this post was submitted on 23 May 2024
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[–] [email protected] 2 points 5 months ago* (last edited 5 months ago) (2 children)

the number of Americans who own 401(K) investments, which benefit from better stock index performance, has increased significantly in recent years

This is the same as saying lots of Americans have bank accounts. The accounts could be empty.

the US cooled inflation down to that level far faster than other Western economies (e.g. the UK and Eurozone)

The US did not experience the same economic effects as the UK. The UK performed Brexit which raised the cost of goods by definition, and had their price of fuel skyrocket due to the effects of the Russia-Ukraine war. The US is not dependent on Russian oil.

wage growth has actually outpaced inflation in recent years

EDIT: Wages with respect to productivity have been stagnant since 1970, but today's average worker produces far more value for their employer. Employers are not sharing their increased profits with their workers, who are making roughly the same as workers from 1970. So yes, workers got a very slight real increase in pay, but are still vastly underpaid.

The inflation rate measures the price change of a basket of household goods

No, it doesn't. That's the consumer price index.

employers are more willing to be generous with pay raises when the economy is good. In short, people credit increases in wages to their own hard work but blame inflation on the Government.

No, increased wages are not because bosses decided to be nice. Corporate profits reached records during the pandemic, paying more reduces profits. Unions and displays of labor activism in the US have expanded significantly in the past few years. People are demanding higher wages from their employers. The entire purpose of the Federal Reserve is to combat inflation. Action by the government is the only way to control inflation.

Economists are not stupid.

That's debatable, but some are certainly self-serving.

Tell me how high interest rates benefits those who have to borrow money for school, medical expenses, a car, or a first home.

[–] [email protected] 4 points 5 months ago

It seems like you read but didn't understand what I said.

When you say that the US "didn't experience the same economic effects as the UK", I respond with "it doesn't matter". It doesn't matter why the US didn't experience a worse economy, just that it didn't. When you say that wages lagged behind inflation for the 50 years prior, I absolutely dispute that conclusion. It seems like you saw someone else talk about it, thought "this sounds true", and then didn't look at the data, which is much more mixed:

You think that the "consumer price index" is different from inflation. The consumer price index is a method for measuring inflation, and you being confused by this honestly makes me want to dismiss all remaining credibility you held. This is like if I said "temperature scales measure how hot or cold something is" and you replied, "no, that's a thermometer".

I never claimed that wages increase because employers are "nice". I assert that employers are more willing to give higher wage increases in good economic conditions, because such conditions give workers more bargaining power. Employers in better economic conditions have more money to give to wage increases, so workers are more able to extract that money through wage negotiations. Compare this to bad economic conditions when employers are going to be much less able to give raises or when the labour force is shrinking, causing supply in the labour market to outpace demand (driving down wages). If the economy is growing, there is more demand for labour, and thus suppliers of labour (workers) are able to demand higher prices (wages). Is this really so hard to grasp?

[–] [email protected] 1 points 5 months ago (1 children)

Wages lagged behind inflation for the 50 years prior, and the gains since March 2023 are not nearly enough to make up for this.

That's very much not true.

[–] [email protected] 1 points 5 months ago* (last edited 5 months ago) (1 children)

EDIT: I'll update my previous comment for clarity

[–] [email protected] 1 points 5 months ago

I was drafting a response but I see your edit now. This report seems to echo a lot of what you're saying, but it lays blame with several far more long-term and structural problems. It certainly would be difficult to argue that we're doing as well as we were doing in the post-war boom of the middle 20th century, but that's like saying things are not currently good because they were better in the past. While technically true, it kinda misses the point and distorts the definition of "good."

You're right, but so are the people saying that things are significantly improving. Coincidentally that's exactly what the article is talking about.