May 13, 2024

I have had the good fortune of working with folks around the world. The US is by far the only place where it is still taboo to talk about who you are going to vote for. There are a lot of theories on the subject, but it’s 2024, and if there was ever a year people were remaining tight-tipped, we’re in it.

So, while my conversation with my Dad did not veer into the treacherous waters of Biden or Trump, we did have an interesting back-and-forth about the perceptions of the economy and the country and whether the data support people’s feelings.

Here’s What We’re Hearing

A recent Newsweek poll reveals that the majority of Americans think the economy is heading in the wrong direction. But, Peter (perhaps you and my Dad retort), many economists agree that compared to other advanced countries, the US is doing great in terms of growth. The labor market added 175,000 jobs in April, and the labor force participation rate held steady.

That’s all true. What typically follows is …

Oh, and let’s quit talking about inflation already, wage earnings are now outpacing inflation, look at the numbers!

Also true. And these were the points my Dad brought up. So why is everyone such a sour puss?

I chalk it up to four things.

1.  Inflation

Inflation, although sticky and preventing interest rate cuts in the short term, is down. That much is true. Yet, only 25% of respondents in the Newsweek poll believe the economy is heading in the right direction. Don’t the other 75% have access to the graph above?

After mulling this over, I realized that inflation isn't an issue for my Dad and many other retired folks. Yes, there are many retired people on tight budgets, and inflation certainly affects everyone. But if trips to the gas station are infrequent and someone’s weekly grocery bill pops from $200 to $220, inflation isn’t much of an issue.

Yet, for many folks (and the Newsweek poll bears this out), their current financial situation has worsened over the past year. Just over 40% of respondents indicated the same, while only 26% said it improved.

2.  Debt

Credit card debt, as I’ve written about, is eating away at wage gains. Sure, you might be gainfully employed and earning well, but if you’re carrying debt (most Americans are) and you’re paying more for most things than you did just three years earlier, psychologically, it doesn’t matter that you’re earning more.

We’re not rational creatures - we feel the spending part much differently than the earning part!

3.  Home Ownership

For the first time in multiple generations, many young people are recognizing that their dream of owning a home is slipping away.

Here are the median US home values between 1965 and 2024:

• 1965: $20,200
• 1975: $38,100
• 1985: $82,800
• 1995: $130,000
• 2005: $232,500
• 2015: $289,200
• 2024: $420,800

Now, adjusted for inflation in 2024 dollars:

• 1965: $202,215
• 1975: $228,404
• 1985: $245,129
• 1995: $270,147
• 2005: $380,793
• 2015: $386,494
• 2024: $420,800

In 1965, the median household income was $6,900, and the median home price was $20,200. That person would spend a tad under 3x their income on a home.

Compare that to the 2024 median household income of $78,171, and a potential homebuyer today is spending 5.3x their income.

Close to 1/3rd of Gen Z are living with their parents because they can’t afford to buy, much less rent. Last year was the least affordable homebuying year in over a decade and 25% of young folks are living in multigenerational households.

That figure was 9% five decades ago.

High interest rates, student loan balances (a topic for its own day, although I touched on it three years ago), and lower real wages than their parents when they were in their 20s and 30s, are contributing to the feeling that things aren’t so hot. Add overly restrictive building regulations in popular markets to live, and many renters are simply priced out.

4. General Disorder

My sense of the general disorder narrative is nuanced. Overall, crime is falling in most cities, but there are outliers. For example, LA, NYC, Chicago, and Philadelphia saw homicide rates decline from 2022 to 2023 by anywhere from 12% to 21%. However, homicides over the same period spiked in DC (27%), Memphis (24%), Dallas (14%), and Kansas City (14%).

Nationwide homicide figures peaked in 2022 and came down in 2023 but have not reached pre-pandemic levels. Aggravated assaults, on the other hand, continue to rise despite falling somewhat from 2022 to 2023.

This latter point, coupled with social media clips of brazen assaults in the streets, I think contributes to an overall feeling of unease. Similar to inflation, it’s not as bad as it was during the pandemic, but it’s still uncomfortable.

Second, and probably more telling, most violent and property crimes in the US are not reported to police. Pew has done some interesting work on this, where in 2022, only 41.5% of violent crimes and 31.8% of household property crimes were reported.

Then we’ve got the percentage of crimes cleared by police. Nationwide clearance rates for violent and property crime are at their lowest levels in roughly 30 years.

One thing we know is there was an officer exodus in 2020 and a police pull-back post-George Floyd. Departments are short-staffed, and policing in 2024 is frankly not something most young folks would consider an attractive career path.

So if you’re someone who has either been a victim of a crime and not reported it or did report it and the assailant was never brought to justice, what good are charts and graphs? You feel unsafe.

What November Holds

A fresh set of surveys by the New York Times, the Philadelphia Inquirer, and Siena College reveal some interesting trendlines.

Biden is in trouble in key battleground states. Roughly 70% of the polled voters indicated the country’s economic and political systems needed a major overhaul and only 13% believed Biden to be the candidate to accomplish this.

Even more troubling for Biden - many of the polled voters disliked Trump but thought he’d be the candidate to drive this change.

I am close to 50, and these figures are incredible:

• Trump and Biden are TIED among 18 - 29-year-olds and Hispanic voters.
• Trump has secured 20% of the Black vote - the highest for any Republican presidential candidate since the Civil Rights Act of 1964.

The country has some pressing issues to address. Have that conversation with your Dad, Mom, sibling, or co-worker. Regardless of your political affiliation, we need more, not less, conversation.