The average price of a new car has hit $50K, not so much because of inflation but because car companies are prioritizing affluent buyers. Accordingly, automakers are producing more high-end vehicles. Anyway, I wonder how much the consumer sentiment index is a function of a sense that middle- and lower-income people are being shut out of parts the economy altogether.
In the next one I would be interested in some data acknowledging the fact that consumer sentiment and consumer behavior seem more detached today than in the past. Retailer (low end, high end and middle) and credit card reporting suggest people continue to spend like they are very comfortable with their own financial position.
I remember polling 2 years ago saying something like 15% said their own finances were bad, but a majority of others' were bad. Same for "how is the economy in your area/state" vs. "how is the economy nationwide. This is where Kyla Scanlon coined "vibesession".
Similar polling results for crime: how bad is crime in your area/state, vs. how bad is crime nationally.
I've thought a lot about "good by historical norms". That makes sense to economists, but not in people's lived experience.
At this point, the majority of people had never experienced double-digit inflation nor double-digit mortgage rates, so their perspective is a lot different. Much like current gas station signs can't accommodate prices over $10/gal now, in the '70s they couldn't accommodate prices over $1/gal. So it was pretty jarring to see signs rigged with a "1" in front of the price when gas prices had typically been in the 30 cent range before 1973. So having seen gas prices quadruple in less than a decade, seeing inflation rates down to 4% as they were when Reagan was re-elected made people pretty happy, even after all the pain of double-digit unemployment that it took to get there.
This is not the majority of people's lived experience today.
That explanation would be a good one if you believe consumer sentiment means more than as a variable than it might. There is a British based consumer analyst @retail_guru who is on bluesky (and X) who keeps coming back to "Watch what they do not what they say". I am guessing people are spending because they actually have money but they believe everyone else is struggling because of the media/social media vibes. My initial question was really about analyzing whether sentiment and behavior are further apart today than prior to Covid.
I like the gopher too and am glad you got out hiking! I suspect the rising price of food and shelter does explain why people don't see or experience any benefit from a general decrease in inflation. If people can't meet their most basic needs, whether employed or not, they get pissed off, and there are sadly more of them than folks buying lattes and Prada bags.
"The theory here is simple: prices didn’t used to dominate how people thought about their personal finances. But now they do, and that’s a source and level of anxiety that doesn’t show up in historical data on inflation, unemployment etc."
I have a theory.
I think people used to feel optimistic that tough times would get better, because we lived in a wealthy, powerful, stable democracy, so we could change up our reps and expect better policies in the future.
Trump has upended ALL of that. And though he's not responsible for Citizens United, the destabilizing effect of Big Money donors owning our government reps and ensuring that tax cuts for the uber-rich are the be-all and end-all of government legislation has revealed just how entrenched income inequality has become. There's no reason to hope that healthcare, housing, or higher education will become more affordable. We know that climate change is going to drive costs up, not down.
For MAGA folks, the initial thrill of owning the libs is fading as kitchen-table issues become more and more pressing every day, and the Trump administration is constantly setting fires to make things worse.
There is no sense of a future that can be bright for our children and grandchildren. Our entire paradigm of America is on the ropes. No wonder we are all in a sour mood. Malaise.
actual polls track what people think now in response that are happening now.
llm's may predict what people w/ given demographics tend to think "on average" but ignores context, ie, what is happening now.
the idea that llms can substitute in any meaningful way for actual polls is silly.
The average price of a new car has hit $50K, not so much because of inflation but because car companies are prioritizing affluent buyers. Accordingly, automakers are producing more high-end vehicles. Anyway, I wonder how much the consumer sentiment index is a function of a sense that middle- and lower-income people are being shut out of parts the economy altogether.
Hope you feel refreshed after your hike! TY for your great work!
In the next one I would be interested in some data acknowledging the fact that consumer sentiment and consumer behavior seem more detached today than in the past. Retailer (low end, high end and middle) and credit card reporting suggest people continue to spend like they are very comfortable with their own financial position.
I remember polling 2 years ago saying something like 15% said their own finances were bad, but a majority of others' were bad. Same for "how is the economy in your area/state" vs. "how is the economy nationwide. This is where Kyla Scanlon coined "vibesession".
Similar polling results for crime: how bad is crime in your area/state, vs. how bad is crime nationally.
I've thought a lot about "good by historical norms". That makes sense to economists, but not in people's lived experience.
At this point, the majority of people had never experienced double-digit inflation nor double-digit mortgage rates, so their perspective is a lot different. Much like current gas station signs can't accommodate prices over $10/gal now, in the '70s they couldn't accommodate prices over $1/gal. So it was pretty jarring to see signs rigged with a "1" in front of the price when gas prices had typically been in the 30 cent range before 1973. So having seen gas prices quadruple in less than a decade, seeing inflation rates down to 4% as they were when Reagan was re-elected made people pretty happy, even after all the pain of double-digit unemployment that it took to get there.
This is not the majority of people's lived experience today.
Good idea. Revealed behavior and all that. One possibility is that people are spending because they have to, and they feel bad about it?
That explanation would be a good one if you believe consumer sentiment means more than as a variable than it might. There is a British based consumer analyst @retail_guru who is on bluesky (and X) who keeps coming back to "Watch what they do not what they say". I am guessing people are spending because they actually have money but they believe everyone else is struggling because of the media/social media vibes. My initial question was really about analyzing whether sentiment and behavior are further apart today than prior to Covid.
I like the gopher too and am glad you got out hiking! I suspect the rising price of food and shelter does explain why people don't see or experience any benefit from a general decrease in inflation. If people can't meet their most basic needs, whether employed or not, they get pissed off, and there are sadly more of them than folks buying lattes and Prada bags.
"The theory here is simple: prices didn’t used to dominate how people thought about their personal finances. But now they do, and that’s a source and level of anxiety that doesn’t show up in historical data on inflation, unemployment etc."
I have a theory.
I think people used to feel optimistic that tough times would get better, because we lived in a wealthy, powerful, stable democracy, so we could change up our reps and expect better policies in the future.
Trump has upended ALL of that. And though he's not responsible for Citizens United, the destabilizing effect of Big Money donors owning our government reps and ensuring that tax cuts for the uber-rich are the be-all and end-all of government legislation has revealed just how entrenched income inequality has become. There's no reason to hope that healthcare, housing, or higher education will become more affordable. We know that climate change is going to drive costs up, not down.
For MAGA folks, the initial thrill of owning the libs is fading as kitchen-table issues become more and more pressing every day, and the Trump administration is constantly setting fires to make things worse.
There is no sense of a future that can be bright for our children and grandchildren. Our entire paradigm of America is on the ropes. No wonder we are all in a sour mood. Malaise.
Excellent comment!! Thank you.
Love the gopher. It's nice to be reminded that there's a whole other world out there going about its merry business.