I love these rhetorical question articles.
“Is getting hit in the head bad for you?”
I find that Betteridge’s law of headlines usually holds up pretty well.
“Any headline that ends in a question mark can be answered by the word no.”
We find that all four measures of typical and aggregate pay, adjusted by PCE, have grown since 2019. When deflating using CPI, we find smaller increases across three of the four measures and a decline in one measure. In other words, nominal pay by these measures has done relatively well in keeping up with overall costs of living since 2019, measured by PCE. Nominal pay has done somewhat less well in keeping up with increases in the costs of goods and services that are much more salient to consumers, measured by CPI. This pattern is consistent across time periods, with pay deflated by CPI experiencing smaller increases—or instead decreases—relative to pay deflated using PCE.
Further, using PCE inflation, there have been gains in real pay across measures relative to the fourth quarter of 2021. Since the fourth quarter of 2022, deflating by either inflation measure shows gains in real pay. Finally, since the fourth quarter of 2023, real pay grew as measured by Average Hourly Earnings, the Employment Cost Index (ECI), and Total Compensation as reported in the National Income and Product Accounts. Real pay as measured by Median Weekly Earnings fell sharply, reversing an almost equally sharp increase in the previous quarter.
They use two ways to measure inflation, neither of which are accurate.
“How can you say that?!?!?” Well, I’m a human who uses money for goods and services and I wasn’t born yesterday.
The rule of 72 is something investors and economists use to estimate how long it should take for something to double given a certain start price and a certain growth rate, you divide 72 by the percent rate of growth. For example, if the growth rate is 7.2% it should double every 10 years, and if the growth rate is 2% then it should double every 36 years.
Now the keen sighted among you might notice that if prices of a thing double in 36 years if it rises at 2% then many millennials and all of gen Z should have never seen a full doubling of prices.
That hasn’t been the experience of most people on a lot of things. Housing is quadruple what it was 20 years ago where I live, and rents similarly went up (but who needs a place to live?) gasoline has tripled since I pumped gas saving for college. Electricity has doubled. Bread (a simple staple food) has doubled. Forget about steak and chicken and pork chops! Internet has quadrupled easily. Used cars went into the stratosphere.
All while the state goes “don’t worry everyone! 2%! In fact we might not even hit 2% this year we better monetize more debt!”
I’m house hunting and my dad loves to bring up the 17% interest rate he had on his first house so I looked up the average home cost and average salary for the year. He bought his home for 3x the average salary and got to be specific on the city.
I’m looking in a wide radius of a dozen cities and the low end of houses are 7x the average salary of my state. Working class cities. 7x the average salary. That is fucking CRAZY. If I hadn’t bought a shitty short sale condo during the housing crash (I fixed it up and it just sold for 3x what I paid), there is no way I’d ever own a house. I have to put all of my profits into the down payment to just barely afford the new mortgage and all I can think about is the people who didn’t get lucky like I did. It’s bullshit