The Only Word Not Used In This Article: Goldilocks, Part II -- From The WSJ -- November 1, 2023

Locator: 45894ECONOMY.   

This is an incredibly good article. 

Part 1.

This is Part 2 -- starting with the "misery index."

Greg Ip has it exactly right. But despite all his "research." Greg Ip is/was unable to answer the question, "why are Americans in such a rotten mood?" There are four obvious answers. Actually five. Archived.

Link here.This is an incredibly long article for The WSJ. ;

The puzzle deepens when I plot the University of Michigan index since 1978 against the “misery index”—the simple sum of inflation and the unemployment rate. Based on historic correlations, sentiment has been more depressed this year than you would expect given the level of economic misery.True, for a long time wages were lagging behind inflation, but not anymore. Median weekly wages are slightly higher now, adjusted for inflation, than at the end of 2019. They haven’t grown, as they did in the years before the pandemic. But other things should have compensated for that.

Workers are getting more time off and more flexibility, which is why the Conference Board finds job satisfaction is also quite high. Federal pandemic relief means household finances are stronger, even now, than before the pandemic. Meanwhile, high housing and stock prices lifted the median household’s wealth after inflation by 37% between 2019 and 2022, the largest in the history of the Federal Reserve’s survey.

Part of the problem is that in inflationary periods both prices and wages rise but people dwell more on the prices and feel worse off. Moreover, while the Federal Reserve targets inflation—the rate at which the level of prices rises—consumers also care about the absolute level of prices and are bothered they remain so much higher than a few years ago.

The average Starbucks coffee has gone from under $3 at the start of the pandemic to $3.63 in the second quarter, according to Numerator, a marketing data company. Grocery prices have stopped going up, but “right now, it is still a little bit of sticker shock,” Steve Cahillane, chief executive of Kellanova, formerly part of Kellogg, said in September. High home prices are a particularly dispiriting form of sticker shock because, in combination with high mortgage rates, they have put homeownership out of reach for so many.

Yet sticker shock alone doesn’t seem severe enough to explain the profound level of economic dissatisfaction. 

The best Greg Ip can do is blame it on politics -- and I think he's correct. It gets tedious.

Misery index. It would be hard to find significantly better numbers ever. Start with unemployment rate:

And Table A-15:

Current inflation:

Homeownership is not part of the "misery index." Since Y-Charts have kept keeping records.

• all time high, 67.9%;
• today: 66%
• delta: 1.9%

A big whoop!

New home sales are surging.

Existing home sales are down.