Why I don't feel better after inflation has "come down"? Because the damage has already been done. Prices are higher, permanently so. Just because inflation isn't sky-high anymore doesn't mean that the prices are coming down; they're permanently pegged at the higher level. People have already adjusted their spending habits to compensate.
We'd need a good round of deflation for me to start feeling better again.
You have got it. People remember the price of a box of cookies before the pandemic was $5 and then in 2022, it climbed to $8 (as an example), and right now if the price is still $8, this is technically disinflation, as prices did not rise. But this is not helping with sentiment and morale. This is what you get in cases of financial plumbing as we had.
In order for the price of cookies to fall to 2019/2020 levels, the economy will have to go through a severe recession, which won't be pretty either.
So as a dad millenial, I get hit with the inflation, and then on top of that, the fashion world decides to drive up prices on all the stuff I need to wear. Just great.
Yup, the millennials (we) are just not catching a break, and good for the ones who are making above $525K, may be they are not as gloomy as the rest of us.
The Amazon thing is wild, even if it doesn't really surprise me. We're familiar with industrial robots for a long time. Seeing these things in "real life" is somehow different. I wonder more and more what is in store for many people ...
I think, American society and the world at large will play out at a large scale as how the Hollywood predicted in their robo movies in 2000. I am note sure about robots turning evil, but I think they will definitely be a member of the society, playing along with human beings in various tasks and activities. In the short term, the backlash is unpredictable. Plus, there needs to be an exponential upskilling, so that people can get relevant jobs in the society. Or, will we move to sort of a universal basic income?
I agree. If people see the need to upskill themselves, or the good in doing so, then they will. Otherwise not. I guess we need to encourage people because there is a huge potential in a society that is willing to upskill. Everybody would win.
I would say food is a major problem for most of us. If not for the drop in dairy prices, it would look even more dismal to consumers. Coming from a lower income family and being born just after WWII, I was raised on a lot of depression era meals. I've learned to substitute to make them healthier and am stretching food dollars. Gen Z and Millennials haven't had that advantage. A lot of post war families did well when it ended so the survival techniques haven't generally been shared since. It's hard to keep optimism when you don't know how to make adjustments for hard times. And there's even more pressure when student debt, mortgages, sudden illnesses, children, particularly those with special needs, transportation and other necessities are added to the mix. It's easy for elders to be judgmental but the truth is, the standards and conditions are far different now and younger generations will have to find new ways to cope.
I don't believe in the "globalization is dead" argument. I think the next decade will see a balance between both globalization and reshoring, with the emerging geopolitical tensions in a multipolar world.
Having said that, I think the deflation in goods are being caused by 3 things:
1) Base effects: The rate at which goods inflation rose post pandemic, it is quite natural to see the base effects playing out on the YoY numbers.
2) Easing supply chains
3) People shifting their spending from goods to experiences/services.
Very interesting piece about the millennials! Sounds to me like they understand what Peter Zeihan has said, which is that millennials are about half a decade behind every generational workforce before it in "formative work learning" and "they will never catch up" unless, of course, they start earning $525K annually. If you and your readers are unfamiliar with Zeihan's work, here is a shorter YouTube video on US demographics:
Thank you for the restack and this is a very interesting perspective. I am not familiar with Peter Zeihan's work, but I am definitely going to check it out.
Thanks for another brilliant post! When it comes to inflation, I doubt that the official numbers provided by the government are even close to the reality people face daily. It’s yet another political instrument.
100%. Most importantly, the headline number has nearly not painted the correct picture of the struggle with low and middle income households have been enduring as prices of food, rent, childcare and insurance have been growing at a much faster pace than the Headline number.
Brilliant post! As an elder millennial, I can relate. When I lived Stateside, I felt there was no hope of living the sort of life I wanted (until I met my first husband who was in the HENRY category - but he left me unexpectedly and we divorced and although I didn’t gain money from the divorce I didn’t lose anything besides time). Living in England with my second husband (Gen X) means we live well within our means without debt (except a mortgage that will be paid off in four years) and even though we live mostly frugally we spend on what matters to us which includes travel. But we don’t have children because they are too expensive! I don’t think I could’ve had this kind of life on my own in the US even if England was at one time considered more expensive than the US. I feel for my fellow millennials. I work as an editor and I read a piece on Substack this morning about how low the journalism industry pays in some part of the US. 😱🙈 What’s the solution I wonder? I learn something each week from your posts even though I’d say I came to your posts with very little finance industry knowledge (outside my day job).
Thanks Elaine for sharing your story. First of all, I am very happy that you are living a much more fulfilling life in England with your husband. As someone, who was in the HENRY category (both Uttam and I), we were completely worn out after 5 or so years. Apart from money earned, there was no fulfillment whatsoever, and in late 2019, both of us left the US to travel the world for a bit, before Covid hit. Now, that we are settled in Canada, it is not that different to the US, and both of us are actually thinking of leaving this place and becoming digital nomads. When I am not on substack and not working out to Pitbull or Bollywood songs, I am scrolling through Insta and the world outside is just so beautiful and actually quite affordable. One doesn't need to make 6 figures to sustain a decent and complete life. The insanity out here is zombifying people as I see it.
I am so glad that you have built your life in a place, where you can live and spend comfortably with intention, without debt and with the right set of priorities.
Pitbull and Bollywood is a cute combo! 🤣 I would love to be in the HENRY category but we don't “need” it in the UK to live comfortably enough. Also, with a master’s in English, I'm not sure how I'd ever make that category. 🤪 Canada does seem to have a good quality of life. I hope if you do the digital nomad life you enjoy it and it sounds like you have a much more free schedule now so that's definitely worth it.
Hi J.R., it looks like you may have been contacted someone impersonating me, a spammer. It is possible that you have been contacted by that person, who has offered you something. Please do not engage if you receive any phishy comments or email under my name. Any email you get from me will be under the name "The Pragmatic Optimist". I have already raised it with Substack and blocked the person, I am very sorry for the trouble and confusion.
Thank you for letting me know. The issue is sorted as of now by substack. Thanks again for your support to my newsletter and I wish you all the best with your health and surgeries you have coming up.
The housing market is extremely nuanced, as you pointed out, where prices are dropping wherre you live, but rising in other parts of the country. As I wrote in my post, there are some areas where its a buyers market, and others where it is not.
As for the American dream, I think millennials and GenZs are rewriting the playbook on this, where there is less preference to have children and therefore the need to buy a house per se. The rise of DINKs is an actual economic phenomena. (Double Income No Kids)
Dad fashion never left!
Sounds like the fashion of Gen X to me. And I agree, we have never left.
Haha, well it is a comfortable style of dressing up.
Why I don't feel better after inflation has "come down"? Because the damage has already been done. Prices are higher, permanently so. Just because inflation isn't sky-high anymore doesn't mean that the prices are coming down; they're permanently pegged at the higher level. People have already adjusted their spending habits to compensate.
We'd need a good round of deflation for me to start feeling better again.
You have got it. People remember the price of a box of cookies before the pandemic was $5 and then in 2022, it climbed to $8 (as an example), and right now if the price is still $8, this is technically disinflation, as prices did not rise. But this is not helping with sentiment and morale. This is what you get in cases of financial plumbing as we had.
In order for the price of cookies to fall to 2019/2020 levels, the economy will have to go through a severe recession, which won't be pretty either.
Digit makes me nervous... well, all AI does, being an 'analog man' and whatnot, but walking, working robots? Yeah... very nervous.
Great stuff as always, Armita - love the Friday5...
Thank you Stone for your constant support.
So as a dad millenial, I get hit with the inflation, and then on top of that, the fashion world decides to drive up prices on all the stuff I need to wear. Just great.
Yup, the millennials (we) are just not catching a break, and good for the ones who are making above $525K, may be they are not as gloomy as the rest of us.
Uh, when inflation slows, prices don't go down, they just go up less quickly...
Precisely!!
The Amazon thing is wild, even if it doesn't really surprise me. We're familiar with industrial robots for a long time. Seeing these things in "real life" is somehow different. I wonder more and more what is in store for many people ...
I think, American society and the world at large will play out at a large scale as how the Hollywood predicted in their robo movies in 2000. I am note sure about robots turning evil, but I think they will definitely be a member of the society, playing along with human beings in various tasks and activities. In the short term, the backlash is unpredictable. Plus, there needs to be an exponential upskilling, so that people can get relevant jobs in the society. Or, will we move to sort of a universal basic income?
I agree. If people see the need to upskill themselves, or the good in doing so, then they will. Otherwise not. I guess we need to encourage people because there is a huge potential in a society that is willing to upskill. Everybody would win.
100%
I would say food is a major problem for most of us. If not for the drop in dairy prices, it would look even more dismal to consumers. Coming from a lower income family and being born just after WWII, I was raised on a lot of depression era meals. I've learned to substitute to make them healthier and am stretching food dollars. Gen Z and Millennials haven't had that advantage. A lot of post war families did well when it ended so the survival techniques haven't generally been shared since. It's hard to keep optimism when you don't know how to make adjustments for hard times. And there's even more pressure when student debt, mortgages, sudden illnesses, children, particularly those with special needs, transportation and other necessities are added to the mix. It's easy for elders to be judgmental but the truth is, the standards and conditions are far different now and younger generations will have to find new ways to cope.
You have painted the picture quite accurately, yes. I agree with everything you said.
Durable goods in deflation suggest globalization is not dead yet.
From mid '90 to 2020 the shift to low wages country has produced a steady annual deflation in durable goods. So this may be the case again.
The other possibility is a sudden increase of productivity.
Maybe both...
IMVHO
I don't believe in the "globalization is dead" argument. I think the next decade will see a balance between both globalization and reshoring, with the emerging geopolitical tensions in a multipolar world.
Having said that, I think the deflation in goods are being caused by 3 things:
1) Base effects: The rate at which goods inflation rose post pandemic, it is quite natural to see the base effects playing out on the YoY numbers.
2) Easing supply chains
3) People shifting their spending from goods to experiences/services.
Very interesting piece about the millennials! Sounds to me like they understand what Peter Zeihan has said, which is that millennials are about half a decade behind every generational workforce before it in "formative work learning" and "they will never catch up" unless, of course, they start earning $525K annually. If you and your readers are unfamiliar with Zeihan's work, here is a shorter YouTube video on US demographics:
https://www.youtube.com/watch?v=oZ_W3yI_vsY
Thank you for the restack and this is a very interesting perspective. I am not familiar with Peter Zeihan's work, but I am definitely going to check it out.
Zeihan is the best social commentator of large trends in my humble opinion Amrita
Thanks for another brilliant post! When it comes to inflation, I doubt that the official numbers provided by the government are even close to the reality people face daily. It’s yet another political instrument.
100%. Most importantly, the headline number has nearly not painted the correct picture of the struggle with low and middle income households have been enduring as prices of food, rent, childcare and insurance have been growing at a much faster pace than the Headline number.
Brilliant post! As an elder millennial, I can relate. When I lived Stateside, I felt there was no hope of living the sort of life I wanted (until I met my first husband who was in the HENRY category - but he left me unexpectedly and we divorced and although I didn’t gain money from the divorce I didn’t lose anything besides time). Living in England with my second husband (Gen X) means we live well within our means without debt (except a mortgage that will be paid off in four years) and even though we live mostly frugally we spend on what matters to us which includes travel. But we don’t have children because they are too expensive! I don’t think I could’ve had this kind of life on my own in the US even if England was at one time considered more expensive than the US. I feel for my fellow millennials. I work as an editor and I read a piece on Substack this morning about how low the journalism industry pays in some part of the US. 😱🙈 What’s the solution I wonder? I learn something each week from your posts even though I’d say I came to your posts with very little finance industry knowledge (outside my day job).
Thanks Elaine for sharing your story. First of all, I am very happy that you are living a much more fulfilling life in England with your husband. As someone, who was in the HENRY category (both Uttam and I), we were completely worn out after 5 or so years. Apart from money earned, there was no fulfillment whatsoever, and in late 2019, both of us left the US to travel the world for a bit, before Covid hit. Now, that we are settled in Canada, it is not that different to the US, and both of us are actually thinking of leaving this place and becoming digital nomads. When I am not on substack and not working out to Pitbull or Bollywood songs, I am scrolling through Insta and the world outside is just so beautiful and actually quite affordable. One doesn't need to make 6 figures to sustain a decent and complete life. The insanity out here is zombifying people as I see it.
I am so glad that you have built your life in a place, where you can live and spend comfortably with intention, without debt and with the right set of priorities.
Pitbull and Bollywood is a cute combo! 🤣 I would love to be in the HENRY category but we don't “need” it in the UK to live comfortably enough. Also, with a master’s in English, I'm not sure how I'd ever make that category. 🤪 Canada does seem to have a good quality of life. I hope if you do the digital nomad life you enjoy it and it sounds like you have a much more free schedule now so that's definitely worth it.
Thanks Elaine, lots to figure out .
And yes Pitbull and Bollywood is the color you need during the winter in Vancouver lol.
Hi J.R., it looks like you may have been contacted someone impersonating me, a spammer. It is possible that you have been contacted by that person, who has offered you something. Please do not engage if you receive any phishy comments or email under my name. Any email you get from me will be under the name "The Pragmatic Optimist". I have already raised it with Substack and blocked the person, I am very sorry for the trouble and confusion.
Thank you J.R for letting me know, I have reported and blocked the person, did the person contact you via email?
I am glad you didn't engage, and I apologize for the inconvenience.
Thank you for letting me know. The issue is sorted as of now by substack. Thanks again for your support to my newsletter and I wish you all the best with your health and surgeries you have coming up.
The housing market is extremely nuanced, as you pointed out, where prices are dropping wherre you live, but rising in other parts of the country. As I wrote in my post, there are some areas where its a buyers market, and others where it is not.
As for the American dream, I think millennials and GenZs are rewriting the playbook on this, where there is less preference to have children and therefore the need to buy a house per se. The rise of DINKs is an actual economic phenomena. (Double Income No Kids)
You are welcome J.R. Glad you enjoyed the post and have a wonderful weekend too.