I need to sit down and really think about these numbers and what they mean, what they don’t mean, and what they should mean and shouldn’t mean.
At least in my experience, the biggest thing that’s changed between now and the 1980’s when I graduated from high school, is the cost of higher education and the disconnect that has opened up between what entry-level jobs pay and what rents and mortgages cost. I was raised in the ‘Born to Run’ state, so it’s not surprising that virtually everyone I knew left New Jersey as soon as they turned 19 years old. A lot of us came back, at least for a time, but we all had the ability to uproot and find work and pay rents, even if we occasionally got a little help from home. And this was in spite of a nasty recession that hit right around the time most of us were graduating from college.
For me, I was able to split a nice two-bedroom apartment in a nice part of Los Angeles for about $400 a month, my credit hours cost only $105, and was only that high because I wasn’t a citizen of California, and while work was difficult to find after the recession hit, it paid enough that I could get by as long as my parents gave me a little help.
The kids I know in a similar position today, simply cannot replicate that experience. And most of them choose to go without a car of their own and to stay at home. Obviously, if their parents have the money and are willing to pay, they can still go off on their own, but it’s not real independence, or even semi-independence. Most kids wind up deeply in debt if they want a college education, and it’s not as clear that the education they get will immediately show a pay-off on investment.
It’s probably easier to control the cost of education than it is to control the cost of housing, so that seems like the more fruitful way to go.
Still, I’m surprised that people are roughly as positive about this economy as they were right before they reelected Reagan in a landslide. I don’t dispute the numbers, but I don’t understand them.
Cheap gas.
I’ll bet that is truer than most would think.
Also…”I’ve been down so long, it looks like up to me.”
Gasoline prices and consumer sentiment
http://econbrowser.com/archives/2015/05/gasoline-prices-and-consumer-sentiment
speaking for myself, I’m NOT happy about the economy. At all.
No one I speak to is happy. But then I don’t live near or converse much with the 1% folks.
Wouldn’t make too big a deal out of one poll. A mere three months ago CNN/ORC poll: 57% pessimistic about U.S. future, highest in 2 years.
The default position of the American psyche is more optimistic than pessimistic and optimism always tends to be higher among the young because they have their lives ahead of them and believe they are more the own masters of their destiny because they have been less disabused of that belief. The percentage of older/retired people doing well has never been as high as it is today.
This Pew report sheds light on some of the problems between the young and the old. Owning a home is one of the largest factors. Also, the growth in retirement communities contributes to the divide between the two groups. People isolate themselves through housing, so the oldsters literally don’t worry about somebody getting on their lawn.
“Older Americans also have been the beneficiaries of good timing, in the form of the long run-up in home values that enabled them to accumulate wealth via home equity. Most of today’s older homeowners got into the housing market long ago, at “pre-bubble” prices–half purchased their present homes before 1986, according to the 2009 American Housing Survey. Along with everyone else, they’ve been hurt by the housing market collapse of recent years, but over the long haul, most have seen their home equity rise. Moreover, most older homeowners (65%) do not have a mortgage to pay.”
http://www.pewsocialtrends.org/2011/11/07/the-rising-age-gap-in-economic-well-being/
The U.S. Homeownership Rate Falls Again, Nearing a 48-Year Low
http://blogs.wsj.com/economics/2016/04/28/u-s-homeownership-rate-falls-again-nearing-a-48-year-low/
And it won’t be coming back under current situation. So no fixed benefit retirements and no wealth in home ownership to give security to Americans any longer. 401ks have proven to be weak sauce, too, assuming you have income to put into one.
Hedge funds will be the slum landlords of the future.
Sometimes I can smell the ingredients for a perfect financial storm brewing in the air.
Would like to see the methodology of the survey but I’ve used up all my free WaPo articles for the month. Is there a link to the study or studies?
http://www.sca.isr.umich.edu/
Also, http://www.investopedia.com/ask/answers/09/consumer-confidence-sentiment-difference.asp
FDR knew what it was — it’s “security.”
The biggest difference is that in the 1980 it was still possible to imagine that as Americans, we had a level of security such that we did not need to worry that we might become penniless and prostrate at almost any moment.
Now, maintaining that illusion is a good deal harder.
It’s nothing to do with the level of any particular good, etc. High prices are a force that simply re-inforces our dependence on the Moneyed Interest. Which may well be a feature, not a bug.
As long as we’re a heartbeat away from utter despair, it’s going to be hard to right the scales…
There are a lot of elements that this group of young adults have to worry about. My oldest son, age 29, had to borrow money for college in spite of earning grants and scholarships. He graduated eight years ago and is still paying off his loans.
In my dad’s lifetime, men got a job and it lasted until they retired with a pension and benefits. My dad worked for the same company for forty-five years. But by the time he retired, the company had begun reducing pension and retirement funding and he got hardly anything.
My son has already changed jobs twice. There is no company loyalty because there aren’t medical benefits or promises of raises or retirement funds. He’s living in a loft apartment downtown and pays a higher rent than we do in the suburbs. But he can walk to his job and not drivng a car saves him the expense of car payments, gas, and parking fees. He has no money to buy a house, but he doesn’t want to at this point.
I don’t know what the future holds for my sons. Their financial world is constantly changing and ai hope they can stay afloat.
We have to keep in mind that that “lifetime job with decent benefits” was a brief period in the US. Roughly 1940 to 1985. That period was facilitated by government policies and programs. Once one age cohort “got theirs,” they began pulling up the ladder that they had used.
Unless politicians stop cutting funding for public universities, not much will change for current and future students. The biggest cost increase over the last 2 decades has occurred at the public 4-year institutions and the curve is quite steep. There is also quite an increase for the 2-year public institutions. Providing additional student services contributes to this increase, as well.
“So if the cost of providing an education has remained fairly stable, why does the price students pay keep rising? The reason, say researchers, is that deep budget cuts in state funding for public higher education and shrinking subsidies at private schools have pushed a greater share of the cost onto students and their families.”
http://www.cnbc.com/2015/06/16/why-college-costs-are-so-high-and-rising.html
How true is this claim?
“Social engineering by central gov’t (Feds) rarely delivers, and often leads to massive waste and calamitous consequences. Just like federal overreach in the real estate market via Freddie/Fannie and CRA–hey, everyone should own a house–produced the housing bubble that had to burst, the ‘college for all’ call via staggering federal subsidies–a key driver behind rising tuition–has now pushed the student loan debt past the $1.2 trillion mark, and thus incubated the next bubble. Nice going….”
Federal spending has overtaken state funding: …Total public funding per full-time-equivalent student for higher education fell 12 percent in the 12-year period starting in 2000, when adjusted for inflation.
Yet during that time, federal funding nearly doubled while state funding fell — federal funding grew from $43 billion to $83 billion, while state funding dropped from $78 billion to $71 billion.
A discussion: http://www.thecollegefix.com/post/26010/
Multiple variables have been in play over the decades since 1960. Not the least of which is that smaller states, cities, and communities have become far less stable. Some of that due to federal spending. A biggie has been MIC dollars. Had the distribution of those dollars not changed since 1960, the economies and population in many states would be very different today than it is.
I don’t think the libertarian claim is true. Government deregulation of the banking industry fueled the housing bubble and the subsequent financial collapse in 2008. The government is not the problem; however, a problem does occur when the government makes a bad marriage with the other party, since the government supplies the money and the other party decides how it’s spent.
Neoliberal economies do depend on blowing up perpetual series of asset bubbles to mask the lack of any true economy and productivity increases.
“Over the post-World War II Keynesian decades, wage and price growth provided the foundation for sustained demand and growth — at the ongoing cost of accelerating wage-price inflation. By the early 1980s, governments around the world sought to crack the back of inflation by breaking labour’s market power.
[…]
On “Black Monday” October 19, 1987, the US stock market crashed…
The still-evolving neoliberal economic order – based on valuing financial returns over wage increases as a source of demand – had been shown up. Asset bubbles were not to be trusted as a stable basis for an economic policy order…Almost immediately, an untested, newly installed Federal Reserve chairman, Alan Greenspan, would flood the streets with money.
[…]
Since then, over the past 28 years, the global economy has run on bubbles. Since 1987, these have spanned the Mexican peso crisis, the Asian financial crisis, the “tech wreck” or “dot-com” bust, and the global financial crisis itself.
https:/www.weforum.org/agenda/2015/08/are-asset-bubbles-a-bug-of-the-economic-system-or-a-feature
Looks to me as if neoliberalism (free-market or libertarian economic policy) is a feature, rather than a bug. Inflation–bubble–bust; inflation–bubble–bust, etc. What is the cumulative effect of these cycles?
Who owns the assets?
The cumulative effect is to direct wealth upwards.
Trickle-up economics again, but we’ve been told for decades that it will trickle down. That meme has to eventually blow up since it’s not true. Until then, more casualties will occur as the war to wage neoliberalism ensues.
Also there’s nothing to stop these universities from “competing” with each other over who provides the best “services”, luxury dormitories, and ornate facilities.
I visited my sister over the Easter holiday and they are in the process of building essentially a spa. Not like the things below, but it ain’t gonna come cheap:
Making a Splash on Campus; College Recreation Now Includes Pool Parties and River Rides
This sort of crap is why it’s difficult for older people that have never had much in the way of luxuries in their lives to have much empathy for the student debt load of millennials. Might be cheaper for the college age party-animals to spend four years at a Club Med than college. Public colleges and universities were never intended to become playgrounds for the young darlings of the middle class. Although there were exceptions even fifty years ago and most people seemed to know which were the “party schools,” and therefore, where the less academically inclined went.
Perverse incentives + “competition” where a good football team scores huge points in recruitment + no state actor to tell universities “No”…
Monetizing public college athletics has been an overall negative for education and increased the value of competition in the mind of the institutions and the students. And the competition always gets measured in dollars and that’s not limited to what is paid coaches but the salaries of all big names a college is able to hire. Meanwhile, the actual teaching is done by TAs and part-time teachers that struggle to earn a meager living wage.
Students and faculty from my alma mater protested the destruction of forest to build…an indoor practice facility for the football team
The tree huggers always seem to lose.
Part of the problem is the alumni associations. Old guys with bucks relish displays of athletic prowess at their alma maters.
It was eventually built, but the location was moved to a compromise area.
Maybe CA/Berkeley environmentalists should take lessons from those in VA.
99% of students with student loans didn’t go to school to sit in a spa, or ride in a lazy river spelling out the school’s initials.
Plenty of us have tons of student loan debt, and degree(s), and are paying a mortgage worth in repayments every month for those pieces of paper that we were told our entire lives would guarantee us a living wage/salary.
I don’t need anyone feeling sorry for me, or anyone else, but it sure would be nice if student loan interest rates were capped at around 2%, considering they are non-dischargeable in bankruptcy and are guaranteed to be paid no matter what by the Federal government.
Hey man, I had $55,000 in student loans for my undergrad that I paid off. 6.8% interest on about $30,000 of it. Luckily I was able to live at home for a year substitute teaching which was enough to pay the $625/month loan payment and save some money on the side. I didn’t ask for those nice gyms and facilities and dorms my school purchased, but at 18-20 years of age I also wasn’t complaining too hard about it. In fact it was a source of pride — we had “the best rated food” for a few semesters I was there. The problem is that there is a fundamental disconnect here of what’s controlled by students and what’s done to “compete”.
But that shit costs money. And the increased personnel for these facilities costs money. Including the administrative bloat. Meanwhile the professors and average personnel get fucked, but admin gets to stand outside that brand new swimming pool and cut the ribbon to the cheers of the governing boards of these universities.
Until someone somewhere starts saying “no” — which could be helped if the state contributed more — then we might get somewhere controlling these costs. More student “aid” will continue the problem.
Well then, I guess the 99% learn early to be complacent as the 1% rules what public colleges are expected to deliver to make college a fun experience.
You might not want to jump all over strong advocates for public education with low to no fees when we criticize public colleges for offering unnecessary luxuries. (Don’t care what private colleges do as long as no public dollars flow to them.)
Jeebus.
But we should back the candidate of the status quo. Makes zero sense to me.
Booman writes:
You tend to live in the past, Booman. The fairly recent past, I’ll give you that, but still..
You take a poll published by an obviously high-level government PermaGov mouthpiece…a newspaper that was an early victim of Operation Mockingbird, the current owner of which now does huge business with the CIA and whoever else will make him $6 billion in 20 minutes…a poll conducted by yet another ex-university that is now merely another well-functioning cog in the Big Money machine…and then you wonder what it all means!!!???
It means that:
#1-The PermaGov Media Complex now is in full howl to convince people that everything is just huky-dory with the U.S. up and down the line so that they don’t feel the necessity of voting for Bernie or Trump.
and
#2-Because the pollsters can only fudge the numbers so far before they drop all pretense of reporting on reality…there are still many people who answer polls (thus signaling that they generally have fallen for the whole PermaScam who have…(sigh) fallen for the whole PermaScam!!! They are the ones upon which this particular “poll” was focused. Guaranteed.
They didn’t come to or call my Bronx neighborhood or any other neighborhood in which I travel fairly comfortably. Not the white rural and working class neighborhoods that are falling like dominoes in front of Trump’s magic fingers, and not the working class, middle class and below-the-poverty-line neighborhoods of all races that are desperately looking for someone…anyone…who will flat out promise to trty to break the .01%’s current absolute stranglehold on this nation.
DUH!!!
“People”…the majority of people if there were to be a fair head count across this country, I will also flat-out guarantee…are not particularly sanguine about the state of the country on any level. The primary votes for Sanders and Trump…which if combined would beat either party into total submission…are the best available proof of this fact.
You still take the pronouncements of any PermaGov media…from MSNBC right on through FOX News… as some sort of serious news rather than simply another diversionary hand motion by the Permanent Government’s corps of media magicians???
And you object to my suggestions that you…and many other people…wake the fuck up!!!???
Please.
AG
P.S. You are not a kid anymore, Booman. Stop thinking about things as if they resemble the way things were when you grew up in Princeton.
Even Princeton isn’t “Princeton” anymore.
Bet on it.
AG
They’ve never called me either and I’ve been in the phone book for decades. How long do you have to wait to give them a piece of your mind?
○ Zbigniew Brzezinski – “Between Two Ages”
○ Political Order in Changing Societies by Samuel P. Huntington
A byproduct of globalization is nationalism which leads to the clash of civilization: politicians of our time are the likes of Geert Wilders, Tea Party canidate Ted Cruz and Donald Trump. Chaos created by US in Iraq and from a revoltionary movement in Arab states from Tunesia to Bahrain.
Er, globalization weakens nationalism, imo. Multinationals use the mechanisms of the state to advance their own interests. The nation state is rendered toothless through trade agreements.
I still find it amazing that people talk about the student loan debt issue without making mention of REPAYE (Revised Pay As You Go)which is Obama’s improved version or IBR (Income Based Repayment).
It is open to everyone regardless of when you took out your loan (Not private loans). It caps your monthly payments at 10% of disposable income. And whatever amount of interest your minimum monthly payment doesn’t cover is automatically subsidized by the government for 50%.
Whatever debt remains is forgiven in 20 years (10 for public service jobs). The forgiven amount is supposed to subject to being taxed as revenue but hopefully that might get taken care of over the next 20 years.
It isn’t perfect but it goes a long way towards making student loan debt very manageable.