[heavyset_go]

And yet 78% of Americans are living paycheck to paycheck[1], and 40% don't have the money to cover a $400 emergency expense[2]. For our riches, we have the highest population of people without health insurance in the first world, and the number one cause of bankruptcy in the US is medical expenses.

Inequality drives cost of living up. Normal people in the US are competing with the richest people domestically and internationally for housing. While normal people need housing to shelter themselves, the rich, especially the rich outside of the US, see housing as a means to store value.

In the past 15 years, the largest growing population of homeless people are entire families, and the most common reasons for homelessness are lack of affordable housing, insufficient income, or loss of income.

[1] https://www.forbes.com/sites/zackfriedman/2019/01/11/live-pa...

[2] https://abcnews.go.com/US/10-americans-struggle-cover-400-em...

[api]

From what I have both seen and read, housing costs are the #1 cause of this. They have exploded in the last 25 years.

The thing that blows my mind is that the COVID recession shows no sign of slowing down house price growth, though it has tempered rents in expensive markets.

If housing still rises even now, something is totally insane.

[nemo44x]

Interest rates have crumbled over that same period. As interest rates go down, housing prices go up. The problem becomes the down payment goes up making it difficult for a lot of people to get the initial equity.

People often forget that mortgages are essentially bonds. When you get a mortgage you are essentially selling the bond. As interest rates fall the bond gets more expensive which means the price of homes rises since servicing the bond gets less expensive in terms of interest. But the principal goes up which means you’re building equity more quickly. So this is good - if you can get to the down payment part.

And interest rates can still get lower. However there are large parts of the country where homes are relatively inexpensive. But they’re cheap for a reason - not many people want to live there.

[api]

What a huge driver of inequality this is... I wonder how much of the economic divergence is explainable by down payments alone?

[jandrewrogers]

Yet the Federal Reserve study whence the "$400 emergency expense" claim was sourced states that 75% of adults are doing okay financially or living comfortably. The question about a $400 expense was about how people would pay for an unexpected $400 expense, not if they could pay for it. Only 12% could not pay for a $400 expense. The news media always tries to paint a dire narrative.

Per the US government, the median household in the US has $1000/month left over after all ordinary expenses. At the 78%, this is around $3500/month. As this strongly suggests, the statistics you are referring to do not actually assert what is often claimed of them. The underlying studies paint a more consistent, and less dire, picture.

[bhupy]

> 40% don't have the money to cover a $400 emergency expense

This is an often cited statistic that's been essentially debunked for being flawed and misleading[1][2].

> And yet 78% of Americans are living paycheck to paycheck

Again, not a particularly useful statistic because 1. real consumption per capita has been increasing[3], and 2. the US has the 2nd highest household consumption[4] in the world.

"Living paycheck to paycheck" includes people that are destitute, but also people that just consume more than they should, and also people that are unable to save money due to increasing housing costs (not due to inequality, but due to zoning regulations). Of those who claim to be living "paycheck to paycheck", you don't know which are destitute.

> For our riches, we have the highest population of people without health insurance in the first world, and the number one cause of bankruptcy in the US is medical expenses.

Sure, this has nothing to do with inequality. If you gave everyone health insurance in America today, inequality would hardly change. And inequality is NOT the root cause of America's healthcare system, the root cause is a series of policies passed in the 20th century that resulted in 1) healthcare being tied to employment, 2) a lack of any form of price transparency, 3) supply constraints on medical professionals that have resulted in the highest PPP adjusted salaries for medical practitioners in the developed world.

> Inequality drives cost of living up. Normal people in the US are competing with the richest people domestically and internationally for housing. While normal people need housing to shelter themselves, the rich, especially the rich outside of the US, see housing as a means to store value.

We’ve always had mega-rich families. The new phenomenon we’re seeing now is not that "normal people" are competing with the super-rich, it's that they are competing with the upper-middle class. Where I live (Brooklyn), The rents aren’t driven up because I’m in a bidding war with Jeff Bezos; they’re driven up because I’m in a bidding war with other high earning millennial white collar workers. The “middle class” worker doesn’t stand a chance in our neighborhood.

Also the cost of living isn't up uniformly across the US, it's only up in most big cities where the root cause is attributable almost entirely to poor zoning regulations, not "inequality". You can see the salary one must earn to purchase the median house in every city[5] and outside SF/NY/Seattle, it's around the median household income.

[1] https://www.bloomberg.com/opinion/articles/2019-06-04/the-40...

[2] https://www.cato.org/blog/it-true-40-americans-cant-handle-4...

[3] https://alfred.stlouisfed.org/series?seid=A794RX0Q048SBEA

[4] https://datacatalog.worldbank.org/dataset/world-development-...

[5] https://www.hsh.com/finance/mortgage/salary-home-buying-25-c...