[hmmmcurious1]

Tbh due to social media and the current economic situation , we're creating an entire generation of lottery ticket buyers. Whats the point in saving if the average job will never let you buy a home in a decent location and the currency is depreciating at an ever increasing pace. Theres a lot of desperate people nowadays so theyre stuck chasing dreams

[rsynnott]

> and the currency is depreciating at an ever increasing pace

This seems a _little_ alarmist, no? Assuming you're in a major developed economy, inflation is falling. It's still too high, but 'ever increasing pace' is simply incorrect.

And while this high inflation is kinda shocking in modern terms, it's not actually that_ unusual historically. The current US inflation rate is lower than it was for the _entire period_, bar one year in the 80s, between 1971 and 1992, for instance.

The housing thing is much more of a legitimate point, but people are over stressing the inflation thing.

[bluefirebrand]

> Assuming you're in a major developed economy, inflation is falling

It is really important that people understand that inflation isn't "falling" in the sense that things are getting cheaper

A lower inflation rate just means that stuff is getting more expensive more slowly, but it is still getting more expensive

Unless we see actual negative inflation, the damage of high inflation rates has already basically been done. Salaries have not kept up and will likely just continue to fall further behind

[sanderjd]

> It is really important that people understand that inflation isn't "falling" in the sense that things are getting cheaper

"Inflation falling" does not mean "things are getting cheaper" in exactly the same way that "driving backwards" does not mean "reducing speed".

Where did this meme even come from, that this is confusing? Did they stop teaching what the definition of the word "inflation" is? Or did they stop teaching about the relationship between measuring values over time and measuring rates of change in those values?

Inflation isn't a confusing concept! Are people really confused by it, or is there just a lot of noise about this?

> Unless we see actual negative inflation, the damage of high inflation rates has already basically been done.

"Negative inflation" is called deflation. That's what happens during a depression. Deflation would be a very bad thing, you do not want deflation.

> Salaries have not kept up and will likely just continue to fall further behind

This one is just simply not supported by economic data. If you're just talking about the tech industry, then, yeah, maybe. But it's not true of the workforce as a whole.

[bluefirebrand]

> Where did this meme even come from, that this is confusing

It's a fairly straightforward misunderstanding of terminology being used in public discussions

"Why are things getting more expensive?" "Inflation"

"Inflation is falling" "Oh so that means things are getting cheaper right?"

People make this mistake constantly. One could argue that discussions about inflation is framed specifically to lead people to make this mistake

> This one is just simply not supported by economic data

Look at any graph of cost of living versus incomes and it's absolutely plain to see that it's true. Not sure what other economic data you're referring to, but I suspect it's misleading at best

[sanderjd]

> Look at any graph of cost of living versus incomes and it's absolutely plain to see that it's true.

So I've been trying to put together graphs to share with you, but I think it's sort of hopeless without knowing what data series you mean when you say "cost of living" and "incomes", or what time period you're thinking of.

I think "cost of living" is usually a city or region specific concept. To get a sense of that nationally, are you thinking of one of the inflation measures, like consumer price index (either "headline" or "core")?

For "incomes", FRED has both "personal income" and "disposable personal income" measures, both from the Bureau of Economic Analysis. Is that what you're thinking of?

Probably more interestingly, what time period are you thinking of when you say "have not kept up"? I was thinking of "since the pandemic started", so I was looking at what's been going on since 2020, but I realized it's quite sensitive to this starting point, and you might be thinking of a different one.

I should have asked these questions before I replied originally :) Sorry about that!

Edit to add:

I guess you did say "look at any graph of cost of living versus incomes and it's absolutely plain to see that it's true", so I can at least give one counterexample before you answer my questions:

Here is CPI (both headline and core) against personal income (and disposable personal income also), with the value of each index set to 100 on 2020-01-01: [0]. The income lines are up ~25% since then, while the CPI lines are up ~20% from then until February 2024. That's 49 months, so normalized by the number of months, that's ~0.5 for income and ~0.4 for CPI.

0: https://fred.stlouisfed.org/graph/?g=1kiu7

But here is the same thing, starting one year later: [1]. This is a very different story! In this case, income is only up ~8% while CPI is up ~17%! This is 37 months, so normalizing the same way gives ~0.2 for income and ~0.45 for CPI each month on average.

1: https://fred.stlouisfed.org/graph/?g=1kiv5

But then the story since 2023 is better again: [2].

2: https://fred.stlouisfed.org/graph/?g=1kivz

So I guess, if you accept the series I've chosen to analyze this, and the time period you're thinking of is the beginning of 2021 to now, then I accept your premise.

But I still don't see any evidence for "will likely just continue to fall further behind"; the trend is flat to closing (albeit slowly).

[bluefirebrand]

I suppose if you're only thinking about since 2020, fine. But the problem has been around much longer

https://www.epi.org/publication/charting-wage-stagnation/

https://www.pewresearch.org/short-reads/2018/08/07/for-most-...

[rsynnott]

Yup, but 'ever increasing pace' means that inflation is rising, not falling.

[paxys]

What "current economic situation"? Aside from what the doomers in news media and social media get paid to tell you, what's wrong with the economy, jobs, salaries?

[nytesky]

Housing. It’s all about housing. And, related, mortgage rates.

[llamaimperative]

Mortgage rates are totally within reason. Housing prices are not.

[sanderjd]

I'm convinced that the mortgage rate problem is not about the rates themselves, but about the second derivative. That is, the rate at which the mortgage rates themselves have changed. In particular, the giant spike from ~2% to ~8% in a couple years.

If they are stable at 6%-7% for the next 20 years, you're right, they will absolutely be "totally within reason". But it's a big distortionary problem that a huge number of people have fixed rates at ~2.5% with almost three decades left on them, while the current rate is more than double that. It's super hard to eat an almost 5% rate increase to do the kind of normal nearly like-for-like home sale that usually comprises a big portion of housing turnover.

[travisgriggs]

And transportation. And insurance. And energy. And health care.

[kjkjadksj]

All those payments are in the small three figures maybe a month while rents and mortgages are an order of magnitude higher.

[danans]

In absolute terms rent and mortgage tend to always be higher than the other categories for most people.

The more pertinent question is how these have changed on a percentage basis, and relative to each other and median income.

[sanderjd]

None of those things are much more expensive in real terms now than they were a decade ago.

Housing is, though.

[travisgriggs]

Enshitification. And the associated rise of the rent seeking economies. The jobs are good. Salaries are not nearly as fluid as the rate at which rates of rent (housing and all other services) fluctuate. I have four kids between 20 and 28. I feel for them. Especially the ones who have kids already, man has having kids gotten expensive.

[sanderjd]

I'm on team "the economy is really good right now, actually!", but, relevant to this thread, I think it's pretty clear that it's hard for people to feel good about things when interest rates are way higher than they were in very recent memory, because it makes the housing market more expensive (and also way more static), and makes things like car payments higher.

I think a good lesson to learn from this period is "people are very sensitive to gas prices and the rates on mortgages and car loans".

[boesboes]

Really? Look around you man. Just an example:

I make about 2 times the median income in my area, that puts me in the top 5% nationally. I can 'afford' the bottom 10-15% of housing. It's already a shitty proposition for me with 16 years experience and career progress. I can't blame young people for saying fuck this shit.

But at least I can afford food. So there is that.

[anthonypasq]

im assuming you live in SF or something, which means you need to understand you are a complete and total outlier to begin with.

Either way, it has never been the case that the average person is able to afford to live in the city and raise a family. why do you think that everyone moves out to the suburbs to buy a house.

The town your parents moved to was not as built up when they moved there as it is now. The city expanded. We just have to accept that we'll probably have to move a lot farther out from the city which is really the same equivalent that your parents did.

[Balgair]

To add to this: Prop 13.

The CA housing market is just totally distorted by Prop 13. It is by design meant to screw new home buyers. And has been doing this for 46 years, with absolutely no end in sight.

I guess my point is that CA folks shouldn't generalize the issues with the housing market to the rest of the US/world just because they have a dogshit law on their books.

[carlosjobim]

> im assuming you live in SF or something, which means you need to understand you are a complete and total outlier to begin with.

No, this is true almost everywhere. Wages are low in comparison to housing cost. If the poster was living and working where houses are cheaper than SF, then his salary would also be lower and he would still be limited to bottom tier housing on his income.

The only way possible right now is to own real estate by inheritance or by having been born earlier to get in before those people who decided to be born later. Either that or you have to find a way to get your income from somewhere different to where you live, so that you can afford property. With WFH normalised I'm predicting massive migration waves as the younger generations from expensive towns, cities and countries move away to where they can afford to live.

[chii]

> puts me in the top 5% nationally

the nation is not completely homogeneous. In the situation where you are looking to purchase housing, the only comparison is in the immediate region (such as the county or at most, the state), as only others in the region competes with you, not somebody in a faraway state whose wages are much lower.

[llamaimperative]

You really can't see the issue with comparing your income the nation, but your housing purchasing power against your locale?

What percentile are you in your area?

And yeah, housing is screwed, but no that does not mean "the economy" is fucked.

[TwitBar]

This thread is mostly geared toward the west but it’s interesting to see a similar thing (albeit, much worse) happening in China. They’re going through their own version of 2008 with many overqualified graduates entering a smoldering job market. Unsurprisingly lottery participation is at an all time high. It’s bleak.

[flakeoil]

In fact, now, thanks to the higher interest rates there is a great possibility to save and earn interest (and compound interest) to buy a house. In addition, thanks to the higher interest rates, it will be harder for everybody to borrow to buy a house so the house prices will not increase as much or even decrease in price. This makes it easier for savers to buy a house.

If the central banks can keep from going down to near zero interest rates of course.

And I agree with you that younger generations, probably at large due to social media, are not patient enough to get rich by saving.

[zingplex]

> And I agree with you that younger generations, probably at large due to social media, are not patient enough to get rich by saving.

Speaking as someone in a younger generation, there's a sense that with the climate sword of Damocles dangling overhead and countless people stressing the already fraying hair, perhaps we may not have sufficient time to accumulate any sort of wealth by saving. Perhaps this is just a lack of patience in our generation, but I think it's quite possible there are bigger factors at play.

[AlexandrB]

If climate change is cataclysmic, no amount of savings/wealth will help you (outside of Elon/Zuck type wealth). If it's merely disruptive, then it's just another factor to consider in your investments.

Think of it like nuclear weapons. You can't really plan for nuclear war, but you can still take nuclear capability into account when making financial decisions (e.g. China is unlikely to annex Taiwan because of US nukes so investing in TSMC is not a terrible move).

[bluefirebrand]

> If climate change is cataclysmic, no amount of savings/wealth will help you

Which is why people are choosing not to bother saving, of course

Because they're constantly being told that it is in fact cataclysmic and there's no stopping it

[AlexandrB]

That's why I compared it to nuclear weapons. There's little point in making decisions based on possible cataclysmic events you can't predict or control. I think it's wise to plan based on a more optimistic reading of the future instead even if you think the cataclysm is inevitable.

It's also notable that the "Boomers" managed to do this with the spectre of nuclear war hanging over them and this threat never actually went away. The younger generation just chooses to ignore possible nuclear war cataclysms in favor of possible climate cataclysms.

Edit: Just consider how "real" the threat of nuclear war must have been to someone who had regular "duck and cover" drills in school. There's nothing comparable for climate change (yet).

[bluefirebrand]

The difference is that the nuclear war "might happen but everyone is doing our best to make sure it doesn't"

while the climate crisis "is happening already and it's too late to stop"

People genuinely believe we will not have a habitable planet in a couple of decades no matter what we do now.

That seems a lot different than "maybe some people decide to fire nukes but probably not"

[ryandrake]

Even though I consider myself a flaming liberal, this is the one "conservative boomer" belief I allow myself to have: Telling an entire generation that 'they have no future because of something they cannot control' has been huge a society-wide mistake, turning so many people into doomers or reckless gamblers, incapable of planning for their future. I think we are starting to finally bear the fruit of telling our children's generation over and over that there is no future and no hope.

[bluefirebrand]

It's been more than one generation at this point, and it gets louder with each one

People forget that the "climate cataclysm" doomsaying started decades ago. There are articles about "we will be under water/burning alive/etc in only a few years!!" As far back as the 70s. Maybe before!

So it's been a huge mistake in two ways, because it's led to two types of outcomes:

The first is like you said, the younger generations have basically given up. High rates of depression, anxiety, and just general "checked out of society"

The second is the older generations that have high rates of "They've been saying the world will end in five years for the past fifty years, so clearly this climate stuff isn't a problem at all" and they are behaving accordingly, as though it weren't a problem at all

[sanderjd]

If you haven't heard of it yet, I have been enjoying a recently released book about this: "Not the End of the World" by Hannah Ritchie: https://www.hachettebookgroup.com/titles/hannah-ritchie/not-...

[asadotzler]

You're exaggerating. No science says that society is going to collapse because of climate change in your lifetime. Maybe in your grandkids' or their grandkids' but not yours. Get real. Read a book.

[carlosjobim]

> In fact, now, thanks to the higher interest rates there is a great possibility to save and earn interest (and compound interest) to buy a house.

That sounds like you've got some extra money laying around that should belong to your landlord...

[flakeoil]

Unfortunately because of the too low for too long interest rates the landlords building cost them too much which is why their rent is too high.

In any case, there is no reason people cannot put some money aside each month and earn some interest every year. And on top of that the house prices will not increase, at least not insanely as in the past, so you have a chance to catch up if increasing your salary and savings for a few years.

[carlosjobim]

If tenants had enough surplus income to put into any meaningful savings, then landlords would increase rents accordingly to scoop up that money. Their entire business is to maximise the amount of rent extracted from the tenants.

It's unrealistic that renters could save themselves out of the hole they are in. Their efforts are much better spent making drastic career changes, high risk investments, or even extreme measures such as drug dealing or moving to another country, than thinking they can beat a game that is completely rigged against them.

[bluefirebrand]

> In fact, now, thanks to the higher interest rates there is a great possibility to save and earn interest

A lot of people live paycheck to paycheck, especially younger people. How are they supposed to take advantage of this, exactly?

[asadotzler]

Find a mix of job and COL that allow you to save a little bit. This isn't rocket surgery here, friend. If your current rent eats all your income, move to a cheaper place and/or find a better job.

I was born in abject poverty. I went to public school and state colleges. I made money in TN, GA, AL, and TX before settling in northern CA. This area is my dream location and it took nearly 2 decades of planning and effort out of college to prepare to buy and settle here in a financially stable way.

San Fransisco isn't the only city available to US citizens. If you can't save in a high COL location, move to a lower COL location so you can save. Then, when you've saved enough, move back to a higher COL area.

This idea that you're stuck in some expensive geography and can't do anything about it is plain silly. I made most of my moves with less than $1,000 in the bank and plenty of credit card debt. After moving a dozen times across nearly half a dozen states, today I own a home in the Bay Area outright, have zero debt, and do what I like with my time and I'm not yet 50.

If I would have left college for the Bay Area immediately, none of that could have happened. It took planning and stages and moving all around the country (and living in the cheap South) but it was doable and is doable now for anyone that wants to make the effort. Yeah, boomers had it a lot easier, but so what. That's history. That was what they got for living in a high tax high investment era and we get what 20 years of Reagan and Clinton gave us, trickle down, so we deal with it.

"I want to live in SF or NYC out of college and own a home because boomers could do that" is bullshit. There's a substantial generation between you and boomers, my generation, X, that saw we weren't gonna have it as easy as the boomers and we didn't complain, we changed tactics and adapted to the environment. We figured out by going to state schools, busting our humps at a half a dozen different jobs including ones with serious physical labor that might even cost you a finger, being illing to live in less than ideal places for years or even decades, could let us settle into something better in middle age.

California costs about 2.5 months more salary to live in than the national average and about 4 months of salary more than truly affordable states. If you can increase your savings by 2.5-4 months of take home all for the price of a bus ticket and a few days of hotel stay to find a place to rent in a more appropriate COL location, you can save for a house, even a house in a high COL location, no problem. You probably cannot save for a high COL location house living in a top 3 COL state while trying to do so.

[1_1xdev1]

> move to a cheaper place and/or find a better job.

Moving costs thousands. Finding a better job is good advice but often requires investment in yourself (education costs money).

How could anyone move to a lower COL area for less than $1000? A security deposit and first month's rent will be more than that almost anywhere you can "find a better job". And that's ignoring the cost to move your things. (But maybe you didn't have any things or expect someone to sell/start over?)

It's clear your intentions here are good but you're giving poor advice. You're out of touch.

[satvikpendem]

At the end of the day, though, you have to do something to change the situation, and just accepting the status quo means you'll just be stuck there forever. Their advice might be harsh, but it's not poor, it's very even keeled.

[cafard]

For what it's worth, I can remember "lottery tickets as financial planning" jokes from ca. 1985.

[verteu]

Some concrete numbers for the curious:

I'd estimate that a single individual with zero skills in NYC could get:

1) A receptionist job for $46k/yr (includes health insurance) [1]

2) A shared $2k/mo 2BR Jersey City apartment [2]

They'd have a take-home pay of $2960 - $1000/mo (rent) - $1000/mo in other expenses (fairly high estimate IMO).

Annual savings (with a traditional IRA) would be about $13k/yr.

It's not much, but the savings rate is almost 30% of gross income, and retirement calculators say you'll retire at 65 a multimillionaire. Surprisingly, a daily Starbucks or avocado toast (or forgetting the tax-deductible IRA contribution) really does eat into the savings numbers. And forget about having kids until you get a career upgrade.

The major risk is an increase in rent without an increase in wages. Let's investigate:

From 2012-2024, rent in Queens (not sure about JC) rose 45% ('only' 3.14% APY) [3]. Over the same period, national wages grew 47% (3.3% APY) [4]. That's good, since our individual earns 3x more wages than they pay rent. Wage growth was even higher among nonmanagers, so I don't think the growth was captured by the 1%. [5]

Overall, it looks OK to me, though the margins are thin, and you need to share an apartment. Hard to make it work for a family. I'd be curious to see some others run the numbers.

[1] https://www.indeed.com/jobs?q=receptionist+-hour+-experience...

[2] https://streeteasy.com/building/3657-kennedy-boulevard-jerse...

[3] StreetEasy Rent Index: https://streeteasy.com/blog/data-dashboard , chose Queens as it was most comparable in price to JC

[4] https://fred.stlouisfed.org/series/CEU0500000003

[5] https://fred.stlouisfed.org/series/AHETPI

[cqqxo4zV46cp]

Kinda feel like you’re putting those in the wrong order.

[hmmmcurious1]

There has never been such a pressure to succeed and appear rich as it is today. Social media is at the forefront of this by weaponizing insecurity and keeping up with the joneses. I'd wager a medieval serf had better peace of mind than 90% of people today

[inference-lord]

Don't worry, with generative AI, everyone's social media will look 10x more awesome and it will all be fake. Even wealthy people will take it to a new level.

[spacemadness]

Social media is already making the wealthy lose their minds. See Elon Musk.

[brk]

'Weaponizing insecurity'

I'm going to use that. Great summary.

[perrygeo]

Exactly this. In my experience, the desperate people with money problems tend to be gamblers. There's a distinctly unhealthy relationship with money that is directly caused by gambling. It distorts their world view to the point where they say shit like "I need to buy more lotto tickets because I need cash" or "today's the lucky day" as they head off to gamble rather than work. All said with a straight face. These people are sick and unwell and need professional care before they destroy their families' lives. It's a disease. Healthy people in similar or worse financial situations do not think or behave this way.

[hiddencost]

Nope

[pc86]

Oh great point, you've convinced us :)

Why is it a foregone conclusion that these things are only occurring in one direction? What evidence is there to support that (or not)?

[WrongAssumption]

Why didn’t you respond like this to the other comment? They gave no reasoning on order, so why should this person? And why did only this one elicit a response from you?