Help me understand. The gap between our nation's wealthiest and poorest is at an extreme. Many cannot afford to own a home, put gas in their cars or buy groceries as a result of a worldwide inflationary spiral and some might argue a capitalist inspired drive for year over year growth and profitability that knows no limits. Poverty in our country has become a middle class reality--at least a kind of poverty that finds too many just barely treading water, not quite drowning just living paycheck to paycheck and hoping that nothing cataclysmic pushes them under. These are real problems, and notably, challenges that neither candidate in our recent election addressed squarely with any candor, much less considered policy proposals.
And yet.....the initial results of Black Friday and the more recently minted Cyber Monday online sales have far exceeded last year's record highs. At over $16 million in sales so far in 2024, auto sales have rebounded from their recent nadir in 2020 by nearly 20% despite average prices tens of thousands higher. With an active monthly inventory of nearly 1.4 million, there are almost 45% more homes on the market today than just 3 years ago--a reflection of high borrowing costs and record prices--some would say are heavily influenced by corporate buying. And rental rates which typically rose 2-3% annually have been climbing at 6-7% since 2021. Even those who are able to pay the going rate can attest to a weekly grocery bill that has climbed nearly 30% in the past four years. All of which has raised the cost of living for a family of 3 by nearly 10% in just 3 years.
Regardless of who one wishes to blame or what turn of events including a worldwide pandemic and supply chain disruptions is responsible for the current state of affairs, there is an apparent, one might even say conspicuous contradiction between our circumstances and our behavior. We continue to consume, and at record levels even in the face of inflationary costs. While average wages have indeed climbed, almost 11% since the artificially depressed levels caused by Covid, we are no better off, and unquestionably more Americans are teetering on the edge of bankruptcy, of destitution, and possible homelessness.
So, help me understand this contradiction between consumption and means. As we should have learned many times over, the present circumstance is not sustainable. Something must give. If the majority of economists are right, the impact of significant tariffs, the loss of immigrant workers in construction, agriculture and service sectors that seem imminent will deal an even greater inflationary blow to our economy--some say plunging us into a recession or possibly a depression. Of course former President Harry Truman is famously credited with saying that he wanted a one handed economist, because they were always saying on the one hand this will happen but on the other it might not.
Whether we choose to believe in the dire projections or remain blissfully unruffled behind our rosy spectacles will certainly bear on the outcome. I say that because consumer sentiment and psychology have as much to do with the contradictions we can observe as any economic theory. Perhaps that is the real explanation for why many have less but many are spending more, why we believe that a new administration will do better despite four years of prior evidence that saw an increase in national debt on its watch of 8.4 Trillion dollars. Can optimism overcome reality? We are about to find out the answer to that question.
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