (instead of rising).
Devil's advocacy (in the sense that I don't agree with Erusian at the object level or think this is what's happening in his example; I do stand by everything I say below in the abstract):
You're thinking of a situation where the groups are stratified by the same measure that you're using to calculate the median. For example, your argument can rebut that idea that median economic stats were improved by making the rich better off while the middle class become worse off.
If the groups are intermixed under the measure, you can raise the median while making everyone in more than half the population worse off, by concentrating the losses in the upper end of Group A and/or concentrating the gains in the lower end of Group B. This is possible because improving the median just means that the number of people in Group B who move from below the median to above the median must exceed the number of people in Group A who move from above the median to below the median (assuming everyone in Group A is harmed and everyone in Group B is helped), but there's no particular limit to the number of people who stay on the same side of the median who are harmed or helped.
Trivial example of concept:
Suppose Austin is 51% men and has a population of 1 million.
Take $1000 from every man in Austin except Elon Musk, from whom you take $50 billion.
Give approximately $101,000 to every woman in Austin.
This will raise the median wealth of Austin under most pre-existing wealth distributions, although 51% will be worse off.
And this could obviously be adjusted to still work if men were 70% of the population, or 99% (because this example is so extreme).
That would show up in graphs tracking quartiles or quintiles separately; do you have any such graphs?
No graphs, I explicitly said at the start that I was engaging in devil's advocacy and I didn't think this applied at the object level.
As a separate matter, my example would show up as an increase at every quintile in most pre-existing wealth distributions.
Loss aversion? -10 hurts more than +10 feels good?
The only way to raise the median by improving things for one group while everyone else is worse off is some combination of: (1) the improved group is more than half the population or (2) a portion of the improved group was previously below the median and is now above the median.
These don't seem particularly plausible for the groups you identified.
I know what "median" means but I don't know what you think I said wrong.
In other words, you can raise the median nominal income while everyone is worse off because real income declines for everyone. You could also raise the median nominal income while everyone is worse off because their bodies are infected with parasitic worms.
Look, I meant to be stating a general fact about medians, like:
"The only way to raise the median of a given quantity by increasing that quantity for one group while decreasing that quantity for everyone else..."
There is no reason, even without context, to believe I was stating something insane like, "There is no way to raise the median of any economic statistic while everyone is holistically worse off."
I never mentioned nominal income at all. That is entirely your straw man.
Don't nitpick based on unnatural interpretations of comments. Nobody likes that.
This is mathematically true. However, it's also irrelevant, as real wages did not improve but actually declined slightly. And I'm contending within that the composition of where people were along the rank ordering (which medians create) changed significantly through redistribution. Which logically you must accept if you accept Biden's programs worked to accomplish their stated goals.
Your first chart in your other comment shows what happened to real wages: They spiked during COVID, fell sharply, continued to fall for a couple years, started rising again, and as of the end of your chart in early 2024 are slightly higher than they were before COVID. They have continued to rise. Real wages are below where they would be if you extrapolate linearly without COVID, but they are still higher than pre-COVID.
> Which logically you must accept if you accept Biden's programs worked to accomplish their stated goals.
My baseline assumption is that programs like that don't have big effects and more generally that presidents have less of an effect on the economy than people think. In principle, it ought to be easier for a president to have a negative effect on the economy than a positive effect, since there is a wider gamut of bad things to do than good things, but I violated my own assumption by assuming the tariffs would be a bigger detriment than they have been so far, so I'm not really inclined to assume that Biden had big effects either.
I agree that the rank order is basically a zero-sum game. However, as such, when people talk about increasing the median of something, they aren't talking about increasing the rank order as such.
----
Personally, I believe that the main cause of the vibecession is housing costs, which are mostly caused by poor state and local government policies rather than federal policies. Secondary causes include things like social media (e.g., driving unrealistic expectations), and higher service costs as bottom quintile incomes increase (e.g., people complaining that they can't afford DoorDash). But these are just my guesses about the most important factors, not strongly-held beliefs.
Another chart shows them declining slightly. But fair point that I overstated. At any rate, I'll accept "roughly stagnated." Whether they grew slightly or declined slightly so long as they roughly stayed the same that's sufficient.
My baseline prediction is doubling the Federal budget in giveaways has macroeconomic effects. It may not have been good policy but the people who were given the money received the money and thus changed their income level. I agree that median is zero sum and this is my point: if the median stayed roughly the same and one group was given huge giveaways then in order for the median to stay the same other people have to decline.
I agree that housing costs drive all kinds of economic issues and people would have been happier with lower costs. However, I think this started prepandemic and so you can't explain the change by it. Permanent increase in service jobs pay, meanwhile, should have had effects we don't see. As to social media, I haven't looked into it but I'm default suspicious of blaming new media for social ills when we're in the grip of a panic about it. I acknowledge that's not a fully good reason but "you have it good, Instagram just makes you envious" strikes me as dismissive at best.
> I'm default suspicious of blaming new media for social ills when we're in the grip of a panic about it.
What would constitute persuasive evidence that it was the problem? Does the boy who cried wolf remain silent when a real wolf is present?
Normal evidence but to a higher standard such that it would not have given a false positive to a reasonable expert in the height of another moral panic. And while the boy who cried wolf doesn't remain silent a significant majority of the cries are false such that any individual call is likely false.
The redistributionist effects of the pandemic recovery economy were primarily shifted towards entry and service level workers who received substantial pay raises as a result of an extremely tight labor market. Unless you think McDonald's and your local grocery store is an NGO, this hypothesis is extremely not correct.
This was the Biden administration talking point. It was not, however, true. What the Biden admin claimed a few times is that by 2022-3 certain groups of bottom quartile workers had real higher wage growth than pre-pandemic trends (about double what the top quartile got). They were quite proud of the fact they avoided a recovery where the rich got an equal or greater share. This is evidence for my hypothesis.
The peak of inflation around 2022 saw real wage growth in the lowest earner cohorts with real wage decline among higher earners as inflation outpaced wage increases. Over time, what happened is that real wage gain gradually shifted up the earning curve until by 2024 there were broad real wage gains across the majority of the employed. People caught up and passed inflation, in other words. The redistributionist effects of this still were concentrated among lower earners because the tight labor market benefitted them most as you would expect based on the labor supply shock COVID caused. This is a story that exists in the economic data regardless of how you feel about political actors trying to make sense of it in a way that is favorable to them.
You might not like it if the more egalitarian party considers it a good thing that the economic recovery reduced income inequality and tries to boast about this, but it's neither here nor there to your false assertion that wage gains just redistributed to special interest groups like NGO's and weren't broadly felt in the economy.
One wrinkle to consider with using median household income measurements is that the formation and composition of households also changes over time in ways that are not straightforward to correct for (aging, changes in share of couples having children, timing of childbirth). I don't know that this would change the picture substantively, but I've also not seen analysis that really looks at it (if others have please share).
Imagine having to get up at 4 am every morning, drive an hour to work, and then run a meat shop singlehandedly--dealing with customers, slicing cuts of meat, dealing with all the behind the scenes stuff like rent and suppliers. You get home at 7 or 8 pm every night. You only rarely get to see your kids. You have a small house in a not-great neighborhood.
Your wife has to deal with five kids singlehandedly. Money is tight. Meat is a luxury. Your husband beats you on occasion, and no one cares.
That was the reality for my grandparents. Yes, my grandfather owned the business, but it was a really hard life by modern standards. Obviously living standards were rising rapidly which is not the case today, but none of the people complaining about how hard things are now would trade places to take on that life.
Bear in mind this was in the Midwest. I assume my grandparents wanted to live in the Catholic working class neighborhood in the city but the business opportunity happened to be in the suburbs. It does seem odd but my father also chose a long commute so who knows?
> You have kids, in fact, FIVE of them, the wonderful bundles of joy!
> You own your own business
> You get to work in-person, providing value to real people
> Your neighbors talk to each other
> Neighborhood kids play in the street
> Civic society is strong: you are members of a church, the Elks club, you volunteer at local events, etc.
> You live near extended family
> With no internet, you only compare your situation to your immediate neighbors
> The economy appears to be growing and prospects for the future look good
You are definitely taking an extreme "paint a rosy picture" view here. My grandfather rarely saw his kids. He never made it to a single baseball game or activity. I have worked enough customer service jobs to know how utterly draining they are, and I've known enough people who owned their own business to know how brutal that can be. My grandfather was a member of a church (which played a big part in his life; kids went to Catholic school, etc), but he definitely didn't have the time or money for the Elks club or volunteering.
Churches at that time definitely played a much bigger role in day to day life--there were certain opinions you simply couldn't have and things you couldn't do as a Catholic. As far as I can tell, the male-female dynamic was extremely different and each sex lived in very different worlds. The social changes of the Sixties were a big jolt for my family and caused at least one close family member to be disowned by my grandparents.
> and I've known enough people who owned their own business to know how brutal that can be.
Brutally difficult, sure, but the causal relationship between effort and results is unambiguous. When there's a conflict with a supplier or the health inspector, real object-level technical problems are involved, rather than drowning in new forms of synthetic misery invented by a soulless algorithm purely to extract value. You're cleaning the tools so they won't rust, sterilizing surfaces because rotten meat won't sell (or can make someone sick in ways that might later become your problem), not just killing time because the boss expects you to always look busy.
Fair enough. The thing is, there is nothing stopping most people from living a lifestyle just like Calvin's grandfather. You can totally get a job running a small business in a very rural area with all those things you describe. There is a butcher in a village near me who asks me, every time I see him, whether I have any interest in taking over his business when he retires. He hasn't shown me his books (although I'm sure he would if I asked), but he clearly makes well over $100,000/year. I have no relevant experience, so I'm sure if he asks me he is asking lots of other people. Nobody has taken him up on it (except the Amish, but he doesn't like them and doesn't want to sell to them).
Would young people today be happier if they chose that lifestyle? Very possible. But they don't want to, even if they can.
I think you're in violent agreement with Scott (though not with all of the commenters) that most Americans today are better off economically than they would have been in earlier times that they associate with better vibes.
I do want to better understand whether it's in fact the case that economic vibes depend more on the first derivative of income than on income itself (which would explain why the vibes were better in the 1950s, causing people today to overestimate how rich they were back then), and if so, why that should be. Hedonic treadmill, maybe?
Are you talking about the very recent possibly-AI-driven uptick in unemployment, or something else?
Weird how unemployment in white men dropped heavily in that same time period, perhaps because there are other companies. (Also I only see any statistic remotely like that for 2021 specifically.)
https://fred.stlouisfed.org/series/LNS14000028
"Fortune 500 companies have hired only 6% white males since 2020."
No they didn't. This is a lie. (You'd have to be extremely gullible to believe this. So frankly, I suspect you don't actually believe this, and are just lying to advance your politic agenda.)
It's probably easier to think of yourself as lucky and rich if you own a refrigerator and a TV at a time when 30 years prior even the richest people couldn't afford that, or (as in the case of my father and his generation who came of age in the sixties and seventies) when you are the first in your family to have a college education and an office job.
I suspect your typical vibecession posterchild would have a nervous breakdown if they had to live in a really nice big house with nothing but dial up internet and a Compaq Presario.
I miss the USENET of the 1990s. (I'm that old.) I've never felt closer to online friends than I did back then.
Hard agree.
One other things I think should be considered when about 1950s, is that while middle class people is middle class in America, they're top class of THE WORLD. It's not just they're up, the others are down. I guess if we modify lots of these graphics but also compare it to the rest of the world, lots of those vibes will manifest and take shape.
That sounds pretty good to me: to own a house & be my own boss, I'd put up with the hours. Not sure much in that scenario is unique to the Before-Time—customer service still sucks, long hours are still usually necessary to make it, etc.—except perhaps for the reward.
E.g., I worked from 66 to 80 hours a week, in my old job, and it was great because I was the boss & made a lot of money—long hours are no hardship, in such a case!
Wish I had it back... (Wish a lot of things, really. But—no point in so doing, I s'pose; what's that old saying about shitting in one's hand?–)
It sounds like the scenario I mapped out is still possible then!
Bear in mind, my grandfather did not make much money. He could afford a small house, a car, and that's about it. Vacations were to a state park about 45 minutes from home and he didn't even take time off for them.
True—*that* part actually does kinda suck, by comparison. Lot of effort for maybe (much) less return... (and the fact that I *don't* own a small house of me own is due to my own stupid mistakes, far more than to any "The Times, They Real Bad" factor, heh).
I'm a little suspicious of the "paint a rosy picture" response because it's always given by people who didn't live through that time.
My grandparents lived through the 1950s and/or the first half of the 20th century, and they universally considered it the best time of their lives, *especially* the women.
My grandmother grew in Houston in the 1950s. As a teenager, she went to country dances every weekend, had a strong community at church, and married my grandfather in her early 20s, who supported her for the rest of her life. She wasn't jobless however-- she got a university education and worked a white-collar job for most of her life. One thing she says to me often, "Oh [Collisteru], life was great growin' up... I wish I could go back."
There are hardships in every age, but the good life people envision in early 20th century America DID exist.
Sure, some people rolled the dice well. The question is what were the odds, and how often you had to re-roll.
My grandma lost her father (much more common than today, medicine being what it was), got taken in by the nuns while my grandma was working, absolutely hated every second of it and became a lifelong church-hater, then became a nurse. Fortunately for her she was very beautiful and had many men courting her. She chose my granpa, a well-connected, well-paid office manager with his hand in about everything that mattered in their small town. For a while, she enjoyed long vacations, a big house, having a maid and a nanny and whatnot. Meanwhile her mother died, and her sister cheated her out of the inheritance (going to court over it was not an option, that's a part of the "family values" and "old time decency" we tend to forget). Then my granpa died (again, medicine being what it was), and she had to go back to nursing, except that she wasn't as young, doctors felt a bit embarrased ogling her now, she had not kept up with the certs or the state of the art (would have been improper for a lady), so now it was mostly changing catheters and feeding dying men. She would wake up every day before dawn and ride her bike in the cold to the house of some dying man whose family might or might try to stiff her on the money, make sexual advances on her, squeeze every ounce of work they could get from her, and whatnot. Then after my aunt finally got out of the house, she could finally stop as the life insurance payout she was getting was enough for the modest life she is living to this day (she's also getting SS now fortunately).
How do you evaluate such a life? It started bad, it went well as long as it went well, but the good part was a lot more precarious than it would be today, as it turned out. I consider her a very resourceful and practical woman, but a bit more girlbossism and some fewer scruples about propriety would have greatly helped. The supposed thigh-knit community everyone talks about, and which she very much was a part of, was not there when it mattered. The supposed decency of times begone did not stop plenty of obscene attempts on the part of the good townfolks, both when she was a maiden and when she was a widow. Yes, it's good to have it good, in every age, but maybe we should consider what happens when you have a bad roll.
The answer may be in your second paragraph. Are people out in the real world really saying these things, or is it just people (bots?) on Reddit and in the media? People love to complain on the internet while people who are doing fine sit the conversation out. I think we may just be seeing the complainers.
For sure the internet heavily overindexes on complainers, but the first two graphs clearly show reduced consumer sentiment.
Im not convinced these are sufficiently different categories either
Who are these non-online consumers being spoken of?
Im not denying that people who are offline have probably had better vibes for a decade plus, but this is not some silent majority, its a few confusing holdouts that ought to be studied
I know a bunch of people in the real world saying things like "I now spend twice as much each week as I did before the pandemic, but my income has not increased at all"; things like "you can see what the house prices are; I will never be able to buy a house at anything like the age you did; I'll be forced to rent - that is, pay off someone else's mortgage - for at least a few decades"; things like "we can't afford to have one of us stay home, but the childcare cost eats most of the second person's salary, so it doesn't actually put us that far ahead"...
If someone were to tell them the problem is all vibes in their head and really they're better off than I was when I was their age, I would... not expect the response to be positive. Also, I am aware of roughly what they earn and where they shop, and house prices in the area are public knowledge; they do not appear to be lying.
I do not know how statistically representative the people I know IRL are, but if all you want is an existence proof, I absolutely can confirm that not only people out in the real world really saying these things, but also they are not demonstably wrong about their own experience.
Yes, I am in a city. You absolutely can buy property less than 1000 sq ft in size (the cheapest in the area right now is a 498 sq ft "studio flat").
The trend here, though, has been to take larger properties, split them into smaller apartments or individual rooms in HMOs, then rent them out. So almost the entire rental market is now properties of that nature.
You're nitpicking terms, but the people I'm talking about would be happy with a flat. My own first property was a two-bedroom flat, and I can confirm that no such flats are now available to buy here for anything like the graduate salary multiple I got it for back in the day. We're far from "oh, why must the poors complain so, don't they know how good they have it?" territory when discussing people shut out of the property market entirely.
Condo dues have gotten out of control too
I live in one of the most expensive counties in the US. Day-before-yesterday I was driving in a beautiful double wide mobile home community and saw two homes for sale. One was for $250k, the other (with a new “chef-inspired” kitchen) for $350k. Both had a site fee of about $1k per month.
I understand home prices in SoCal are getting outrageous. But there still seems to be reasonable options. Or do manufactured houses no longer count? If so, why?
Mine is a small city, but does have two trailer parks. Neither have property available for sale, or (quick check) have had in the last year. I guess it's maybe possible if one waits long enough eventually? I honestly hadn't needed to consider that option when I was buying my first flat after I graduated, so if that's what it takes to get something of your own now, that feels like a change.
The local council proudly announced a new community of little manufactured bedsits - not trailers, more like chalets - to help relieve housing pressure at the cheap end of the market a couple of years back. I actually don't know what happened to these, but it was around two dozen units in total so I'm sure that helped the folk who got lucky but the impact on the overall market would have been imperceptible otherwise.
I wonder if some of the problem is information overload. The economic data doesn't track what one particular person is buying, they a huge "basket" of goods from all over the country, and whatever basket they use is constantly changing. It also constantly adjusts its value for "hedonic regression" in some complex formula.
The average person just doesn't have the time to sift through every single consumer item for sale and find the best deals. They don't have the time to appreciate all the complexities of new electronics. They just want to keep buying the same stuff that they've been buying their whole life, for the same price. But that's not possible- you have to perform a complicated search and study process all the time to learn about new products and prices. Heaven help you if you fall for a scam like "extended warranty" or "10 year car loan." And you can't just "move somewhere cheaper" because moving is really difficult, and you have no idea whether the cheaper area is actually a good deal or cheaper for a good reason that makes it horrible to live there.
This could be generational (I'm a zoomer), but of people I'm close with IRL, approximately all of them say these things on a regular basis.
I'm in a high cost of living area; I don't know anyone in my age bracket who is marrying or buying a house, or planning to, or even talking like such a thing is possibly in the cards for them. I'm not surprised there are places where the norms are nicer, though. There are too many people around to generalize entirely.
Hopefully, that's what the statistics are for. I can't say for sure which of our anecdotes more faithfully represents the average young American, but we've got the Official Measure of Vibes to disambiguate, and (per Scott) it doesn't look great.
Ah yes, the avocado toast argument. You nailed it, the millenials would be able to buy houses (that are 20x their income) as easily as the boomers (who bought houses 3x their income) if they just laid off the avocado toast. Good analysis.
Huge differences regionally. People tend to forget that the USA is _massive_ and, for all intents and purposes, like twenty (or however many) different "countries". Being surprised that things are different in Idaho and NY is like being surprised things are different in France and Bulgaria.
This could be seen as a slightly more expansive version of the "Brooklyn Theory of Everything" - the Coastal Metropolitan Areas Theory of Everything? It might be true, but I keep hearing that the economic situation in Idaho-type parts of the US is *worse*, not better.
A key part of the "Brooklyn Theory" is that the media industry really is a total nightmare of endless layoffs, unpaid internships, city newspapers shutting down etc as Google et al. eat all the advertising revenue. They have been in an awful recession for decades and since they have the megaphones, they can spread their misery to everyone else.
Yeah, came into the comments to point this out. It's not just that the media is concentrated in an unusually expensive city; it's a deeply wounded, struggling industry concentrated in an unusually expensive city.
Thinking about it a little more, there are two separate issues, why do Zoomers/Millennials think they are doomed (longstanding issue, likely caused by what we are talking about) and why did consumer sentiment specifically tank in 2023-2024 (still partly this I think, partly people still being mad about high prices even after inflation shrank). At least that's how I see it.
Agree, after seeing how much media opinions on big tech changed overnight in 2016 I learned how much the opinions of journalists in NYC really changes the zeitgeist of discussion. The journalism industry is so miserable with people still looking to get college degrees in a field that pays terribly. Even the alternative media economy is primarily driven by wretched journalism majors.
There seems to be a feedback loop at play here:
A - Jake, who's active on social media, keeps seeing posts of rooftop bars, gallery openings, and interesting people living their best lives in NYC
B - Jake decides he needs to move to NYC. It just looks like the place to be.
C - Jake moves to NYC. His apartment is tiny, rent eats most of his paycheck, and the subway is a nightmare. He vents about it on social media, but his posts still feature skyline views, trendy coffee shops, and nights out in brooklyn.
D - Meanwhile, Sarah back in Ohio sees Jake's posts and thinks, "wow, I need to move to New York..."
And the cycle repeats.
Back in my day we didn't all want to move to New York City because of social media. We all wanted to move to New York City because of Sex and the City, and Friends, and Seinfeld.
same same but less feedback loop:
A - Melvin sees Joey on Friends having a ball in NYC
B - Melvin move to NYC and hangs out at the local coffee shop
C - Melvin complains that real life in NYC isn't as fun as Joey makes it look on the tube.
D - Melvin writes a letter to his friend Dave back home about the good life in NYC, maybe Dave can be his Chandler
E - Dave moves out to NYC and is unfortunately a Ross.
But why were those shows in particular so influential? It's not like they were the only popular TV shows of the time. But they seem to be the only ones that influenced a generation to try to live that lifestyle. Nobody watched the Simpsons and thought: "I want to move to a generic suburb." Nobody watched That 70s Show and thought: "I want to move to a small town Wisconsin." Nobody watched Gilmore Girls and thought: "I want to move to a rustic small town in New England." Nobody watched the Drew Carey Show and thought: "I want to move to Cleveland."
For some reason there's something about living in NYC that really, really resonated with a lot of young Americans, and I don't think it's just because they showed it in a few TV shows.
"Nobody watched Gilmore Girls and thought: 'I want to move to a rustic small town in New England.'"
Yeah they did. I see your broader point, but a ton of pumpkin spice latte hoes of an earlier generation absolutely did do that.
Yeah, Gilmore Girls was more like Friends in that way: https://www.nhpr.org/2025-12-01/how-cts-leafy-hills-and-town-greens-inspired-gilmore-girls has "We even talked to some who moved here because of the show."
Yes. Similarly, LLMs seem most ready to take the jobs (or at least undermine the already precarious living) of professional writers and maybe even content creators. And like you said they're the ones with the megaphone.
I know 2021 predates that, but it made it worse, anyways.
Interestingly, the decline of newspapers well predates big tech and the media vibecession times: https://cdn.baekdal.com/_img/2023/circulationperhousehold.png
(That's a random web version, but there's a similar chart in the book "The Rise and Fall of American Growth"; that book blames TV.)
Although newspapers per household have decreased following a consistent linear trend since 1950, that trend would have *felt* much worse for journalists in the 2010-2020 period, when the *relative* decrease was almost 50%.
There was a decline in circulation, sure, almost certainly related to TV. And there was a related decline in the number of newspapers (evening newspapers, competing with evening newscasts, were especially hard-hit). And newspaper columnists would perennially wring their hands a bit about both trends.
But newspapers as a whole industry were doing just fine in the 1950 to 2000 time period; inflation-adjusted newspaper advertising revenue *trebled* despite the decline in circulation.
And then, between 2000 and 2012, US newspaper advertising revenue suddenly collapsed all the way back to 1950 levels. Internet advertising did what television couldn't -- it devastated the actual business newspapers were in.
( https://www.statista.com/chart/612/newspaper-advertising-revenue-from-1950-to-2012/ )
If the vibes were indeed so great, Trump would be a joke candidate, certainly after 2020.
Sorry, can you explain what you mean?
If people were feeling better about their prospects, they would vote for establishment-friendly candidates.
Scott explicitly states that the vibes are bad, the question is whence the divergence between the vibes and the economic statistics.
There's no question that economic sentiment is poor. It's recently been about as poor as we've measured, including during the worst financial catastrophe since the Great Depression. The question is why that is the case when macroeconomic indicators are consistent more with what we see in relatively good circumstances that have historically predicted much better sentiment than we were measuring.
Part of this not mentioned in the article right off the top is that conservatives have become much more apt to answer whatever they think makes the Republican position look better in surveys* and this shows up in the economic survey data the same as it does in all manner of polling. There are a few theories for why that behavior has intensified more recently, but you can be agnostic about why that's happening and just accept that it is. But even if you correct for this partisan effect where intensely negative GOP sentiment pulled the numbers down, there is still a quite substantial gap in want of explanation.
*Democrats do the same thing in reverse, but the partisan effect is much more pronounced on the Republican side, often roughly twice as large where there are opportunities to measure a flip flop.
Based on your "Brooklyn theory of everything" analysis, this feels like a real life symptom of Peter Turchin's Elites overproduction hypothesis.
Also, this article from Oren Cass's substack feels like it's orbiting the same topic: https://www.commonplace.org/p/john-ehrett-young-men-refuse-to-fight. I like their theory---the vibes are bad because life feels more *random*, that there's less of a playbook on how hard work pays off. I will note that their analysis is crude and overly generalized.
when the above surveys measure household wealth, does that include adult children living with parents? my perception among my zoomer-millenial cusp cohort is that more people our age were living with our parents and for longer times than in the past, despite having jobs and so on. is this effect captured somewhere above?
From what I can tell, the main source is the Federal Reserve's Survey of Consumer Finances. It's not that clear whether they would count the wealth of an working adult child living at home toward the net worth of their parents. It might for some people, not for others. Appears to hinge on whether the child is "financially interdependent" with the parents. If they have their own bank accounts, auto loan, things like that, they may count as a separate person. Hard to tell without looking further.
In any case, while children do live at home more than they used to, I don't think this effect is large enough to drive the graph very far in either direction. Probably a modest effect.
I think she's saying the opposite: young people who would've counterfactually lived on their own and driven household income down (by virtue of being young and early career) instead share households with their parents driving household income up by composition, but feel worse in an abstract sense than if they were able to live on their own. I guess if instead of household incomes we looked at normalized household income (income/number of people in house ratio) this would show a downward trend.
Again, I have no data here and no idea how big this effect is.
This also feels related to the material from Warren's "Two Income Trap" book about the security derived from a non-wage-earning adult in the household who could probably get a job in a pinch to help make ends meet. If incomes are up in part because there are on average more wage earners per household in the same size household, that sense of security, of having wiggle room of a back up plan, would be down.
This would be compounded by the general opaqueness of many middle income job searches, if people are less confident they or their household members could get a new job quickly in a crisis.
Maybe it's all part of the difference between things feeling less good and things feeling less secure, as other commenters have said. A higher bank balance necessary to feel even kind of OK.
Similarly, a lot of (perhaps most of?) the gains in household income for decades have been from more women entering the workforce, meaning double-income households, not from individual wages rising.
But that's been happening for decades. I doubt it has accelerated over just the past few years.
Even the "tipping point" at which more women work than want to work, meaning the trend is now leading to unhappiness, happened years ago. So I don't think that can be a major cause of the recent vibecession as defined.
Maybe the trend of young adults having a job but living at home with their parents accelerated over the past few years? Did the rental market really get that much worse compared to the entry-level living wage market?
It's interesting to compare it to Europe as the control group. Unlike the US, whose economy muddled through just fine during the last decade, we are currently experiencing a massive economic decline that could soon turn into a full-blown collapse. And yet, outside of debates about immigration or foreign policy especially regarding Ukraine you don't really hear the same level of rancour about 'things being bad' in the local media.
(Western) Europe hasn't experienced massive economic decline but rather plateauing and then sluggish growth and divergence with the US. https://www.imf.org/external/datamapper/profile/WEQ
Yes, I would consider a sudden divergence from the US as a peer economy, as it has been for at least the last 50 years, to be a decline.
It's obviously very different from the literal meaning of "decline".
The relevant point seems to be that Europe is doing comparatively worse, but the vibes are better. If this is true, why?
Can't say for the rest of Europe, but the vibes are *terrible* in Finland (as is the status of the real economy, even in comparison to the rest of Europe), and have been for quite a while.
The vibes in the UK are horrendous. I think this goes beyond us- why do you think Europe is struggling with populism in so many countries?
No argument from me. So you are saying vibes are as bad or worse in Europe?
Is Europe struggling with populism, or are European populations struggling against governments that don't have their best interests in mind?
When I see complaints against populism from people who I assume generally favor representative government over some flavor of unfreedom, whether it's communism or a dictatorship or Socialism or whatever, I'm always puzzled. If not the population, who exactly do you think the government is supposed to work for?
I am an Italian currently living in the US. My main guesses would be:
* Right-wing parties control a supermajority of TV and print media. They have also been in the govt most of the time, which means they control the state TV and have an interest in presenting things as rosey. The much older population makes the internet less relevant for public sentiment. Even in the few years where they were at the opposition, they mostly focused on immigration and crime to rile up popular sentiment, I guess because the population is older, their voters even moreso, so they care more about that than about the economy
* The absolutely massive and unsustainable intergenerational transfers keep everyone somehow sedated. Maybe your wage is terrible, especially after taxes, maybe you're unemployed and it's hard to find a job, but grandma will be happy to help out her only grandchild. Most don't realize they're just getting their money back. This is bound to collapse soon but see the point above, the media really don't want you to think about it.
* It's a lot easier to feel like you're providing opportunities for your kids. The stereotypical rich-kid private uni is, even as a proportion of median income, still *a lot* cheaper than an Ivy and probably even an unremarkable liberal arts school. Unless you want to study business or law, there just aren't private unis (there is one for medicine but it's universally considered bad). Public uni is cheap and usually open access. If there is some kind of selection (eg medicine or architecture), it's a standardized test, so you don't have to worry about optimizing your kid's extracurriculars, you can just have them do what they like or what is important to you. You don't have to worry about living in a good school district because anyone can enroll in any public HS, and with very few exceptions private HSs are worse. If you are more aware about the state of the country than most of your connationals, and want to send your kid to study abroad, any other EU country is bound by treaty to treat them exactly like their own citizens, you just have to make sure they speak decent (not excellent, decent) English. The anxiety Americans have about setting up their kids for success is assuaged, partly because Italians are less ambitious but mostly because it's objectively much easier to do so.
* Related to the above point, but the EU ensures that in the worst countries there is a lot of evaporative cooling. The most ambitious Italians are not doomscrolling about how terrible the tech job market is in Italy, they're learning German or looking for a job in the Netherlands. And when they're there they complain even less than the locals because well, nobody like an ungrateful guest, they don't want to feel they uprooted their life for nothing, it's still much better than Italy, the usual reasons immigrants are much more appreciative than natives everywhere.
The last point obviously does not apply to the richest countries themselves (hence why populism in the Nordics, Germany and the Netherlands looks more like MAGA than the rest of the European right), but the first three do, mutatis mutandis. The second and the third one even moreso, opportunities are as equal as they can realistically be and the safety net really robust. Nobody is afraid they will end up destitute, and opportunities are as equalized as they can realistically be across the bottom 95% (maybe even 99%) of the kids. Once you take away those two sources of anxiety, people tend to be a lot more relaxed.
This is an absolutely fantastic comment. It really paints a picture and offer new insights (to me) on the vibes in Italy. And I love your use of the term “evaporative cooling”.
Relative decline would have been better phrasing, but the relative decline of (most) of Europe and Japan vis a vis US since 2008 is pretty substantial.
The bad economy narrative only becomes a thorny issue when so-called "right wing" parties are in power. Because the people in the media are moderate-left agitators who want to use their work as a vehicle for their politics.
To add to the "Brooklyn Theory of Everything" - is it likely that social media algorithms are biased in favor of SF/DC/NYC in some overt or subtle ways that bolster this problem?
Of course the social media algorithms are biased in favor of SF/DC/NYC, but so is over-the-air television (though in the opposite order among the 3). The hollowing of local media makes this worse, but that also seems like a matter of decades rather than recent changes. Is there any reason to think that the bias has suddenly gotten more intense?
I'm not sure what this would mean. I doubt it's actually hand-coded to boost things from those cities more, and I don't know what emergent dynamics would make this happen.
I think this post from Slow Boring (also published this morning) has some relevant information in it https://www.slowboring.com/p/you-can-afford-a-tradlife. It doesn't explain why the vibes are so far off now compared to 2010, but it explains why people feel things are so bad now compared to the bullseye of the "return to better American times" movements (the 1960s). TL;DR we're not comparing against a consistent baseline and people's memories of "how things were" during "better times" are incorrect.
Yglesias has written a whole bunch of great posts explaining why the "standards of living were higher in earlier decades" meme is wrong: https://www.slowboring.com/p/nostalgia-economics-is-totally-wrong, https://www.slowboring.com/p/why-its-harder-for-families-to-thrive, https://www.slowboring.com/p/nostalgia-politics-is-a-dead-end, https://www.slowboring.com/p/the-90s-werent-that-great (guest post)
Yeah, I think this must be a large part of it. Every so often I'll come across some piece of writing from the mid 20th c about what someone considered a luxury (e.g. bus fare or a car to get home from work) and I'm struck by how expectations have changed.
I think it's a form of survivorship bias. The nice, well-built houses from the 1940s are still here, while the cheap ones were bulldozed long ago. I think this happens in memory, too. People recall the best parts of the past and forget about the quotidian, mediocre, and disappointing ones.
Meh, tear downs are rare. In decent areas most of them have just been steadily band-aid-ed to keep them livable
Asking if the economic thermometer reads right or if the youth have it with their vibe check, you may be looking at the chasm between the map and the territory.
Job applications stopped being a signal of intent, and became a volume game, a metric to spam. Dashboard says low unemployment, but the job market has become a customer service loop from hell.
If metrics are similarly optimized over reality in the financial plumbing, then its more of a thermostat...
What *precisely* do you suspect is wrong with the statistics?
I think I was making a slightly spicier point, but I probably didn't articulated it well. The gap between the map and the territory could be the signal of a deeper, structurally critical system.
In this case, the core issue wouldn't appear on the graphs, as the substrate creating the data has transitioned in phase.
I gestured at this in my initial comment, with how job applications have changed. The employer can't trust resumes, applicants can't trust job postings, and the "price" and the "clearing rate" stop reflecting reality. Textbook market failure.
Similarly, securities used to be a claim on value generation, paid out via dividends. Now, the CEO's bonuses use the ticker price as a metric. The Agent is actively determining what the Principal of the shareholder uses as an indicator, by issuing buybacks. This transforms the security into a claim on price action.
What does this actually mean in a system where liquidity is more important than money or god, where APs and MMs transact with wide exemptions and special rules to maintain this liquidity? Add major shareholders collude with banks to get zero interest loans against collateral, explicitly because this avoids price discovery, and you've got quite the soup going.
The worst case is, the Vibecession is ground truth of the captured, living in an engineered, permanent gap between reported success and negative-sum extraction.
The cost of this transposition is a lack of trust. And if you can't trust the map, you stop using it to navigate the territory.
That the metrics do not incorporate the full systemic degradation of lived experience fueling the growth. That the gap is intentional, and profitable.
The "territory" is unknowable. You are looking at the gap between a map made carrying around an altimeter and fixing as many points as possible, to a map collaboratively drawn by millions of people who don't have to use it to navigate, just to like, express the vibe of a place and make a point and show the group that they have the right opinions.
Maybe there is something the former misses, but the latter is scarcely evidence of it.
Also, most people report *their* situation as being good, but the *economy* as being bad. Quite the interesting cartography you have there, where if you try to aggregate different maps, you get a mathematical impossibility!
https://www.axios.com/2023/08/18/americans-economy-bad-personal-finances-good
You can report your state as positive while simultaneously feeling that the effort/cost of maintaining that state, the process, is unsustainable.
BLS shows 5.4% multiple job holders as of late 2024, but that number only captures people with two W-2s or formal arrangements. Sporadic gigs make the reality much higher, and most of these gigs do not yield similar benefits.
April 2019:
"I am doing good/excellent": 56%
"Economy is good/excellent": 50%
= 6 point gap.
April 2024:
"I am doing good/excellent:" 46%
"Economy is good/excellent": 24%
= 22 point gap.
As we see with the "Red Queen's Race", the link between the input/effort and the output/reward has become noisy and unreliable. When people stop trusting that link, they switch to high variance strategies.
With this lack of trust you also get "doom" spending; if you don't trust that your capital will ever grow, you might as well spend that money on now. That makes the economy look good, but it’s actually a result of nihilism, not that the core of tokenized trust is intact.
The RPM of the system remains high. Are the “vibes” a psycho-social artifact, or the sound of the metal screeching?
I'm surprised you didn't address one thing...but I guess it's just a different way of saying "vibes", still I think this connects to a lot of econ discourse and...frankly...I don't have a good solution and it honestly scares me a little:
So, when prices go up really fast, that's "the economy." It's a force external to me, and I'm mad that it's happening, cuz I sure as hell didn't do it.
When *my salary* goes up really fast, that's...just me, obviously, I deserve that. I'm happy it's happening, and I SURE AS HELL caused it.
In short: it's an outrage if eggs cost $10, and that's true even if I make $500,000 a year and made $250,000 the year before. That massive jump in my income was the result of my blood, sweat, and toil. I didn't do the egg thing.
My own read on the vibes of a lot of people my age (esp. who voted for trump) is that they actually expect *the real sticker price of commodities* to go down as the result of...some unspecified economic corrective policy...and if not, well, things will be bad for whoever is in charge, and this will be true no matter how much anyone makes.
Obviously, if you know economics, you know the cost of things going down would be bad, and that your own salary going up is due as much to economic forces as anything, but you can't fix sentiment errors like this by sitting the whole country down and having an economics lesson (indeed, I'd argue biden tried that).
I don't know what to do here
I think that's a real effect, but doesn't explain the recent decline in sentiment. It's always been the case that people overattribute their wages to their own effort, so why didn't that make people mad in the second half of the 20th century, when inflation was way higher than has ever been in the 21st?
People were definitely mad about inflation in the 1970s, it was a massive political issue! And that is the only time in the second half of the 20th century with inflation higher than it has ever been in the 21st (treating the inflation in 1969, 1980, and 1981 as part of the 1970s inflation).
Inflation in 2021 and 2022 was higher than it has been since 1981, so even people who should have remembered how inflation works seem to have forgotten. Forty years is a huge gap.
yeah, the difference here is pretty sharp. I know my "explanation" is kind of basic, it's just "what's different is the inflation happened really fast", but it's the part of the dynamic that Scott didn't address that I think needs to be. I actually agree that the vibes have been "off" for a lot longer than the 2020s, and I think the loss-of-friction and elite overproduction hypothesis are at play there, but smarter people than I can address them. What I haven't seen is the sticker shock which is a big part of the effect, particularly for people like me, who are nominally very comfortable.
I have an acculturated sense of what $50 "ought to be able to buy" and I feel pressed when I spend $50 and get like, half a bag of groceries. That's true no matter how much I actually make, and that's because when my wages go up, that's a personal accomplishment...everything in our society has conditioned us to feel this way...so if my wages double over five years, it FEELS LIKE I should be able to buy twice as much stuff, but I can't, and that's an outrage, and I want someone's head on the block because of it.
I think that's a very strong point there, as far as explaining why the vibecession has been steeper over just the past few years.
Anecdotally, that feeling of outrage is also what living in California feels like. Why is my house so terrible when I make so much money? Everyone is confused and insecure about that. Contrast with Texas, where the vibes are the opposite. #blessed
I agree with everything you said. It just strikes me as hard to pin the whole phenomenon on two years of high inflation. It's been pretty close to its long-run average for the last two years (2.5%). It was well north of 3%, and often much higher, for almost all of the period 1967 - 1992. During the part of that that period we have data for, consumer sentiment (as measured by the statistic at the top of Scott's article) was pretty high, and the dips in correlate pretty well with recessions. This present one does not. '67 - '92 is also a large chunk of the supposed golden years that vibecessioneers pine for.
I guess your theory could be that 3-5% inflation doesn't trigger mass rage, but 6-8% does, but that seems a little contrived. It also fails to explain the phenomenon to the extent that you think it began before 2021 (which I would argue it did, although it's certainly accelerated since then).
I think that inflation is only one of several causes of the vibecession.
I think dissatisfaction with prices now is ironically because the recent inflation was brief and less severe than the 1970s. When that inflation ended, people were just happy to have prices stay the same - having them fall 90% was obviously never in the cards - whereas today people want the prices themselves to return to 2019 price levels, so the return to normal rates of inflation doesn't satisfy them.
I'm not sure why everyone is so convinced that the vibecession started before 2021. The graph of consumer sentiment to me looks like the vibes got way lower and stayed low after 2021. I don't see evidence for bad vibes from 2014-2020, in fact I see the opposite.
It's just anecdotes and feeling, mostly. I'm thinking of things like this: https://www.theatlantic.com/ideas/archive/2020/02/great-affordability-crisis-breaking-america/606046/.
You're right that our consumer sentiment graph drops in 2020 and not before. And kvetching about cost of living, loss of opportunity, etc. is always going on at some level. You could argue these things were just garden-variety before 2020 and have only reached unusual levels since 2020.
I had an unusual life trajectory but the vibes have felt off for me since the great recession. I feel like people have been saying "in these uncertain economic times" or "a PERMANENT position? In this economy?" since around that time.
Looking into the data a bit more, it seems like young people in aggregate thought the economy was quite good pre-2020:
https://data.sca.isr.umich.edu/get-chart.php?y=2025&m=10&n=1ar&d=cha&f=pdf&k=d160e29122da76699e90754db73f84c003e2d4a067aa6841acba196195dab299
This is going to sound stupid, but I swear it's what I've heard (from Zvi, in particular).
What makes people get mad over inflation isn't the current inflation rate; it's the current price level. Hence, people being mad over inflation increases as inflation continues at the same rate, and then doesn't go back down for years after it ends (because the prices are still high; their idea of "low inflation" is a return to a low price level, which would require deflation).
I think in most cases with an inflation-wage spiral, there was either an obvious external cause for both (eg, war), or most people were close enough to subsistence to materially notice that yeah, I can buy more things. Also, the economy was a lot simpler, most workers were still selling mostly time and exertion rather than skill, so when market wages for the hired hands went up, it was pretty evident that it was not because they had all suddenly gotten better at shoveling coal or moving bricks.
Nowadays the attribution is much more difficult because we earn (and spend) so much more on so many things, and also the labor market is vastly more diversified. If I am working at Walmart and suddenly get a job at a fancy bar with good tips, is it that the service workers' market is tight in general? Or that cocktail bars are doing well bc or some fads (and thus I showed great foresight applying there)? Or that someone finally recognized my genial personality and can-do attitude? Well one might be tempted to pick the last or the second. We all live on Lucas islands now, the islands are multiplying, but unlike in the model, the islanders are not exactly perfect bayesian updaters.
> Obviously, if you know economics, you know the cost of things going down would be bad
This is literally the whole point of the economy. To provide more/better goods for less cost.
If it's not doing that, then it's broken.
by "cost" there I literally meant the sticker price of a good. Let's say eggs.
The "cost of a good" can go down in relative terms even if its cost stays the same, or increases slightly. If Eggs cost $5 on monday, and $10 on tuesday, that sucks...but what if your pay sextuples between monday and Tuesday. That's better! You'd prefer that situation probably, to one where they both stayed the same.
We had a period of pretty rapid inflation recently and my point is that the sticker price of commodities themselves simply won't be going down. Every economic solution will bring earnings UP so the relative increase of these goods won't matter as much, and in fact most of scott's charts demonstrated that actually happened...things aren't so bad. But what I'm saying is there's a lizardlike part of all our brains that just expects $100,000 to buy [x] lifestyle...so if you make $100,000 and don't have that lifestyle, you feel outraged that the market is off.
We're not lowering the actual cost of most goods anytime soon. It's not like someday we will wake up and the price of "stuff at the supermarket" will be "back to the way it was in 2019." If that were to occur, I submit something *bad*, not *good* would have happened in the economy.
Yes, I understand, but people's pay isn't changing. In aggregate, across the entire nation, maybe (dubious, imo, if it's even close to keeping pace with actual inflation). But one person's pay doesn't suddenly go up 20%, barring changing jobs or a big promotion. Most years, most workers are lucky to get a small 1-3% adjustment.
They eat the full cost of the sticker-price change.
And the sticker price of things falls all the time with nothing bad happening. A decent laptop cost $2000 twenty years ago, now you can get an objectively-better laptop for $500.
There's no reason that can't happen with food, except that the capitalist system will not allow it.
so, like, even if you're right, my point was kind of like that no actual tenable political position is going to return the cost of the stuff at supermarkets to pre-2020 prices. We're not instituting socialism next election cycle, nor are we like, implementing price ceilings or pegging the USD to some commodity like gold. So: whatever your solution is, it's not happening by ordinary politics, and that is what worries me: there is not a coherent, achievable solution to this problem I see, and it's durable, and bipartisan, so this resentment is going to keep getting worse and every party is going to come INTO power on a promise that they can make the vibes better, then got OUT of power being told that the country doesn't need an economics lesson, they need the vibes to be better.
We could implement a higher tax rate on land value and intellectual property, while broadly decriminalizing things like mining, riverine freight, home remodeling, educational excellence, and childhood.
decriminalizing?
I am *begging* people to learn what "real income" and "median" means.
The graphs in the article make it clear that (1) wages *are* keeping pace with inflation (that's what "real" means) and (2) it's a large portion of the population and not just a few outliers dragging up the average (that's what "median" means, and also there's a graph breaking it out by percentiles if you want to argue that actually it's some particular class that's doing badly).
Also, food as a fraction of a family's income has gone down - that was the basis for that silly "the poverty line is actually 140,000" article that made the rounds a few weeks ago. Their argument was that the poverty line is calculated based on the cost of food and therefore doesn't accurately track the costs of everything else a modern family needs.
Well aware of what those terms mean and how to interpret the graphs, but thanks for your condescending tone.
My whole point was that you can say "real income is keeping pace with inflation because your salary has increased to a greater degree than inflation has' till your blue in the face but it's not going to change how people actually *feel* about prices. When my salary goes up, that's due to my hard work, blood, sweat, and toil, if i'm making 300,000, I have a mental model (formed circa 2012) of what 300,000 should buy, and when I can't buy that, it feels like someone else's "fault"
I realize this is *deeply* irrational, but I think that's the really awful problem here. Most people ARE irrational. I'm FULLY aware of how much my salary has grown relative to inflation. I've read about it a lot. It STILL feels raw when my salary can't buy what I IMAGINE it OUGHT to buy. I could be a millionaire, and if I had to buy 1 dozen eggs for $7.50, I'd be really, really mad
"There's no reason that can't happen with food, except that the capitalist system will not allow it."
Except food prices have fallen historically? And the capitalist system does allow it? If you read a book about American frontier farmer life and you'll see what I mean - wheat prices falling because of increased supply was occasionally a huge problem for farmers, although great for everyone else.
Food prices aren't falling now, sure, but that's mostly because we haven't seen recent huge improvements in food production or storage/shipping. If we suddenly found a way to grow and store large amounts of blueberries for much cheaper than before, you can bet your biscuits prices will fall. How do you think the average person came to be able to afford tropical fruits like oranges and pineapple, if not decreases in food price?
As someone who raises some of my own meat and sells a bit, and lives in a rural area where food production is a thing, unfortunately I disagree. Large parts of the American food production economy are propped up and manipulated by large-scale government intervention. The only way we're going to get out of the whole and make it so that farmers and ranchers can be truly self-supporting is for food prices to go up. Food is too cheap. Now good luck squaring the circle for how to make that all happen without major problems.
> You'd prefer that situation probably, to one where they both stayed the same.
Unless you'd worked all through the weekend, at that Monday rate, saving up to buy eggs for a meal you plan to cook Wednesday, and now you won't be getting paid for your Tuesday-rate work until at least Friday. Boss wants overtime again next weekend, well... what if prices get rug-pulled again? Or something even worse happens, now that the possibility is established? Such uncertainty has a massive impact on calculations of whether the extra effort seems worthwhile. Consider panels 5 and 6 here: https://clowncorps.net/comic/chapter-6-page-84/
Another issue that wages often do not rise to match inflation. In today's economy, in my experience, the only way to get a raise that matches inflation is to apply for and get a new position. This also tracks with worker/company loyalty (workers wanting to stay at the same place their whole career, companies trying to retain their good workers for their whole career).
yeah, I think a lot of this comes from the fact that *prices* can go up on just someone's say-so, but it generally takes a great deal of work to make your *wages* go up. It always feels like a personal event, and it always feels like something you *did* rather than something that merely happened.
How do we square the home ownership stuff with stats about the median age of the first time homebuyer? I saw a number of articles that all seem to be based on this report.
https://www.nar.realtor/newsroom/first-time-home-buyer-share-falls-to-historic-low-of-21-median-age-rises-to-40
It suggests that despite the ongoing costs of a mortgage, the activation energy is too high. You have to be wealthy to take advantage of this form of wealth creation.
This is what we would expect to see if in fact there is a generational gap in access to home ownership.
In Toronto, at least, small condos are the main form of new housing. They are extremely expensive compared to a full-on house in the 50s.
Just make sure you save room for that home office, because your company isn't paying for office space anymore. Or maybe they're on a hybrid model, where they expect you to have a large enough home to include an office, but also still commute from time to time.
While we're at it, comparing mortgage costs per month ignores that people now get mortgages for longer terms
The Freddie Mac data used here is specific to 30 year mortgages.
The problem isn't term length, but when you start paying it off. Buy a starter home, pay for 5 years before you use your equity to move up, repeat 1-2x. If you start that process at 20, your investment matures before retirement. If you start it at 40, your starter home had better be your last, because you don't have time to build equity and move up, or you'll be paying a mortgage throughout retirement.
Came here to ask the same question. I've seen that "median age of first-time homebuyers soars to 40" reference thrown around a lot in the last month.
If home affordability hasn't changed much for young buyers, what other factors are holding them back?
This also addresses the question, "why are the vibes bad for younger generations, while the older folks aren't concerned?" If you're already in the home ownership game, you're fine.
I remember buying in '17 with an interest rate < 3%. In '21 my buddy was looking to buy, with my same budget, except he was looking at condos a third the sqft of my new construction house. At that point, I realized I'd lucked out and he'd been shafted, because I bought a few years earlier.
Exactly. There's so much encoded in the median age of first time homebuyers. Start a 30yr mortgage at 20, and watch your wealth build over time while your asset gets paid off well in advance of retirement, with plenty of time to save for your golden years.
Meanwhile, if you start at 40, on a 30yr mortgage, you're still paying off after retirement. Time is money in investing. Earlier the better. If Boomers started at 20 and Zoomers don't start until 40, it's not a linear loss of wealth-building capacity.
This is what I hear from the younger generation. "If I save for retirement, I can't save up a down payment. If I save for a down payment, I'm missing retirement savings. But it doesn't matter, because every year the savings goal for a down payment gets more out of reach. It feels like swimming against the current, financially"
Also health insurance costs a fortune, it covers nothing, and medical bills are insane regardless. Meanwhile seniors get a government ride on lower costs despite higher needs and more capacity to pay.
Plus higher education requirements don't just mean more work for the same achievement, as Scott suggests. That's the less interesting half of the story. They also mean sacrificing time working/earning for time training/borrowing. An undergraduate degree is taking at least a year longer to complete, now lots of people are finding they need a master's, then add an unpaid internship.
Compare a welder who got paid for his work/training from age 20, to someone who had to shell out 6 figures they didn't have before getting to the same point in their 30s as the welder of yesteryear. There's an extra 10 years of wage earning for the welder, and an extra 10 years of education-related debt accumulation for the Zoomer.
Maybe there's an inflection point where the confluence of factors reverse the sign from positive to negative. I think that's what the vibes are trying to tell us about the state of wealth accumulation for the rising generation.
Yep that’s it. The data is massaged in such a way that it’s meaningless. It is trying to to capture wildly different situations, average the outcomes and pretend everything is fine.
In practice, at any given level of lifestyle it has become much more difficult to attain.
We get boomer style arguments about not taking holidays or going to restaurants but this is categorically wrong. They didn’t make the same type of things but they did spend at least as much money on it if not more. It’s just that some consumer goods have gotten cheaper or benefited from technological improvements so your money goes further but at the same time the service is generally worse (air travel is a good example, much cheaper but also much shittier at the baseline).
It’s a trend that is happening in much of the Western world and I believe it is deeply linked to the financial system and monetary creation process.
They have basically tried to make a system that removes the reliance on children for financial security (retirement/end of life) and in the process they have killed the very thing it’s based on: making new children.
The naysayers are full of shit, they hand wave everything away by pointing at few meaningless indicators like a magician doing tricks with the other hand.
But things are not really fine, to realize that, look no further than the debt to GDP ratio, that has attained insane levels recently.
It looks like the boomers who created that debt aren’t too keen on reimbursing it.
But who is going to pay that debt ?
If you try to answer this question it becomes clearer why the vibes aren’t great.
Air travel is a great example. You can partly re-create coach air travel from 25-30 years ago, but it isn't today's coach. It's today's first class. You get a seat that is roomy enough (but not luxurious), a meal served on the plane (not gourmet but more than pretzels), drinks upon request. You can opt out of parts of security theater by paying more for your ticket and/or by paying for and jumping through hoops to get PreCheck, whereas in 1998 you'd just walk on. In a dozen ways air travel is worse, but if you pay enough, you can almost claw back to the quality of 30 years ago. But the charts say that a coach ticket is cheaper than ever! Apples to oranges.
This is a great point. The counter example is in technology, where a taxi is cheaper and more convenient (Uber), and a TV is nearly the same price for a product that's not nearly comparable to a modem flat screen. Netflix allows binge watching and content streaming beyond the wildest dreams of a 90s consumer. Plus you get a lot of 90s content from streaming services!
Someone once pointed out that the nature of competitive markets is the kind of improvements in process/quality we see in tech, and that if you study the logistics of making things like toothpaste that the comparative price of production over time should look kind of like electronics, just at a smaller magnitude. In other words, the natural trend isn't for prices to remain stagnant, but rather deflation is the natural trend in a competitive market.
So what gives? Why do prices keep going up, despite improvements across industries over decades that should drive prices down? I suspect this is the inflation cost everyone thinks should be there, but that never seems to show up in the statistics.
Fiscal conservatives are always going about predicting economic collapse "when the bill comes due for printing all this money". And I'm partial to those arguments. I've been hearing them for decades, and largely agree, except the collapse never comes. When there's a collapse everyone recognizes, "this isn't the Big One, but it's coming!"
At some point, you become suspicious that there will be no collapse, and indeed I think this is where fiscal conservatives lose people. It's a predictive failure of the theory: that inflationary spending gets 'hidden' somewhere, building a decades-old systemic risk that can never be proven.
Not that they're entirely wrong. Where's all the inflationary spending going? It can't stay hidden forever. This is where the natural deflation from competitive markets solves the issue. Without decades of inflation, toothpaste would be too cheap to meter. Socks would be disposable. The reason tech gets cheaper isn't because it's special. It's because it outpaces the deflation in other industries, so the offset after inflationary government spending is still net negative.
“Where’s all that inflationary spending going?”
I suspect the answer is: into ever growing economic rents. But the distinction between earned and unearned income was buried by the neoclassical economic orthodoxy, so you’re going to have a bit of an archeological dig on your hands to get a grip on the concept and its implications …
Exactly. And most things are like that. Consumer appliances are technically cheaper but they are utter crap. To buy the level of quality that your grandma had, you need to go towards the high end and suddenly it’s much more expensive.
What it considered a baseline restaurant meal is basically fast food where you do half the work yourself, but previously the boomer could get a filling well made meal, served at your table for the same price corrected for inflation.
You can readily see that boomers are full of shit because in the same breath they’ll tell you much better it was before and then tell you how good the young have it.
Of course when they have to buy the level of quality they are used to, they complain that it is very expensive.
Also it might be different depending on countries but they have created a ton of laws and regulations that makes everything more expensive.
In my country a driving license would be a few hours with a teachers and you would be good to go. Now it cost a month of minimum salary because there is a legal minimum of training hours you have to pay the driving school before they allow you to take the exam. The car now has a mandatory biyearly check up that you have to pay regardless of the state of the car and its mileage.
Everything is like that.
The people saying it’s just the vibes are full of shit because they compare situations that are absolutely not comparable if you look at the details. Of course if you only look at money as an object and not as a tool that allows you to do stuff you’ll get a wrong answer.
CJL notes below that Bolhuis, Cramer, Schulz, and Summers (2024) argue that it’s the price of debt (which is not part of the CPI) that explains the vibes, and that this helps explain sentiment differences cross nationally as well: https://www.nber.org/papers/w32163
And presumably the price of debt is also connected to government accounts?
I’ll read that but at first sight it makes perfect sense.
Previous generations « got rich » by taking on debt, which is believe is what started the real estate inflation.
With high growth taking on debt is actually cheap. But now we have low real growth and mortgage rates are also high and it largely limit you debt capacity. This why the propose « solution » is to extend the mortgage time, which is a very bad deal.
So even with technically better paid jobs you can only access properties that are worse than you could have decades before.
Supposedly debt is created by private banks but it is definitely linked to governments accounts in a roundabout way. They benefit from the increased liquidity that allows them to borrow more.
I have not checked in details for every country but it doesn’t look like it’s only about vibes to me. At some point someone has to pay the debt or the market loose all credibility.
We can make the parallel to « investment » in cryptocurrencies that do not make sense on the surface: it has no real value, it is only artificial speculation, but if people think the financial system is fucked it makes sense as a storage of value that governments cannot control.
The main link that I see is that public debt crowds out private debt, raising interest rates for everyone. In other words, if the government hadn't issued so much debt, then investors would be forced to buy more private debt, driving down the price.
This is it
I feel like your "deadweight loss due to increased effort for same returns" explanation is perhaps the largest part of it (plus maybe a bit of Eric Fletcher's intriguing "now free time is way more fun to have" hypothesis).
E.g., I got the same degree that my mother & grandmother obtained—but it led to a steady lifetime career at Dow Chemical for the latter, and a succession of decent jobs for the former, and... absolutely nothin' for me. And I did better in terms of GPA than either of 'em!
Of course, this was always obviously going to happen—my /intended/ path was different; I had wanted to keep going & get a PhD in the field, but due to a variety of issues never could—so it's mostly my own stupid fault in the end. Still... it's kinda depressing.
(Same with the homeownership: "but most young people are renters" seems like it ought not really be a disqualifier, there, since they surely /want not to be/ renters.)
I have nothing to contribute, except to say I'm extremely grateful to have this subject tackled head-on by the ACX commentariat. Almost everyone I know is a vibecessioneer and the whole subject seems very confusing to me. Best of luck to all in the fruitful investigation of alternatives.
I might put more weight on the second derivative explanation. People in other eras seemed to have taken a lot of motivation from the idea that while their life may have been quite uncomfortable, their kids and grandkids would inherit a better future, and that made all the work worth it. People may rationally not feel that today.
I think the low friction of applications is a big driver of this (both in jobs, college, dating etc). I am in my final year of an Electrical Engineering degree and applied to ~500 full time jobs this fall. I am a reasonably economically minded person, I try to avoid pessimism know the stats on how everything has gotten better over time, pro capitalism etc. But even I was having trouble mentally reconciling what I knew about the numbers with my feeling from the inside of like being rejected over and over again while being in a pretty in demand field. Additionally my algorithms started to pick up on this and fed me content about how the sky was falling no one was getting hired etc. Things got pretty dark for me mentally for about a month. I’m mostly on the other side of it now, I got some offers (ones I probably won’t take and because they are in the wrong EE field) , and a lot of interviews scheduled etc. But I just don’t think humans are built to mentally understand “ You will have to be rejected multiple hundreds of times over a month or two to get a job”. Even if it’s relatively guaranteed if you put in that effort.
I'm in a similar situation but at the other end of my career. I'm 57 and have been unemployed for almost two years. Very occasionally I score an interview but it's like a 1 in 100 thing. In the past I was able to network my way into opportunities but that hasn't worked this time.
I'm not picky -- I've applied for positions that pay 1/3 what I could get in tech, but no luck. It could be age bias but that's impossible to really know.
I've never gotten a position via networking, and I'm currently experiencing the longest stretch of unemployment of my career so far. An enormous ratio of applications to even first-steps interviews, and always more applicants than slots there.
Probably a mix of a lot of factors, mentioned in your essay and in the comments. I really liked you mentioning that it takes way more « work » to get the same results.
A few additional factors:
1) The fact fast food and electronics got cheaper don’t matter. What truly matters is housing and this didn’t really improve.
2) Social status is important and zero sum at the same time. If everyone gets richer at the same pace, you are not increasing your status. And even if one is enlightened and realizes the futility of seeking status, friends and women don’t so you need to play the consumerist and social media game.
3) Loss of job stability. Few young people can expect to have a job and stable income. Lots White collar workers need to play the stupid LinkedIn game, update their resume and « advocate for their own jobs » or else they will have problems.
But even plumbers are not sure to keep their jobs long term. Everyone predicts that there will be no stability and hates it.
4) I imagine that a lot of people at the bottom quantile income (which apparently increased) is now just people on a mix of welfare and gig work so their status is low and they probably don’t like the economy.
5) I think some things might not be right in inflation and gdp calculations. Maybe check the recent palladium piece on GDP.
Housing has only worsened a little and is probably offset by the decreases in the prices of other things. People are still spending a lower overall fraction of their salary even if they're spending a bit more on rent. Maybe young people are mad because homeownership has become somewhat harder?
Agree with the points about status and job stability. Status is an under-appreciated aspect of human happiness and any attempt to assess why people are happy or sad without taking into account status is incomplete. The fact that much of life has become an endless grind for the same position in the status hierarchy certainly doesn't help either.
I think your point about food is very spot-on. The fact that we can now buy a cheeseburger at Wendy's for $3 doesn't make anyone feel rich, even though this cheeseburger probably cost 1/10th as much as a % of personal income as it did in 1960. It should be something we feel grateful for, but it's invisible to us.
Same with TVs. Nobody buys a $250 TV and thinks "wow, this would have cost $2,000 in 1980".
It's like another form of loss aversion (economic losses feel worse than economic gains feel good). Price inflation stings a lot, price deflation means next to nothing to us.
In fact you can also see examples of when price deflation gets significant, people interpret it negatively instead of positively. "Oh, so I'm supposed to feel good about getting $5 t-shirts from Amazon that are made with slave labor in China? From a delivery truck that spews greenhouse gases? No thanks."
Many people find it easy to make criticisms of predatory capitalism when prices are high (Blackstone bought all the single family homes) AND when prices are low (Jeff Bezos made $200B doing all these supposedly bad things). There is a persistent negative bias related to anything financial, and many can easily create just-so stories about whatever aspect of the economy they want to complain about.
Maybe this persistent negative bias related to anything financial is there a revealed preference of the masses, and since we live in a democracy, maybe we should change society to pander to those biases. This country belongs to the majority.
I don't understand, are you implying that the masses are revealing that they dislike the concept of money?
That's not what I meant. I'm using the same kind of definition used by OP when when said, “There is a persistent negative bias related to anything financial.”
If I understand correctly, the OP was saying:
If something is expensive, it's percieved as "unattainable" and a sign of a declining world.
If something is cheap, that low price is percieved as being "enabled by immoral exploitation" of the earth or other people (which is also a sign of a declining world).
I think he was claiming that people have a reflexive negative opinion whenever money comes up at all, in any context.
if this is what he meant, I don't think any specific preference is being revealed (except maybe "we should structure society so as to never talk about costs").
What does this mean?
And this is why I'm disappointed this article just trusts the inflation number and goes no further. I guess this is not his expertise, but I'm kinda expecting more dive to what exactly are in those basket of goods.
Number 2: maybe some classes of people in society actually do deserve to have greater social status. Maybe it's not just a matter of "playing games." Maybe the 401(k) holders and long time homeowners have received unfair, unearned status advantages.with the help of a pliant government, and maybe these injustices should be reversed.
Hypothesis (somewhat, but not entirely covered): lifestyle creep in choice of cities, availability and quality of housing
As millennials and Gen Z grew up, they were used to the lifestyle afforded by boomers that were established over decades. Air conditioning. Newer cars. Living in nicer neighborhoods. Ignoring the fact that many boomer families once started in broken down houses in bad parts of town.
Lifestyle creep is further accentuated by the housing being made available. On housing, when you do get new units of housing, that housing stock is usually brand new, huge houses and expensive. Or apartments that are luxury and with dog walking floors and social spaces, when the boomers lived in a room with no windows in someone’s basement for 10 years.
But - the Brooklyn effect covers this slightly, but young people moving to ANY city makes them feel more poor / unable to afford housing. Their parents started up with a starter home in Toledo, Ohio, for $80k. That starter home is still there, and still costs the same (or less, with inflation) because no young person wants to live in Toledo, Ohio. They all move to Cincinnati, Minneapolis, and Chicago. Meanwhile the people that grew up in Chicago, Cincinnati, and Minneapolis all move to LA, Boston, and Brooklyn. The lifestyle creep of moving to expensive cities impacts all cities as ghost towns are created across the US.
So, while rent in Boston is $3,000 for a 1 bedroom apartment in Boston, that same $3,000 payment would get you a brand new $300,000 house in Michigan. They just don’t want it.
So… Why don’t they just move to Michigan and buy a new house? Because millennials and Gen Z would rather cut off their own ear than give up the lifestyle creep of living in a big city. They’ll list 100 reasons why cities are better, but also complain about bad economics.
If we took everyone that was complaining about housing and made them all move back to the dying ghost towns, the financial vibes issue would be over.
If I were to try to prove this with a chart, I would show a few things (yes, this data probably doesn’t exist):
Air Conditioning in housing chart by age, by generation. (I expect up, indicating nicer living conditions)
Average population density of primary residence, by age, by generation. (I expect younger generations moving to cities drives this much higher)
Square footage of new housing over time. (I expect always increasing)
% of high school graduates staying in city of high school, over time. (I expect lower over time as people increasingly go to far away colleges in nice cities where they stay).
This is a great article exploring the nicer homes themselves which accounts for 1/2 of this, and the other 1/2 is everyone generationally relocating to denser / more expensive cities.
Agree about the location creep.
It seems like housing prices really have gone up, because the same house in the same location in suburban Boston costs 4x what it did in 1970, adjusted for inflation.
The problem is that it's not the same location. That area is now much more valuable in terms of access to employment and amenities than it was in 1970. Back then, the house was far away from everything (car ownership was less common) and on the edge of the urban area. Today, the urban area completely surrounds it and it's quite a bit easier to get around. So at least some of the rise in real prices is explained by the rising real value of the land the house sits on.
In some ways, a better comparison would be a house on the new edge of the Boston urban area, several miles further out. I'm sure that one is more expensive in real terms, too, but the increase is going to be quite a bit smaller.
Alas, it would be over latgely because the lower pay would mean the numbers matched the vibes. Remote work changes this, but ... Nowhere in the US is super cheap, and I don't assume my town is in a Goldilocks position.
That’s true with many roles but not all. I moved from HCOL to LCOL and maintained the same salary. My wife as a nurse earns less. It definitely varies!
>If we took everyone that was complaining about housing and made them all move back to the dying ghost towns
It seems like you haven't considered the issue of what people would do for work in these dying ghost towns. How would they make money? The good-paying, high status jobs are concentrated in the cities that you mention. And no working remotely apparently isn't the answer either, as employers seem to be moving away from 100% remote
Young college graduates need to be where career opportunities for young college graduates are. The people who can truly just live anywhere - whose presence in the most desirable areas is in some sense extravagant - are retirees.
One piece that I would investigate is "stability": the sense that one's financial position is more precarious than in the past. I've seen a perception that jobs are less stable; one can't count on a "good job" to last for one's entire career in ways that it used to. If people are renting rather than buying their homes, there's the expectation that rents will go up, and the possibility that they'll get kicked out for random reasons like the owner selling. Healthcare costs are purportedly going up, and that is something that has very high variance. This has direct effects in that people are considering the cost of risk.
Also, I think you're downplaying the "30 years ago, people under 35% had 11% of the wealth; now it's 4%" statistic. That's a lot more than just demographic changes would account for. Your counterbalancing statistic only covers since 2019, and is also a relative change rather than an absolute one.
And, finally, I wonder if the average mortgage costs are accurately portraying the true average rather than just the cost for homeowners who haven't yet paid off their houses. Has the proportion of 30-year to 15-year mortgages gone up? Has the frequency of moves gone up, such that people are in their mortgages for longer? What does the average, including homeowners who have paid off their mortgages, look like?
Mortgages may be arduous at first but, unlike rents, over time they ease off due to inflation and salary rises. So there's the question of how far into their mortgages millennials are on average, especially since these days they may start them when older than their parents did.
Indeed, that's a good point!
Also, two other pieces of the housing picture that I think are worth considering. Buying a house means paying a down payment, and that's not accounted for in the mortgage payments. What are the median numbers for when people acquire sufficient liquid savings to pay a down payment? (I doubt this data is easy to get as such, but data on when people buy their first house may be an adequate proxy.)
And mortgages aren't the entirety of the ongoing cost. My impression is that the fraction of housing that comes with large HOA payments has gone up substantially, particularly in the critical category of "townhouses". That could add another 5-10% on top of the mortgage payments.
I think you are absolutely on the money when you talk about stability. Even if income and opportunity remain high, people have to "hustle" more to take advantage of that opportunity. People have to be more proactive, more imaginative. The economy is forcing people to be more entrepreneurial.
Apparently, the public hates it. They may be willing to give up GDP growth and personal income if it means greater life stability. I can't know that for sure, but there's no way for us to gather data about that, because the option is never on the table. The population is simply FORCED to accept a more efficient economy with lower personal stability, and then economists smugly say "Don't worry, if you were ever given what you say you want, you wouldn't like it."
I think this is partially what Scott was gesturing at with his Brenda example; the amount of effort required to get to even a better place feels disproportionate versus the stories I hear from the earlier generation (messing around until mid 20s then hopping into a job, staying there for life, gradually getting promoted). I think a lot of people would trade lower consumption for that stability, lower prerequisites, and cheaper housing.
I have personally just sacrificed economic considerations to move to an organisation with a reputation for stability and loyalty to employees. I have a mortgage and two kids and that's hugely valuable to me, much more so than e.g. an incremental overseas vacation.
Stress per dollar seems like an important metric. Scott's example about the person who had to wade through application sewage to get to $50,001 salary by 35 seems like a pretty obvious example that he then oddly says supports the opposite?
Niche topic but I wonder if this impacts the increasing standards for med school, my friends who went into medicine school for MD/DO seem to have met much higher standards than their parents before they were considered competitive. I’m curious if the high stability of medicine makes it relatively safe harbor of a storm and therefore very competitive.
I will be honest and my vibes are low entirely because of the mortgage increase. I had everything ready to buy a house in 2021, and the housing prices rose so much I can’t afford one. I’ve been living in rentals for 4 more years than I expected. Sure, my rent only increased by 10%, but now I have a 3 year old who wants to play outside in a yard that I own, and instead we are in a tiny apartment with no yard. I’ll probably figure out how to buy a house by 2027, but 6 extra years of rentals makes this a bad decade for me even if my income increased by 50% over this time.
I agree with this. I was forced to sell and rebuy because of a work relocation and my monthly bill went up 25% for a house that cost 25% less. You really do feel that interest rate! (Went from a 2021 2.75% to a 2023 5.99 interest rate, home price from $860k to $603k, mortgage from $4k to $5.3k… includes some higher property tax rates but lower insurance rates)
It’s crazy! While my overall vibes are up, even though I’m well on my housing journey I feel the housing vibes too.
Easy explanation: people dont like higher inflation, even if wages are keeping up. Relatedly, people really dont like visible inflation, like grocery or restaurant prices
To explain further: people probably think that their 20% increase in wages from 2022 to 2024 was the result of hard work and skill, but the price level overall increasing by 20% in the same time period is unrelated to their wages
If I go by newspaper headlines, everything is getting dearer in price. So even if wages are going up, cost of living is going up as well, and so things feel like they're not doing well. So the economists can say "but stocks are booming!" and I can still answer "that doesn't help me buy steak which is now so pricey, a celebrity chef advised to switch to venison instead":
https://www.irishexaminer.com/food-columnists/arid-41751327.html
Everything getting more expensive is the very thing that inflation indices measure. Unless you disbelieve inflation calculations (which you could, but probably shouldn't, see the section where Scott covers this in the post), wages are going up faster than prices.
Agreed, I think this is an inflation problem + public goods decline.
Scott really covers nearly everything in these. When I hit "Inflation-adjusted rents have gone up 30% since 1985" I was ready to come in here and suggest that maybe there was some information being lost in averaging in rural flyover country together with major cities. But then I hit The Brooklyn Theory of Everything!
But... wait, I don't actually buy that city rents haven't gone crazy. We were renting in the inner-inner not-quite-suburbs of Boston for $1700 in 2021. When we checked back in 2024, it was at $2800. Pretty sure that's roughly in line with overall Boston rental price movement. Is NYC maybe not the best to look at because of all that rent control I always hear about? (This sounds so simplistic that it has to be wrong, and I know nothing about NYC, but I have to throw it out there).
I see that the final conclusion still lands on housing-in-cities anyways, but I think the argument for it is still even stronger than these sections suggest.
>But even if these three factors are really making things worse, so what? Have previous generations never had three factors making things worse?
I think housing is the single most important thing (if war and famine are safely out of the picture) to people's feeling of economic security. If two of those three factors are housing, that's gonna go a long way.
Good point on the rent control distortion. If most of those rent-controlled apartments are locked up by older people who will never give them up to the younglings short of death, well, the boomers mostly aren't dying yet, so the rents that matter to the "vibes" are the average of the non-rent-controlled apartments, not the average over all rents.
I second the recommendation of redoing that part of the analysis with "elite" cities that don't have much in the way of rent control.
It may not just be rent-controlled apartment.
If you look into the rents in Germany and Switzerland (the ones I know about), there are two very different measures of rents, even after adjusting for flat sizes etc:
1) The median rent of a person who lives in the city.
2) The median rent of a person who moves to the city.
I believe that the second one has absolutely skyrocketed in the last 20 years in all major German and Swiss cities, while the first one has only moderately increased. The reason is that rents are sticky. People who have lived in the same flat for 20 years have seen limited increase of their rents, whereas rates for new tenants have increased dramatically.
If you look into official statistics, as Scott did, they will probably measure 1), and see a moderate increase. But for young people, 2) is much more relevant.
I don't know whether it is the same for large US cities. The housing markets are different, for example in Germany (and Switzerland?) there are much fewer home owners than in the US. But on this side of the Atlantic, I think this is a very major factor for why many young people are struggling with their rents.
Yeah I'm expecting more analysis on "real price" that the youths have to pay. I don't even know if someone has collected that data, but alas.
I'm a millennial, and I feel like my generation led the charge on the "everything sucks financially" front and I was a part of this cohort for a long time. Partially this was based around graduating from college around the Great Recession, which did feel like a particularly hellish time to be starting adult life. But even if it actually wasn't, maybe achieving financial consciousness at the exact moment that the economy cratered greater than any time in living memory changed the way we think about financial security forever. One of the big cultural differences between Gen Xers and Millennials (at least it seems to us millenials) is that Gen Xers struggle against boomers was always about not succumbing to the mailaise and spiritual blight of the steady office gig and the house with a white picket fence. Whereas for millenials, maybe its about finding any gig or housing situation that is secure enough that it can't be washed away by economic catastrophe. And that's a much higher bar!
Personally, even though I am doing okay, and have even reluctantly begun investing in the market as I have more liquidity, I find I have an anxious compulsion to check my bank account to make sure I have enough savings to pay rent and groceries for months if suddenly the market completely crashed (and I'm self employed!). This may be a unique psychological issue (I'm certainly working on it) but if you imagine some version of this anxiety hovering over everyone at all times, it might explain why the vibes always feel bad. It would certainly explain why it got so much more acute after Covid, which was, depending on your age, either the first or second major unprecedented economic disaster and period of mass uncertainty in everyone's living memory. Boomers lived under the fear of the bomb, we live under the fear of economic collapse.
Yeah, I don't know if you're trying to be optimistic or not, but this is definitely the sort of thing that contributes to the general vibe of doom and gloom.
To be clear, it's definitely legitimately the case that people who graduated into the Great Recession (including the years after the recession was officially declared over but while the labor market was still weak) had a much harder time finding jobs and earning money, and there's some research that suggests that these effects are sticky (because the amount you earn in your current job affects how much you can ask for in your next one). The problem is that, per Scott, the beginning of the vibecession coincided with the *end* of the Great Recession, not its beginning. Any Great-Recession-linked theory of what's going on has to somehow explain that.
"Vibes" probably lag the economic data, in part because they're based on memories of what one's finances were previously like and the tendency to distrust recent changes, and in part because they're based on savings (and housing, and etc.) from previous years. It seems entirely plausible to me that people went into the Great Recession with enough savings and stability and hope for the future to carry their "vibes" through most of it.
Could millennials entering the job market and hearing that the recession was officially "over" but not really feeling that for several years (in my case, almost a full decade after I graduated, but I admit I am an outlier) explain it? Everybody expects to be broke the first couple of years out, its seen as something of a rite of passage. But when you are closer to 30 than 20 and still only reliably making +- 20k a year, it quickly stops being romantic. It makes sense that it would hit around the time the median millennials were hitting the expected transition point from "young" adulthood to full fledged adult, where you are expected to be making enough to support a family. Suddenly that sense of doom that was abstract before feels a lot more acute.
I'm a late boomer who graduated during the first Thatcher recession...
>I have an anxious compulsion to check my bank account to make sure I have enough savings to pay rent and groceries for months if suddenly the market completely crashed
I thought "have 3-6 months of living expenses in savings in case you lose your job" was a pretty standard bit of financial advice. I wouldn't call that anxiety unless you're irrationally worried about losing your emergency fund.
Well it used to be a year-and-a-half, I've slowly been forcing myself to invest part of that so it grows over time. Although now I'm pretty sure the AI bubble is going to pop and take all of that with it, so I'm not super hopeful.
Do you have recommendations?
Thank you! Got the house, fortunately. I've heard silver recommended before, so maybe I'll look further into that. It's too bad I never got further than "looking into" I-bonds during the pandemic.
Something that gets hidden in the aggregate is that consumer sentiment among democrats is much higher than among republicans from 2021 until 2025, and then they switch. This seems relevant.
https://en.macromicro.me/charts/110438/us-michigan-consumer-sentiment-index-within-political-party
You use median values to account for potential skew form outliers, but can median values correctly account for bimodal distributions? Basically, I wonder if there are haves and have-nots and a large chasm between them, which could explain why the data appears fine but there’s still a vibecession.
This theory is frequently called the “k shaped economy” where the rich are doing much better (and propping up the trends) but the poor are doing much worse.
Scott tries to account for it with the splits by generation, which I think mostly covers it, unless boomers are equally K shaped as millennials/gen alpha.
I think it’s just lifestyle creep/higher expectations. We all grow up expecting to improve from how we were raised. That’s why young people think you have to be a multi millionaire to be considered successful.
Scott accounts for this in the "Fine, Let’s Talk More About Inequality" section, where we see that the lowest quartile increased its real wages by more than any other quartile from 2015 to 2025. Of course this is just about wages; the proportion of assets as parts of total wealth has probably boomed for the top quartile in that timeframe as they benefit the most from increases in asset values.
Even in high-inequality societies, the income distribution is still roughly unimodal. In the Census Bureau's household income data, they bin into 9 income levels, and the peak in the distribution is at 100k-149k, which is above the median. Unless you're arguing that the people in that category are the have-nots (as Mike Green recently, and incorrectly, did), it doesn't seem like that's the right story here.
What about the theory that the Great Recession caused the economy to perform under trend until 2015-6, when the housing market picked up and became unaffordable? More recently, the job market has felt frozen, as AI is funneling investment into asset prices with relatively low increases in hiring. Because of the vague nature of the claim, explanations can’t be dispatched individually by pointing to timelines.
Imagine you're a young college-educated worker in America.
Geopolitics says your labor will be devalued by China. Tech companies say your labor will be replaced by AI. Billionaires are building zombie apocalypse bunkers. America is clearly in a more heated political climate.
Young workers may have the same dollars in the bank. But, they're saving in anticipation of doom. Not all money is created equal.
You can root cause this anxiety to 'negative media', but quarterly reports and technology white papers aren't media. They're our best predictors of the future (as bad as they may be) and they're reinforcing the same negative narratives.
But young people aren't saying they're that worried about China or AI. There's a lot more talk of billionaires and immigrants and inflation than of either of those things. Maybe these things feed into a general sense of doom that makes people blame the politically convenient stuff?
Post-versailles Germany blamed their problems on the Jews. The average individual only feels pain and a general sense of dread. Few introspect on where their anxieties come from. Societies under stress find convenient scapegoats. Story as old as time.
This comment nails the issue, though not in how it intended. Every generation faced the threat of horrible doom. The Great Depression, Fascism, Communism, nuclear Armageddon, Vietnam, overpopulation, pollution, race riots, stagflation, global ice ages, global warming, Japanese imports, outsourcing, and so on.
The difference is back then we lived in the real world. All the threats were background noise that we simply ignored. We were busy living. Today, we are immersed 24/7 in social media fanning the flames of catastrophe and economic pessimism.
This is where lack of community really comes in. If you're spending time with real humans, that's a buffer against the constant onslaught of news. But also, our level of trust in institutions is rightfully in free fall and the fragmenting of meaning and shared narratives also doesn't help.
But I like y'all *better* than real humans...
"it's the first derivative, stupid". Yes, people have much higher standards of living today than they ever did. What they don't have is a belief that tomorrow is going to be better than today.
Huh. If you think the singularity is going to increase productivity by orders of magnitude, doesn't that offer the possibility of a better tomorrow?
Singularity is not going to add more real estate at the French Riviera.
But more importantly, singularity might increase overall and average productivity, but no one is promising that it will be equally-ish distributed. That's part of the issue with the computer revolution, the gains were not widely distributed. Those who were able to use it increased their standard of living manifold and those who weren't feel like they have been left behind
Inequality is not the problem; poverty is. Poverty is rapidly declining worldwide, and increasing productivity is a boon. Paul Graham said it better: https://www.paulgraham.com/ineq.html
I don't have statistics for any of these, but there are two additional forces that spring to my mind: the popularization of political and ideological beliefs that emphatically believe that good and ill flow from systems, not individuals, and, frankly, people being bad with money.
Parts of the heavily left-leaning internet political community are all-in on the idea that most problems are systemic, and require systemic solutions. Speaking in favor of individual-scale solutions loses you status. Of course, many problems in life are systemic, and it's useful for your model of the world to include this, but online left-leaning political culture can lead to a metastisized feeling of helplessness, as every Bad Thing becomes a Systemic Bad Thing, and therefore outside your ability to control. And then you get in-group status for echoing and reinforcing this notion.
The problem with the above theory is that I don't have numbers for it, and that I'm only really familiar with it in the context of left-leaning spaces. I feel like there may be some equivalent concepts in right-leaning spaces (deep state elites? Market effects of immigration?) but I don't think it's quite the same.
As for money... Lots of people are bad with it, but don't want to hear as much. I only have a small, anecdotal sample, but I absolutely know people who have made fairly typical hellworld claims about the state of the economy, but on further examination are actually buckling under very expensive rent/car/lifestyle choices. I want them to have it all - the comforts they enjoy, and enough surplus income to feel secure with them. But seeing this play out IRL definitely made me take online discourse about economic problems with a bit more salt.
If one person is bad with money, it's an individual problem, with an individual solution. If 10 million people are bad with money, it's a societal problem, with the societal solution.
The equivalent external locus of control narrative in right-leaning spaces is religion. And there, the external locus of control is positive, not negative: God will ultimately win and "all shall be well."
Speaking in favor of individual-scale solutions loses you status there too, at least in some circles. It's seen as trying to control things yourself instead of surrendering to God's will.
As for mapping that onto trends, maybe the decline in religion means fewer people now have the comfort of an optimistic external locus of control, but they never developed the agency necessary for whatever individual solutions might be available to them, and so are left with a pessimistic external locus of control?
A major contributor to the vibecession may be that millennials are reaching their late-30s and 40s—traditional ages for stable adulthood, homeownership, and family formation—yet many are still renting and have little accumulated wealth. Renting at 25 feels normal and temporary; renting at 38 with children feels insecure, stagnant, and far behind the life trajectory previous generations achieved. Even if rent-to-income ratios haven’t worsened dramatically in recent years, the psychological meaning of renting changes sharply with age, producing a sense of failure, instability, and blocked progress. This cohort-level disappointment aligns with the timing of the vibecession and generates widespread pessimism not captured by conventional economic metrics.
> yet many are still renting and have little accumulated wealth
Which is because they live in expensive luxury apartments in expensive cities!! They should seek high paying employment in low cost of living regions!
Isn't the whole reason why high-cost-of-living regions are like that because they're where the high-paying employment is?
+1
I’m sure that’s a contributing factor for those people that are successful, but many college graduates move to big cities just for vibes/politics/social reasons.
No. It is *a* reason, of course, but cities offer more than jobs.
The attachment for Gallup index redirects to your local directory. Please replace that.
Have you looked at leisure time?
Subtracting hours worked from hours per life doesn't really measure "free time". What I've been noticing in my students' careers (not in USA) is that for the same hours on the clock, and the same dollars per hour, you need to spend more time actually working. Sometimes it's as direct as work responsibilities spilling over to free time, but often it is things like
1) They used to teach you on the job, on the clock. Now, you have to take classes outside of the job to stay competitive.
2) Commute hours raise dramatically, which is also unpaid time you spend for the job
3) Job is more stressful, requiring more time for basic recuperation (or even money for therapists) before you can actually spend time on what you want.
4) Worse working conditions means more workplace-related illnesses that take money to treat
5) They used to give you uniforms for free. Now, you have to buy them
Factors like this would look good on the lines on the graph (you spend more real post-inflation money on goods and services for every hour worked), but it is much more miserable life for you. You de-facto work more, and a lot of the money you spend is not 'discretionary income' for hobbies and hookers, but cures for the new disease that merely brings you back to neutral.
This was not in USA, so those observations directly might not apply, but maybe something like that is happening in the USA? "Shrinkflation" of labor?
Have commute hours risen? I vaguely remember graphs saying the average commute has stayed roughly the same.
What country are we talking about?
The United States - but it's only a vague memory; the graphs could be wrong or out of date or qualified in a lot of ways I forget.
Well, I specifically said that this is not about the US, and this list was intended to be just an illustrative example of the kind of thing I'm talking about
If urban housing costs have risen I'd be shocked if commutes hadn't too, since there's an inherent sliding scale between them.
It's social media. "It's the phones" and "it's negative media bias" sit downstream of the impact of social media on the median mind. We figured out that pitting people against each other by increasing their negative emotions is the best way to generate engagement, and as social media reached critical mass this drastically changed the way people perceive the world around them. Then, regular media followed in their footsteps (which explains why your last graph shows the start of the decline in 2013). The one thing these two businesses have in common is that they live and die by ad revenue. Your best lever to increase ad revenue is to add users and then make them spend as much time as possible on your platform. In other words they've turned people into dopamine crackheads and amplified whatever latent obsessive tendency they had. It used to only be young people, but as older folks started using Facebook en masse, we started realizing just how easily they'd get radicalized.
Whenever you discuss the Vibecession, do you stop to wonder where people get their vibes from? Isn't it likely that they get them from what their algorithms are serving them on their phones, or from their 5 closest relationships (most of whom probably get their vibes from their phones)? To the average person, it doesn't matter that, factually, real wages are up since the end of the inflationary crisis of 2022-23. It also doesn't matter that the inflationary crisis is completely over by now. You'll still hear them talk about how much more expensive their lettuce is at the store than last year, and they'll feel validated by saying that kind of nonsense because everybody else is saying it. In your community, do you really want to be the only person who says "No actually it's highly likely that your grocery bill hasn't materially increased from last year"? I mean, go for it if you want to be thought of as a pest or some kind of bootlicker. Because that's how vibes work now: either you complain all the time, or you exist in a bubble of numbers that nobody should trust (except for the mostly made-up numbers that they see on social media).
Anyways. It's social media.
edit: I'm being cute by emphasizing social media as the only cause in my post, but of course it's a multi-faceted topic and you did a great job bringing together most (if not all?) of the potential contributors to the vibe crisis.
I've been wondering lately about this lettuce point. The Dems are hitting Republicans hard on affordability right now, and I see all of these replies to Scott Bessent's posts saying "clearly you haven't been to the grocery store lately, it's an apocalypse". But I really don't think it's wildly different in aggregate from last year? (besides certain things like coffee that were tariffed).
Good point on the coffee bit. Coffee and cocoa are two commodities that have skyrocketed in price over the past couple of years, including 2025, and they're closely linked to both daily life (coffee) and fun (cocoa/chocolate). They're highly visible items that people who care a lot about inflation might now over-index on.
Upvote this comment. This is the best comment I have read so far
Great summary on an interesting topic.
I do think the housing analysis comes to a conclusion too quickly. All else equal, I imagine consumers are happier to buy a low-priced good on credit at a high interest rate than the reverse. Especially since you get the option to refinance your mortgage, which historically many Americans have taken for granted. In 1985 the 30y fix mortgage rate was 12%, and it fell basically in a straight line to half that over the following decades. So, all the people buying houses in 1985 with leverage saw immense capital gains over the course of their lives all while their financing cost constantly cheapened. Sounds pretty easy, right? Should also mention that from 1985-2025 the mean house price:income ratio has doubled, making it harder to get approved for any mortgage today.
Also, regarding the section about young people wanting to live in cities, I think this might be related to the confusion about how median real incomes have increased 33% over that time. What if the distribution of jobs has merely been shifting to higher cost-of-living areas e.g. Midwest manufacturing declining while big-city programming jobs are on the rise? In that case, although it would be true to point out that median income has outpaced the CPI index, it might not be true that the median individual has experienced income growth beyond their own inflation (as in your example if you move from Boston to NYC).
I think you were a little dismissive on the share of wealth by generation section which does demonstrate the issue. The complaint of not being able to own a home or general inequality is certainly based on wealth. The entire institution of law and law enforcement is based on ownership, protecting property rights. Rule of law and protection of property rights is a fundamental principle of investing/financial markets which is a massive driver of economic sentiment and GDP growth. You can show wages and prices all day long but in the long run those things are a drop in the bucket compared to ownership. A job can be taken away at any moment, property is protected (or at least prolonged) in the courts.
"But do you really compare your age cohort to other age cohorts? How do you even mentally calculate the total percent of wealth owned by old people?" These are excellent questions and do highlight that this would be difficult to measure, but that doesn't mean people aren't doing it. Boomers owning 23% compared to millennials owning 4% at the same age is a massive difference, especially because wealth grows on an exponential scale while every graph in this post on wage growth shows a linear increase. We are constantly comparing ourselves to one another, our parents, grandparents, etc. When people are upset by inequality they generally aren't pissed that a doctor has a nice house because while it may be unequal, it doesn't feel egregiously unfair. But when they see people in the tech sector with hundreds of billions that control politics, society, and a large chunk of our daily lives, it doesn't matter how much smarter or harder they worked, there's absolutely no way that can be fair.
Getting to the top is about ownership. It's been that way for hundreds of years. If you don't own things, then you both feel like and are actually at the bottom of the socioeconomic hierarchy. Even if you are better off with more money, more material goods, and better health outcomes than previous generations, in comparison to everyone else in society you are doing much worse.
He touched a bit about it by saying that boomers just have more people, but then lacks the follow up to calculate wealth share per capita per each generation. I think that trend will reveal something.
I was going to jump in and shout "No, that home price data isn't adjusted for the size of housing!" like I usually do, but luckily you used the Case-Shiller index, which looks at changes in the prices of individual homes over time, so we don't need to worry about that *too* much. There's still the problem of homes being renovated and expanded, but that shouldn't make much of a difference.
But anyway, let's try doing that. This article contains a measure of median new home sizes over time in the US, using Census data: https://www.bankrate.com/real-estate/average-home-size/#smaller
We can easily get the typical price of a new home from FRED: https://fred.stlouisfed.org/series/MSPNHSUS#
Using these, we can estimate that the median price per square foot in 1973 was $151.39 (in 2024 CPI adjusted dollars, https://fred.stlouisfed.org/series/CPIAUCSL#), and in 2024 it was $195.48. Not good. This appears to largely be explained by the decline in home size growth since 2015: if growth had kept up at the 1973-2015 rate, new homes would typically be 2,734 square feet, and the price per square foot would be $153.44, almost exactly what it was in 1973. Naturally there's also the question of "Has the price per square foot of a *rental unit* also gone up?" but I don't have the data for that.
It's not easy to reason about why this happened. Maybe restraints on supply got worse around 2015 (I think changes in zoning rules have been fairly gradual, so this seems implausible), so people were forced to turn to cheaper, smaller homes. Maybe preferences changed in some way. Maybe this was some weird, delayed effect of the Great Recession. Maybe the rise of single homeowners kicked in somehow, driven by lower marriage rates. I don't really have anything insightful to say on the "why" question at the moment.
edit: Price per square foot over time can be seen here: https://x.com/jack_whitcomb_/status/1996668310042095979
The part about opportunities now requiring more effort to achieve thanks to reduced friction seems important to me. Today, you have to spend much more time applying on LinkedIn and padding your resume to get a job, swiping on apps to get a date, etc. There's more zero-sum competition for whoever can spend the most time doing these otherwise pointless activities because whoever does it the most gets the opportunity.
This is not equivalent to what people are saying, as you noted, but most people don't think all that deeply about anything and instead in terms of shallow associations. In this case, even if someone is not any less likely to get a job but they have to put in more effort to get it, they might feel like the job market has become worse which feeds into the feeling that the economy as a whole has become worse. When you add in negativity bias in the media, it's easy to see how such sentiments can become very popular even if the data doesn't agree.
1 - I think you're way too quick to take CPI as "correct". The task the BLS is given (to calculate the growth of the cost of living for everyone in America in a single number) is frankly impossible, although they do a really good job, setting the gold standard for government stats internationally.
In my mind, the main problem is that they are not accurately reflecting the cost of "participation" in society. According to the BLS, new car prices have gone up 20% in the last 30ish years (since 1990)--basically zero annualized. But this is because cars have improved so much--they are safer, air conditioned, you can play music in them, etc etc. In reality, a Honda Accord (middle class car) roughly doubled in price during that time, and a Ford Mustang tripled.
I don't think the BLS has done anything wrong--the product really is better. But there's a human psychology issue of, people want to participate in society, and all they feel is the cost of that. Yeah, the technology is better, but the feeling of buying a new car is pretty much the same as it was in the 90s--you don't want a new car without AC or safety features (not that it even exists really), you want to buy the car that everyone middle class buys.
2 - Relatedly, there is a huge issue of envy that exists only because of the internet and phones. It is now shoved into everyone's face how much money others have. Everyone with a meaningful following (podcasters, bloggers, influencers) is basically rich, and people have parasocial relationships with these figures in a way no one did in the past. So in 1990, you looked around, and saw your lifestyle compared to your friends and neighbors in your local area. In 2025, you open up Instagram and see the lifestyle of a jacked 27 year old "forex trader and crypto entrepreneur", and compare yourself to that. There's a great article (I forget if TLP or you or someone else wrote it) that argues this explains political polarization in America as well--different lifestyles in different regions are suddenly accessible to all, when they weren't 30 years ago.
A Honda accord is a Japanese car! I don’t have the stats for used cars (it’s tricky to think about the price of a used car over time), but in any case the price of vehicles has gone up a lot more than is reflected in CPI, because the technology has improved.
And speaking of the safety of SUVs, vehicles larger than the M4 Sherman tank, they might be safer for the driver, but they are disastrously more dangerous for everyone else: pedestrian deaths in the US are /up/, while in most of the rest of the world they keep dropping (and that's total deaths and not deaths per distance walked which paints over the scale of the problem - you wouldn't dare to walk on many American streets)!
Basically, the perverse incentives (for companies to sell SUVs, for individuals to buy them so as to be safer in the crashes with other SUVs) increase GDP, but decrease the quality of life both with their direct ("having to" choose a more expensive model of car, paying more for the gas because it consumes more) but I would say especially indirect (from "soccer moms" having to drive their kids to hobbies because the kids don't have independent mobility, and being unable to go to a bar with your friends to spend the evening because you can't walk home and you can't drive home drunk, to health consequences of not getting any exercise while commuting) effects.
The situation with cars is largely if not completely unique to the US - at local municipal level at least I am actually getting mostly good vibes in many places as the mistake of ever embracing the automobile is corrected and cities are becoming safer, greener, quieter, offering more nice human spaces, capable of enabling independent mobility for more people, making commute easier and cheaper - but looking at it from the outside, cars and SUVs in particular seem to be a gigantic drag for the welfare and personal economics of the Americans (as it represents a growing "mandatory cost for participating in the society" as the person upthread mentioned, and that cost affects less well-off disproportionately).
That being said, it's just one aspect of general trends of perverse incentives that affect the globalized economy (other commenters have brought up enshittification which exists almost as mathematical necessity, one even suggested most economical activity is actually negative-sum), and I would even say other aspects of human endeavour (like dating, or for some inane reason replacing books and notebooks and pencils with tablets in schools, which I personally expect to be bad for learning, but that Moloch wants us to do for some reason, like "wanting to appear modern" or whatever). In my country (Finland) it's definitely not just vibes with record unemployment and poverty, and being forecast to be the sole developed economy that does not grow (on account of the most right-wing government in our history trying to do Thatcherian economics just in case it happened to work on the 100th attempt), but I do feel the same sort of bad vibes as Americans are feeling.
Also, the article claims "bad economies are exactly when you would expect next year to be better (through mean reversion)", but this ignores the possibility for long-term trends that would override short-term fluctuations. For instance, the GDP growth of the last century has in large part been fuelled by burning of fossil fuels /while not pricing in the externalities/. Well, that bill was inevitably going to come due, and while I'm more optimistic than some others (for instance, I talked about good vibes regarding cities becoming less dependent on cars, and I believe this to be a win-win-win arrangement economically, environmentally, and in terms of quality of life for the growing number of people living in cities, or indeed generally reversing the trend of "enshittification" of everything, thus increasing QOL while at the same time putting the economy on more economically sustainable footing), of course things like these affect people's vibes about their future economic well-being.
Heck, if you're an European and participate in discussion forums, Americans will voluntarily tell you in detail how poor you are, constantly!
Have you considered distributional effects of housing inflation? i.e. The cheapest rents are growing fast, but the average is moderated by the expensive rents growing very slowly?
I've noticed this happened to housing prices in my city, Kevin Erdman has a more rigorous argument: https://kevinerdmann.substack.com/p/im-afraid-the-economy-isnt-improving
I think this is exactly the point.
Inflation is not the same for everyone, and trying to produce one number skews the picture a lot.
How do you calculate inflation?
Well, you see what people spent money on, and how much. For each product/category you look at the price increase relative to product improvement, if there is any, and that is how you get your inflation.
But in our economy, the top 10% drive 50% of consumer spending! They buy different things than the median household!
So inflation could be negative for top 10%, high for median household, and still the measured inflation could be low.
And indeed, we see much higher rent inflation in places with lower rents. And this is after we took into account that people are downgrading in order to afford those rents.
So someone who expected to live in a house has to rent an apartment, a person who expected to have an apartment have to get roommates, and one who expected to have roommates have to stay with his parents or doesn't get to live in that city at all.
This. See Mark Blyth’s “Inflation: A Guide for Users and Losers”
How do the median rent/mortgage prices match up to what they're actually getting for that money? I can't remember the exact numbers, but talking with my grandparents and parents about what their first houses(considered small and cheap at the time, but detached single family homes in town with a small yard) cost compared to what you could get today for that after accounting for inflation was pretty stark. Would the median rent show if prices went up overall but the proportion of people in the cheapest options increased alongside, or are split between more roommates or something along those lines?
It seems difficult to argue that housing prices haven't increased significantly somehow when you look at what the last couple of generations actually bought at similar points in their life compared to the current ones, but I haven't seen any large scale numbers about it, it's possible I'm judging too much based on anecdotes.
I would also note that that detached single-family home didn't have a HOA payment, whereas the equivalent these days is a townhouse with (around here) several hundred dollars per month of HOA payment.
> "(does this prove that the root cause of rising college prices was government loans all along?)"
Can we get a Much More Than You Wanted To Know on this topic please??
Scott already did that:
https://slatestarcodex.com/2015/06/06/against-tulip-subsidies/
Although it's over ten years old now, so it may be ripe for an update or a follow-up if Scott were inclined to do so.
Related to this, one of economist Arnold Kling's often-repeated arguments is that there's a widespread pattern in modern public policy of subsidizing demand while simultaneously restricting supply. Which often seems to have the effect you'd naïvely expect from that combination: the stuff doesn't actually become all that much more accessible, but it does get a lot more expensive.
I think he first formulated that complaint about housing policy especially in the pre-2007 era, when the federal government tried to encourage home ownership by subsidizing mortgages while at the same time state and local governments were using restrictive zoning and planning approvals to limit the supply of houses to buy. Since then, he's also attributed the same pattern to higher education, health care, and a few other things.
I don't have a particular article by him on the subject handy, but his substack is https://arnoldkling.substack.com
I think you underrate the "Brooklyn Housing Theory Of Everything" due to rent control. Half of the apartments in NYC are rent controlled, and pretty much all of the public statistics lump together rent-controlled and non-rent-controlled apartments. So the aggregate stats don't look all that bad. But if you do not already have a rent-controlled apartment in NYC, statistics about rent-controlled prices don't affect your quality of life.
I suspect the rent control aspect of the "Brooklyn Housing Theory Of Everything" is also a contributing factor to the "all landlords are slumlords" meme. One of the hidden costs of rent control is that landlords of rent-controlled units in areas with housing shortages tend to be able to get away with being quite a bit shittier to their tenants than landlords where rent prices are at market-clearing levels, since if you move you lose your claim to your current rent controlled apartment and you're likely to have difficulty finding a new one.
There has been a graph floating around showing that Gen Zers now believe that $500k is the “minimum” needed to be financially successful. Expectations have risen faster than reality? And maybe that is caused by the internet always exposing us to the wealthier?
Scott, you linked to a file on your hard drive! The link after "disambiguate" goes to a file on your hard drive rather than to a page on the internet.
Good deep dive. Just one thing that struck me, though, about one of the bullet point takeaways is that even if you're a renter, Zillow and RedFin help keep you very informed on exactly how far away you are from being able to afford a decent home in your expensive metro. So....maybe that helps exacerbate the cost of living perception/reality disconnect.
The winners in the current economy are too busy winning to write about how they're wining.
Or, cultural leveling is lagging economic leveling.
To unpack that a little, the reduced friction for applying for opportunities means they are open to a wider range of people. Opportunities that used to go to well-connected people now go to grinders. But the well-connected people still wield cultural influence, which they use to complain that they aren't getting the same opportunities their parents did. Meanwhile, the people who are winning lack either the access or the inclination to share their stories.
This leans really hard on income levels and prices, but almost not at all on risk. Things like job stability, health-care tail risks, eviction risk, or how hard it is to get back into the middle class after a bad break (such as --- graduating into the GFC, getting laid off in your 50s, long-term unemployment) barely show up. You can be richer than your parents on a chart and still reasonably feel worse off if volatility is higher and the downside is harder to recover from. That seems like a big part of how people actually experience the economy, imo.
in my opinion it's due to the inevitable effects of late stage capitalism. the huge amount of student debt most college graduates are loaded down with - and for what? nobody cares about your college degree when hiring anymore -, the truly insane cost of healthcare and the cost-benefit analysis of how much bang for your buck you actually get for your healthcare dollar, shrinkflation, the Temu-ification of most products, all of this makes it feel like everything is getting shittier than it was in, say, the 90s. on the 80s cheap things were poorly made and expensive things were (usually) better made. now even expensive things are poorly made in China.
> nobody cares about your college degree when hiring anymore
Uh, yes they do. They wouldn't hire you if you didn't have one. It's just that it's not impressive, because everyone has one.
sure. but that's basically the same thing, meaning just having a degree is required to be considered for a job, but it's no guarantee of getting a "good" (well-paying) job. the difference between now and say, the 1960s/70s is getting a degree forces most people to take on crippling amounts of debt for predatory student loans. so this thing that's required but not helpful is the same thing that fucks you over for decades. can't win!
sure. but that's basically the same thing, meaning just having a degree is required to be considered for a job, but it's no guarantee of getting a "good" (well-paying) job. the difference between now and say, the 1960s/70s is getting a degree forces most people to take on crippling amounts of debt for predatory student loans. so this thing that's required but not helpful is the same thing that fucks you over for decades. can't win!
What is "late stage capitalism"?
According to Wiki: https://en.wikipedia.org/wiki/Late_capitalism
The phrase is from 1925!
So is 1925 "Late stage Capitalism"? I would guess not, at least not how you are using it. So, what exactly do you mean by that?
what i mean by late stage capitalism is this:
https://knowyourmeme.com/memes/cultures/late-capitalism
This article is kind of long, and refers to 3 books.
If I understand correctly, you refer to post-industrial globalized economy.
Did I get it right?
If so, ai don't understand how student loans relate to this. Many other countries have post industrial globalized economies without student loans.
Could the shifting population pyramid be impacting status need fulfillment?
For a lot of people, homeownership is the way towards building equity and wealth. Being permanently locked out of homeownership is frustrating.
I bought my townhouse in 2015 and pay about $1,500 in mortgage. If I were renting instead Id be paying twice that and not building equity. Additionally, my house is worth double what it was 10 years ago. I suspect that homeownership in the 20-30age range has been steadily decreasing and its at all time low.
Additionally, I think the increasing age of marriage is really impactful here. The world is really designed for two income households. If you're unmarried you're in a very tough position to build wealth.
Maybe primates are wired to think things are going well when there are lots of healthy children running around, and the dramatic decline in that is killing the vibe no matter how big the numbers on your screen get?
Depression and desire for change are adaptive responses to not having children from an evolutionary POV, no?
Yes, I'm less of a Trekkie than I otherwise would be because the lack of children (and natural areas for them to play in) kills the spaceship utopia vibe for me.
One of the main issues that I think you missed is that the vibes are now ubiquitous - they occupy nearly every waking moment of our lives. Not to mention that young people (spending proportionally more of their time and a greater percentage of their lives on social media/online) have pathological FOMO. The aspirational messaging (ads, short form video) about what their lives should be like is ever-present and virtually unavoidable given the need to be EOL to keep up with culture. TikTok/IG will show you a million unobtainable ways to be glamorous and powerful and you only have one life with limited opportunities. Everywhere you look, people are grifting by making their lives look better than they are. Young people have fewer comparators to help them realize how much of that is total BS smoke and mirrors - as opposed to boomers and gen x who are not only older with more experience of the world, but have a clearer view of the actual percentage of exceptional people vs regular schmucks.
This will be a big part of it, and though I don't have direct experience (out of the dating pool for some years), I imagine the dating market reflects it as well: men and women expect certain standards of appearance and consumption from prospective partners, so that it is difficult to opt out to a cheaper standard of living.
I'd like to see the vibes graphs broken down by partisan affiliation, with markers indicating control of the White House.
Suppose partisans are more likely to claim the economy is bad when they see the Hated Other Side in control, independently of real conditions on the ground (I would be astonished if this were not the case); whereas, when the Virtuous Our Side is in control, they judge their circumstances "normally", roughly the same way unaffiliated voters would (I am less confident that this is the case but it seems plausible).
Suppose the effect is proportional to how much brainspace they spend on hating the Hated Other Side. If most of someone's time is spent tweeting about how Everything Is Terrible Because Them Them Them, well, the economy is part of everything, and that's going to be more salient when they're asked the question.
Suppose that for the last ten years or so, a larger and larger fraction of the public have been spending a larger and larger fraction of their time drinking from a hatehose.
When one party is out, the other is in, so you wouldn't see a jump in overall sentiment whenever the White House changes hands. But you *would* see a jump in the by-party version, and *that jump would be significantly larger today than it used to be*, dragging the total numbers down -- partly just because it's part of the average, partly because of knock-on effects on the mainstream narrative.
So that's my hypothesis: the vibes drop comes mostly from the mindkilled, of whom there are more today than there were ten years ago. I don't know if a consumer-sentiment-by-partisan-affiliation graph exists, but if it does, and if the hypothesis is correct, it should show up in that graph.
I think this is a good hypothesis for part of the effect.
What do you make of this argument: I personally am better off, but I perceive other people complaining and think things in general are bad? https://www.civitasinstitute.org/research/should-we-believe-the-economic-data-or-americans-lyin-eyes-the-answer-is-yes
"I think inflation calculations are pretty good."
I wouldn't be so quick to dismiss the argument that inflation figures are wrong. Like you said, if inflation has historically actually been much higher it provides a very parsimonious explanation for all the other data.
CPI might do a good job measuring short term changes in inflation, say year to year, but it's very unclear that it can be used to make long term comparisons between different decades, as all figures in this post implicitly do.
I liked this post a lot about ways CPI figures can be systemically wrong stretched over time:
https://devinhelton.com/economics/gdp-and-cpi-are-broken
The metric which that post suggests as a more realistic measure of real incomes is how many hours of median wages are required for a 30 year old man to provide: A running car. A house. 2k calories of food daily.
I asked chat gpt's deep research to calculate an index for that basket of goods and the index has been on a secular decline since around 1970, and in 2025 was only about half the 1970 value (i.e. it takes twice as many working hours to provide those goods now.) https://chatgpt.com/share/6931e385-c8b8-800f-922f-cf2202485000
Also even if the CPI figures are right, the composition might still matter. Broadly, essential goods are more expensive now than in 1970 and consumer goods are much cheaper. Even if that looks like a wash in CPI figure it could still mean a loss in wellbeing for several reasons:
1.) Maybe consumer goods are more likely to be affected by hedonic adaptation or have negative externalities. By normal CPI measures a smartphone might be worth a million dollars in 1970, but what is the actual hedonic effect of smartphones? (maybe negative?) Having a "one million dollar" smartphone isn't going to make up for not having a £300k house.
2.) Maybe consumer goods have steeper diminishing marginal utility. The same way having three right shoes isn't better than one right and one left shoe, being able to afford twenty 50" tvs isn't as good as being able to afford one tv + a house to put it in.
Thank you. I can't believe he calls this a "Much More Than You Wanted To Know" and he dismissed the accuracy of inflation estimates so flippantly.
Another thank you for saying this. He gives data for everything else and this gets a heuristic (read: assumption based on vibes from unnamed sources), even though it's VERY central to all the other arguments.
This post also seems to ignore that even though all the factors seem "pretty good" or easy to ignore one by one, things have a way of multiplying when they're combined. It's tempting to look for "one big cause" for such a big issue when there is no such thing.
I think the truth is that a lot of economic numbers come from things that don't affect people who are on the verge of poverty in the same way; if stocks are up, and house value increases, and groceries cost more, but the average person near poverty doesn't have stocks or a house, so it doesn't matter; they still can't afford groceries as easily as before, and there is no "offset." Therefore it really DOES matter how inflation is calculated, and what categories are inflating, because it affects every class differently.
Amazing write up. Intuitively it seems that the bad vibes are largely driven by algorithmic biases on social media towards (1) negativity/rage bait, and (2) negative social comparison (ie "look how many people are having more fun/getting more stuff/achieving more than me"). I think older generations, lacking social media, had lower expectations in life.
So it sounds like society was ruined by underbuilding in a few key cities causing urban elites to produce too many whiny op-eds that convinced rural americans they had the same problems that exist in reality nowhere but the few cities, which caused them to elect a brain damaged used car salesman president twice. So the responsibility is split between the nimby coalition and ISPs: rural internetization was a mistake, some people just can't handle it. I will not forget this...
hilarious AND insightful--terrific post!
In my local circle, I have noticed that people now are WAY more percarious than their parents, and they noticed. EG, my grandfather got back from the war, got a job at good year on the factory floor until his back went out, then the company found him a couple positions where he didn't have to use his back; security guard, shift planner, company union rep handler, etc.
He eventually retired on his company pension and lived frugally but comfortably until he died of a freak medical accident due to a totally unique allergy, whereafter his wife survived for another 20 years on her survivors benefits.
My parents respectively are an alcoholic dead beat/ ex-teacher who worked her ass off doing her job+an entire other full time job to get on the property ladder before it was too late, has a market based pension that is doing ok, and is generally doing alright through not needing assistance in her life and not spending any money.
I am doing good through never having had to rent a house, I either lived with family or couch surfed until I could afford to buy shares in a family property at cost. I have a STEM degree that gets me the same equivalent purchasing power as my grandfather job at the tire factory. I have never received a raise above inflation except by threatening to quit or actually quitting. I have never had and will never have a guaranteed pension. I am doing better than most other millennials because I hate gambling, drugs, getting drunk, loud events, spending money, cloths, social media, having fun, etc; and I love doing all my own plumbing/cooking/maintenance/etc.
Even though I have no debt and a deep savings account, my life is significantly more precarious than my grandparents or my parents, though I have a higher status, higher paying, and more prestigious job.
People notice that shit. I would feel betting making way less and knowing that if I eg. got a TBI I wouldn't lose all my money, my property, and then die in the street without the charity of those close to me.
>Even though I have no debt and a deep savings account, my life is significantly more precarious than my grandparents or my parents, though I have a higher status, higher paying, and more prestigious job.
This might be rude but is it possible the thing you're really lacking is marriage and children?
Not in that sense, I mean in the sense of if I get in a bad car accident or get disabled touching a computer somehow, my entire material safety net is capital I have accumulated and an utterly unreliable insurance system that will do it's best to kill me if I don't wrestle with it all the time or a lawsuit.
A spouse and no kids might make someone less precarious, but kids?? They are literally money sinks
Kids are also time sinks; watching them takes a lot of time and does have highlights, even if you aren't spending money. The sort of people who set the narrative tend not to be introverts who happily entertained themselves for free before kids.
Depends on when he gets the hypothetical TBI. If it's while his kids are young, that's extra precarious. If it's when his kids are adults, that's less precarious because they can help take care of him.
I didn't see mention of the fact that many people feel forced to take on additional jobs or side hustles. Perhaps the extent to which incomes don't appear to have fallen is driven by an increase in working hours. A Red Queen scenario where people appear to be in the same place but they must run faster to stay there. Seems like that could tank a vibe for sure.
Average working hours per week are nominal: https://fred.stlouisfed.org/series/AWHAETP
The percentage of Americans with two jobs is pretty low: https://fred.stlouisfed.org/series/LNS12026620
Thanks for the info. I speculate that the high-rent, "culture-making" cities in the US would have a multiple-jobs rate significantly over that national average of 5%. Even higher for residents in those areas who have not yet achieved superstar tech/ finance/ professional pay. Which is a lot of people. And as Scott said, the people in these locations disproportionately set the discourse.
Could part of the explanation be the inequality problem, but turned on its head? In other words, the people who are complaining the most and the loudest -- and being heard the most -- are members of the Shouting Class (tm Noah Smith) -- who are predominantly in the top 20% of the income distribution, which is the quintile that (as your chart shows) ARE worse off in 2025 compared to 2020.
I would actually say that top posts/comments on Reddit are more influential in spreading the negative vibes than any sort of mainstream media, and I think the ones making those posts are not generally in the top 20%.
I think the vibscession is multi-causal to an absurd degree, with the largest cause most likely being housing, but additional causes being less clear and therefore more up for debate, but probably all contributing in some capacity. Which will necessarily lead to endless possible discussion on the matter and difficulty in forming any consensus.
Further, I suspect these various causes are a mix of: true things with serious impact, minor things that nonetheless have serious impact due to human psychology (loss aversion, status seeking, etc.), minor things that are exaggerated or feel more impactful due to political feelings related to them (billionaires or immigrants existing, private equity or foreigners buying housing, healthcare costs, etc.), things that aren't real issues but are felt anyway (similar to the example of crime going down but people still feeling it's up), etc.
It's a huge morass of all these things put together, with different levels of impact for any individual person that all ends up feeling like it's harder to get by now than it was at some point in the past. So it's necessarily going to be hard to pinpoint how much each cause contributes overall, other than, as mentioned, the housing theory of everything is probably the strongest contributor.
Have to agree with this. There is clearly something going on that makes it difficult for people to 'thrive,' as in feel secure about their future and start a family etc. Yet in my own professional life I have seen coworkers on ~35k ordering door dash, and heard people on ~200k complain about how they'll never afford a house, when they just bought a brand new truck, their third vehicle for one guy.
One thing not mentioned in Scott's article is the cost of a down payment on a house, which should be mentioned somewhere alongside the cost of a mortgage payment.
My personal hypothesis is that we just have *more things to buy* than ever before, so while many things are cheaper, people are buying more things, or even think more things are non-negotiable "must haves" (e.g. food delivery, annual overseas vacations, larger vehicles). This plus goods like housing, education, and healthcare getting more expensive make people feel more squeezed.
The ludwig institute has some interesting alternative measures of inflation. https://www.lisep.org/tlc
Here are some of their criticisms of the CPI:
Medical Care
The portion of CPI for medical care largely ignores healthcare premiums — which make up the majority of a medical budget in most households. For the bottom 60% of American Households, health insurance premiums account for more than 70% of all medical costs. The CPI instead focuses on the prices paid by the insurance companies, which is irrelevant for Americans’ budgets and spending.
Housing
CPI’s housing portion allocates less than 25% of the cost to rent, thus assuming a majority of Americans own their home. But for the bottom 60% of the U.S. population by income, only about half were homeowners in 2020. Making the issue even worse, the housing CPI relies mostly on surveys of homeowners’ estimates of the value of their own home. Alternatively, the TLC uses actual rental prices.
Technology
CPI for technology does not account for the fact that technology has gone from being a luxury to a necessity. The CPI attempts to price, for example, the cost of checking email. But it doesn’t consider that Americans are now expected to be able to do this instantaneously, whereas this was not the case 20 years ago. This paradox is reflected in the fact that from 2007 to 2018, the newest iPhone release price went up 100% while the CPI for telephone hardware went down by more than 50%. The TLC index instead considers the minimal amount of technology that families need to function in society in any given year, and then prices this bundle throughout time.
Transportation
CPI for transportation accounts for all transportation-related goods, including boats, new cars, and airline fees, which are largely irrelevant to middle- and low-income families. The TLC Index takes into account the price of only the necessities, including gas, used car prices, and regular car maintenance.
Yes to all this though I will note on your description (I hope less of an issue with the underlying index) that you really don't need the latest iPhone to check email.
And so today, we learn that free press and economic mobility were a mistake. The problem will eventually solve itself one way or another. It'll be fun looking back and breaking down exactly how bad the societal management of this era was.
Some theories, all bad, and all depend on the cohort of relatively well-off suburbanites having outsized impact on the vibes:
The hardest to prove and the one I believe most is that old people aren't dying. By this age the elites who write think pieces about society should have inherited their engineer father's home and summer home. Instead they're still earning $50k a year in a well-located, but tiny apartment, and their parents pay for their phone and car. By the time the old man kicks it they'll be 60.
Next guess is medical costs are truly, stupidly insane. N=1, and I'm definitely not a victim of the vibecession. My life's pretty good. I also own a house and have a wife and kid. But I carry way more debt than I'd like because despite paying $700/month in insurance, it cost $6000 (my out of pocket maximum) for my wife to give birth to our kid, and another $4000 to pay for complications from the pregnancy. That's nuts. If I also had student loans and a less good job I'd be willing to believe I had it uniquely bad if someone said so convincingly.
Next up is the manner in which elites were raised. My parents did a better job with this than most, but that's honestly an indictment of boomer parenting generally. I was a bright kid with a lot of talents, so I was told to go to college and get a good office job, that, in the words of Community's Troy "Does nothing, or at least from a distance looks like doing nothing." It was assumed that was an end goal. There was very little suggestion that I would provide other people with value in exchange for money, except in some abstract sense. It would not have occurred to me that the reason to be a lawyer or an engineer was to provide someone with legal or engineering services.
Finally, I think the most likely is just that people don't expect to have it as good as their parents. They expect to have it better. And that's not (quite) as entitled as it sounds. Productivity *has* massively increased thanks to automation, reduction of friction, etc. It's not insane to think the median dude should capture some of it.
So what we end up with is a culture where cultural elites' "children" are now 40. They see some guy who just inexpertly gutted the national government getting a trillion dollars. They grew up expecting to just get fabulously wealthy for being smart and following the rules. (They'd say they don't want this, that they just want to be "secure" but the amount of money needed to feel "secure" is actually infinite). The support systems that invisibly helped their parents like inheritance aren't functioning. And they just got a $10,000 hospital bill.
You can see why they feel betrayed.
also this:
https://www.yesigiveafig.com/p/part-1-my-life-is-a-lie
Why does the chart on percentage of wealth owned by generation start with the Silent Generation? Surely the Greatest Generation owned a significant portion of the wealth in 1990
Good post. Your list of hypotheses inspired me to think of a couple of other potential ones...
1. Aspatial Brooklyn effect. In the UK with rising minimum wage (*no bad thing*) there is now if I recall correctly, a smaller gap between minimum wage and professional wages. So if the vibes are set by the professional rather than minimum wage band this could add to the "I expected more for all this investment" effect?
2. Imperfect inflation measures. I agree that the experts will have thought about this, but I'd be surprised if it's not still an area of ongoing debate among the experts. Is weighting the hypothetical basket by spending proportion really enough? Or does that miss e.g. when essential goods such as food and housing+commute go up in price, that has a bigger impact, because what matters isn't the proportion of wages people spend on them but the proportion they *expected* to spend on them. Also when people have to settle for lower quality food and accommodation then does it show up in the stats?
Someone explain the thumbnail joke to me.
(It's a bull...because economists are bullish?)
(It's a bull...because the vibes are bull?)
(It's a yak...because a "much more than you wanted to know" post involves lots of yakking?)
(It's a longhorn...because "long horn" is some kind of econ jargon like "long tail"?)
I think it's because the shaggy fur makes the bull kind of also look like a bear.
The economists are bullish, the vibes are bearish, so the thumbnail is a bearish bull?
I dig it as an Unsong-y/LitCrit interpretation, but I have doubts about whether it's the joke Scott intended to make.
It's a sad-looking bull, to represent the economy being good but people being unhappy about it.
I guess he does look a bit forlorn. Thanks!
"But can people notice this? Sure, you compare yourself to your friends, neighbors, etc. But do you really compare your age cohort to other age cohorts? How do you even mentally calculate the total percent of wealth owned by old people? Aren’t most old people hidden away in retirement communities where young people don’t see them?"
While per capita measures are probably more pertinent, I would totally ignore this. You could think of it as the amount of money 'sloshing around' the social spaces in which you would participate with your age-group peers.
One additional thing on the 'more work to stay in the same place' -- having a bunch of people applying for the same roles leads to lower quality signal in traditional application sources like resume pools.
The result is that hiring across the board is significantly more likely to favor more nepotistic sources. Think: a friend of a friend, someones son, someone that has a referral from someone else that you trust. That in turn means that increasingly high paying jobs skew heavily towards people who are already in the 'in-group'. A different form of wealth inequality, if you will.
Scott, the email version of this post ends in "This post is too long for email. Continue in the Substack app."
If you still have any influence with them, can you get them to cut it the FUCK out with this antisocial behavior?
Yeah, this is really annoying. I intentionally read posts in my email so I can avoid Substack's dysfunctional site, I don't want them to nudge me for more engagement.
I suspect they don't that on purpose to increase engagement -- the limit is quite long for most people who are not Scott.
Also, they don't get money for your visiting the website, but from subscription that people pay either way, so they don't have much of an incentive.
I imagine there could be some technical limitations in some e-mail servers. Or maybe it's sheer technical incompetence, that is also likely with Substack.
> But most people judge crime rates by what they hear on TV. Vanishing economic opportunity is much more personal. Can people really be wrong about something so close to their own lives?
I think the answer to this is basically "yes". As Krugman notes here:
https://paulkrugman.substack.com/p/a-win-for-the-vibecession-story
... based on survey results, people generally reported that THEY were doing as well as before over the last few years, but the local/national economy was doing much worse than before.
This is more or less equivalent to saying that people's personal experiences diverged from their views about how things are going in general.
(Although to your original phrasing, I guess they're not literally wrong about something close to their own lives.)
1) manufacturing was relabeled supply chain unbeknownst to most of rhe world - supply chain consumes 85%-90% of company cost. Guess where the money is.
2) first year students I’ve worked with get 6-figure starting salaries
3) all the old-timers who GTD are retiring and not being taken over by AI - task modeling is barely possible
4) Numeracy positioned skills are snapped up fast.
5) if you could hire someone who can get boxes to customers vs marketing, guess who wins
6) Lack of talent has been a screaming crisis for now at least a decade.
7) 99% of People don’t realize how things get to them.
8) Software people are a dime a dozen.
9) My GPA is bigger than yours is bullshit and everyone knows it, Gradw inflation is a joke with hiring managers, believe me.
10) People who can conceptualise the planned purchasing, logistics, operations for a $1B data center, $10B chip fab, anything that scale at all I can count on one hand. And they’re retiring.
For young adults in particular, I don't think the bad vibes are at all new. My go-to illustration is the first verse of the theme song for Friends, which started airing in 1994:
"So no one told you life was gonna be this way / Your job's a joke, you're broke, your love life's D.O.A., / It's like you're always stuck in second gear / When it hasn't been your day, your week / Your month, or even your year"
Consumer sentiment is a lot lower now than it was in 1994 (55-ish vs 80-ish), so this isn't the whole explanation. I think the other half is that Covid and recent trends in national politics have combined to massively shake people's faith in institutions. Consumer sentiment took big and lasting hits after 9/11 and the 2007 financial crisis, too. These are also visible in Scott's slightly shorter slice of the series, of course. And further back (see https://fred.stlouisfed.org/series/UMCSENT), the index was down around 2020-2025 levels c. 1977-1982, which is generally attributed to a combination of the oil embargo, monetary policy shenanigans (first high inflation and then very high interest rates to bring inflation under control), and cultural hangover from Vietnam and Watergate.
Yes, I think the Covid hit to institutional trust is big. When you feel like you're all in it together, you can put up with more financial uncertainty than when you think everyone is trying to put one over on you.
Is the cost of medical care figured in?
Tentatively, people's incomes might not be too bad, but the likelihood of keeping a job is lower and (you mentioned) the difficulty of getting a new job is much higher.
Yes, medical care is included in consumer inflation measures. Here's how CPI does it:
https://www.bls.gov/cpi/factsheets/medical-care.htm
Maybe already mentionned but the quality of what you get for the same amount of money may have got dramatically down and it would be impossible to notice.
When I compare my life to my father's at my age I'm not like "Oh, he earned that much with this qualification and I make less than him, therefore the economy is collapsing"
It's more like getting anecdotes from him riding a cool motorbike while the only one I can afford is a cheap chinese one that will break if I go too hard on it.
Then there are the non-monetary services that have disappeared and were never accounted for but perhaps increased material comfort, like homegrown food or off the book services
The thing is it seems super hard to quantify these
if only a German gentleman had explained all of this 150 years ago
Yes, the country would have collapsed even faster if we had followed his advice. Great idea.
And yet he predicted exactly the phenomenon that Scott is here trying so hard to understand by applying the same analytical tools that produced the unhappiness he hopes to analyze
Didn't he protect that profit would decline, and the proletarian majority would be both deprived and concentrated to the point they would develop class consciousness and overthrow capitalism? He might have thought that plausible... in the "good old days" https://entitledtoanopinion.wordpress.com/2011/05/23/the-good-old-days/
Are you referring to Karl Marx, Max Weber, Otto von Bismarck, or some other German gentleman who had relevant thoughts on the matter?
How did Marx explain the vibecession, accepting for the sake of argument that the data in this piece is accurate?
My 2 cents:
I think people are also just WAY less patient these days. Everyone expects immediate gratification, and that includes success. Even people who are on track to an eventual promotion or saving up for a home feel that the system is broken when they see through their warped social media feed the many enjoyoors living the good life around them. They see the entrep-influencers on linkIn giving talks at conferences and the bro-fluencers bragging about their 7 businesses generating passive monthly income.
Boomers grew up in a simpler and less stimulating time, where often they enjoyed an evening reading a book, or listening to a record. Many of them worked very boring office jobs where there was no option to tune out via a quick glance at instagram or twitter. The brains of our current generations are short-circuited by everything designed to give immediate dopamine hits with minimal friction. If only the track to success could be the same.
So, how to sum this up... I think the expected payoff in gratification with any pursuit (be that financial, artistic, even spiritual), has dramatically shortened, most likely due to the prevalence of media (did it all start with Lifestyles of the Rich and Famous? MTV Cribs?) and social media (what was it Rene Gerard said about memetic desire?)
And when I'm done typing this response, I admit I expect a thoughtful reply almost immediately (please) :)
In addition, I think that people are perceiving more randomness in wealth and status. It used to be that doctors or lawyers or businessmen would earn rewards by doing something visible or (theoretically) repeatable. Nowadays it looks like some idiot going viral for inscrutable reasons. People perceive more chance for advancement when the pathway is legible, rather than all the visible top earners being, essentially, lottery winners. The first suggests "I should (and can) do this, it could be me." The second suggests "This sucks, it could (should) have been me, but it isn't and that's unfair."
Some more questions I think we need to ask ourselves:
- Are young people seeking different jobs than previous generations, and are those jobs concentrated in cities with higher cost of living?
- How do average mortgage / rent costs compare within the 20-35 demographic with what that demographic paid in the 80s? Are old people dragging median mortgage / rents down?
- Are there different expectations as to what kinds of jobs young people want? Is it true that most boomers were happy being local firefighters, while most young people want to be Googlers? Do certain average jobs seem less prestigious or fulfilling, perhaps due to how these jobs have changed? Is there an increase in social mobility that precipitated this ("if some of my peers are Googlers, I want to be a Googler too")? Perhaps contact with distant / former peers through social media? If a classmate moved to NYC in the 80s, you wouldn't see much of them, whereas now, you see their prestigious lifestyle through social media?; does this affect life satisfaction? Do influencers create unrealistic expectations?
- Is the belief in the vibecession correlated with social media use? Mainstream media use? Political camp, even if on same side (e.g. traditional / liberal left vs. "cancel all the things" left)?
I think the vibes are bad because they represent a break in the implicit social contract that says if you Learn to Code then you won't have to worry about social status precarity.
https://open.substack.com/pub/andrewsiegler/p/why-are-people-bothered-by-low-employment?r=ksoj&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false
Scott that first link is to a file on your C drive, not to a web location
http://file///C:/Users/scott/OneDrive/Desktop/2025_05_01%20Values%20and%20Beliefs%20Topline_PDF.pdf
One thing you got close to but never nailed was the perception of unfairness and overburden facing young professionals these days (the vibecession only applies to middle class people in their 20s, not the actually not well off).
We might make more than our grandparents did at our age, but at least they knew they had it best at the time; there was no social safety net for the poor, there were far fewer aging retirees going on cruising, the country was on the up. Meanwhile, we know that while we are technically doing a bit better, so much of our excess productivity is being redistributed to massive strata of the population that used to get far less of a share of middle class young professional productivity.
If the poor and the elderly had the same consumption patterns now that they did in 1950, young middle class people would be massively better off, and we know it.
> I think inflation calculations are pretty good.
Yes, the "but look at the gold" people are lunatics and wackos, but inflation _is_ chronically and intentionally understated. While the methodologies and data central banks use are secret, we know enough to know that it's preeeetty bullshitty and they can, to an extent, get out whatever number they want. And they want to get out a number that shows they're not completely shit at their jobs, and that things are good, because if they get out a number showing they're shit at their jobs and the economy has been contracting in real terms, people freak out, they get fired, and the economy tanks even harder.
(Obviously made-up numbers to illustrate the point)
One of the methods used to fudge inflation numbers is including a term for "quality". So if TVs get twice as expensive, but the inflation-adjuster can justify to themselves that TVs got 4x as good, then they put in -50% for that term.
Another is when things get more expensive, they just take those things out of the basket so the basket doesn't look as bad. If beef and chicken go up 100%, then just take out beef and chicken and substitute lentils or eggs or whatever.
(Roughly accurate numbers from the top of my head, not literally correct but correct-ish).
We've had years in Canada where housing costs went up 30% (nominally 30% of a household budget, roughly), and food also went up, sometimes a lot (10-20%+), and economists will say with a straight face that headline inflation was 5%. Sorry, but that's just patently absurd.
Speaking again for Canada, you cannot convince me that people are better off in real terms than 20 or 40 years ago. An hour of work buys less food, less housing, less education, maybe a little more clothing (but of substantially inferior quality), less gas/energy. Every single thing is less affordable.
You seem to be guilty of some motivated reasoning, because your conclusion (that inflation is understated due to technological change) is the opposite of what almost all thoughtful researchers have concluded. I sometimes wonder why people come to such strong conclusions without apparently having looked at extant research at all.
I have a half-baked theory about downwards mobility that I haven't really examined and am not totally sure how to examine.
Some segment of people grew up in affluent upper middle class households. They went to college, they got degrees from prestigious universities in the humanities, they entered the workforce. But they entered into one of the fields that doesn't really pay well now (ie not software/finance/law). They make a cross-generational comparison to how they grow up and are struck by how much worse off they are than their parents were.
My general theory is that this segment of downwardly mobile people from upper-middle class backgrounds with lower-middle class incomes are disproportionately vocal (in part because one of the professions that has become worse to work in is the media). On the counter, the people who are making high incomes in many of these fields are disproportionately immigrants or the children of immigrants. Moreover, people who are doing well attribute their success to themselves, those who are doing poorly attribute it to society.
Of course the shape of this isn't necessarily knew: fathers making solid incomes as longshoremen and their descendants making bad incomes as longshoremen is such a good concept they made a season of the wire about it! But what's perhaps new is for this downwards mobility be happening to people in what were historically high status jobs, and to people with the capacity to be publicly vocal.
I think it would be interesting to look at changes in wage levels by occupation, especially historically high prestige white collar professions. I also think it would be interesting to look at non-transfer income vs parental income and see if it has explicatory value.
I do think this somewhat ties in with your theory about people feeling that they put in a lot more work just to get to the same place.
Related to this, I suspect that a lot of people feel downwardly mobile as young adults even if they aren't actually downwardly mobile, because of subconsciously underestimating or overlooking that people just starting out as adults tend to have lower income and much lower wealth than people who are mid-career. If you're a fresh college graduate with upper-middle-class parents, then even if you're on an upper-middle-class career trajectory you're likely to feel poor compared to your parents because you have only observed your parents' lifestyle and financial situation when they were probably quite a bit older than you yourself are now.
The contrast is going to be sharper if you stumble a little out of the gate and it takes you a few years to get onto an upper-middle-class career path. And it will be sharper still if you're actually downwardly mobile and never get onto a career path that matchs or surpasses that of your parents.
Every explanation for the vibecession that does not attempt to explain why there is a huge drop in 2021 specifically and persistently lower vibes for the following years should be disregarded. I think the best explanation is just inflation: this is what is most different in 2021-2024 compared to previous time periods, but you can also blame the shift to remote work, or higher housing prices. Examples of bad explanations would be "phones bad", "media bad", or "inequality bad" without explaining why they became worse in 2021.
There are a lot of comments here about the lack of job security, the need to network, the number of applications, etc weighing on people. And that is probably true to a degree--I am going through a job search right now as my current company prepares to lay people off. It's not fun!
However, I have actually worked at one of those old fashioned, work-there-for-life companies. This was around 2010--it was a very old financial services company that had started in life insurance and branched out from there. Almost everyone who worked there had worked there for decades, there was a pension, lots of benefits based around the idea that people would be basing their careers around this one company. And it kind of sucked! All decisions were made by the cadre of old white guys at the top, decision making was extremely slow, promotions could be had but you had to wait your turn. The company was proud of no layoffs ever, but the salaries were not great and initiative was not rewarded (better to let the folks at the top make the decisions). There was a decent amount of sexism (even by the time I worked there, women who had kids were looked at with a certain degree of disapproval), and racism (I have never heard a high-ranking executive use the phrase "jew them down a little" in front of a whole division of the company). There was very little push by anyone to make things better or improve processes and things were extremely inefficient on every level.
I know that wasn't exactly how every old time company worked, but I'd suggest that the type of companies the "Company Man" used to work for were more like this than most modern companies. Competition can be frustrating but it also has benefits.
"I think inflation calculations are pretty good."
They're not. First, CPI is pretty bad and all of those graphs you made should be re-based using PCE inflation instead. The difference between CPI and PE inflation tends to be small month to month, but the difference compound over time and become substantial. The overall effect is that deflating CPI over time leads to over-deflation (it's well-known and is usually even taught to undergrads that CPI overstates inflation) and a downward bias in real measurements. Again, these differences are not trivial, e.g. https://fred.stlouisfed.org/graph/?g=1I5eB
Second, a thought experiment. Suppose you could go back in time 30 years and take your smart phone with all of its capabilities with you. The technology would be considered miraculous, the single most valuable object on Earth, and you'd be the wealthiest person on Earth for owning it. Today that same phone is such a commonality that it's taken for granted; kids have them, homeless people have them. So in what way does it make sense to compare this kind of wealth over time? Or the basket of goods that one dollar can purchase? That isn't a rhetorical question: it *doesn't* make sense. The problem with inflation as measured by a basket of goods is that the basket of goods changes in ways that fundamentally cannot be quantified when you have an economy with rapid technological change and a long enough period of time. If the period of time is short enough, you can try to do hedonic adjustments (and they do), but that has limits to its applicability.
To be sure, the "shadow inflation" people are cranks. And measured inflation is still useful in shorter time intervals since the error won't compound so much (e.g. most macro models use inflation to calculate period-specific real quantities like this month's change in nominal wage minus this month's inflation). But these long-term comparisons of real measurements are such nonsense.
Hi! I’m the person who coined and first published this term. I’ve been studying this phenomenon for the past four years, so forgive the rather long comment! A quick factual clarification: the Vibecession began in 2022 as the sentiment–data divergence that opened up that summer is the real starting point. The decade before didn’t have the same shape of malaise, which you can see in the sentiment data you included. People who’ve also been working on this topic tend to focus on the same pressures you outlined like housing, education, measurement problems which are absolutely part of the story. Maybe this is what you meant by smoking gun, but the Vibecession has crossed into somewhat of a meaning-making crisis which shows up in collapsing trust and inconsistent reactions to the data. Every generation has one of these, but ours is flattened across all ages due to social media and those tighter economic constraints. Expectations around future stability collapsed at the same time institutions lost credibility, and that combination changes how people interpret even good data. Also the post-2020 political environment runs on performance and constant identity signaling, and economic sentiment gets lost in those dynamics, which is why the usual models don’t fully explain what’s going on. Finally, we really aren't in one right now, as the economic data has deteriorated meaningfully and the negative sentiment is warranted at this point.
Hi Kyla! Congrats on the YT channel, btw.
One thing I thought when I came across the ‘vibecesion’ meme is that, in France specifically, we’ve been having one since at least the 80s (I’m a Gen X).
I don’t know enough about the USA over that time but moving from Paris to London in the late 90s, that was one thing I noticed - Londoners were freer with their money and felt less grumpy and unhappy…
Paris eventually recovered and/or London eventually lost its swagger so I don’t think it’s true anymore but, still - most of my life, people have constantly complained everything was always getting worse.
In France/Europe, I feel this is due to the high unemployment and underemployment/ the end of the post war boom. It seems we never recovered.
The USA does seem significantly more perplexing given how the post 70s-80s period does have decades of good economic environment (the 90s notably).
Could it be a steady rise in background fear/anxiety? In the 2000s, you had a stock market crash, 9/11, a recession in 02-03, the GFC in 08/09, a slow uneven recovery for 10 years, a pandemic in 2020, inflation in 2022 and now AI is going to kill us all or take all the jobs and women don’t want to fuck anymore…
So even though one may have navigated through all that ultimately well enough, it may sure feel uncomfortable and unstable?
The Boomers may have to contend with their own series of crises but job security & family formation weren’t in doubt?
Prof Galloway statistics may be cherry picked but it does feel like something is rotten beyond just ‘vibes’?
Good points you’ve raised but one point of disagreement - women definitely still want to fuck, lol. Maybe you meant they don’t want pregnancy quite as much as they used to because of the opportunity cost?
I mean, it was a bit of a bait… ;)
But, yes. Though before babies, I would worry about marriage rates. It seems to have dropped in a way that is not explained just by more people pursuing higher education.
> Could it be a steady rise in background fear/anxiety? In the 2000s, you had a stock market crash, 9/11, a recession in 02-03, the GFC in 08/09, a slow uneven recovery for 10 years, a pandemic in 2020, inflation in 2022 and now AI is going to kill us all or take all the jobs and women don’t want to fuck anymore…
This (in addition to home-ownership and job security) is what I tend to emphasize in my headcanon. Zoomers have known nothing but back-to-back crisis, and yet boomers are surprised that the youngins are all completely blackpilled on their future economic prospects.
I think what’s missed here and in other attempts to explain/understand the “vibecession” is how first mass and then, even more forcefully, social media has moved expectations/perceptions. Millennials and subsequent generations have been more exposed to extreme wealth and power than any previous generation, so, while they may technically be doing better than Boomers at the same point in life, they are comparing themselves to who they see on TikTok, Instagram, etc., not their peers and predecessors. I think Kyla’s discussion of the Attention Economy and increasingly casino-esque nature of markets gets at this, but I think the extent of interconnections here are only just coming into focus.
Essentially, I think the vibecession is a case of missed expectations much more than the economic anemia of “real” recessions. But missed expectations can produce learned helplessness and defection, which is what then produces converts felt bad vibes to actual downward slides.
True. Perception may matter more than reality
I think this is what Mark Fisher referred to as Hauntology.
(I also did think it was odd to not mention Kyla anywhere.)
I think it’s the phones, again. Every generation has had winners and losers, and average people, financially, but in previous generations you heard from the winners, as they got famous and influential, and you heard fron the average people, as they were the peers. You didn’t hear from the losers. With the internet, you disproportionately hear from people with a chip on their shoulder and a lot of free time.
I don’t remember the exact wording of the question, but I remember a survey stating that while yes, people thought the economy was in the dumps, they thought they themselves were doing fine. They were just reporting that their impression was that things were bad out there. If you picture of the word is shaped by reddit and twitter, that makes sense even if the people posting there aren’t a representative sample of the population.
How does this square with the idea that social media tended to show our peers lives better than they are and this makes us depressed? Do we get depressed when we see people better off and when we see people worse off?
"We know of other cases where the public believes things are worsening even as they get better: crime rates are the classic example.
But most people judge crime rates by what they hear on TV. Vanishing economic opportunity is much more personal. Can people really be wrong about something so close to their own lives?"
Well, people only live within one generation. They know about their own lives, but they have no benchmark regarding what things were like growing up in a different era. So when people complain about the present relative to the past, we have no basis on which to defer to their judgments.
I appreciate the desire to be fair, but this piece bends over backwards too much to avoid the simple conclusion that things aren't that bad, and people have just gotten a lot more neurotic. There's a long term trend of news getting more negative, phones have added to the problem, and anxious and miserable people just see everything in their lives as worse.
And this explains the drop in consumer sentiment in 2021 and a persistently lower level how? I'm open to the idea that covid made people more neurotic, but if you mean that you should say it explicitly.
One aspect of the “vibecession” discussion that can't be shown in charts is the increase in number of expenses that are considered “necessary”. If you compare the number of line items on my budget to my parents or grandparents, the difference is stark, and I consider myself much more frugal than my peers. A few examples: financing cars was far less common for boomers than it is now; radio and television were largely free; eating takeout was far less common; internet bills didn't exist; etc. An anecdote that really struck me highlighting this comes from Stephen King's book On Writing. In it he writes that he had to take the call letting him know that his first book, Carrie, was getting a very lucrative advance from his neighbors house because he didn't have a phone in his house! Compare that to now, where every household member has their own phone (and associated bill) and you can see how different things were for older generations. The inflation numbers (whose accuracy is much more suspect than you are letting on) may show that wages have kept up with existing costs, but those numbers won't account for new costs that didn't exist before and are now considered normal.
I lean heavily towards the "ivory tower High Modernist metric" AKA GDP explanation, with new expenses being a huge part of my narrative. I want to emphasize insurance, childcare, healthcare and government general.
Measuring median income presupposes that people want the things they're buying, including government expenses purchased with dollars that never reach the income earner's account, products that the purchaser only bought because some regulation said they had to, and products that were only purchased because they were heavily subsidized.
One thing that this post doesn't quite address is that there seems to be a discrete shift associated with COVID in what economic indicators contribute to the vibe (this is not my thesis, I got it off Twitter, but it informs how I think about the "vibecession" quite a bit): https://x.com/quantian1/status/1688398356303826944
Between 1981-2019, consumer sentiment could be predicted from a basket of pretty normal economic indicators (inflation rate, change in inflation rate, unemployment rate, change in unemployment rate, housing prices, strength of the dollar, interest rates, and stock prices). This feels kind of "just so" to me, but the thread asserts that, since you get the same fit and divergence training the data on fractions of the 1981-2019 period, it's not overfit (I feel like I don't know enough statistics to judge this). After COVID, three attitudes change, of which the third change is the most significant: the unemployment rate seems to matter a lot less now, people prefer housing prices to fall rather than rise, but most significantly it seems like interest rates now matter a lot and people HATE when they are high. (Speculatively, a lot of the relatively good 2010s economy ran on ZIRP -- https://www.readmargins.com/p/zirp-explains-the-world -- and when that stopped being possible the vibes became bad.)
That said, I'm not sure I have a clear-cut answer for why interest rates would abruptly become much more important to consumer sentiment when COVID happened in such a discrete way. The biggest shift in ordinary people's experience of the economy is indeed mortgage payments, but we don't think of the vibecession bad vibes as being primarily a homeowner phenomenon, and many of your points stretch back into the 2010s (eg, the Brenda Boomer vs. Martha Millennial comparison), whereas actually there was an abrupt change in 2020 in what economic indicators matter for the vibes.
~~
(Much more speculatively, I think there are a *lot* of trends in American public life that point in a certain direction until 2020 and then reverse, even besides "what economic indicators are important". The two I'm most confident about are LGBT acceptance/support for gay marriage, which rose steadily for decades, peaked in 2020, and is now declining; and evangelical self-identification -- not church attendance or belief, self-identification -- which peaked in 2020 and is now declining. There are several others that I think turn around this time but where I'm less confident COVID is the peak, and I think that you could tell a coherent story where it's downstream effects from the collapse of Venezuelan state capacity, since most of Latin America sees similar trends -- but it's not obvious to me why that would cause a huge shift in the US and I don't think this is the cause of American changes. But there's a pattern where the evolution of public opinion on many issues pointed in a particular direction consistently from 1991-2020, and since then has reversed. I don't know what caused this, because I don't necessarily have a good theory for what caused shifts in social attitudes between 1991-2020, but I think COVID interrupted *a lot* of how people make sense of the world around them.)
I guess when all you have is a hammer, everything looks like a nail. But even though this was another great post, and a brilliantly conceived analysis; whenever I read something about how Things Are Actually Great, part of me can't help but thinking "another few thousand words written by a homeowner to try to prevent infill development."
And the thing is, I get it. If I suddenly on the home, I might find myself waffling on the issue... But I'm not there yet and I don't have to struggle with that bias. The cost of housing, especially for renters, is massively damaging quality of life and I think it's poisoning the vibes.
Even if your income has gone up and your overall cost of living hasn't changed, the secular increase in housing costs as a proportion of your income is going to be demoralizing.
Love this! This dynamic has been driving me nuts for a while now and I am happy to see another person address it, especially at this length.
A couple of additional thoughts come to mind:
- While the CPI ownership/rent equivalent might not be perfect for tracking the increase in housing prices as you note, CPI does place a 35% weight on that cost which is actually quite a bit higher than actual median income share spent on a mortgage (to say nothing of median rent, which is even lower).
- It's obviously still possible, as you note, that housing cost increases, which are a very real issue, are carrying a disproportionate burden of "the vibes". However, I think it's worth noting that ~70% of Americans are homeowners. So those rising prices actually make the majority of people wealthier. Also, the homeownership rate for Millennials isn't tracking much behind that for the Boomer at the same ages (a couple percentage points). Yes, the younger generation is paying more, inflation adjusted, for those houses. That's not ideal. But also it can't really be said they are getting negative vibes from being locked out of homeownership or something.
- There was one item I was surprised wasn't mentioned: all the polling that shows people say their personal finances/economic situation/etc. are good but the same for the country is bad. I wonder how you think that fits in to all this? Like, are the vibes not actually an individually felt phenomena, but a projection? That would seemingly add weight to the "it's the media!" explanation. Or is it this a "punditry bias" thing?
Rising prices make people wealthier on paper, as you say. But that doesn't mean they are happier or materially better off. Compare:
- Owning a 2br condo in Somerville, MA nominally worth 800,000 (2020 dollars)
- Owning a house in the same neighborhood 20 years ago, nominally worth 500,000 (in 2020 dollars)
A lot of people would rather have the house.
This is a good article, but the claim, "Mortgages have gone up 100% since 2021. But this doesn’t fully explain the vibecession, because it seems to have started before that, and even non-mortgage-holders are angry."
Non-mortgage holders are likely angry at that because the high cost of a mortgage for many precludes them from getting on in the first place.
I think the best theory is that phones and the loss of social capital have made folks depressed.
You're much happier with a ton of friends and social events, and folks don't do those as much now, so as mentioned, they feel they need to be in the top 1% to be happy, when they'd probably be happier with more friends and meaning than more income, but they always think more income is the elixir.
Thanks for a compliment and dispassionate overview of the vibecesssion. Allow me to attract attention to a piece of data that goes with the very large increase in the number of university graduates documented in your piece. A highly publicised study has recently reached the conclusion that the average IQ of the vastly expanded body of university graduate has become close to that of the average population. This may result in a widespread reaction of dissatisfaction among the young similar to that observed among the general population in the recent inflation episode: each individual feels robbed of his hard-earned fruits of his salary increase (university education) while failing to recognise that without the general inflation he would not have been able to gain the salary increase/university education in the first place. At the same time it is probably true that selective universities have been resuiring heavier entrance credentials thereby increasing the deadweight losses associated with the competition for entry.
I have not been able to find data to assess this, but my pet theory is that the basket of consumption middle class people are chasing as "normal" has changed.
Anecdotally, I see this on:
1) expected square footage per person in housing (e.g. kids sharing bedrooms seems much less universal than it used to be)
2) vehicle space per household member. Meaning both size and number of vehicles. My perception is also that "cars as status goods" has made its way further down the socioeconomic ladder than it used to be but that's wild speculation.
3) frequency, duration, and distance of vacations: I blame this one, perhaps unfairly, on the prevalence of travel vloggers. Here there is some data: https://ourworldindata.org/tourism
Basically: while people have gotten wealthier over time, the standard of living they're pursuing has increased even more, which can come out as feeling poorer on net.
"1) expected square footage per person in housing (e.g. kids sharing bedrooms seems much less universal than it used to be)"
Definitely, this was a discussion over on TheMotte and some of us (me) shared our experiences growing up where it was normal for kids to share rooms, and the OP (who apparently thinks it's inhumane third world conditions if there were two kids in bunk beds in one room) finally snapped and snarked at me about my shitty childhood. Fun times! At least I wasn't the only dinosaur relating how "sharing a bedroom used to be normal, my friend".
So definitely there is the expectation "I will have two children at the very mostest and they must each have their own room from the second they are delivered and of course I and my co-living domestic partner need a bedroom of our own and maybe a guest room and and and", which costs a lot of money now if you're looking for a house, and if that is your minimum acceptable standard of living to not give your spawn shitty childhoods, well then yeah. Things look dark and bleak and terrible because only a billionaire can afford all that, right?
Though I do think cost of living in general has genuinely gone up as well.
I think that the media emphasize bad economic news because that is what people, especially young people, want to hear. I see the vibecession as just one of those social contagions, like teenagers deciding that they are all queer. (I'm a Boomer and an economist, in case you were wondering.)
This doesn't seem to explain the steep drop in consumer sentiment in 2021 and a new persistently lower level of average consumer sentiment, unless media companies weren't emphasizing bad economic news prior to 2021.
If you admit the possibility that people suck at attributing why they are unhappy, then you should be open to the possibility that non-economic concerns might drive responses to economic survey questions.
We are stalled out on climate, education, automation, representative democracy, social connection... and many other issues of legitimate concern. Not everything important gets picked up in economic measures, but some non-economic things that are important might get picked up in economic vibes.
Regarding the vibes portion: there is a potential that the reduced attention spans are a correlate for reduced patience and immediate gratification, such that the younger generations are not achieving boomer-level success in their 20s and 30s, but having not seen boomers work through their 20s and 30s, they don't understand the years of slogging through hard work to achieve the success they expect.
Combine impatience with higher educational attainment, wherein a boomer may have needed a bachelor's to achieve a certain job, but now a master's degree is required for the same job. This is because of a few factors: grade inflation means the bachelor's doesn't have the same credibility it used to, bachelor's is more prevalent so not as much of a signal, and bachelor's-level work has been automated so to provide value you need more education.
So a Gen z hears stories about a boomer who gets a job from a bachelor's, and is able to buy a home and support a family. That same Gen z needs a master's to achieve the bachelor's-level success, and doesn't have the patience to do that, so vibes take a hit.
A lot of debate here is about how we perceive present conditions. People may feel it’s hard to cover rent or find a stable career, and I can’t argue with how someone feels about their situation. But implicit in this is a comparison to a counterfactual of what their life could be or should be; maybe idealization of the past is the problem?
When people think back to the good old days of 1995 or whatever when we were happy and free, what do they base this image on? Mass media from the era shows wealthy nuclear families in spacious suburban houses. Your lived experience was a childhood where your parents were near the age of peak lifetime earnings. A pretty nice fantasy! But not what life was like for the equivalent 90s version of yourself at the time.
What people need to hear is: your struggles are real, but people in the past also had these struggles, and then even more so.
Michael Green posits that it's a combination of (1) the cost to participate in society has risen, even if the goods being procured are less expensive (2) inflation disproportionately affects necessities like housing - see point 1; even if the housing is better, it's vastly more expensive (3) the marginal gain in quality of life per dollar of income is very bad at certain thresholds, and in fact negative at crucial points.
https://www.yesigiveafig.com/p/are-you-an-american
GATTACA as utopia because it eliminates deadweight loss
/s
Scott says that housing costs have only gone up 10% as a proportion of one's income. And that that isn't enough to explain bad vibes.
But that's kind of assuming that the housing-cost-ratio was reasonable before it went up 10%. If the ratio was already on the cusp of being unreasonable, could 10% be enough to break the camel's back?
House prices are a large enough fraction of income that, as prices go up, we might expect people to mostly pay the same for worse housing, as opposed to paying more for the same quality of housing.
Sure. In which case I would rephrase my question this way, "Is it possible that in the past few years, non-affluent people have seen their housing downgraded to the point where we have crossed a significant threshold of soured vibes?"
An additional consideration: I've often seen it claimed that the rise of remote working has motivated people to value larger, more comfortable homes. The more time you spend at home, the more you will be motivated to care about the less ideal attributes of your home.
Back in the day, a 40th percentile income was basically enough to guarantee a wife. Now, you need like a 80th percentile income for that.
I could be wrong about this but I think more than 20% of men are able to get married.
Yes, but they have other good qualities, like maybe they are unusually attractive or charming. If you are median or below in those qualities then you need an 80th percentile income to be reasonably confident of finding a wife.
31% of the U.S. is single. If half of those are male, and 90% of that group is straight, at most 14% or 15% of the population may have this as a meaningful potential contributor to The Vibes.
I obviously don’t stand behind those specific figures, which are illustrative/rhetorical and tbh look hella low to me. But I shake my head a little when comments on a forum
of generally high quality appear to assume that the discussion is entirely by and for straight men, as if nobody else is reading — no, worse than that: as if nobody else in the population at large is affected by or contributing to the “vibes.”
Come on, man.
On the Brooklyn theory. If media sentiment was the main factor wouldn't you expect it to vary in English speaking vs non-English speaking countries? Whereas, you get the same phenomena in all the developed countries as far as I know.
One thing I'm curious of is if the cost of raw goods is only slightly higher, but what counts as the baseline version of that good has changed, something like 'lifestyle inflation':
Examples:
pre-covid: spend $12 on dinner
post-covid: spend $40 to doordash dinner, even if the raw ingredients are only slightly more
pre-covid: go to irl spots to date
post-covid: subscribe to multiple dating apps to date
pre-covid: time split between office+home
post-covid: more time at home, higher expectations of space+quality, fewer amenities provided
Most of these seem like longer-term trends which covid accelerated.
It's hard to know the right way to measure this, but if we look at the revenue from all of these consumer companies (e.g. all delivery services, all streaming services, I even subscribe to chat apps and social media now, neither of which I did prior to covid..) over the last decade, it's a large figure and has to be coming from somewhere.
Generational inequality can become very noticeable, though, if you think about differences in consumption patterns. Think about how much of the economy is geared towards producing for which cohort. Older people living in suburban homes have very different consumption patterns from younger folk renting in urban areas. A lot of lawnmowers are being produced, but not enough matcha lattes because the older folk now have a lot more relative economic heft than they used to.
Even CPI wouldn't necessarily capture this difference. The basket of goods will also be biased towards the more numerous Boomers' consumption patterns. So one would have to look at cohort-wise CPI adjustments to rule out this story.
From an economist's perspective, there could be another explanation: if people are rationale, they may be taking their lifetime disposable income into account. When social security is bankrupt, and deficits remain high, and the only way to preserve benefits is to continue to increase the future tax burden on millennials and gen Z, then perhaps some deep pessimism is totally rationale. I don't say I believe that story, but it is one potential explanation from economists.
The catch is that expected death of Social Security isn't new either. 35 years ago, I assumed it would be bankrupt by now. My grandfather told me that he had expected social security to be bankrupt before his own retirement in the 1970s.
This doesn’t fit chronologically too well, but rates of obesity, diabetes, and chronic pain have shot up dramatically since the 90’s at least, with a related surge in unemployment and disability. Youth pre-diabetes is skyrocketing too.
I can’t help thinking that all these miserable people are dragging down the vibes for themselves, their family and friends.
A sense in which I gather "the vibes are bad these days" which was only tangentially addressed here: the vibes are that old people have too much power and sacrificing us for their benefit:
1. Elected officials are really old these days, because increasing life expectancy has decreased a significant source of turnover.
2. Old people are a larger fraction of the population, so their votes have more influence (this is true, as you addressed)
3. Old people have a higher share of wealth (true, as discussed here) so their campaign contributions have an outsized influence (do they actually donate to campaigns proportional to this wealth? idk)
4. It often takes a long time for the government to bring about change when it wants to do something with infrastructure (see e.g. LA's Measure M, passed in 2016 to build out more public transit, but which is still working on delivering it's projects, or California High Speed Rail, which was passed before then and still not connecting any cities with high speed trains), so in many senses it matters how old the people who were voters/electeds a decade or more ago are, making this worse (the vibes are that programs like that are getting worse/slower, making this aspect worse, but idk how true this is).
5. Old people disproportionately run the businesses we have to work for (unless you want to run your own business, which I don't) due to it taking a long time to work up the hierarchy, giving another axis of influence (is this getting worse? idk), and they make decisions to enrich themselves at our expense (which is maybe unfair to lump in a small group of people as "boomers" more generally, but vibes don't care about details like that).
What does it cost to buy future stability? Can it be done?
We've got climate change eating at the idea that institutions or countries can continue without shocking alterations. We've got AI eating at the idea that skills will allow you to earn a living. We've got inequality eating at the idea that changes will benefit instead of harm you. And we've got the decreased friction that makes it feel like everyone hates you, personally.
Where is the optimism supposed to be coming from?
Problem is that the people pushing that line have never admitted it was a problem to begin with. And we can all see it is, just from the cost of natural disaster numbers.
Nate isn't the one pushing the idea that climate change is over as a problem. You are. Don't hide behind someone else and pretend.
Gonna be kinda hard for them to be the same people, given the 45 year gap between the ozone layer response and AI. That's a full career span.
>For another thing, the loudest complaints come from young people who don’t have mortgages anyway.
>This on its own can’t justify the entire vibecession, because most vibecessioneers are renters,
This feels to me like saying 'People have proposed that the recent turmoil comes from the increasingly high price of bread, but most of the complaining actually comes from very poor people who can't even afford to buy bread in the first place, so that can't possibly be the problem.'
People who want a home and can't afford one are exactly who you should expect to be complaining the most about high home prices!
>No. As we see here, over the past decade, the bottom quintile has done (relatively) best of all:
I feel like the 'relatively' is doing too much work, here...
Imagine the thought experiment where the lowest quartile started off making $10,000 and went up 5%, and the highest quartile started at $500,000 and went up 1%.
That means the bottom quartile is making an additional $500, and the top quartile is making an additional $5,000
There's a narrow syntactic definition by which you could call this 'decreasing inequality', but I don't think any of the bottom quartile people would experience rich people's income going up 10x more than theirs in real dollars as 'decreasing inequality', and celebrate this great victory.
Furthermore, things like houses and pizzas are bought in real absolute dollars, not in percents of income. If rich people and poor people are competing to buy those things in a market, the determinant of who gets what is how many real dollars everyone has, not by what percent their relative incomes have changed over time.
I think what young people are really complaining about is a lack of mobility. Sure you may make the same money as your colleague, but at the end of the day you may feel stuck due to the class you were born into. Let's call them Person A and Person B, who are both 25 and make $60k.
Person A:
- Born into upper-middle class
- Got mediocre grades but passed
- Great healthcare/dental their entire life, checkups cost very little
- Parents paid phone bills, medical bills during student years
- Assisted or paid for their education in it's entirely
- Helped with a down payment on their first home
- Stand to inherit some portion of the family home/money when parents pass
Person B:
- Grew up middle-lower class
- Busted ass to get top grades since they were told it's the way out of the life they've known growing up, but ultimately wound up in the same job as Person A
- Accumulating health/dental issues due to not being able to afford them earlier in life, gets hit by them now that they have a "real " job
- Saddled with student debt that eats at every pay check
- No money to pay for a mortgage after other expenses come out
- Parents leaving little-to-no inheritance, so they need to save aggressively for later in life
Even if Person B's top grades and perseverance land them a job earning twice as much as Person A, there's a real chance that they're still stuck in the class they were born into.
That's certainly a thing to complain about, but has it got worse over the last few years?
Campbell's law:
The more any quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.
the data the economists use has been campbelled to meaningless
and on the other side
Spengler disease :
people with no real material problems like to complain A LOT
as society gets richer , more and more people get to complain
there is also a possibility of the entire system degrading as a whole (though I don't believe that it is the right explanation). but in theory, it could be that "the same set of people" is no more "competing for the same set of results", but instead, for a "some smaller set of results". e.g. "all the good paying jobs have suddenly moved to China".
It's very important to distinguish between household income and personal income because the number of earners per household has been shrinking. Real median household income is up only 38.5% in the trailing 40 years, but real median personal income is up 60.75% (source: https://fred.stlouisfed.org/series/MEPAINUSA672N) That's almost a doubling of the gains in income, if you look at individuals instead of households. H/t Thomas Sowell who raises this point in several of his books. No one should ever quote household income figures for purposes of evaluating the state of the labor market -- it's extremely confounded by social changes in household size.
Can you explain this? I would have expected household income to go up more, because now more women are in the workforce. Who is leaving the workforce? Were people's live-at-home children working 40 years ago?
Almost all the increase in female labor force participation happened more than 40 years ago. The trend plateaued in 1988 at 83%, vs 65% in 1948. Almost all the increase in single parent households also happened more than 40 years ago so I’m stumped as to why the figures diverge so much. Fewer children pooling their earnings into the household total?
https://fred.stlouisfed.org/series/LNS11300060
chatgpt 5.2's answer also mentions:
* Aging reduces earners per household as some of them retire.
* fewer adults living together (not fully captured by the single parent household stats -- marriage rates declined more)
* income effect: People fissioned into more households when they could afford to do so.
https://chatgpt.com/s/t_694fe815dc588191ad70a0deb83b0fea
CPI is fine, but AFAIK the basket of goods does not factor in changes to the quality of the goods. While shirts and pants are about the same price or cheaper than they used to be, they're also made of plastic, baggy and stretchy, and are often tossed after just a few wears. They suck, yet consumers pay about the same price as they used to. TVs on the other hand are like *the* example of a consumer good getting better and cheaper simultaneously. And then, how different can a carton of milk possibly be year over year? Could it be that a basket of goods seems relatively price-stable and yet the overall consumer perception is, this stuff is turning to cheap crap?
Thank you for your analysis but this smells like one of those many, many things in America that makes zero sense until you break it down by race, or at the very least, tribe.
Arguably could be less of an “elites driving the national conversation -> vibecession” and more of a “people with X type of job drive the national conversation -> vibecession.” I haven’t looked at the data, but looking at the jobs that have gained the most and lost the most employment since 2022 would be interesting
the past 20 years of journalism moving online has been particularly bad for jobs in journalism. That seems like an obvious explanation of the increasing negativity in media. Also people got on social media and went crazy because of algorithms that optimize for eyeball-time instead of endorsement-upon-reflection.
The wealth accumulation graph is interesting. Seems like GenX accumulated wealth at greater rate than millennials in their young professional years (20s-30s). Which isn’t explained by the population pyramid since there are more millennials than Xers.
I think the vibecession started in the mid-2010s because that's when all the social media sites changed their algorithms to optimize engagement instead of explicit likes. On the margin that increases the reward for producing and the probability of spreading everything that the better angels of your nature don't want you to see, and that caused most of what's wrong with twitter. An increase in fakery, combativeness, negativity, intellectual laziness, etc.
I think you gave up on the housing explanation too quickly. Kevin Erdmann has shown that rent increases have hit the lower end of the income distribution especially hard, and in a recent post (https://kevinerdmann.substack.com/p/im-afraid-the-economy-isnt-improving) he notes that rent-adjusted income growth for the bottom third of households was basically negative from 2015–2022. If there’s a non-cyclical driver behind the change in “economic vibes,” my strong prior is that it’s coming from housing or health care.
For the first time, this is less than I wanted to know, very specifically regarding inflation measurements and how we adjust for it in wages.
Specifically, I can remember around 2013 when there was a proposal that Social Security COLA adjustments (annual cost of living increases) be tied to Chained CPI, rather than CPI. And the AARP seemed very, very convinced that minor changes to how inflation was calculated would dramatically impact real people’s Social Security checks (1). I’ve seen calculations that chained CPI is 0.25-0.3% (5) lower than CPI. Which is small overall but large relative to overall inflation, roughly 2%, and compounding.
I don’t want to argue here that the goldbugs are right and the purchasing power of the US dollar has dropped by 80%. But it does seem plausible that different inflation measures, even if both equally valid, could dramatically alter the real median wage over this period.
For example, from FRED’s “Real Median Household Income” series (2), from 2000-2024, income grew from $71,790 to $83,730. That’s about a 16.6% increase over 24 years. That’s roughly a 0.6% annual growth rate. If the difference between Chained CPI and CPI is roughly 0.3%/year and real median income growth is ~0.6%/year, then how we measure inflation has a pretty significant impact on how we calculate real income, as well as every inflation adjusted measure we looked at.
And I’m pretty confident that chained CPI is valid, because in the “Real Median Household Income” data from FRED, under notes, it says “Income in 2024 C-CPI-U (2000-2024) and R-CPI-U-RS (pre-2000) adjusted dollars.” Which looks like the pre-2000 numbers are calculated using traditional CPI and the post-2000 numbers are calculated using chained CPI. This is buttressed by the fact that FRED’s chained CPI data only goes back to 2000 (3)
So, briefly, I don’t like the “Miscalculation Of Inflation” section and I wish it dove into more detail because:
#1 There are multiple valid inflation metrics. I have nothing against CPI, it’s a solid metric and we have the data going back to the 60’s, and I have nothing against chained CPI, which is the current standard FRED uses and also makes more sense (4). However, there are more inflation metrics beyond Chained CPI; Penn State lists 5 here alone (6)
#2 The impact of different inflation metrics is large enough to significantly alter the increase in real median wages, say up or down 50%.
#3 I don’t understand how the decision to use different inflation measures affects all our other inflation adjusted metrics. To make this specific, I don’t know what the real median household income would be for 2019 if we calculated it with CPI (the way we did in 1999) vs with chained CPI.
#4 The response from economists here feels…dismissive. Which would be fine if there really was a single consistent inflation metric everyone was confident in, and maybe there is, but there seems to be a lot more complexity and value judgment to inflation metrics than “just CPI”. Especially when there’s such a gap between consumer sentiment/vibes and official statistics which would be significantly impacted by different inflation measures.
#5 Which is worse, because…I cannot help but note that the kind of guys who post things like the “US Wages in Gold” or “The Fiat Crisis” (7) are disproportionately multimillionaire crypto bros who…On the one hand they all sounds like salesmen at best and scammers at worst and constantly predict a US fiscal and monetary collapse but…they did go act on those beliefs and built the entire crypto ecosystem worth at least half a trillion. Anyone who’s financial/economic philosophy directly leads to them inventing their own ridiculously lucrative alternative financial system deserves to be taken at least somewhat seriously.
To clarify, I don’t think the impacts of different inflation measures are large enough for a decline narrative but they could be for a stagnation narrative.
Real Income growth of 16% from 2000-2024 sounds like slow, solid but uninteresting growth. 6-7% total growth over that same period “feels” like stagnation.
Inflation-adjusted rents going up 40% vs 30%.
An average mortgage payment of $3.3k vs $3k compared to an average mortgage payment of $2k in 2000.
I would appreciate any insight anyone else has, as this is a subject I know worse than nothing about, I know a little. And I wish I knew more.
(1) https://states.aarp.org/what-is-the-chained-cpi
(2) https://fred.stlouisfed.org/series/MEHOINUSA672N
(3) https://fred.stlouisfed.org/series/SUUR0000SA0
(4) As far as I can tell, chained CPI just attempts to adjust the basket of goods by how consumers vary their purchases as prices change. Pretend I buy 4 pounds of beef a week. The price of beef doubles. I stop buying beef and start buying chicken. CPI measures as if I still buy 4 pounds of beef. Chained CPI tries to capture my change to chicken, which is hard.
(5) https://www.cbo.gov/publication/44088
(6) https://sites.psu.edu/inflation/
(7) https://balajis.com/p/fiat
Good comment. I too thought Scott much too dismissive and hand-wavey on "Eh, economists love CPI so I trust them."
“Uber for humidifiers” sounds like something John and Ramchandra would pitch at Bay Area House Party: Episode IX.
I think Scott has his fingers all over it: credentialing, job hunting, dating, house hunting, etc. have all become Red Queen’s Races. Martha Millennial has to work much harder to get to the same place that Brenda Boomer did because the race *for everyone* is harder. Everybody needs more internships, more networking, more degrees so we all have the same or slightly better economy. But it feels terrible because it is terrible. If Martha has to apply to a 1000 jobs when Brenda only applied to 10, Martha is genuinely worse off, even if their jobs are basically the same. (Also: why is GenX once again forgotten!?)
That strikes me as adjacent to Joseph Heath's idea on what drives populism (https://josephheath.substack.com/p/populism-fast-and-slow). Key excerpt,
"Elites have basically rigged all of society so that, increasingly, one must deploy the cognitive skills possessed by elites to successfully navigate the social world. (Try opening a bank account, renting an apartment, or obtaining a tax refund, without engaging in analytical processing.) "
People don't seem to experience negative subjective effects from inequality:
https://x.com/robinhanson/status/1994254650250547572
I'm here ~450 comments too late so I have no doubt this comment will be ignored, but I think there is an economic measure that *does* explain the vibecession: labor market tightness. Or put another way, how easy is it for you to shift jobs and get a raise.
When people are asked "how do you feel about the economy?" they don't interpret that as "how are you doing today?" but rather "what are your prospects for the (short term) future?".
And since 2023 they've been bad! People over hired during COVID, when it was easy to get a 20% raise changing jobs, and the job market has been bad or flat ever since.
People felt good about the economy in 2019, because the job market was good! People even felt good about it in COVID because the economy was overstimulated. And growth gives people hope.
Where is the hope now? Gone. People feel lucky to keep their job and know the market is tough.
My prediction is that the vibecession will end when the labor market tightens again and people start getting raises again, or feeling that they could get one if they tried.
I would recommend reading Kevin Erdmann’s work. He argues that the housing shortage is now national- not confined to “superstar cities.” I think psychologically this is an important piece of the puzzle.
I have only partly read the post + comments, but is the following point considered: "The bottom quintiles have greater voice now -- due to lower absolute poverty and due to social media -- so their frustrations are heard better."
Perhaps the vibes were killed by a sense of instability. If you feel you can never truly achieve/get success because it can't be held, that would hard skew your perspective. The pandemic lockdowns were a big wrench for most people. Unlike a national tragedy like 9/11, this was personally felt by most young people. Unlike a burden like WW2, there's was no ticker tape headline "It's over! We won and we're back!" Those vibes just linger, everything could fall apart at any moment and there's nothing you can do..
"youth-specific unemployment rate was near historic lows"
Worth pointing out that unemployment traditionally doesn't include people who aren't seeking work (as another commenter pointed out) in addition to not including people employed in potentially less desirable gig work
If the income data includes these people then this is partially accounted for with the caveat that a situation where the bottom and the top diverge with the top incidentally including the 49th percent would still show this data with this split caused by something like a K-shaped recovery
You mention individual debt, but no mention of government debt? The extremely high government debt ratios which young people are going to be expected to payback should be part of the story here.
If individual debt is the same while simultaneously the government debt is at post WW2 levels across the whole developed world, and that is before factoring in the real crunch that will hit government finances as the boomers continue to age out of the workforce and start drawing on heavily-politically protected and completely financially insolvent pension systems.
Anecdotally, I don't know a single person who seriously expects to receive any sort of pension in old age while we will still have to pay/service the debt we had relatively little to do with running up.
Is government debt related to the cost of consumer debt? CJL notes below that Bolhuis, Cramer, Schulz, and Summers (2024) argue that it’s the price of debt (which is not part of the CPI) that explains the vibes, and that this helps explain sentiment differences cross nationally as well: https://www.nber.org/papers/w32163
> There is one anomaly, which is that I remember people complaining about the bad economy and the Boomers and hellworld since well before 2020 (consider the Trump and Sanders campaigns), but the official vibes didn’t crash until COVID. Is my memory faulty?
my memory is the same, and I'm now asking the same question.
every chart in this post seems to support, or at least not contradict, the following story:
- 2008: Subprime mortgage crisis. economy is bad. vibes are bad
- 2009-2018: economy steadily improves. vibes steadily improve.
- by 2019, vibes are about as good as 1998.
- 2020: Pandemic. economy is bad. vibes are bad.
- 2021-present: economy is... complicated? stocks are good. wages briefly shot up, then slowly declined, and are now rising again. recent grad unemployment is rising. vibes are improving, but still bad in absolute sense.
are we just conflating two different trends?
- a mysterious meta-vibecession in the 2010s
- a real but explainable vibecession in the 2020s
> even though bad economies are exactly when you would expect next year to be better
This feels like Gambler's Fallacy. Historically speaking, when people have felt like things are bad, the next year has generally been worse. There's no iron law that things will get better just because they've been bad for a while, and just as good things compound, bad things (or absences of good things) also compound.
Things have been bad and gotten better at times, but this tends to take heroic effort that is only later treated as inevitable.
RE: The metrics:
Charts 1, 2, and 4 use "real income" or something similar as their metric, and show it consistently going up. The natural counterargument is that their methods for calculating inflation are faulty, and they underestimate the degree to which the dollar has deprecated. Anchoring to food or housing costs would've been better. Big Mac Index isn't perfect, but it definitely paints a different picture.
Chart 3 shows "employment rate" which has, for the last decade and then some, been goosed by filtering out people who have given up and stopped looking for work. This (https://www.bls.gov/charts/employment-situation/civilian-labor-force-participation-rate.htm) is the real employment rate graph, courtesy of BLS.gov. It has steadily gone down until 2016, gone up for about four years, plummeted with the Coronavirus, and then stagnated well below pre-2021 levels.
To touch a bit more on the "more effort for same results" portion - the interview process has grown more and more bloated/performative, and in some cases has become an arms race (recruiters using AI to filter applications, appliers using AI to generate cover letters / modify resumes to get past filters).
When I was about to graduate college (good grades, CS + math degree in 2017 before the job market declined, etc) I applied to 10+ jobs a day with not even an interview or non-automated reply. Then a professor told me about an opening with a company he works with, and I instantly got an interview and then the job. Within a month I had several recruiters reach out to try and hire me for the exact same role at different companies. Anecdotally, many of my friends have similar experiences - I think only one of them has actually gotten a job without being expedited through the process by a connection, and that was because he was truly uniquely qualified for the role.
Maybe this experience is different for 'stand-out' candidates, but that just brings us back to the original issue: more effort, same results. In the 60s/70s, my dad learned programming from discarded punch cards and got a job in the field after dropping out of college. Nowadays kids are getting 4.0+ GPAs and extracurriculars to get into good colleges, dropping tens to hundreds of thousands on tuition to get bachelors and masters, and then still struggling to find jobs - likely at similar rates to before college was necessary.
Thank you!
This world needs more factcharts, datagraphs and exploration of *multiple* hypotheses! You've even got more than two hypotheses here! Bravo! 👏👏👏 (it's worth *at least* three claps 🎉)
The one thing I'd have looked for is: isn't there a survey on *how* people perceive things as bad? Seems like an obvious starting point for hypothesis generation, unless no such survey exists. Back in the days of reporters, they'd actually go around with microphones asking people.
> they’ve done no worse than the US average.
*Studio apartments* going up by well over $1000/month in NYC is no small change. Most Manhattan studio apartments are over $3000/month? Maybe nbd for a man of your eliteness, but I find this absurd. That's more than I spend on everything in a typical month (I own a 3-bedroom house, and am supporting at least three other people).
I think it'd take longer to properly explore this than the space of this comment (honestly, if I really wanted to explore my own position on this properly, I think it'd take more than the space of this blog post.) But as someone whose impressions of society are generally not much driven by news media, my feeling is that there have always been people saying that things are getting worse with time, regardless of what economic indicators say. But since around... maybe twelve years or so, give or take? My impression has been that people pretty much everywhere I go genuinely do seem to be getting less happy and less satisfied with their lives over time. I think this is a real reaction to changing circumstances (people are not simply becoming less happy because news media are telling them that things are bad and they should be upset,) people are correctly noticing things are getting worse in ways that substantially affect their life satisfaction, and economic measures are badly geared towards capturing these changes.
In theory, when economic measures are improving, people should be better off overall, because economic progress tracks the production of value, broadly "things people want," and as long as it goes up, people should b getting happier. In practice this simply isn't true, the axioms of economic theory depart from reality in some essential ways, and it's entirely possible for economic measures to improve while people are becoming worse and worse off overall.
One thing I might look to is not a basic basket of necessities, but a basket of luxuries and near-luxuries.
Specific to the upper midwest, there are a lot of people whose parents had a "nice" car, a cabin "up north", some family vacations to X, etc. Consider the current price point of boats, small aircraft, offroad equipment, and other luxury goods. There's an old joke about how you could tell how the auto industry was doing by the size of the shrimp cocktail at the Detroit Auto Show. And flying sucks post-deregulation (even though we can do it much more at lower prices!)
I wonder if there's a simultaneous mixing of perceived quality dramatically decreasing* while a certain basket of aspirational luxury goods relevant to some socio-political sect of tastemakers has dramatically increased in price?
*flying. Or most home goods and many consumer goods. There's no "nice lower upper middle" segmentation anymore, there's Ikea, and there's $5k Amish hand built footstools.
I wonder if you're underrating overt corruption as a primary cause.
Empirically, the economy is all about dollars and cents and relative wages. But in terms of vibes and narrative, the economy is a story. "People are paid according to the jobs they do and the worth of those jobs. If you work really hard, stay in your job, and be honest, you can be successful and build a great life. The harder you work, the more successful you can be!"
This was always just a story on some level, but I don't think its ever been as obvious of a lie as it is now. The President isn't the hardest worker, but a mob-boss who's primary skills are grifting, bullying, and abusing the legal system. The most successful billionaires you hear about are often just people who played the right casino or happened to find themselves at the top of a technology stack during the moment that technology went big. The richest man in the world doesn't even pretend to be a hard-working Tony Stark anymore, he's clearly an aging fat racist obsessed with winning imaginary culture wars on X. We all can watch Elon score a trillion-dollar pay package while his social-media-addled brain crashes his company's sales into the ground. And when we see things like this, we lose faith in the economy's ability to allocate resources with any kind of fairness or sanity.
Add all this up, and you get a world where working hard is for suckers and losers. The real success stories come out of the casinos, from scammers and liars and the lucky. Real success is the content creator who's 30-second game video randomly goes viral on YouTube. The crypto billionaire who bought the right memecoin in the right second, the latest silicon valley startup that monetizes destruction of the social contract. The ultra-rich don't even bother to pretend it's any other way, they build themselves gilded ballrooms and livestream the lavish parties where they laugh at the poor hard-working fools they're depriving. Their incomprehensible wealth built on the backs of all the people stupid enough to go into work.
For people who aren't successful influencers or grifters, I think this state of affairs is just hard on the soul. It's hard to feel good about an economy increasingly built on crypto scams and predatory betting markets and gilded-age cruelty, even if it's making the lines go up. It's hard to have faith in a system that seems to live and die on the whims of meme-brained investors caught in the throes of incomprehensible tech-religions. I think when people try to measure "the economy", they aren't just thinking about the numbers but also how those numbers make them feel. If you're a good person, something you want from the economy is a feeling that it organizes society in a way that feels at least vaguely moral. You want the wicked to be punished and the virtuous to be rewarded. Our economy has become exceptionally bad at delivering on this, and it always feels to me like a core reason for the negative vibes in every person I talk to.
Yeah, I agree that Donald Trump's corruption relative to that of other US politicians is exaggerated; US politics is pretty clearly corrupt, and has been for a long time.
That said, I do think there's an increasingly pervasive sense that there's no longer any reliable connection between working hard and doing well, in both the economic and the personal spheres. Some of it's because bad things are getting noticed more (e.g., Donald Trump and his corruption), some of it's because of past events (COVID lockdowns -- if the government can just shut down the country indefinitely with little to no warning, how secure can your plans for the future really be?), some of it's because of increased competition (degree inflation, dating) and some of it's because a lot of stuff is genuinely more random and opaque than before (algorithms auto-rejecting your job application because your CV didn't have one of the precise key words the company was filtering for).
Trump is orders of magnitude more corrupt than Biden
This.
Yes. But at the same time the memecoin crypto scam economy is booming, the practical economy, building houses and factories, is in the doldrums. Fewer houses are being built. Fewer tons of steel are being produced.
The economy looks good, in part because the economy is becoming increasingly detached from reality.
Perception of the economy is extremely politically determined: https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2Fcbrus9mj2n4e1.jpeg
Could the poll results reflect increased political polarization? I.e. there's now no longer a group of people in the middle whose opinions reflect the actual economic situation of them and people they know, who would prop up economic polls when the economy is actually doing well? (Also Trump is highly polarizing, which could also skew the poll results)
That's a great chart, I'd love to see an updated version. Did things flip again in January 2025?
looks like it https://www.pewresearch.org/short-reads/2025/10/03/most-americans-continue-to-rate-the-us-economy-negatively-as-partisan-gap-widens/
Fantastic, I love it.
Unlike the 2021 flip where you can say there was a lot of other factors going on due to covid, the 2025 flip is fun because nothing of note really happened to the economy in that time.
The 2025 flip is also interesting because it seems like the first time the flip is actually similar in size between Democrats and Republicans. In 2017 Dems don't move, in 2021 their jump is about half as big as Republican drop, but in 2025 they're both between 30 and 35 points.
Wouldn't high house prices affect those who didn't own homes the most? after all if you own a home already, you're set. It's those who are currently renting and want to own a home and are realizing it ain't gonna happen that are thinking "this economy sucks now; my parents own a home"
To the extent you believe the large consumer confidence surveys (Conference Board and UMich) accurately measure sentiment, there are dozens of subindices which shed light on the actual reasons people feel bad.
A few things to note - there's no obvious differentiation by either age or income, so any hypothesis relying on things being especially bad for young/poor/middle class is not showing up in this data. The subindices on labor markets, income, and the stock market are strong (as they should be). The subindices that are weak are related to inflation, buying conditions for durables (inflation again), buying conditions for homes, and vibier questions like expectations for retirement, expectations for future income, etc.
The OECD also produces consumer confidence surveys and the US is pretty middle of the pack compared to other advanced countries for the last three years - US, Australia, western europe, UK, japan, are all in the -1 to -1.5 z score range historically. China is the worst, around -2 z scores. Interestingly, Mexico is one of the few places with high consumer confidence right now.
So for me, the synthesis should be any explanation is pretty global and pretty widespread across demographic groups. That suggests inflation and media negativity.
I was a doomer when I graduated in 2014 because that's what my parents and literally every single media outlet and professor were preaching to me, then I got a job right out of a college with a mediocre (3.6) GPA from a state school and went to work as an analyst at a midsized regional bank, got promoted internally a few times and lived very frugally with my wife (met at work), now I'm able to be a stay at home dad with our kid while she works from home. We live in Oklahoma; we bought new construction last year for $200k with some spare cash I had laying around in a brokerage account. So I am pretty fully cured of the doomerism, success is trivial. My bosses and coworkers constantly praised the fact that I approached my job with gratitude and focused on identifying the goals and achieving them efficiently and optimally from 9-5 every day. That's it. No late hours, no connections or networking or anything else fancy.
I have a stoner friend from college, he's had 5 jobs in ten years (gets fired or laid off every couple of years due to bad/entitled attitude at work - including from a job at my bank I helped him get before he graduated). No gf, due to terrible attitude toward women and insane standards he doesn't himself meet. Smokes weed and plays video games and puts in minimum effort at work, then complains the billionaires are keeping him down. Most recently he was making more than our state's median household income while saying this. My theory is it's 100% media and cultural degeneration/bad memes.
Gonna do the bad thing and post a link without being 100% sure it hasn’t already been posted, but this is right on point:
https://drafts.interfluidity.com/2025/11/12/real-purchasing-power-over-time-is-not-economic-welfare-over-time/index.html
Thanks for posting that! It's all worth reading, but this quote stuck out for me:
"One can argue that, by the preferences revealed in America's historical suburbanization, our contemporary sprawling life is better than the more compact urban life that preceded it, and actually commuters are gaining welfare roughly in proportion to the vast expansion of transportation miles purchased. One can argue that America's suburbanization reflects political, economic, and social factors beyond individual preference, that are in any case locked into the built environment in ways now exempt from personal choice, and that in fact suburban life is alienating and undesirable, as revealed by the very high cost of housing in compact urban areas that offer similar levels of safety and amenity under a pedestrian lifestyle."
People have a bias towards predictability. If you get fired from your job in 2025, you are likely to find paying work, but maybe it is some high paid remote job stationed in Maryland that you have never heard of. In comparison, if you get fired in 1990, maybe there are four to five companies in your field in the city, they all hire only locally, and you are friends with someone who works at each one, and you know that someone at one can probably convince management to squeeze you in.
Modern economic life feels very unpredictable. The prices and how they change feel unpredictable. Where you are going to work in five years is unpredictable. Neurotic people equate unpredictability with badness.
As a Boomer born in 1955 I can tell you what part of the Problem is, people do not look back far enough. The Modern/Post War US was created by the Greatest Generation which came home from WWII with the elan that they could do anything. Prior Generational Elites had Kowtowed to Europe but these Guys had rescued the British, Put the French in their Place, Pacified the Germans, Stood down the Soviets & Nuked the Japanese. They then created the Greatest(at least until then) Boom in US history 1946 - 1971. Things fell apart Economically for the next 20 years until Boomers took over with Bill Clinton skipping the Silent Generation who were Children during WWII but made up the bulk of the Korean War Vets always the third Wheel behind the WWII Vets & the Boomer Vietnam Vets & for awhile eclipsed by WWI Vets.
Zoomers especially don't realize that when the Vietnam War was on there were 550,000 US troops in Vietnam. That number was drawn down after 1970 but they still were Drafting 20 year olds for all of 1971. All those Men(Pre Coed Military) being released into the Workforce with 10 Veterans points instead of 5 like today seriously blocked opportunities for many 2nd half Boomers. BUT we still had cheap College Tuition. I paid $741/yr to attend UC Berkeley in 1980/81($2914 in 2025) & received a $900/yr($3539 in 2025) Pell Grant to pay for it. We sucked it up, survived & parented the Millennials.
I actually agree it's the Phones & but also Dating Sites plus the Centrality of NYC(SF to an extent but limited by the 3 Hour Time Difference). These proliferations along with COVID shutdowns killed nightlife which hasn't returned Post Pandemic. Therefore their are no real places to meet people organically so everything is driven by the feed on your phone/device. It has also caused declines in the Beverage/Food Sector sector where young people find employment & actually might be behind the decline in the Alcoholic Beverage sector because people don't consume as much at home. It also factors into the Retail Real Estate Sector decline.
(1) Regarding housing:
(a) The graph for average mortgage payments is for *new* mortgages, but for any given year's new mortgages (and adjustable rate mortgages) only make up a small fraction of all mortgages. A graph of average mortgage payments would show much smaller changes.
(b) There's a ton of talk of homeownership, but you didn't look directly at the homeownership rate. Here's a graph: https://fred.stlouisfed.org/series/RHORUSQ156N
(It rose since 2016; it's below the Bush era pre-recession peak; it's above pre-1996 levels; none of these changes have been large.)
(c) The most important thing about the homeownership rate: it's ~65%, so a majority. So (ignoring that some people would like to move out), increasing home prices are good or neutral, not bad, for the median American household. (But the homeownership rate in Brooklyn is <30%.)
(2) The section on media vibes didn't consider the cause; but the source of the negative media vibes is pretty clear: the number of journalism jobs dropped by >50% since 2000, due to competition from the internet. There is in fact mass unemployment among journalists; journalists are being paid worse, probably can't afford a house, etc.
Higher housing prices are only good when you cash out. If you intend to live here for the foreseeable future, higher value doesn't matter much, and may even be bad, due to property taxes.
Maybe the median hourly wages trend is pretty flat and increased median household income is largely attributable to women working longer hours (outside the home)? That might account for some sense of stagnation.
Idk man. My wages aren’t higher than six years ago for my profession. (Big tech in SV) Homes have definitely gone up in price here too. The homes in Palo Alto were unattainable then too but then the rest of the neighboring areas got even more expensive. Now, if you want to live close to work you need to be bringing home around $600k/yr reliably. That’s hard to do for one engineer. Again, it wasn’t easy before either but if you weren’t lucky to be a part of some stock boom… you’re cooked.
And it’s been years of this. It hasn’t gotten better. Prices never stayed down. Just blips and blips in the market also usually mean your job security isn’t too good either.
Dating is bad too. The ratio here only gets worse and worse every year as all the other professions are priced out and people’s kids keep moving away. What happened to women joining tech? It’s never gotten past 20% and looks like it never will grow past it.
Idk Scott. I do think for some Americans it’s not too bad. But shit, the overachievers in these competitive cities aren’t doing well.
I often wonder what the point of doing all this insane work and grinding to beat millions was worth. All I get is an old 1950s 1 bedroom rental that doesn’t even have insulation. Yet, the weather is more adverse than ever before. It’s not the 1950s anymore and I’m certainly working harder than they did then. If you were living in this in the 1950s it was because you were a failure and a drunk - not the top 1% of your cohort.
Imagine graduating a top university, beating everyone to the most competitive positions in the world, and on a national and worldwide scale being in the top 1% to be living like some fucked up alcoholic who can’t even keep a job consistently in the 1950s did.
Seems like the vibes aren’t just off for the people who are actually pushing hard. The economics are fucked for them too.
I wrote of a concept called the Success Water Line that tries to explain this. In short, technological advances eliminate simpler jobs, raising the bar needed to contribute. You need to be smarter than before to be valuable.
https://open.substack.com/pub/justincs/p/the-success-water-line
Not the greatest time to be citing Larry Summers, but just wanted to point out that Bolhuis, Cramer, Schulz, and Summers (2024) take on this question exactly as of 2024 and argue that it’s not the debt but the price of debt (which is not part of the CPI) that explains the vibes, and that this helps explain sentiment differences cross nationally as well: https://www.nber.org/papers/w32163
This seems like a really strong hypothesis, which is not really in the discourse much at all. Maybe because debt is supposed to be bad, so we shouldn't feel sad if there's less of it. It's also a way of operationalizing concerns that the vibecession is connected to government debt.
>My heuristic is that when the mainstream consensus refuses to engage with a critique and hem and haw about it being “problematic”, they are usually wrong. But when they explicitly declare “This is incorrect” and write papers explaining their reasoning, they are usually right.
This heuristic appears very vulnerable to confidently spouted bullshit. As in, at the very least you still need to verify whether someone's confidently explained reasoning actually engages with the arguments it's claiming to refute. Otherwise, you'll interpret as the latter case something that should properly be classified as the former.
For an example particularly relevant to this post, I posit the recent pundit reaction to https://www.yesigiveafig.com/p/part-1-my-life-is-a-lie . Yeah, I get pundit opinion pieces are not scientific papers, but they're arguably even better for the narrow purpose of demonstrating the mechanics at play, and I found the unwillingness (or perhaps outright inability, e.g. Noah Smith plausibly genuinely doesn't comprehend what he should be arguing about) to engage with the argument really striking, and telling.
I don't know why this is happening, but it'll burn itself out over the next couple of years, or sooner. Just like all the other mass sentiments of the last decade. It's just mimetic. It might even be peaking now, given all the pushback from thought leaders.
You seem to consistently mistake "people who aren't on the property ladder" as people who aren't affected by / contributing to the vibecession, because the mortage rates don't affect them". Paraphrasing, not quoting.
As a homeowner as of 2025, my mid 30s, in the UK, in my experience the loudest plaintiffs are those who can't afford to buy a home ("... and never will!")
For obvious reasons, the prospect of never owning a home is massively bad for vibes. The more people there are who agree they won't own one, the worse the vibecession.
A bit off topic, but I'm curious why you are bothered by "Another reason not to trust it is that they changed the survey methodology in 2024" but you are not bothered by the fact that CPI's methodology is to literally change the survey every every year?
You indicated that you had read the papers by economists and were convinced it is fine, and I would like to hear more about what convinced you that it is fine for economists to change the survey every year but bad for a sentiment survey to change once in a decade?
I am genuinely very confused when I see rich Americans try to postulate that "the economy" has anything to do with "human flourishing" (even a stunned definition thereof as would be given by Marxist materialism)
My basic assumption is something like:
- Most money generating practices increase human misery and are negative-sum (even politically-neutral-status + high-status professions like doctor, pilot or high-end chef)
- Given that we personally benefit from this (even though collectively we suffer), it pays dividends to make-belief this is otherwise
- The alternative is figuring out how to prompt systemic change which is hard and will lead to a lot of immediate personal suffering (even if for trivial reasons, like having less money and people liking you less); So we don't do it
---
I'm not saying this is obvious, I think it's non-obvious and ultimately hard to prove either which way. A fair treatment of the topic would be a 50-page long debate about ethics and causal chains.
I just want to point out that it's fascinating, to me.
---
I think a better frame of analysis here would be to take actions (rather than professions or sectors) on which money is being spent.
Not "high level" things like "flying from LA to SF" but as granular as possible
Paying $300 to workers and $3,000 equipment cost to extract hydrocarbons and refine them into ATF, paying $20 gas cost + $320 equipment cost + $500 worker wages + $120 company profits for fuelling plane with ATF, paying $120 weighted license for self-check-in kiosk software ... etc
I think this sort of analysis would be hard (and one would be tempted to use LLMs, which do a very poor job at this sort of task) - but if you covered actions people pay for, selected somewhat "at random" and covered even 10% of GDP now compares to 2010 or 1990, I think it would quickly become obvious why this is the case.
My intuition about "Oh yeah, obviously things are getting worst" stems from something like this understanding of economics (vs thinking in high level abstractions like sectors).
I too have an intuitive sense that we're all fucked. However I am currently taking citalopram and undergoing treatment for depression, which I strongly suspect I have suffered from my whole life. If I always trusted the "we're all fucked" voice I would definitely be fucked. Scott is very different to me but I like his approach because there's a willingness to go where the data nudges you, and even if you don't end up with something perfectly true it's probably more reliable than the scared adolescent in my brain. I wrote my first draft of reality when I didn't really have a clue. I'm here trying to write the second.
Maybe we should blame social media for this too?
You included a chart showing that the vibes got bad specifically after the pandemic, then said, "I remember them being bad before that" and based your analysis of the various theories on the latter instead of the former.
I'm also skeptical about the rent chart and would like to see the source data. I've seen plenty of articles stating that, for example, the average post-pandemic rent increase in the largest US metro areas -- housing half the population and probably significantly more than half of the younger set -- is something like 50% (my rough calculation from https://www.cbsnews.com/news/rent-apartments-cities-near-me-biggest-increases/ ). This has to be inflation-adjusted, but I think if you say "most urban young people saw their rent increase by 50% in 3 years" it takes on a much different flavor than the "this is a New York problem" theory. (Side note: It is actually very funny that you chose Boston, a now notoriously expensive city to rent/buy in, as the hypothetical move-from location!)
When all's said and done, I think the housing theory has the most legs. Ezra Klein talked about this, along with a few other things (gas prices & cost of college education come to mind) in a June 2024 episode of his podcast: "The Economic Theory That Explains Why Americans Are So Mad." Part of the reason that I'm sympathetic is that I feel it it myself: I was vaguely mad about inequality before, but then the price of every house in the neighborhood where I live basically doubled, and the situation now seems hopeless in a very personal way. It feels like a major piece of the American Dream that I once held as attainable has all but vaporized since the pandemic.
I agree. When I read „There is one anomaly […] the official vibes didn’t crash until COVID. Is my memory faulty?“, my subjective impression was that this was a tangential remark with no further role to play in the essay, so I was surprised that it was then invoked to discount the obvious explanation, mortgage prices, younger people can‘t afford to buy their own home any more.
What if we are comparing ourselves more frequently to people we should never even know about via social media (insta, tiktok, but even linkedin). What if this comparison is driving the feeling that we are not succeeding?
I think for me, in the UK, the price rises have been like nothing I've seen in my life.
Products doubling in price and reducing in size and quality make it hard not to feel like everything is getting worse.
Even if my wages might have gone up, paying £7 for a pint seems mental.
Prices might be the same in real terms but it's hard to mentally adjust to higher numbers.
I agree. We think inflation is normal but it distorts our sense of value.
> There is one anomaly, which is that I remember people complaining about the bad economy and the Boomers and hellworld since well before 2020 (consider the Trump and Sanders campaigns), but the official vibes didn’t crash until COVID. Is my memory faulty?
Back then the vibes about the state of the world *in general* (including/especially abroad) were indeed already bad https://x.com/SweetestCyanide/status/752831763269967872, but those specifically about the economy and specifically about things in the respondents' own country cratered with COVID, I think.
I wonder how far the post-COVID vibes crash is due to direct economic (after-)effects of the pandemic, and how far it's due to the precedent of entire countries being shut down with very little warning. Once you've experienced that, it's hard not to have a nagging sense in the back of your head that "This current situation is only provisional, things might be upended again, nothing is certain anymore," and uncertainty is generally very bad for economic confidence.
I'm not from the US (Israel), and we have similar dissatisfaction here that seamingly contradicts the classic economic indicators.
I think an important indictor that isn't measured (or widly published) is what percentage of population is worse off *then their own parents*. I would expect this to be high when GDP groth is low (the "second derivative"), and when social mobility is high.
Messy. I agree with the factors listed, but I would add:
1. Depression/Anxiety - lots of reporting suggests this is rising. I have depression too, whilst it's possible we are just snowflakes, thawing out takes time. Interpreting ambiguous, okay data as "I'm so fucked" is basically what anyone with a "mild/moderate" mental health problem is fighting against. I expect some negativity will come via the media BUT it's also possible that people who are vulnerable to negativity go into the media. The media has always been predicated on constant vigilance against corruption in authority, all the way back to the Reformation. That's our culture, especially in the english-speaking world but it is exhausting. Compulsory CBT for anyone wanting to write for a living please!
2. The decrease in the rate of GDP Growth may be hard to gauge for the average person quantitatively, but qualitatively? I absolutely think people are sensitive to "what's new". What else is there to talk about after you say hello? I used to talk about movies and now I basically don't go to the flicks. Age up to a point but this has happened faster than I would have expected if it was just grumpiness. I loved Barbie, Oppenheimer, the French Dispatch - I had some critiques, but that's art for you. The trends Scott describes in the Singularity is Cancelled can absolutely be felt by consumers. Whether it's sustainable to have a high rate of GDP growth in order to overcome a negative bias is another matter.
Re: depression rates in the USA - U.S. Depression Rate Remains Historically High https://share.google/3Tzb6NXA2j1i8CXXs
I do not understand the two figures under the heading "(Briefly) Declining Real Wages". One seems to show a jump in real wages and a decline until mid 2023. If I understand correctly what you write around it, the other should show the same data but for a longer time period, but shows a drop in the variable in question and then a below-pandemic upward trend. The text below the second figure says that only the 2023-4 period saw falling real wages. I do not see that in either of the figures. Noah Smith writes with respect to rhe first figure that "real hourly earnings halted after summer 2022".
According to this analysis, the phenomenon to be explained started with the pandemic: https://www.economist.com/graphic-detail/2023/09/07/the-pandemic-has-broken-a-closely-followed-survey-of-sentiment
Previous correlations of sentiment with fundamentals broke down. So probably any explanation should focus on whatever the pandemic changed.
As a mid-millenial, I'd like to add a few vibe datapoints. Some have been mentioned in the post or the thread as well, but I'll still list them explicitly for suport;
Achieving the same level of wealth/comfort compared to previous generations, esp boomers requires significantly more complex effort, as the post somewhat outlines. Sometimes I feel like I live in a world where there is such a huge amount of dumb "I just barely finished highschool" wealth, it's hard to fathom. This is also the tone of many "boomer memes" on various platforms, so I think there is something to it.
The world, work and life, have become a lot more complex and fast-paced, for the same reward, and thus more stressful.
Somewhat related to above; the basics of life seem complex now (because they maybe are?), like dating, and maybe with time settling down into a house. And there is not really any plan B/alternative bright future ahead it seems.
We are overwhelmed, over- and under-informed, like knowing more about psychology and health than ever before, but at the same time maybe oblivious to other strifes. At the same time we might not be psychologically actually healthier, just more sensitive, which can lead to worse outcomes I guess.
Generations feel more isolated than ever and nobody learn from each other, maybe that's echo-chambers, maybe it's erosion of shared spaces and discourse culture
Everything seems to be eating its tail, fake reviews, extreme targeting, enshittification of the web, politics etc.
I guess I could continue for a while, but maybe interesting enough as quick sketch.
> Kevin Drum has this up to 2020
> [Average Mortgage Payment]
This is a case where I'd like to see an explanation of the graph.
(Actually, I'd like to see that in almost all cases. I can't believe how common it is for essays to look like "I believe X. Look at this graph:
[graph with no labels]
As you can see, this unlabeled graph proves the correctness of my position.")
What is an "average mortgage payment"? Is it the payment that is calculated by assuming a 30-year fixed-rate mortgage after making a 20% down payment on a house that cost the average price of a house that year?
Is it the amount of money people spent making mortgage payments that year divided by the number of mortgage payments that occurred that year?
Is it some other quantity?
The graph is actually titled "Average mortgage payment: adjusted for inflation and the 30-year mortgage rate". It sounds like adjusting for the 30-year mortgage rate would make this graph completely invalid as to the question "are the bad vibes driven by interest rates?" But I don't know whether that's true, because all I have to go on is the subtitle.
> does this prove that the root cause of rising college prices was government loans all along?
Years ago I read something that outlined the following argument:
- College tuition has gone to outrageous levels.
- Some people say this is because the cost of operating a college keeps going up.
- Some people say this is because the government will give anyone a bunch of free money if they promise to spend it on college.
- Everyone seems to agree that it's a complex issue and there's no real way to tell these two theories apart.
- Theory #1 represents a reduction in supply.
- Theory #2 represents an increase in demand.
- These should be easy to tell apart; with rising demand, prices will increase at the same time that quantity sold increases, whereas with falling supply, prices will increase while quantity sold decreases.
These are not really disentangled. Free money from the government could also cause the cost of operating a college to go up.
Yes, there is a mechanism by which free money from the government can cause the cost of operating a college to go up. But that mechanism relies on the free money increasing the college's revenue; they can't get any extra money themselves without making a sale to a customer.
This effect cannot result in quantity sold going up. And really, it shouldn't be able to affect the tuition figure one way or the other - the model goes:
1. There is a certain amount of demand for college attendance;
2. Colleges set their tuition at a rate that maximizes total revenue¹, given the level of demand;
3. University staff set their wage demands at a level that colleges can support, given their revenue.
An influx of free money to customers can increase the revenue-maximizing tuition rate, and this gives room for staff to demand more wages. But if causation runs the other way, from more demanding staff to higher tuition (to cover the staff), quantity sold will drop.
¹ I've assumed here that revenue comes from tuition. This is not necessarily the case; alumni donation might be a significant source of revenue. We'll just ignore colleges where that is true.
> Speculatively, maybe people complain that they are not getting the level of success they expected based on their qualifications. That is, the same average-talent person is getting the same average-salary job they would have forty years ago. But since they have a masters’ degree and five internships and 12,000 LinkedIn contacts, they expected to get a better-than-average job. When they don’t, it feels like success slipping away.
I sometimes mention the book Pre-Industrial Societies: Anatomy of the Pre-Modern World.
It had a treatment of education that I found very interesting. In the highly stylized model of the book, the purpose of pre-modern education is to acculturate the elite class of a geographically expansive culture such that two of them can recognize one another even if they've never met. This is necessary because the elites sometimes have to move around.
The book notes that in modernity, pre-modern educational systems were expanded to everyone, using a curriculum that was essentially unchanged from the pre-modern elites-only curriculum. This is what a "liberal arts" education means: it's an education that would keep you from embarrassing yourself in your career as a French count. That's the purpose.
But (the book doesn't note, as far as I can remember) that goal seems like it would be of limited value to the student who is unlikely to become a count.
And my uncharitable spin on this might sound a little too cute, except it's an eerily exact match for all the official messaging around college: if you go to college, and study anything at all, you will be buoyed into the life of an aristocrat.
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It's probably worth noting that a complaint very similar to this is (or was recently) dominating the vibes in China, where they refer to 内卷, which is supposed to be "the opposite of evolution". When a friend decided to mention the concept to me, something I mentioned while looking for analogies was the Red Queen's Race, motivated by the quote from Lewis Carroll's Red Queen: "It takes all the running you can do, just to stay in the same place". [This is slightly mangled from the original text.] My friend immediately declared that that sentence perfectly captured the concept of 内卷.
The stereotypical response to 内卷 is 躺平, "not trying" (literally "lying flat"). So it's not obvious to me that the theory "this is too difficult" is a bad match for the complaint "I'm not getting anywhere".
> Although this can’t lower the average society-wide success level (because there are still the same set of people competing for the same opportunities, so by definition average success will be the same), it can inflict deadweight loss on contenders
I don't understand this. Suppose you're in an Amish community where whenever anyone gets married the community assembles and builds them a free barn.
Then suppose the community modernizes and, instead of giving each new couple a barn, they offer the option to have a barn built if you take on a very large debt to certain other community members. You have to pay this debt back.
Then, because it's still the same people doing the same work, everyone gets exactly the jobs they would have before, and everyone earns exactly what they would have before.
So now, by construction, we have the same society, but new entrants are all saddled with large lump sum losses. (Old entrants get some benefit from no longer providing free barn construction labor.)
Our new entrants are getting the same opportunities with "only" a large loss. How does that not lower their average success level? It seems clear to me that their average success level is 𝘸𝘢𝘺 𝘥𝘰𝘸𝘯 compared to before. At a systems level, we've moved from each household receiving a big windfall early in their lives and then paying it back gradually (by participating in the construction of new barns) as they get more established, to each household receiving a big loss early in their lives and then making it back gradually. At any point in their lifecycle, the same household appears to be worse off under the new system than they would have been under the old one.
Then there are knock-on effects; under the "marrying gets you a free barn" system, you're going to see much earlier marriages than you do under the "marrying means you have to pay for a barn" system. That's 𝗮𝗹𝘀𝗼 a huge drop in everyone's success levels.
Kudos for thorough investigation of US economy, I’ve learned things, but at the same time, when looking at your second graph (one from Gallup), which you take to be the correct measure of vibes, I feel mystery completely vanishes?
Like, it shows that vibes had fallen of a cliff in 2020 (no explanation needed for this one), but they actually never really got as bad as in 2008, and they started to steadily improve after 2022, which was the year of inflationary spike, after which the economy got better?
So the last datapoint from 2024 shows vibes at the level of 2012, which was four years after the Crash; this seems roughly where I'd expect them to be two years after the smaller disaster of 2020 to 2022?
As for 2025, which is not on the graph, there are of course new completely non-mysterious reasons why vibes might go downhill. Not looking it up, but in the spirit of accountability, I expect, with, let's say, 70% confidence, that Liberation Day will be visible in the future updated version of that Gallup chart.
The section on inflation is a bit weak. Would be good to discuss this paper: https://www.nber.org/papers/w32163 and a slightly more recent update from the IMF: https://www.imf.org/en/publications/fandd/issues/2024/12/the-true-cost-of-living-marijn-bolhuis
It's not obvious either that people who are not currently on the property ladder are not dissuaded from purchasing their first house by high mortgage rates (https://www.cnbc.com/2025/01/23/why-americans-who-planned-to-buy-a-home-last-year-didnt.html).
Granted this might not explain all of the vibecession (unless inflation measured differently shows that inflation is still growing in excess of the Federal Reserve's target) but it is likely to explain a good chunk of it.
More people having access to phones and the internet also means more visibility on people with less. People who /are/ actually struggling might make up the same share, but you hear more from them than before since we're all on the same internet. People have also always idolized and wanted to be like celebrities and wealthy people, but social media elides the differences in background and makes everyone seem like peers, making ones own position feel more precarious and austere.
One possible version of 'More Work To Stay In The Same Place' is that it's a lifestyle issue. That is, you have to accept to sacrifice an ever larger share of your preferences to stay in the same place, for the kind of preferences that don't show up in economic data : moral values, family life, etc. It might not be the amount of effort itself which is the problem, but rather the amount of other things that you fell like you need to lose to have as much comfort (or maybe to be in the same percentile of comfort). That seems like this could result in an impression that the economy is doing worse without any visible explanation in economic data.
A factor that I'm not seeing discussed much is quality of works/quality of jobs. That is, from what I observe, work is a lot more awful now than it used to be. We've pushed hard enough on "ivory tower High Modernist metrics" AKA GDP, that we've Goodharted jobs into maximizing income at the expense of working conditions.
In particular, it used to be that employers basically trusted employees, and ate the expense from a few defectors who abused that system, lowering everyone's wages. Now, there's a firm adversarial relation between employer and employee, as increases wages at the price of a much more stressful work environment.
The true minimum wage, that is, the minimum expense for an employer to have an employee, is much higher than it used to be, and those extra wages, and lawsuits and paperwork and etc, have to come out of benefits like trusting employees not to defraud their employer by taking unnecessary bathroom breaks, or letting them bring leftover food with them back home trusting that they won't intentionally fail to sell the product so as to harvest more leftovers, or etc.
Much of the article compares "people doing the same jobs" but this is actually "people producing the same product". Work is very materially different for Americans today, and jobs aren't what they used to be, particularly at low incomes where minimum wage policies have the most impact.
I think when looking at it long term there is an aspect of change in how we consume that makes both the inflation measure inaccurate and more so perceived wealth worse. According to CPI cost of clothing has gone down dramatically, but declining quality due to a shift to fast fashion isn't really accounted for. Same goes for many consumer items. In the past consumers were forced to buy good quality stuff that lasts a long time and feels good, which is probably still the better decision today, but people act imperfectly. People also used to be forced to buy much more whole foods and cook from scratch and eat less meat. The prices of these items might have declined, but people instead shift to ultra processed foods that have also gotten cheaper, but lead to much worse outcomes and still cost more. There are also other aspects where inflation does not track perceived wealth. The biggest one being that we are much sicker today and spending much more on healthcare because of it. We also live alone more commonly and earlier. I don't think this is the main driver, but I think it's part of the story.
These, "Why don’t these poor idiots understand how great the economy is?" takes grind my gears. Economists point to the fact that, survey respondents aren’t reliable because they tend to include non-economic factors in their evaluation of the overall economy. They’re blaming people for being bad at economics rather than being humble about the limitations of economics. This idea that you can point to aggregated nationwide statistics and ask, “hunh, why are people so mad? My chart looks beautiful?” Maybe people aren’t reducible to one, or even a dozen charts. Maybe there are different reasons why different groups are miserable, and they vary by place, by class, by age cohort, by gender, and by a billion other different factors. If you just wave away problems that can't be cleanly worked into your model as "non-economic factors," it doesn't mean you're being scientific, it means your model is worthless. The real take away from "the Vibesession" conundrum should be, maybe economics actually sucks, and is bad at describing reality.
Are the “how many sprockets to make” guys really doing a good job right now? The past 5 years has been all pandemics, black swans, supply shocks, and other outlier events that aren’t predicted by, or easily modeled by economists. The only companies that have grown consistently are data center related.
The essence of rational discourse is the giving of reasons. Raw, unreasoned claims don't really belong there (although they might be useful for rhetorical effect / emoting / coalition building / etc).
If you don't like someone's reasoning, you can give reasons why it should be rejected. If you have reasons for believing an alternate conclusion, you can give those too.
If you respond to a reason-giving attempt at rational discourse with a universal unreasoned rejection, you're responding on a different plane. Which is totally fine!
Your argument (that no analysis that doesn't describe the truth of all social reality is bad) and the negative emotional valence have both been noted.
It’s tiresome, isn’t it? They’ll go right on claiming that the economy is great even as political volatility and instability clearly indicate otherwise.
Of course, they’ve either forgotten (or never knew) that their subject was originally called political economy. It’s still the correct term whether they like (or admit) it or not.
The biggest issue with the CPI is that it's not measuring 'how much does lifestyle X cost now vs then' but measuring 'how much are people spending on things' -- the basket of goods is weighted by actual expenditure.
For example, I can't afford to move to a bigger house, so I'll buy a new phone, a new TV, or go on a fancy holiday. In consumption terms, I am spending more than ever, even as the things I would really like to buy, a single earner family, a family home, and more children, become ever more unaffordable.
This was a hypothetical, not my actual situation, but I know a lot of people who are in it.
I beg you, before you give out any more advice, sit down with someone and work through their monthly budget with them. I’m sure they’d love your help.
I’d go with a hand grinder and an aeropress— no one in a flat share wants to leave a $1000 espresso machine out on the shared kitchen counter ! Plus you can take it with you to work.
I think the average person could save 6k a year by living like a monk; this is a drop in the bucket compared to the size of the 65k deposit needed to buy the modest suburban home I grew up in.
I only know one person who managed to save a down payment solo— and she lived with her parents for five years after graduating college, paying them no rent.
The zoomer/millennial strategy of “live well right now and wait for the whole thing to collapse” is not the most irrational thing in the world.
Yeah, in the UK 10% down is standard, and we don't have a percentage property tax keeping prices closer to incomes. Getting by without a car is slightly easier in the UK than the US, especially if you can use a cargo e-bike, but in either place it becomes much harder if you add kids to the mix or move out of the city.
Man I'm out of touch though. I thought 6k seemed a lot for a vacation and so I looked it up and apparently Gen Z spend $11k _per trip_ which seems insanely high.
> , so I'll buy a new phone, a new TV, or go on a fancy holiday. In consumption terms, I am spending more than ever, even as the things I would really like to buy, a single earner family, a family home, and more children, become ever more unaffordable.
Yes. And then the economists come along and say "10 years ago, a TV of that quality would be worth an absolute fortune, look how rich you are".
Right, as my wife says “the essentials are expensive and the luxuries are cheap”
> Mortgages have gone up 100% since 2021. But this doesn’t fully explain the vibecession, because it seems to have started before that, and even non-mortgage-holders are angry.
Non-mortgage holders may *be* non-mortgage holders because they've been priced out, and their anger would be credibly explained by this.
What if you compare the real earnings of boomers and millennials at the same age stratified by educational attainment? This might just be another way of saying that you have to work harder to get to the same place, but on the other hand, if you need a 4-year degree to get 20% more than your parents but in the meantime have lost 4 years of income and been saddled with $100,000 of debt, you might in effect be poorer.
I suggest that inflation is wrong.
Imagine a toy example, where every year there is a fancy TV that costs $1000, and a cheapo TV that costs $500.
Every year, the cost of everything else goes up by $500. But, every year, last years fancy TV becomes this years cheapo TV as TV tech improves. So each year, overall, inflation is 0. Sure you spend $500 more on everything else, but you save $500 by switching from a fancy TV to the now equally good cheapo TV.
And for any particular year, if you got a fancy TV last year, this is true.
But over 20 years, everything else goes up by $10,000. Oh and all the TV's are much better.
In other words, if there is something that is getting rapidly cheaper, and is included in the typical basket of goods, it can have an outsized influence.
I have not noticed a perception that housing costs have increased in New York, but when I was younger, most young people expected that they would have to find some roommates to afford a place. Now many people expect to have a place of their own - in New York City! Wondering if that is a symptom of a general rise in expectations driving the vibecession.
I think it was Kyla Scanlon who coined the term "vibecession."
My initial thought is just that all of life’s meaning has been recast relatively recently in individual economic and credentialed terms for status-seeking American young people. So when reality bites and normal unremarkable economic and academic outcomes shake out for most people in their late twenties and beyond, it just hurts a lot more. As opposed to the counterfactual world in which life’s meaning was still traced in thick family relations, religious significance, and national warmaking projects. Maybe a related claim would be that young people are unhappy for all the red-coded reasons that now seem obvious (atomized social ties), but the only high-status way to express that angst among the elite or elite-seeking is in an economic framing. Life definitely feels like it is set up wrong - easier to make sense of that or say it out loud in Brooklyn as a Marxist signal than as an illiberal one. The bill for two centuries of classical liberalism come due intelligized in classical liberal terms.
It seems weird to me that it's high-status now to only care about formerly crass material concerns.
Why mess around with debating inflation. Just find unadjusted hourly wage and price of good that is unadjusted (sometimes harder to find than adjusted values).
1980 Minimum Wage $3.35 Beef Price 2.34
Hours to work Minimum wage to get 1lb of beef in 1980: 0.7 hours
2024 $7.25 8.34
Hours to work Minimum wage to get 1lb of beef in 2024: 1.15 hours
From nationalchickencouncil.
For houses find wages for that area and houses for that area (not comparing median city wage to median rural house).
> why mess around with debating inflation
Agreed. The more I look into it, the more it seems that adjusting for inflation on time spans longer than a decade is meaningless for the stories we want to tell.
Unfortunately, this beef thought experiment is commonly brought up as an instance of substitution bias in price indices:
https://en.wikipedia.org/wiki/Substitution_bias
If there is a cheaper substitute, such as chicken, then consumers will prefer that, reducing the demand for the original good, thus raising its price. If the basket isn't updated, then inflation will be overstated.
I suspect that no one actually cares about the economy, but can't admit it because they cannot articulate the real things they care about: social stability and in-group well-being. It's just like crime; except TV never had much to do with that. Instead, people use "fear of crime" as a *psychological proxy* for fear of chaos: people think crime rates are high when they see vandalism, litter, or people they don't know hanging around public spaces. It's fear of disorder, not crime.
Similarly, people perceive the economy as doing better after the election of a president they voted for. Democrats thought the economy was doing fine under Obama, Republicans thought it sucked. During Trump's first term, republicans thought the economy was doing fine, democrats thought it sucked. The pandemic threw a wrench into this relationship, but it's reasserting itself now. Democrats think the economy sucks because Trump is in charge, meanwhile, republicans think the economy sucks because Trump promised the moon, but appears to be making things worse.
This is mostly, though not entirely young people because most, but not all older people know better. My own memory goes back to Carter, so I've seen enough to know that the guy in the White House doesn't control very much. But this idea, that no one is in control, is extremely anxiety producing for certain types of people--the center never held? Then how can any of us plan to improve our lives?
If I'm right, then I predict that news media bias tracks presidential election performance. Right wing news will be positive during right wing administrations, and vice versa left wing.
The next guy who can make real economics sound like populist common sense is going to sweep the election.