How Economists Got It Wrong for 3 Years. (nytimes.com) 160
Economists spent 2021 expecting inflation to prove "transitory." They spent much of 2022 underestimating its staying power. And they spent early 2023 predicting that the Federal Reserve's rate increases, meant to cure the inflation, would plunge the economy into a recession. None of those forecasts have panned out. The New York Times: Two big issues have made it difficult to forecast since 2020. The first was the coronavirus pandemic. The world had not experienced such a sweeping disease since the Spanish flu in 1918, and it was hard to anticipate how it would roil commerce and consumer behavior. The second complication came from fiscal policy. The Trump and Biden administrations poured $4.6 trillion of recovery money and stimulus into the economy in response to the pandemic. President Biden then pushed Congress to approve several laws that provided funding to encourage infrastructure investment and clean energy development. Between coronavirus lockdowns and the government's enormous response, standard economic relationships stopped serving as good guides to the future.
Take inflation. Economic models suggested that it would not take off in a lasting way as long as unemployment was high. It made sense: If a bunch of consumers were out of work or earning tepid pay gains, they would pull back if companies charged more. But those models did not count on the savings that Americans had amassed from pandemic aid and months at home. Price increases began to take off in March 2021 as ravenous demand for products like used cars and at-home exercise equipment collided with global supply shortages. Unemployment was above 6 percent, but that did not stop shoppers. Russia's invasion of Ukraine in February 2022 exacerbated the situation, pushing up oil prices. And before long, the labor market had healed and wages were growing rapidly.
Take inflation. Economic models suggested that it would not take off in a lasting way as long as unemployment was high. It made sense: If a bunch of consumers were out of work or earning tepid pay gains, they would pull back if companies charged more. But those models did not count on the savings that Americans had amassed from pandemic aid and months at home. Price increases began to take off in March 2021 as ravenous demand for products like used cars and at-home exercise equipment collided with global supply shortages. Unemployment was above 6 percent, but that did not stop shoppers. Russia's invasion of Ukraine in February 2022 exacerbated the situation, pushing up oil prices. And before long, the labor market had healed and wages were growing rapidly.
They aslo probably didn't anticipate (Score:2, Insightful)
More (Score:5, Informative)
Starting in 2020, the amount of money in the economy grew by around $5 trillion dollars. That's, roughly, a 30% increase. That's an extra $5 trillion dollars floating around an economy that was mostly shut down, followed by a few recovery years featuring significantly restrained supply chains.
So, yeah, inflation.
Production didn't stop though (Score:5, Insightful)
I agree that $5 trillion is an issue, but only because of who we gave it to. Almost all of it went to the top and they used it to buy out their competitors. They can now charge whatever they want and we have to pay it because they own basically everything. Because we literally gave it to them.
Re: More (Score:2, Informative)
Stagflation is what they're alluding to. Though if they're Keynesian they generally discount the possibility (in fact their economic models basically say it's impossible, but then it happened in the late 70s.) One of the reasons I tend to subscribe to something between freshwater and Austrian economics.
Re: (Score:2)
Re:They aslo probably didn't anticipate (Score:5, Insightful)
The world economy was in free-fall at the time, risking something akin to 1930's. It took more than a decade and world war to get us out of that mass slump, so nobody wanted to risk that, choosing to error on the side of inflation. Inflation sucks, but the 1930's sucked more. In hindsight the stimulus should have had a quicker shut-off valve.
I mentioned this elsewhere (Score:4, Interesting)
We barely turned the valve on as is. The problem isn't how much we gave, it's that we gave a ton of money to the top like always (trillion in PPP loans and tax cuts) and the top used that money to consolidate and buy out competitors because we stopped enforcing anti-trust law.
Capitalism can't function without competition and we don't have it.
Re:They aslo probably didn't anticipate (Score:4, Insightful)
There is no inflation and if there is it's transitory
And if it's not transitory it's not that serious because people can afford it
And if it is serious then it's TrumpPutinCovid's fault
And if you exclude food, housing and fuel it's solved anyway [businessinsider.com].
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not Economists.. Pundits, Media, Elites. (Score:4, Insightful)
Many economists were not all saying this, plenty were saying other things.
The problem is, massive inflation is very GOOD for the Elite, the faster money moves, the faster they get their cuts, and it flows up quickly.
They HATE slow economies, and low inflation, because they cannot grow their wealth as fast.
In fact, the only reason inflation has been as LOW as it has been, is because the economies are so engineered to take money to their hands quickly, that much of it is drained out before having much effect.
They have used their power to 'educate' us that inflation, fast economies, is good for the middle/low where most people exist.
Hence, people plead and dream of lower interest rates, more government spending, and higher 'healthy' inflation - because they have been brainwashed into wanting this even though it is destroying the middle class. They are rewarded with leasehold fancy cars, bigscreen TVs, and $1000+ smartphones, while they lose their actual assets of value, and sink deeper into debt to fund the wealth of the elite.
However, it is not, it is good for them, the people at the top, who are now wealthy on a scale NEVER seen before, not even in empires and kingdoms of the past.
The biggest problem now, is that the elites are using both communism (where the unwashed should own nothing) and capitalism (where the elites should we 'rewarded' financially) to try and create a system where the vast majority SHOULD own nothing and therefore be 'equal', while our betters own everything, for our own good, because they are 'better'.
History has shown us time and again that this will fail, and the tower will collapse as the middle classes give up and stop being productive, because there is no reward.. But the collapse is never pretty, or painless.
None of this is new or unexpected, all of it has been clear for some time, however people have blinded themselves to it.
Not so much (Score:5, Interesting)
Also, it was dwarfed by what we gave the 1%, which was around $6-$7.5 trillion (you math whizzes out there will recall that a trillion is 1000 times a billion, also you'll note that range is way, way broader than it should be, that's because we didn't track how much was spent all that well).
Now, what do you think is gonna happen when you give somebody already flush with cash $6 or $7 trillion dollars? Well, they're gonna spend it. But not like you and me do. They already have more money than they can spend on themselves personally. No, they're gonna go around buying up assets. What the cool kids call "capital".
That means grocery stores, apartments, houses, retail establishments, you name it. And what are they going to do when they own basically everything thanks to the money you gave them while you were complaining about giving working Americans _barely_ enough money to avoid homelessness (or not [invisiblepeople.tv]).
If I own every game in town I can raise prices as high as I want. I mean, what are you going to do? You've already shown people'll blame the guy working at Burger King for it anyway.
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It was $3200 tops (Score:5, Informative)
In most places that's about 2-3 months rent. Tops.
We know it wasnt bread and circuses because there was quite a lot of tracking on what it was spent on. And it was almost entirely food, rent & bills. A handful of folks paid down credit cards or filed cars. A smaller handful saved it for a rainy day. I did, but by "rainy day" I mean "my kid's eventually graduate school because a 4 year STEM degree isn't enough to make a living anymore". I am in the *extreme* minority and our screwed up system is still going to bleed it dry from me like a badly constructed MMO economy
Oh and this is all *maximums*. I got about $1400 all told in stimulus payments. I borrowed $20k to get my kid through school. That $1400 didn't exactly go far.
As for future taxes, the Trump & Bush tax cuts were $10 trillion dollars. Never see your lot complaining about those. Why are you so obsessed with people who have basically nothing in life? You really seem to have it out for them.
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Well, sure, nobody doubts that pandemic aid *contributed* to inflation. But *how much* was that aid, and how much did other factors like supply chain disruption contribute to inflation? And were the inflationary consequences of aid *worse* than the consequences of not doing aid?
COVID was an unprecedented natural disaster. We've never had that kind of practically everywhere all at once kind of thing happen to us. What makes a natural event into a disaster is that you aren't prepared to cope with it. It's u
World-wide (Score:5, Insightful)
Inflation is a world-wide problem, thus it's hard to blame it on (just) US politicians of either party. Just about the only countries without inflation problems are those facing national slumps. You can argue the world collectively made mistakes, but as the TFA points out, economists don't have enough experience with pandemics as a reference.
At least IF we have another mass disaster, we have Covid's econ lessons to apply. Good lessons can be painful lessons, but protect us from worse pain.
Re:World-wide (Score:4, Insightful)
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We all know the President has a big lever labelled "INFLATION" on his desk. It's right next to the one that says "GAS PRICES"
Re:World-wide (Score:5, Insightful)
Well, with former vice president Biden, I have to wonder.
He did drain our national reserves, even as his admin shut down a lot of new drilling for oil...they passed the so called inflation reduction act that pumped more money into the economy and did just about everything you'd not want to do, if you wanted to reduce inflation....
But hey...Biden-omics...he's out there labeling it....he can own it and it appears the majority of the US voters (both parties) thinks he does.
Re:World-wide (Score:5, Interesting)
Sure the SPR is lower now but there's also a question of if that's as bad as some make it out to be or is it just a political attack tool.
As an analyst at SEB put it "But overall, it is a net exporter of hydrocarbon liquids. It doesn’t need all that big strategic reserve as a security of supply anymore Essentially the U.S. doesn’t need such a sizable SPR anymore to secure coverage of its daily consumption,” he added."
“The U.S. SPR today is much more of a geopolitical tool than a security of supply tool. It’s a tool to intervene in the global oil market. To intervene in the price setting of oil,” he went on to state.“The U.S. SPR is now drawn down to 50 percent, but it still holds a sizable amount of oil. But it is little in comparison to the firepower of OPEC,” he continued.
Also I find this argument to be a little empty as the same people criticizing him for using the SPR were almost beat for beat the same people giving him shit for high prices and there's only so many options the President has on gas prices. Should he maybe have done nothing? Maybe.
Also it's widely known 2023 is the highest energy production year in US history and it's still scheduled to go up more in 2024, so what did Biden 'do' exactly. Also it was one of his campaign goals to lessen fossil fuel usage so he's holding promises in a way?
Also the IRA is expected to reduce the defecit over 10 years as it had a few new taxes in there to raise revenue as well as the $150B the IRS is estimating to return over those 10 years with it's new funding. Will that happen? Time will tell but it was hardly a bill that was built on back of just deficit spending. It is a far, far, far more responsible budget bill than the 2017 TCJA which was almost all new debt.
So Bidenomics, it's a bit cringe aterm but it's a far cry better than "Trumponomics" or whatever the hell Republicans pretend their economic policy is nowadays (there isn't one anymore),
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Every president has been using the reserve like that for decades now. Maybe even longer. I never bothered to dig into the history of it.
But what Biden's doing isn't really draining it. When they release oil from the reserves, they auction it off. Bids are in the form of "I'll take 1 million barrels now, and I will give you 1.1 million barrels in 6 months". Oil companies essentially borrow the oil from the reserve, gambling that oil prices will be cheaper in the future when they return the oil with some extr
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He did drain our national reserves, even as his admin shut down a lot of new drilling for oil...
Shut down drilling on leases that are already sold? I don't think that's even possible. And even if he *did*, that would effect *future* oil supply. What he did was cut down on new oil exploration *leases*. That may be a bad idea, but if so it's consequences are still years in the future.
If you want to explain what is going on *now* it makes more sense to look at actual US oil production [cloudfront.net]. Production plunged after the first quarter of 2020, and began recovering in the first quarter of 2021. At present
Oil Smhoil (Score:3)
> [Joe] did drain our national reserves, even as his admin shut down a lot of new drilling for oil
This is spin. The national oil reserve is supposed to be used when oil prices spike too high. And drilling in the US would do very little for US oil prices as our share of world output isn't large enough to change it more than a few cents.
We have to end our dependence on oil, and if people shout "drill! drill!" every time oil prices spike, which they will and do, we'll stay stuck dependent on it forever.
Furt
That's not what the inflation reduction act did (Score:2)
...they passed the so called inflation reduction act that pumped more money into the economy and did just about everything you'd not want to do, if you wanted to reduce inflation....
That's not an accurate recollection of the inflation reduction act. While the name of the act was clearly just a name (this is the case with many bills) it took significant amounts of money out the economy while also adding large amounts in. It took enough out to where the consensus amongst economists was that the money put in wasnt going to do much to inflation with conservative economists predicting a slight increase in inflation and leftists ones predicting a slight decrease https://apnews.com/article/i [apnews.com]
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The average Slashdotter is vaguely aware that "the rest of the world" exists, but is pretty sure that they just do whatever the US does, so it's actually Biden's fault. Or Trump's. Obama maybe? The ghost of Ronald Regan?
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I'm assured every day that it is Trudeau's fault. At that every bad thing in the world is Trudeau's fault, so the idea that Biden has anything t do with it is obviously fake news.
Situations do not Repeat (Score:2)
as the TFA points out, economists don't have enough experience with pandemics as a reference.
True but if you have to have experience of a particular situation before you can make predictions from it then you are really not much use because, thanks to ever-changing technology, we are never in the same situation twice.
For example, given the advance in vaccine technology from this pandemic, it's not clear what the impact of a future pandemic might be. We came up with a vaccine in under a year, if that gets shortened further to say a few months (say if some human trail stages could be replaced by m
Re: (Score:2)
The mRNA vaccines were made in a couple of days. We're not going to get much faster than that. If you can simulate away the actual trials then you don't need vaccines, you'd use your god-like powers to catch the virus in mid-jump to the first human it infects.
Now, given the amount of dumbassery regarding vaccines, if another serious pandemic occurs before at least a generation passes, we're going to see some genuine evolution in action.
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Reading about the vaccine dumbassery late 19th century about the smallpox vaccine doesn't leave me much hope, especially now that this shit has been so politicized.
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Bullshit, every day I'm assured it is all Trudeau's fault. The idea that a nation 10x bigger population size and the worlds reserve currency would do it is fake news.
Got it wrong? (Score:3, Insightful)
The fed never issues bad news. Anything the fed says, is therefore suspect. Any forecasts based on information from the fed are tainted.
This isn't because they don't know, or because they can't make good predictions, it's because they're lying.
Anything they say is an attempt to forge public opinion, to make the economy move in whatever direction they think it should.
Populist economic reporters take that bad information and use it to generate clicks. They don't care about accuracy either.
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Apparently, the truth is trolling. The fed is statutorily compelled to maintain maximum employment, stable prices and moderate long-term interest rates. [federalreserve.gov] They'll say what they have to, to achieve that result. Note the order.
I suppose you believe every bit of financial advice you get. People couldn't possibly be trying to make markets and line their own pockets. Then again, I suppose selling to the rubes would be difficult if they understood that no one is on your side in financial markets. They are ther
Re: Got it wrong? (Score:2)
The fed's interest policies have decreased employment.
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No argument. But they were given a shit sandwich to work with, also. Their tools are not working the way they used to - took 2 years of hikes to get mortgage rates up to close to 8%. If this were 1983, of course, we'd have undergone 5+ years of high interest rates before inflation cooled down. The leadership in 2020 apparently forgot about that. Once it gets started, only a sustained downturn stops it. So here we are.
The quotes from the time about changing psychology and keeping people from assuming
If you took all the world's economists... (Score:3, Funny)
Re: (Score:3)
That maybe not, but if you add a steamroller, we could solve a few economic problems... if they don't move around too much.
There are things they agree on (Score:2)
And the overall record since WWII is vastly better than the period before. Doctors aren't expected to cure everyone, so why should economists be disdained because they aren't right ALL the time.
Only 3 years? (Score:5, Insightful)
I think it would be news if a significant fraction of economists made a prediction about the wider state of the economy that was generally correct over any 3-year period. We still haven't recovered from the trickle-down/supply-side nonsense and only some economists have recently realized the error.
They *always* get it wrong. (Score:5, Insightful)
Re: (Score:3, Interesting)
> paint a picture that makes whatever policy their masters are pushing look like a good idea
There used to be Kings' Bishops who would absolve the Kings from all sin. It's the same now.
Keynes was offered the deal of being punished for his kiddie diddling or taking the Bishop's role but new-modern.
He came up with formulas "to prove" that the things governments want to do are good for the economy.
And every economic calamity since then has proven the Keynesians wrong.
The Austrian economists all easily predic
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So you must have made a lot of money off all their great predictions. Let us all in on this action. Given us some examples of a non-trivial, testable Austrian economist predictions of the future. We can come back in a year and have showers in all our gold.
Have Economists ever really gotten it right? (Score:2)
Re: Have Economists ever really gotten it right? (Score:2)
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No.
But at least they're reliable.
Compare and contrast 1930 - 1936 v 2007 - 2013 (Score:2)
The fact that the world hit a minor speed bump in 2007 but didn't collapse into a major depression like 1930 is because economics knows a lot more.
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Does it matter?
We usually ignore them and just give rich people tax cuts instead.
Theory didn't meet reality (Score:2)
NEWSFLASH: PREDICTING THE FUTURE IS HARD!! (Score:2)
Economics is basically prophecy.
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It's narrative. If you want to be invited to all the good parties you need to tow the establishment line. The establishment wants to hear that endless borrowing, spending and monetizing is fine and has no negative consequences.
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It's narrative. If you want to be invited to all the good parties you need to tow the establishment line. The establishment wants to hear that endless borrowing, spending and monetizing is fine and has no negative consequences.
Best analysis so far.
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I wish they were scientists. They and their theories have a far better track record of predicting the future.
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What Economics is (Score:3)
The Science of explaining tomorrow why the predictions you made yesterday didn't come true today.
Not a Science (Score:2)
who runs the FED? (Score:2)
I thought economists were the ones running the FED? But it seems that economists predicted the Fed's actions would doom us, but then it didn't. Of course there are many different views, because economics isn't an exact science. (most economic hypothesis are not testable, so its not science at all).
Because it's a religion at this point (Score:5, Insightful)
That brings us to the proscribed beliefs. In this case, you're not allowed to seriously consider other sources of inflation, i.e. monopolies.
Meanwhile, as a point of example, 67% of all single family homes in LA are owned by mega corporations and 80% of all medical facilities in Florida of any kind are owned by one company (taking from 2 states for a nice, broad sample here). To say nothing of all the grocery store mergers, collusion on apartment rent using software, and the massive megamergers happening in oil and gas right now (over $100b worth in the last week)
So what happens when your an economist, you have a set of allowed and forbidden beliefs and the real world contradicts those?
You either find a new line of work or you tow the line and pray to the God of the Reserve.
Our problems are political, not economic, but there's another verboten. You're not supposed to bring politics into the "science" of economics.
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The same or worse (Score:5, Insightful)
We've done trillions of dollars of tax cuts for the 1% while handing out trillions of dollars of free money to them. When you have more money than you can spend you save. When you have more money than you can save you invest. And when you have more money than you can invest, it's not money anymore it's power and they're using that power to buy up everything and transform our capitalist economy into a Neo feudal nightmare.
Ignoring the massive white colar job losses (Score:5, Informative)
Job Market so Great Why Do I Feel Stuck: https://www.wsj.com/lifestyle/... [wsj.com]
And just recently "Wall Street has been Quitely Cutting 20k Jobs in 2023" https://www.forbes.com/sites/j... [forbes.com]
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That article doesn't remotely suggest "massive white collar job losses." From the article:
"A year ago, college grad unemployment was 1.8%; today it’s 2.1%."
So college grad unemployment is still around half of the overall unemployment, and well within what economists have long called "full employment." Even IT employment is well within the full employment range. That's still a historically strong employment market.
Yogi Berra Said it Best (Score:2)
Predictions are hard, especially about the future.
But seriously, no matter how good their models are, and no matter how accurate the data they feed into those models, there's just no way to accurately forecast such a complex system as the global economy. People shouldn't be surprised when even the best predictors fail to do the impossible.
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No, Jerry Pournelle said it best when said that the US should have a Chief Voodoo Practitioner instead of a Chief Economist. They'd be right just as often but at least fewer people would take them seriously.
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Because most economists are hacks (Score:2)
Most economists basically repeat each other in one big echo chamber circle-jerk. Few rely on or do even actual research to come to their conclusions. Instead they rely on reading the tea leaves from the same data sets that are usually decades old. Feel free to peruse any paper or article put out there by any pop-economist to see what I'm talking about. Try to find their citations and follow them back to their source. They all mainly get paychecks from interested parties who want specific narratives to
They didn't do any math (Score:3)
Repeat after me (Score:2)
That is all
Maybe the models are wrong (Score:2)
Inflation (Score:2)
Almost all of the inflation is due to a handful of causes -
1) oil producers cutting supplies and US gasoline refineries closing plants - this has caused a continuous spike in gasoline prices. Gasoline has a poor elasticity of demand (people have to go to work, school, etc. and have no choice but to buy; businesses have a fairly fixed gasoline requirement for things like deliveries, etc.)
This has a knock on effect on all prices of anything that requires transport.
Similarly anything requiring natural gas or
Maybe they need to go back to Bastiat (Score:2)
....print money for years like a drunken sailor, and inflation is INEVITABLE. /shock
He didn't even consider the straight inflationary effects of government debt, either.
How Economists Got It Wrong for 3 Years. Easy (Score:2)
"Economists" != "All Economists" (Score:2)
Monopolies anyone? (Score:2)
So off the bat I agree that Economists are more charlatans and carnival barkers than rigorous scientists, no matter how much they claim otherwise. Economies are largely driven by feelings, herd mentality, and other "animal spirits" that are hard to model, but easier to create excuses for.
One thing that was actually clear is that many companies were raising prices faster and for longer than necessary to deal with the initial demand spike or rising raw materials prices. We've had decades of low regulation,
complete bullshit, yet again. (Score:2)
"did not count on the savings that Americans had amassed from pandemic aid and months at home"
MONTHS at home? Are journalists really this stupid? Pandemic aid and months at home didn't do squat for the amount of money that Americans had in their pocket. Sure, a few select people benefited from pandemic aid, but that's NOT why we're in this situation.
The reason we're in this situation is because of two reasons:
1. The stock market's meteoric rise, where major indexes doubled in value over two years, making in
Economists did NOT push that (Score:2)
Economists are basically (Score:2)
modern fortune tellers. Yeah, some of what they know is real and actually works. But they can't predict the future. Most of what they do is make guesses. Kinda like those people who make guesses about the stock market... it turns out they're right *at most* half the time (if not much, much less).
Re: (Score:2)
"First-time homebuyers are priced out, and existing homeowners are locked into their old rates and can't upgrade. So instead of saving for a down payment, people are just going out to eat, going on trips, and buying a lot of stupid little things that make the consumer spending metrics look skewed."
God I hope so... my fear is that everybody is just saving up like mad for a down payment, which means when rates go down, house prices will spike as everybody jumps back into the pool at once.
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Rates won't go down. Real estate has been used to park the money of people who found nothing to invest their money in. This money is being parked, and they don't care that they can't sell it at the inflated prices. Leaving them empty is no big deal to them, because as long as these houses are supposed to be worth 400k instead of the 100k they could fetch, they don't have to realize that loss. Right now, that house is in the books for 400k and it's valued at that.
If they had to sell it for 100k, they would h
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Mortgage rates are actually just climbing out of historically low levels. The problem is that with the crazy-high cash values of today's housing, rock-bottom mortgage rates are needed to give anyone with less than a top-10% income a sporting chance at affording it.
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Spot on, when my parents bought their house in 1975 the rate was 9% (!!!)
Of course at the time the price they paid for the house I grew up in was $48k, or adjusted to 2023 dollars, about $260k
They are looking at selling their house in the near future and they can easily grab nearly $800k for it now. They obviously have done improvements but nowhere near enough to justify a nearly 300% price increase. The concept of "homes as investment" really makes things screwey
Normalize by average take home pay, not inflation? (Score:2)
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We kinda do that in the rule of thumb "25% of income should go towards rent" so it's definitely getting worse
https://www.marketplace.org/20... [marketplace.org]
When Moody’s started tracking housing affordability more than 20 years ago, the average household spent about 23% of its income on rent. A decade ago it was 26%. And at the end of last year is when that average hit 30%.
In any case fact is the interest rates are a secondary problem. Housing is just too damn expensive now. It was still expensive when rates were b
Return to normal rates, then return to normal size (Score:2)
So I guess now we need % of take home per square foot.
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That's gonna get real tricky because so much of real-estate is hyper local.
For the budget I bought my house in I got a place about 15 minutes out of the downtown area with about 2500sq/ft. For the same money I could have half that but much closer to downtown. If I was willing to put up with going 30-40 minutes out of downtown I could have gotten close to or over 4000sq/ft for the same money.
Of course by me the homes in the downtown area are the ones that have inflated in price by far the most. I used to
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That's gonna get real tricky because so much of real-estate is hyper local.
True, but that is not something new. A home 40 minutes from the beach was cheaper than a home 5 minutes from the beach in the past, just like today.
Nothing fancy, like 1500sq/ft. Today it's close to a million. Crazy shit.
Location, location, location. And the preceding is an old phrase. :-)
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That's an issue in some parts of the country. But the areas where home prices are the highest are the highly populated areas that ran out of places to build new homes a long time ago. Scarcity of land drives the prices far higher than home sizes do.
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ran out of places to build new homes
This isn't really a physical limitation but a policy choice brought on by zoning and nimbyism and other factors. The USA doesn't get to say "out of space" in any of it's cities. They have just ran out of space to build *single family homes* but that time passed long ago in most metro centers.
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Sure, building big multi family homes is fine for cities, and we should probably do more of that.
But the appeal of the suburbs is the single family homes. No one will be happy if you try to build the suburbs like cities.
The problem with the US is there's a ton of land, but only small areas of it are appealing for the vast majority of people. We need to figure out how to build up more metro areas rather than cram more people into the biggest ones.
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Thing is that means citifying the suburbs as many suburbs, the most popular ones are right outside city centers.
Fact is though there is still a lot of wasted space in American cities, it's also very exacerbated by lack of public transit systems. If the suburbs want to keep their car centric lifestyles that means some of them are going to get more dense, no way around it.
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No, it doesn't mean destroying the suburbs. It means we should develop areas other than the coasts.
The coasts had a ton of appeal back in the days when the only transportation options where horses and boats. Now that we've got plenty of other viable options, we don't need to pack most of the population on the coasts. Use more of the land. Lowering everyone's quality of life shouldn't be the first choice.
We got used to affording luxury, buy modest now (Score:2)
Mortgage rates are actually just climbing out of historically low levels.
Yes. Which allowed people to buy bigger homes than they historically did.
I recall people bragging about their low 12% loans in an era where loans were 16+%. This was the 1980s. Our current rates are about 2005 rates, 1970s rates.
The problem is that with the crazy-high cash values of today's housing, rock-bottom mortgage rates are needed to give anyone with less than a top-10% income a sporting chance at affording it.
Want a sporting chance? Look for smaller more modest homes. The McMansion era is over for now.
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It's not all about size, you can't buy a '50s-sized house for inflation-adjusted '50s house prices right now. The same is true of the '70s or '90s.
Take home and square footage the real metrics (Score:2)
It's not all about size, you can't buy a '50s-sized house for inflation-adjusted '50s house prices right now. The same is true of the '70s or '90s.
Adjust for inflation if better than nothing but inflation is not entirely accurate either.
I think we need a comparison that takes into consideration take home pay and square footage. That avoids some of the accounting gimmicks. Take home and footage is what we use when we go shopping isn't it? 25% of take home defining how big a mortgage payment should be, this payment then leading towards the square footage we should be looking at.
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There's some causality there, but I don't think it's that way around.
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Not sure I understand this...I mean, in the 70's-80's, there were double digit interest rates, and yet people then still saved and bought houses.
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Houses were a lot cheaper then.
Corrected for inflation, housing prices were pretty much flat, with data going back to the 1700s in the US. Then in 2003 they started going up. In 2009 that got smashed in the US, but not some other places. but the response to that was to lower the interest rates to unprecedented levels, which made housing prices go up a lot.
"Transitory" was political spin (Score:2)
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Care to translate that into English for us there buddy?
I have absolutely no idea what you're saying nor the point your are trying to make...
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