Very few Americans say they’re better off financially this year than they were last year, according to a large new survey. And they’re feeling that way despite indicators that say the economy is on the up.
According to that poll, only 13% of people said they’re better off this year. Almost 90%, across income brackets, across the country, and across political views are pessimistic. Americans are saying something that must be heard. But what is it?
Today, On Point: Behind the pessimism Americans have about their own financial lives.
Guests
Michelle Singletary, personal finance columnist for the Washington Post. Author of “What to Do with Your Money When Crisis Hits: A Survival Guide.” Her column “The Color of Money” is syndicated in newspapers across the country.
Heather Long, economic columnist at the Washington Post.
Related Reading
Washington Post: “My husband just retired. I’m scared to death of running out of money.” — “My husband and I are fortunate. We have enough for retirement.”
Washington Post: “Consumers are confident inflation is waning. Are they too optimistic?” — “Inflation has been like a cold you can’t shake. It started off bad, and some symptoms linger like a persistent cough even as things improve.”
Washington Post: “Opinion The ‘vibe-cession’ is over. Americans are starting to feel it.” — “Opinion The ‘vibe-cession’ is over. Americans are starting to feel it.”
Transcript
Part I
MEGHNA CHAKRABARTI: This is On Point. I’m Meghna Chakrabarti, and here’s the question for today. Do you feel financially better off this year than you did last year?
MOLLY: My answer is a resounding no.
PATRICK: I do not feel better about my financial situation than I did a year ago, largely due to cost of housing. In my area of Madison, Wisconsin, many places require you to have triple income compared to what the rent is. So if rent was $1,000, you need to make $3,000 a month.
MICHELLE: Our daycare just raised rates 15%, that’s one five.
MAGNUS: So I do not feel better off financially this year than I did last year even though I got a raise. And the architecture firm that I work at is doing pretty well. But that’s basically irrelevant to my financial feelings, which all come down to student loan payments starting again.
PAT: Yes, I would say that I do feel better off financially. More so now than a year ago. Prices have come down, particularly in areas like gasoline. We are no longer heading into a recession.
PAUL: Given the repercussions of the pandemic, which was the huge impact on our economy from loss of jobs to supply chain issues worldwide and compared to other countries, I firmly believe I am better off than what we could have been.
SARAH: The boots on the ground experiences is that we all watched inflation soar as high as 9% last year, and then we’re supposed to feel like it being only 3% is good news. That’s no. Americans want to see prices go down because we’re paying for these increased prices.
CASSANDRA: For sure what would make me feel better about my financial future would be seeing costs stabilize. If I have a job and I’m getting more money, that would equate to my not having to make these decisions about what to buy, what not to buy. That would make a difference. But the cost of living has never kept up with the raises that companies pay.
ERIN: My household is pretty stressed about our financial future. The whole combination of everything is just really stressful. We’re not really sure what’s going to happen. I’m already working two jobs, so we’ll just, I guess we’ll just see what happens.
CHAKRABARTI: That was Erin, Cassandra, Sarah, Paul, Magnus, Patt, Michelle, Patrick, and Molly from Maryland, Wisconsin, California, Florida, New York, Washington State, and Connecticut. Now, feelings are feelings, right? Feelings are not facts, but all facts are not the same. Some are discreet, describing a very specific point in time.
Others can be more longitudinal, accreting their authority over a much longer period of time. In other words, contradicting facts can be simultaneously true, and people can have a lot of contradicting feelings about those facts. An immortal case in point, the U.S. economy. The latest numbers, read individual points on the great curve of time, are really good.
The labor market is strong. Wages are up for lower wage workers. Prices have cooled off a bit and inflation is down. Longer term though, read decades. Wages have sorely lagged. Corporate profits or inflation, prices in some sectors continue to go through the roof, and for the past 40 years, more and more risk for things like health insurance, education, retirement, have been heaped on individuals.
And then there’s the pandemic. It pulled the rug out from under just about everyone. And right when folks might be feeling like they’re about to fully stand up, key parts of pandemic relief are coming to an end. So maybe it’s not such a surprise that despite the latest monthly economic indicators, only 13% of Americans recently surveyed in a YouGov poll feel like they’re better off this year than last year, and that dismal number is not unique to one political party or one income bracket.
Americans don’t feel great about their financial prospects across all political identifications and income. According to that YouGov poll, for people making $100,000 or more, only 21% said they were better off this year than last. So today we’re going to scrutinize both fact and feeling to understand better what Americans are trying to say when they say they’re pessimistic about their financial, present and future. And to do that, Michelle Singletary is with us. She’s personal finance columnist for the Washington Post.
She has a nationally syndicated column, “The Color of Money,” read across the country. And her latest book is “What to Do with Your Money When Crisis Hits: A Survival Guide.” And other than those grade A accolades, she’s also one of On Point’s Money Ladies. Hello there, Michelle.
MICHELLE SINGLETARY: Hi, good to be back.
CHAKRABARTI: It’s that last title that I personally love the most.
No offense to the Washington Post, but so glad you’re back with us. Now, as I mentioned, we’d usually call this a Money Ladies segment, right? With Michelle. And for the folks who listen regularly, with Rana, that’s Rana Foroohar. But she couldn’t join us today. So we’ve got a terrific pinch hitter with us.
Heather Long, she’s an economic columnist, also at the Washington Post. Hello there, Heather.
HEATHER LONG: Hi, good to be here. Always good to fill in for the great Rana.
CHAKRABARTI: (LAUGHS) I hope you’re feeling in good company being now part of our stead of Money Ladies here.
LONG: I’ll take it. I need some survival tips too, Michelle.
CHAKRABARTI: Don’t we all. (LAUGHS) Okay. So let me get straight to it. And again, just jump in whoever, but Michelle, I’m just going to start with you. When we sent you that information about that YouGov poll and it’s not Gallup, but it’s still something I think is significant, about the seemingly across the board pessimism that people have about their own individual finances right now.
What was your first reaction to it?
SINGLETARY: I think what you said at the top of the show is accurate. Feelings are not facts, but the feelings are real and there’s really two things going on. There’s the overall inflation, which is down significantly, and then there’s core inflation, those things that really hit home, like rent, car prices, auto insurance.
And so it’s a tale of two cities, if you were. Two issues, the larger picture is we are better. You can’t go from 9% to just over 9%, to just over 3% and think that things are not better. But when you dig deeper, lots of people were struggling even before the pandemic and when inflation went up. And so they still feel crushed by a lot of financial obligations. And when you’re in the middle of the storm, even as it’s passing, you still feel the effect of that storm.
CHAKRABARTI: Okay. Heather, before I turn to you, I actually want to get a voice of a listener in here, who says, basically, all things considered, things are good. This is Paul Lybarger from Denver, Colorado.
PAUL LYBARGER: Given the repercussions of the pandemic, which was the huge impact on our economy, from loss of jobs to supply chain issues worldwide and compared to other countries, I firmly believe I’m better off than what we could have been.
I think those Americans who expect to be better off are expecting too much given the residual effects of what the world has gone through.
CHAKRABARTI: Okay, Heather. So first of all, if Paul were with us, I’d be like, in comparison to which other countries do you mean? But also, he’s saying he’s questioning people’s expectations of what life should be now.
What do you think about that?
LONG: Yeah, it’s a really fascinating comment. On some level he is 100% right that I was writing those stories in 2020 when there was a real fear that we could end up in another Great Depression, like the 1930s and we avoided that. And as a matter of fact, we’ve got more people working than we’ve had, in many ways, in 20 years.
On a lot of levels, things are better, way better than anybody would’ve expected two or three years ago, given what we’ve all been through. What’s interesting, and I think the clips that you played to start the show really hit on this is yes, inflation, as Michelle was talking about, 9% last summer.
Down to 3%. But when we are talking about those numbers, we’re talking about the growth in prices. Prices are still growing and you take something like home prices, which are so visible as you’re driving around town or looking at those websites for maybe your dream home, could you afford it?
And in the start of the pandemic, the typical home price in America was $280,000. Today it’s over $400,000.
CHAKRRABARTI: What? Is that the median home price across the country?
LONG: Yes. The medium home price.
CHAKRABARTI: So it’s almost doubled.
LONG: Not quite doubled, it’s up massively. And people feel that. That’s before we even talk about the mortgage rates soaring through the roof. And so I think there’s something real here in the sense, and I try to acknowledge that, like Michelle was saying, these feelings are real. There is a real psychological toll, yes on a paper. And in fact, incomes now, on average, are growing faster than inflation.
And that’s really a positive and people are starting to see that and feel it. But the prices are still really high across the board.
CHAKRABRTI: Okay, so let’s go to Frederick, Maryland. Where On Point listener Molly Carson had this to say.
MOLLY CARSON: My answer is a resounding no. Last year at this time, there was some hope that we might have student loan forgiveness.
We were also still in the blush of pandemic relief funding, where I got money for having children. That tremendously helped, and my household, as my kids get older, the more activities they have, and my family makes a very good income, and yet I definitely feel less able to buy the things I need to buy this year than I did last year.
I think inflation certainly is playing a part. As well as the lack of these exciting, and I think comparatively small investments in families that we saw during the pandemic, and with that hope of student loan debt relief. So in all those ways, I’m disappointed and definitely in a more precarious financial situation this year than last year.
CHAKRABARTI: Now Michelle, we just got a minute before our first break, but I want to start us talking about what Molly just said there. The loss of certain government supports, namely that student loan relief. That’s on a lot of people’s minds.
SINGLETARY: Yeah, it is. And really quickly, if you are struggling, the Department of Education, the Biden White House, has a plan in place to help with that.
They’ve got a new debt repayment plan that will allow families who are struggling to pay, in some cases, $0 per month.
CHAKRABARTI: $0 per month. Okay. But then for those who don’t?
SINGLETARY: Even if you’ve got federal loans and you apply for one of the income basement repayment plans, it will, it should fit in your budget.
But if you listen to what Molly said, really listen, it’s the extra stuff that they don’t have money for. So they’re not worse off. They just can’t do more of what they want to do, not necessarily what they need to do.
Part II
CHAKRABARTI: Magnus Westergren. He lives in New York City. He answered our question that we put out last week about do you feel better off financially this year than you did last year? A lot of people said no, including Magnus, who works at an architectural firm who he says is actually doing well this year.
He even got a raise, but nevertheless, he still feels financially worse off because of those oncoming student loan payments.
MAGNUS: After the student loan payments went on pause during the pandemic, all the money that I saved I spent on buying myself an apartment. So now I have a mortgage and I have a wonderful apartment in the city that I love.
But with student loan payments starting my payment is going to be probably somewhere around $1,500 to $2,000 a month which is going to be a severe challenge to pay. Now that I have a mortgage to pay as well. Yeah. That’s why I am very much fearing for my financial future this year.
CHAKRABARTI: Okay. Heather Long, Michelle told us a little bit about her thoughts regarding those student loan payments.
How does this, how do you analyze this moment? Because we heard this over and over again from people who were like, I was really glad not to have those payments, and now I feel like I’m going to go underwater because of them.
LONG: It is real. You’re going to have, people are going to have to cut back on their budgets, no doubt about it.
And Michelle was getting at that. She’s been hammering on that point. You got to get rid of the extras and that’s not fun. I’ll just throw out another point. Not to be really doom and gloomy, but what scares me the most looking at the economic data lately is if you look at what happened this summer, people were spending like it was boom time, they were spending double the amount of income growth.
So that means they were either spending down their savings like Magnus was describing, or they were using credit cards or using one of those Karma or other apps you can take a short-term loan out from. And that’s just not sustainable, even if you don’t have student loan payments that are about to restart and other supports that are coming off.
Somebody mentioned the child payments, for example, which are long gone now. So I think that to me is really the one worrying thing. The U.S. economy is driven by consumption and consumer spending. And right now, people are overspending with money they don’t have.
CHAKRABARTI: Okay. Heather and Michelle. Oh, so many thoughts. Because I think you just got right to the heart of the matter. There’s so many contradictions here. First of all, as Heather just said, The U.S. economy is measured by consumption. It’s also driven by things like, consumer optimism and et cetera. And yet I’m hearing from both of you saying people were spending like it was like 1999 and they shouldn’t, and they shouldn’t have.
Help me square that contradiction, Michelle.
SINGLETARY: Okay, so listen to the last call. And what I’m going to say is not going to be popular. And please don’t send me no hate mail. I’m telling you, do not do it. You’re going to be deleted right away.
LONG: You get enough as it is, I’m sure.
SINGLETARY: I get enough as it is as a Black woman and a woman. So listen to what the caller said. I went and bought a place. But he went and bought a place without considering that at some point those loans were going to kick in, and so if I had been invited him, I would’ve created a budget, including that student loan that would’ve probably told that person, it’s not time for you to buy it right now, that you might need to still rent, or you might need to rent and get a roommate.
Until you figure out how to make sure that those payments, those student loan payments, can fit in your budget in addition to a home payment. So is it the fact that the loans are kicking in, or this person didn’t do their due diligence in terms of making sure that everything that they’re responsible for is in their budget?
Listen, folks, you borrowed this money to go to school, and there are certainly some people who absolutely deserve a break. Their wages aren’t kept up. They had these promises of these great jobs when they finished college, or maybe they didn’t finish college, but there are a lot of people out there doing this pause that went to do some things.
Not considering that responsibility is going to kick in at some point. And so that’s the tough love. You can’t do it all. So you’ve got to look at your budget, it’s not a bad thing. And you got to let that budget dictate where you’re going. It’s just like when you’re in a car and this GPS and you plug in the coordinates.
You use that to help you get to where you’re going. That’s your budget. And that person didn’t look at that, even with the promise of loan forgiveness, it was not going to be enough to erase it for a lot of people. Some yes, but not all. Not $10,000 or $20,000. And I really want people to be honest with themselves.
Is it that you’re worse off or that you’re trying to do too much with money that you don’t have?
CHAKRABARTI: Okay. Heather, I want to fully disclose that I am a true-blue believer in Michelle’s gospel of frugality and budgeting. No, seriously, like I grew up in a family where one of the like constant mantras was, “Do not spend more than you earn.”
Okay? That was like drilled into me since I was two. And so Michelle is a spiritual guide here for me. But what I’m going to ask, and I do want to hear from both of you on this, is that, look, let’s be honest for us here on radio show, don’t get mad at me, Michelle. Okay. It’s easy for us to tut, right?
Make a budget. Presume that your student loan payments were going to have to come back eventually. Maybe this isn’t the best time to buy a house. I hear everything that Michelle says about that, but there’s an undercurrent of our analysis between the three of us here that presumes that people should give up on what they think a successful American life should be.
And I don’t know, I don’t think people should give up on that. Heather, you talked about people, trying to achieve their dream homes in this economic period, or going to Taylor Swift concerts, doing things that they want to do rather than what they need to do. I don’t think we should define American life universally except for the richest of us as a prolonged or perhaps permanent austerity period.
Why shouldn’t people go to Taylor Swift concerts to give themselves a bit of joy, and also that should be a normal part of life, shouldn’t it, Heather?
LONG: Very fair, Meghna. And I’ll just say I disagree a little bit, just a tiny bit with Michelle on this one. I would say it was a great time, when those mortgage rates were low, it was a great time to buy a house. And if he can find a way, maybe getting a roommate or something creative to make it through the next few years, until hopefully those student loan payments go away, that’s going to be a really good financial investment, probably, to own a property in New York City and to get in while those mortgage rates were low.
So we don’t know the full budget picture, but I’m more optimistic for Mr. Magnus than maybe my colleague. I think you’re right. I would also throw out another thing that’s important to remember in the last three years, and that is the great reassessment of work.
So many people were able to quit a job or they got laid off and then find a career. And get on a career ladder. And job satisfaction is the highest we’ve seen and ever recorded as it started in the ’80s. We’re looking at these surveys of job satisfaction. So yes, people are saying maybe their finances and they’re not feeling better on their finance side, but if you look at job satisfaction, people are much happier.
They have more flexibility. Some can work from home, some have Fridays off. Even people working in the hospitality sector find it a lot easier to plan out their schedule than they did pre pandemic and that they get a lot higher pay and better benefits. And so I think when you look holistically at where we are as a nation in the past three years, it’s not just about consumption and the budget lines that a lot of people have been able to trade up, I would argue, trade up to a better lifestyle overall.
CHAKRABARTI: Okay. Michelle, I’m going to turn back to you here on this and I’m going to, I’m going to drive at this over and over again. ‘Cause to me, this is the thing that I don’t think we in the media talk honestly enough about, and that is, I totally understand having to tighten your belt for a certain amount of time, everyone should have the wherewithal to do that, to get through rough times.
But I think the truth is that the pandemic exposed how well most Americans accept the wealthiest, essentially, you know that fact better than anyone, Michelle, that like this tiny number of Americans had $500 in cash for emergency purposes, and everyone else basically didn’t.
So it’s wait a minute, this American life that I was supposed to have or that even I’m supposed to be able to give my children. It hasn’t really existed for decades, and now maybe we’re in a situation where it may never come back for huge numbers of people. And I think the settling in of that reality or possible reality is what’s driving some of this pessimism that we’re talking about this hour.
And I really, and it’s not just I sympathize, I completely understand why Americans might feel that way, even if they’re earning $100,000 a year.
SINGELTARY: I run the spectrum of someone who’s lived a life where I had to go live with my grandmother. Because my parents abandoned us, and my grandmother never made more than like $13,000 a year.
And so raising five grandchildren, husband who’s an alcoholic, didn’t bring his paycheck home. Listen, I’ve been there, I’ve walked there. I actually know. I’m not speaking from some sort of high point where I’ve made this great salary all my life and I don’t know what your life is. I absolutely know what it’s like to open a refrigerator and not have any food in there.
But what I’m saying is, and I love that we disagree, Magnus, I’m not saying don’t go for your dream, but it has to be realistic. Okay, so let’s say you’re going to take advantage and buy a property, but did you consider maybe I need to get a roommate while I’m going to do that?
I can’t get a one-bedroom place because even if interest rates are lower that time, it doesn’t matter. If you can’t pay that mortgage, it doesn’t matter if that interest rate is 3% or 7%. And there’s some things in life that you are not going to be able to do. It’s not your fault. We don’t have a good safety net for folks.
College costs too much, but that doesn’t mean on an individual level, you can’t make the kind of decisions that will make it worse for yourself. Did I, when I was a hungry child, want more? Certainly. But my grandmother knew that she could only do with so much, with the income that she had.
And so you got to tamper your expectations for where you are in life until you can get into a better position. It makes no sense for us to tell people to go out, Hey, you know what? Life sucks. Why don’t you go ahead and go to that concept that you can’t afford because whatever. And on that point, I don’t have a problem with paying for Taylor Swift tickets at whatever that crazy price was.
Because that’s not the difference between you buying a house, and paying your rent. But I am concerned about the big-ticket stuff that does make a difference. So I don’t care that you buy that coffee every day, but I do need you to look at the rest of your budget and maybe not take your lunch or maybe not go on a $2,000 or $3,000 vacation because you figure, I deserve this.
No, I’m not going to co-sign for that. And you shouldn’t either. And this is coming from someone who’s not been where she is now, and I understand the want and need to have more.
CHAKRABARTI: Michelle, this is why I love having you on. Seriously. Reality check. Always. Okay. So even when I don’t actually disagree with you, but I’m trying to give voice to what I think a lot of people might be feeling.
So let’s actually listen to some more folks who called in and let us know about how they’re feeling. Some of them definitely said they feel better off this year, and the reasons were quite varied. Here’s Rich Berg of Washington State. He also feels financially better this year than last.
RICH: For a few reasons. One is that social security benefit payments went up substantially due to inflation, and the next reason is that bond rates, treasury bond rates are substantially higher, which provide a stable rate of return for our retirement savings. And I also am encouraged that the Biden administration is taking serious action to mitigate climate change, which I feel will affect our financial future.
CHAKRABARTI: Okay, so here is also Jim Remi of Buffalo, New York. Unlike Rich, Jim doesn’t feel better off financially this year than last.
JIM: And I think that’s because of inflation, and I think that’s also due to the nation’s large debt of $31.5 trillion. I also believe the Federal Reserve is responsible for some of the mess that this country is in, as well.
So no, I do not feel as good financially as I have in the past.
CHAKRABARTI: Okay, Heather, so Jim there raising two of the shibboleths of, I guess let’s call them deficit hawks here. He’s talking about that large debt of $31.5 trillion, and he is also pointing at the Fed saying, “You’re responsible here for how people feel.”
Your thoughts?
LONG: You hear this a lot, so I’m glad it came up on the program that look, everybody knows that the acrimony in this country is up. The partisanship. We went through a situation where we got pretty darn close to the United States defaulting on its in-debt payments when we were back in May heading into June, and we had to watch Congress and the White House try to come to some last-minute deal to avert a really massive crisis. And thank goodness they came together, and they did it and they passed it just in time. But there’s a lot of close calls, obviously that led to a debt downgrade of this nation by another of the big, by another of the big credit rating agencies in August.
And so I think he’s onto something, and that’s definitely part of the reason that we’ve just seen sentiment across the board about just about everything fall, starting around 2016. And it really hasn’t rebounded a ton. The Fed is an interesting one. I covered the Federal Reserve for the Washington Post for a few years and continue to watch it very closely.
Let me say this. There is no doubt and even there’s economic research that shows the Federal Reserve played a pretty big role in making inequality worse in this country. And what I mean by that is what the prior caller to him said, which is a lot of the Fed’s actions really juice the stock market.
CHAKRABARTI: Yeah. You do sound like Rana.
LONG: Yeah, I’ll channel that. So there’s something to that. There’s something to that. Now I will say I think they’ve done a pretty decent job in the last several years of helping the world not end up in another great depression in 2020, the Fed was very fast to act and they’ve done a halfway decent job. They were a little slow to get going, but a halfway decent job of trying to bring inflation down without tanking the economy. We are not sitting here in a recession today, which a lot of people a year ago would’ve bet you money. We would be in a recession right now.
CHAKRABARTI: Okay, so Michelle, let me just quickly turn back to you on that because I think Heather put it the right way. A lot of people were thinking that a recession was going to land but it didn’t. So how much of this is people seeing whatever’s covered on their radio show or television show of choice and channeling that bit back into how they feel about themselves.
SINGLETARY: Oh, absolutely. Not you, not us at The Post. (LAUGHS) Not Heather. But I think there is a, listen, that’s the nature of business. You hype up the thing that people fear because they’re talking about it. So it’s not like you didn’t make it happen. We know people are fearful. The pandemic shut things down.
People lost their jobs. There was less money out there. Because people needed it. And so there’s all this, “What are we happening? What’s going on? Oh my gosh.” And people feed into that. And rightfully, there is a lot of different segments in this country.
People struggling. They were struggling before the pandemic. They’re struggling now. People in the middle were just hanging on. And then, the one-percenters is just taking it all, most of it. And all of that feeds into people’s fear and have this sense that things are not better for themselves.
Part III
CHAKRABARTI: We’re trying to think through what’s really driving some pretty dismal numbers as revealed in a recent YouGov poll about how Americans feel about their financial lives now in comparison to last year.
In a nutshell, they don’t feel very good about it at all. And in fact, Ray Russell tells us on Facebook, “It’s not that people are pessimistic, it’s the prices for grocery and consumer goods, plus sky high interest rates.” We talked about that a couple of minutes ago. Ray says, “You can’t put lipstick on a pig.” And Jason Munch says, gosh, he just really nails it with a very precise question.
“Economy is doing better. For who?”
Okay, so that’s some of our online commentary from listeners. Let’s listen to Rosemary Malfi. She lives in Salem, Massachusetts, and it’s interesting because she told us she feels fortunate that her family is more stable this year in comparison to last year, but nevertheless, they’re not comfortable because they’re feeling anxious about their future.
ROSEMARY MALFI: I think the housing market is another piece of it. I think that really probably varies a lot depending on where in the country you’re living. Lots of people in my neighborhood say, if we were trying to buy a house now, we couldn’t afford to live in our own neighborhood. So I think there’s this sense of lacking options and not having choice, right?
If you wanted to move or if you needed to move, where there’s this sense of where would I go and how could I even stay in my own community?”
CHAKRABARTI: Again, that’s Rosemary Malfi in Massachusetts. Let’s swing down to Florida. That’s where Pat Gavin lives. He’s in Fort Lauderdale. He feels quite differently.
He says he’s better off now than last year.
PAT GAVIN: Prices have come down, particularly in areas like gasoline. Certain commodities are still high and will likely remain high, but we are no longer heading into a recession. And I think as that settles in and we stop raising interest rates, we’re going to see an even better shift in the economy and in the financial market and see more people realizing that we are much better off.
CHAKRABARTI: So Pat there saying hold fast, everyone better times are coming. But over in Seattle, Washington, Cassandra Conyers says she does not feel better off financially this year than last year. Because yes, she feels like she is still paying more for things like gas, food, medical appointments. And also non-essential things like streaming services.
CASSANDRA: But the cost of living has never kept up with the raises that companies pay.
So I would say that obviously increase in salary, but really what I’d like to see are cost stabilizing so that I would feel like if I figure out how to spend my money wisely now I don’t have to go through this catechism the next year and the next year. And the next year.
CHAKRABARTI: Okay, Heather, so a lot of listeners are looking forward, and in fact, even though Cassandra and Paul, Pat, I should say, have different senses of how their financial lives are now, both of them basically said if costs can stabilize in the future, things will be better.
What would it take to stabilize costs?
LONG: Yes. The White House is certainly hoping that’s exactly what happens and that there’s a lot more Pat’s out there in the world. Look it, we’re in a situation. Finally, it started to transition this spring, April, May, June, where incomes are rising faster than inflation.
And over time, that will get to a scenario where people will be able to buy more than they are able to afford and buy today. But how long does it take to really get you back to that trajectory, say pre-pandemic and the feelings you had pre-pandemic? Unfortunately, and that could take years, which is not a very settling thought.
I think we’re seeing a lot of good trends in the sense that gas prices, okay, they’re up a little bit this summer, as we always see at the end of a summer, they’re about where they were a year ago or certainly well below those $5 craziness that June of 2022 that we saw. Anyone who’s been and bought eggs recently knows that a lot of grocery prices are a lot better in many cases.
So it’s across the board a lot of things other than housing and cars. And unfortunately those are the big ones for many people’s budgets. Are starting to stabilize. If not, come down a little bit. You’ve seen these things like airfares and hotel costs starting to creep down a little bit, but certainly a long way to go to get anything back to what people felt.
CHAKRABARTI: Creep down from absurd.
LONG: Yes. There you go. You’re writing the headline better than me.
CHAKRABARTI: (LAUGHS) It’s not as absurd as it was last year. But Heather, there’s one other thing. Speaking of interesting ways to describe what’s going on there. I believe there was a column that you wrote at some point in time, you wrote something about calling the economy or people’s perception thereof as a ‘vibe-cession’ rather than a recession, a ‘vibe-cession.’
What did you mean by that?
LONG: Certainly, it’s just what we’ve been talking about this whole hour. That even though many of the actual economic facts and data points look pretty darn good right now, people rate this experience terribly. Quite a few people at the beginning of the summer thought we were in a recession, which we couldn’t have been further from in a lot of ways.
What I do think is interesting is what you were just hitting at. If you look at what economists, what the nerds look at, like things like the University of Michigan Consumer Sentiment Survey or the conference board consumer sentiment. There’s a real divergence between how people rate the economy right now, which they rate pretty good.
Not great, but let’s say like B grade and what they rate the economy, their expectations for the future. And the expectations for the future are what’s really low, and that’s what tends to pull down sentiment. When you’re asked, and that YouGov poll, and I think you’re right. I started noticing this around the 2016 election that you would be interviewing someone in suburban Philadelphia in a beautiful home, and they were clearly very well off.
And you’d say, “Why are you voting for Donald Trump?” And they would say, “I’m just really fearful about my future and my children’s future.” There was this kind of disconnect between the reality of what they were living today and what they forecast was coming, this very pessimistic forecast.
And I don’t know how we change that. It’s the anxiety levels, as you were mentioning, are just really high right now.
CHAKRABARTI: Yeah. I think we change, and first of all, I agree completely. I don’t think we can brush that sentiment aside. I think it’s a core feeling that people have about their lives and the lives of their children and the country as a whole.
But as we’ve been hearing from all sorts of listeners today, the word stability seems to be coming up a lot. Like people want to have a sense of greater stability in their lives now and in the future. And Michelle, to that point, a lot of people are going to continuously have the question about what should I do now in order to at least do what I can to provide myself more stability?
And for example, here is Erin Mulhern, she’s in Deep River, Connecticut and this is what she told us.
ERIN: My household is pretty stressed about our financial future. Pre-pandemic, we were paying $35,000 a year in child care expenses in addition to student loan payments. And during that time, we had to use a lot of credit cards.
We just, we didn’t have a choice. Because our income just didn’t meet what we were able to live off of. And I know people always say, “Just live off of what you can afford,” but this state is very expensive. And even being at the bare minimum of what you were, what you can live on, we still weren’t able to just buy groceries for our family for the week without using credit cards.
So one of the silver linings of the pandemic for us is that the student loan payments were paused and then all the daycares around us were closed. So we automatically started saving a bunch of money and all of that money we dumped back into our credit cards. So we went from having five credit cards and about $60,000 total in debt, to one credit card with $20,000.
CHAKRABARTI: Now, Michelle, I feel like Erin reads your column because she paid down that debt, that credit card debt by a whopping amount. She also told us though, that things are still iffy for her and her family. And again, the childcare and the student loan issue is looming for her. So what could someone like Erin, who has done the right things over the past couple of years, do now to help hopefully give her more stability?
SINGLETARY: Ooh, that’s a big one. (LAUGHS)
CHAKRABARTI: I always give you the big ones.
SINGLETARY: Oh my Lord. I tell you. Why ain’t go with that to Heather, though.
CHAKRABARTI: Okay. You can generalize it though because I think Erin’s situation is pretty common.
SINGLETARY: Yeah, it’s a tough one for me because, I’m not going to wag my finger. And I’m not really wagging my finger with anyone. I’m just stating the obvious reality is that what’s happening to her, the solution isn’t for me to tell her to budget better.
The solution is more affordable child care. The solution is more affordable education opportunities for people. And so those are the policies that we have to put in place that will help people like Erin. There’s only so much cutting that you can do for a lot of people. And in America, we want our kids to go to college because we know that is one of the major pathways to a middle-income stable lifestyle.
But to do that, you’ve got to take on a lot of debt for some of the schools that folks go to. And so I sort of back it out and take it away from Erin. Because it sounds like she’s doing all that they can. But what I will say to people who are listening to her who are not there yet, think about like right now we’re about to send a whole bunch of kids off to college.
They’re starting, and maybe some of those people shouldn’t be where they are. They should have been maybe at a community college for two years and then transfer the four years, but they’re living on campus. Maybe they should be living at home, those kinds of things, and just we should vote for the people who are going to put into place safety nets to help families like Erin.
We talk about the cost of daycare and how horrible it is, but think about the people on the other end. Those people who, the reason why daycare is so expensive and daycares are closing down is because people who are taking care of your kids aren’t making enough money to take care of your kids.
And so we can’t blame the centers because they can’t get folks ’cause you can’t live it. And I think Cassandra, one of the listeners before talked about, there’s been wage growth, but it was stagnant and terrible before that. And so people are just catching up to what should have been in place already.
And what can we do? We need to stop grousing about the fact that a restaurant is charging an extra $5. And pay the people in the back. We, all of us are in this together. And so I’ve become a better tipper. I have become a better use of using people in my community, businesses and things like that.
And I look at prices differently now. A lot of the people who are grousing, you can afford a little bit more. We can’t have all these cheap products and cheap services. And not think about the people on the other back end of that. And I just, The Post just had a great story about why furniture costs why furniture doesn’t last us so long.
Because it’s so cheaply made. Why is it so cheaply made? Because we don’t want to pay the people in the factories that are making it so that the businesses have to find a cheaper way to make cheaper stuff that fall apart that we have to then replace. And we all have to pay a part in this, right?
We may have to pay a little bit more, and we also have to be a little bit more grateful for what we had.
LONG: Totally.
SINGLETARY: So that more means we want to travel and do all this stuff, but those people who are serving us can’t make enough to service us on those cruises and those vacation spots that we go to.
So we, listen y’all, I’m emotional about this because I’ve been at every stage that we’re talking about. And now that I have more, I can reflect back and I try to position my life and the things that I do to help, I tip better. I don’t grouse about that. I sent my kids to affordable schools.
We could have paid more, but it would’ve stretched us, so they went to state schools. All three of my 20-year-olds are living at home because it still cost so much, but that allows them to save and make better decisions. And so as we talk about how we fear things, really assess, is the fear legitimate?
If it is, we gotta do something better with policies, but if it’s not, be a little bit more grateful for what you have. Because there’s a lot of people who don’t have food on the table and can’t afford the place that they’re living.
CHAKRABARTI: That’s it. Beyond Michelle’s excellent advice on the nitty gritty of personal finance.
So one of the reasons why I love hearing from you the most, Michelle, is because as you’ve said today, you’ve lived the life and are, and still, and also still living the life of people who come to you for advice. And let’s be honest, I’m not casting aspersions in Heather’s way or my way, but maybe I should to myself. But I think in the media, I’ll just say it.
I think the media is not totally non-representative of most of American lives, right? And so when we talk about the economy, we do it in the way that economists do, right? We’re like, oh, there’s this relative drop in the inflation rate. Yeah, great. Like it went down from 9% to almost under four, that’s wonderful as a relative drop, but Americans are still looking at the absolute cost that they’re paying. And they’re still looking at the absolute future costs they’re going to have to pay or they’re saying, “Okay, unemployment is like really low right now. Awesome. But the job, those 126,000 jobs or whatever they created last month, I got one of them.
But it doesn’t pay the bills.”
That’s the reality.
SINGLETARY: And what I love about what you do with this program, with the Money Ladies, and I hope Heather’s part of the rotation.
CHAKRABARTI: You bet.
SINGLETARY: Is that we need both. What Heather is saying, the macro and what she, the fact that when the Fed policy made the stock market grow, but who did it grow for?
Pat said, who’s benefiting? Lots of wealthy people are benefiting, so we need both perspectives. Heather’s and mine and together and yours, we can have a conversation that isn’t tinged with such hatred and despise. Because we need Republicans and Democrats and independents, and we need all of us to work together to have an economy that is going to be everywhere, right? It’s going to be people who have a lot and people who don’t have.
But we do want to strive to have an America where at least you have a decent living and a decent place to live.
CHAKRABARTI: Michelle, forgive me from taking it back from you, but Heather is still there and you’re going to get the last 30 seconds today, Heather, and you’re definitely part of the Money Ladies rotation.
LONG: Thanks for having me on. I’d just throw out, I think we didn’t get political, and I don’t normally like to, but I think one of the interesting things about Biden-omics is the president’s team really focused on this industrial policy and what didn’t get enacted was universal Pre-K, daycare subsidies.
Free community college, prayed, parental leave. Those things that would’ve been felt by a lot of these callers today.
CHAKRABARTI: Maybe we’ll have a discussion about that in the near future. I’m sure we will.
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