US economy thread (4 Viewers)

[massraider]

Can even financially responsible people in their mid-20s making a decent salary afford to buy a starter home right now? Depends where, but in most markets I don't think so. Nobody thinks that's an issue?

This is a long term problem, and I don't see any answers coming from anyone.

 

[culdeus]

One of the more low-key lessons that I've learned over the past few years is that people get a lot more upset about inflation (and, relatedly, higher interest rates) than I would have guessed. I was a kid at the time, but folks must have been incandescently pissed through much of the 1970s and early 80s. I understand now on a psychological level why the Fed is so willing to accept some extra unemployment if that's what it takes to keep inflation in the 2-3% range.

So true, people HATE inflation. I can't find it now, but there was a survey result going around a few months ago where most people said something like a 2% increase in inflation was worse than a 2% increase in unemployment. So paying a few extra pennies for your Little Debbie Nutty Buddy at the Piddly Widdly or your 128 oz Mtn. Dew Baja Blast at 7-11 is worse than hundreds of thousands of people losing their jobs. Got it.

Replace Nutty Buddy with gasoline. Nothing seems to get people more upset than seeing gas go up.

We don't pay enough for gas.

And when we buy prescription medicine we're buying one in the UK, three in India, and another couple in Japan. We subsidize the world.

I don't feel guilty paying for cheap gas - we make it up elsewhere.

The damage we do using carbon emitting fuel is a global problem that impacts generations to come. I don't think inefficient price distribution of prescription drugs is equivalent.

We should also pay a lot more for everything plastic, ideally we should look to eliminate use of plastics to the greatest extent possible.

Totally agree on the plastic thing. The carbon thing is irrelevant unless we get countries like China to match our efforts.

You need to pay attention more to the advances they are making. China realizes the world will run out of gas. We just build bigger SUVs and ***** a ev can't go 300 miles.

 

[Alex P Keaton]

One of the more low-key lessons that I've learned over the past few years is that people get a lot more upset about inflation (and, relatedly, higher interest rates) than I would have guessed. I was a kid at the time, but folks must have been incandescently pissed through much of the 1970s and early 80s. I understand now on a psychological level why the Fed is so willing to accept some extra unemployment if that's what it takes to keep inflation in the 2-3% range.

So true, people HATE inflation. I can't find it now, but there was a survey result going around a few months ago where most people said something like a 2% increase in inflation was worse than a 2% increase in unemployment. So paying a few extra pennies for your Little Debbie Nutty Buddy at the Piddly Widdly or your 128 oz Mtn. Dew Baja Blast at 7-11 is worse than hundreds of thousands of people losing their jobs. Got it.

Replace Nutty Buddy with gasoline. Nothing seems to get people more upset than seeing gas go up.

We don't pay enough for gas.

And when we buy prescription medicine we're buying one in the UK, three in India, and another couple in Japan. We subsidize the world.

I don't feel guilty paying for cheap gas - we make it up elsewhere.

The damage we do using carbon emitting fuel is a global problem that impacts generations to come. I don't think inefficient price distribution of prescription drugs is equivalent.

We should also pay a lot more for everything plastic, ideally we should look to eliminate use of plastics to the greatest extent possible.

Totally agree on the plastic thing. The carbon thing is irrelevant unless we get countries like China to match our efforts.

You need to pay attention more to the advances they are making. China realizes the world will run out of gas. We just build bigger SUVs and ***** a ev can't go 300 miles.

I’m not just focused on cars. Industrial carbon usage matters too.

 

[Dinsy Ejotuz]

This is a long term problem, and I don't see any answers coming from anyone.

Build more houses, wait for lack of buyers to help push down demand, and wait for incomes to increase. Not much of a "solution" really -- more of a path.

Wish I could find date from like 1985 to the early 90s -- gut is that the current situation is similar.

 

[General Malaise]

Mortgage rates in 1990 were 10.4%. It was not easier back then for people in their mid-20s to buy a home.

 

[Chadstroma]

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

She can’t afford it. She put it on a credit card. But, who cares? Right?

At what point do these credit card companies fold when their customers default? I don’t know. They’re pretty flush. But, it’s coming, eventually.

What's coming? Credit card companies going out of business? Really? No. Wrong, hard no. They are fine. They LOVE this environment. They never fold, they just get bought out. We're you even alive in 2000? Do you not remember Providian?

No, I don't think so. The following is the largest credit card companies in the US ranked by purchase volume. These 8 have about 3/4 of the credit card market share. No other issuer has more than 3% market share.

1. Chase
2. American Express
3. Citi
4. Capital One
5. Bank of America
6. Discover
7. U.S. Bank
8. Wells Fargo

Notice that 6 of the 8 are also some of the largest banks in the country. It would take an economic event worse than the 2008 RE crash to topple these. If they did fail, there is a choice of two options: 1) Do what government and regulators swear would not happen and save them because they are too big to fail or 2) Actually break up, wind down and spin off a saved institution. Of which would be a huge undertaking for just one of these companies, let alone during a crisis event where more than one would have failed or be failing. What I am saying in this is that first, most of these are nothing like Providian. Second, there economic downturn would have to be significant for these to fail due to their required reserves. Third, even if that actually happened, the government is likely to bail them out or perhaps take ownership and then break it all down.

As for Providian, Providian did not fail. It sold to WaMu. Of course, the reason of the sale was a weakened company with financial distress. Now to head off any arguments that that acquisition lead to WaMu's demise, that would be completely unfounded and false. WaMu failed due to a good old fashioned run on the bank. It lost more than 10% of it's deposit base with the span of a week. Let me be very clear about this. EVERY SINGLE BANK THAT HAS EVER BEEN OR IS OR WILL BE, would fail in the same way facing that same circumstances unless rescued by the government. The reason for the run was a lost of confidence due to the failure of IndyMac which lead to large scale media speculation of 'who is next' of which since IndyMac was a large lender of Option ARMs the speculation landed on the other lenders that did large volumes of Option ARMs- namely, WaMu and World Savings with Countrywide having sold about a month or so before IndyMac failed and BofA was seen as impervious due to it's size and being 'too large to fail'. Further eroding confidence was one particular Senator trying to grandstand and ended up pouring gas on the fire as well as, at least I believe, executives at Chase that helped spread and push rumors of WaMu failing in order to continue to pursue their acquisition of WaMu (before WaMu failed, Chase made an offer to buy WaMu which was rejected as it was quite a bit under the current stock price at the time.) WaMu did not fail due to credit card portfolio (which actually was performing quite well) or even Option ARMs but just the run like you see in It's A Wonderful Life but in this story.... they ran out of cash and time.

That all being said, the amount of credit card debt is at an all time high. One way that many Americans have got themselves out of a mess of high credit card debt has been doing a cash out refinance on their homes. Many Americans have the equity but they are less inclined to refinance due to a severely low interest rate. I talked to one client last week that has about $30K in high interest credit card debt and also a 2.75% mortgage. Due to their credit scores being so low, they were referred to me by a bank MLO to help. I then found out that they also had a recent 30 day late on their mortgage which severely complicated things. I was able to find a solution but in my own words 'it was ugly'. It would have cost them about $10K just to do the refinance and then the rate would have been about 10%. Even with it being that ugly, I calculated that their break even point with the much higher mortgage rate AND the high costs of the refinance was short of two years AND that was with my using a very conservative 20% interest rate among all their debt which I know their actual rates are higher than. (if you were wondering, the plan was to refi them, clear the debt, their credit scores would jump up significantly and then after 6 months had passed from their 30 day late, do another FHA refinance to get them a much better rate- they declined this option... I do think to their detriment but I understand the psychological challenge of accepting losing a 2.75% mortgage and spending $10K to get out of credit card debt. They said they would try to pay down their debt, unless they somehow greatly decrease their expenses and/or increase their income, they will not make much of a dent. I can still refi them in 6 months but their credit score will still be much lower and they will have a higher mortgage rate than they would have if they followed my plan.

 

[culdeus]

One of the more low-key lessons that I've learned over the past few years is that people get a lot more upset about inflation (and, relatedly, higher interest rates) than I would have guessed. I was a kid at the time, but folks must have been incandescently pissed through much of the 1970s and early 80s. I understand now on a psychological level why the Fed is so willing to accept some extra unemployment if that's what it takes to keep inflation in the 2-3% range.

So true, people HATE inflation. I can't find it now, but there was a survey result going around a few months ago where most people said something like a 2% increase in inflation was worse than a 2% increase in unemployment. So paying a few extra pennies for your Little Debbie Nutty Buddy at the Piddly Widdly or your 128 oz Mtn. Dew Baja Blast at 7-11 is worse than hundreds of thousands of people losing their jobs. Got it.

Replace Nutty Buddy with gasoline. Nothing seems to get people more upset than seeing gas go up.

We don't pay enough for gas.

And when we buy prescription medicine we're buying one in the UK, three in India, and another couple in Japan. We subsidize the world.

I don't feel guilty paying for cheap gas - we make it up elsewhere.

The damage we do using carbon emitting fuel is a global problem that impacts generations to come. I don't think inefficient price distribution of prescription drugs is equivalent.

We should also pay a lot more for everything plastic, ideally we should look to eliminate use of plastics to the greatest extent possible.

Totally agree on the plastic thing. The carbon thing is irrelevant unless we get countries like China to match our efforts.

You need to pay attention more to the advances they are making. China realizes the world will run out of gas. We just build bigger SUVs and ***** a ev can't go 300 miles.

I’m not just focused on cars. Industrial carbon usage matters too.

They are winning there also.

 

[Chadstroma]

This is a long term problem, and I don't see any answers coming from anyone.

Build more houses, wait for lack of buyers to help push down demand, and wait for incomes to increase. Not much of a "solution" really -- more of a path.

Wish I could find date from like 1985 to the early 90s -- gut is that the current situation is similar.

The problem- until recently there was extremely limited amount of building for not just a year or two but by decades. After 2008, the 2010's saw the least amount of homes being built by any decade until you went back to 1930's. This, at the same time, as the population growth in the US adds more than 300,000 people in the country with as of 2022 333 million people (for reference, the population of the US in 1930 was 122 million.

Supply and demand is off and will continue to be off for quite sometime. This is why both rent and ownership costs have increased when historically one would decline when the other increased and vice versa.

People tend to think of 2008 and have a 'what goes up, must come down' kind of thinking and that is just not understanding the actual facts and numbers behind the market conditions of finding a place to live.

 

[culdeus]

Mortgage rates in 1990 were 10.4%. It was not easier back then for people in their mid-20s to buy a home.

This is misleading. PITI is a much better metric

 

[Alex P Keaton]

One of the more low-key lessons that I've learned over the past few years is that people get a lot more upset about inflation (and, relatedly, higher interest rates) than I would have guessed. I was a kid at the time, but folks must have been incandescently pissed through much of the 1970s and early 80s. I understand now on a psychological level why the Fed is so willing to accept some extra unemployment if that's what it takes to keep inflation in the 2-3% range.

So true, people HATE inflation. I can't find it now, but there was a survey result going around a few months ago where most people said something like a 2% increase in inflation was worse than a 2% increase in unemployment. So paying a few extra pennies for your Little Debbie Nutty Buddy at the Piddly Widdly or your 128 oz Mtn. Dew Baja Blast at 7-11 is worse than hundreds of thousands of people losing their jobs. Got it.

Replace Nutty Buddy with gasoline. Nothing seems to get people more upset than seeing gas go up.

We don't pay enough for gas.

And when we buy prescription medicine we're buying one in the UK, three in India, and another couple in Japan. We subsidize the world.

I don't feel guilty paying for cheap gas - we make it up elsewhere.

The damage we do using carbon emitting fuel is a global problem that impacts generations to come. I don't think inefficient price distribution of prescription drugs is equivalent.

We should also pay a lot more for everything plastic, ideally we should look to eliminate use of plastics to the greatest extent possible.

Totally agree on the plastic thing. The carbon thing is irrelevant unless we get countries like China to match our efforts.

You need to pay attention more to the advances they are making. China realizes the world will run out of gas. We just build bigger SUVs and ***** a ev can't go 300 miles.

I’m not just focused on cars. Industrial carbon usage matters too.

They are winning there also.

Did anyone say otherwise?

 

[General Malaise]

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

She can’t afford it. She put it on a credit card. But, who cares? Right?

At what point do these credit card companies fold when their customers default? I don’t know. They’re pretty flush. But, it’s coming, eventually.

What's coming? Credit card companies going out of business? Really? No. Wrong, hard no. They are fine. They LOVE this environment. They never fold, they just get bought out. We're you even alive in 2000? Do you not remember Providian?

No, I don't think so. The following is the largest credit card companies in the US ranked by purchase volume. These 8 have about 3/4 of the credit card market share. No other issuer has more than 3% market share.

1. Chase
2. American Express
3. Citi
4. Capital One
5. Bank of America
6. Discover
7. U.S. Bank
8. Wells Fargo

Notice that 6 of the 8 are also some of the largest banks in the country. It would take an economic event worse than the 2008 RE crash to topple these. If they did fail, there is a choice of two options: 1) Do what government and regulators swear would not happen and save them because they are too big to fail or 2) Actually break up, wind down and spin off a saved institution. Of which would be a huge undertaking for just one of these companies, let alone during a crisis event where more than one would have failed or be failing. What I am saying in this is that first, most of these are nothing like Providian. Second, there economic downturn would have to be significant for these to fail due to their required reserves. Third, even if that actually happened, the government is likely to bail them out or perhaps take ownership and then break it all down.

As for Providian, Providian did not fail. It sold to WaMu. Of course, the reason of the sale was a weakened company with financial distress. Now to head off any arguments that that acquisition lead to WaMu's demise, that would be completely unfounded and false. WaMu failed due to a good old fashioned run on the bank. It lost more than 10% of it's deposit base with the span of a week. Let me be very clear about this. EVERY SINGLE BANK THAT HAS EVER BEEN OR IS OR WILL BE, would fail in the same way facing that same circumstances unless rescued by the government. The reason for the run was a lost of confidence due to the failure of IndyMac which lead to large scale media speculation of 'who is next' of which since IndyMac was a large lender of Option ARMs the speculation landed on the other lenders that did large volumes of Option ARMs- namely, WaMu and World Savings with Countrywide having sold about a month or so before IndyMac failed and BofA was seen as impervious due to it's size and being 'too large to fail'. Further eroding confidence was one particular Senator trying to grandstand and ended up pouring gas on the fire as well as, at least I believe, executives at Chase that helped spread and push rumors of WaMu failing in order to continue to pursue their acquisition of WaMu (before WaMu failed, Chase made an offer to buy WaMu which was rejected as it was quite a bit under the current stock price at the time.) WaMu did not fail due to credit card portfolio (which actually was performing quite well) or even Option ARMs but just the run like you see in It's A Wonderful Life but in this story.... they ran out of cash and time.

That all being said, the amount of credit card debt is at an all time high. One way that many Americans have got themselves out of a mess of high credit card debt has been doing a cash out refinance on their homes. Many Americans have the equity but they are less inclined to refinance due to a severely low interest rate. I talked to one client last week that has about $30K in high interest credit card debt and also a 2.75% mortgage. Due to their credit scores being so low, they were referred to me by a bank MLO to help. I then found out that they also had a recent 30 day late on their mortgage which severely complicated things. I was able to find a solution but in my own words 'it was ugly'. It would have cost them about $10K just to do the refinance and then the rate would have been about 10%. Even with it being that ugly, I calculated that their break even point with the much higher mortgage rate AND the high costs of the refinance was short of two years AND that was with my using a very conservative 20% interest rate among all their debt which I know their actual rates are higher than. (if you were wondering, the plan was to refi them, clear the debt, their credit scores would jump up significantly and then after 6 months had passed from their 30 day late, do another FHA refinance to get them a much better rate- they declined this option... I do think to their detriment but I understand the psychological challenge of accepting losing a 2.75% mortgage and spending $10K to get out of credit card debt. They said they would try to pay down their debt, unless they somehow greatly decrease their expenses and/or increase their income, they will not make much of a dent. I can still refi them in 6 months but their credit score will still be much lower and they will have a higher mortgage rate than they would have if they followed my plan.

I brought up Providian as an example because they were bought out by a bigger entity. That was my point.

 

[General Malaise]

Mortgage rates in 1990 were 10.4%. It was not easier back then for people in their mid-20s to buy a home.

This is misleading. PITI is a much better metric

Do you think it was "easier" for a person in their mid-20s to buy a home in 1990? I don't.

 

[Chadstroma]

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

She can’t afford it. She put it on a credit card. But, who cares? Right?

At what point do these credit card companies fold when their customers default? I don’t know. They’re pretty flush. But, it’s coming, eventually.

What's coming? Credit card companies going out of business? Really? No. Wrong, hard no. They are fine. They LOVE this environment. They never fold, they just get bought out. We're you even alive in 2000? Do you not remember Providian?

No, I don't think so. The following is the largest credit card companies in the US ranked by purchase volume. These 8 have about 3/4 of the credit card market share. No other issuer has more than 3% market share.

1. Chase
2. American Express
3. Citi
4. Capital One
5. Bank of America
6. Discover
7. U.S. Bank
8. Wells Fargo

Notice that 6 of the 8 are also some of the largest banks in the country. It would take an economic event worse than the 2008 RE crash to topple these. If they did fail, there is a choice of two options: 1) Do what government and regulators swear would not happen and save them because they are too big to fail or 2) Actually break up, wind down and spin off a saved institution. Of which would be a huge undertaking for just one of these companies, let alone during a crisis event where more than one would have failed or be failing. What I am saying in this is that first, most of these are nothing like Providian. Second, there economic downturn would have to be significant for these to fail due to their required reserves. Third, even if that actually happened, the government is likely to bail them out or perhaps take ownership and then break it all down.

As for Providian, Providian did not fail. It sold to WaMu. Of course, the reason of the sale was a weakened company with financial distress. Now to head off any arguments that that acquisition lead to WaMu's demise, that would be completely unfounded and false. WaMu failed due to a good old fashioned run on the bank. It lost more than 10% of it's deposit base with the span of a week. Let me be very clear about this. EVERY SINGLE BANK THAT HAS EVER BEEN OR IS OR WILL BE, would fail in the same way facing that same circumstances unless rescued by the government. The reason for the run was a lost of confidence due to the failure of IndyMac which lead to large scale media speculation of 'who is next' of which since IndyMac was a large lender of Option ARMs the speculation landed on the other lenders that did large volumes of Option ARMs- namely, WaMu and World Savings with Countrywide having sold about a month or so before IndyMac failed and BofA was seen as impervious due to it's size and being 'too large to fail'. Further eroding confidence was one particular Senator trying to grandstand and ended up pouring gas on the fire as well as, at least I believe, executives at Chase that helped spread and push rumors of WaMu failing in order to continue to pursue their acquisition of WaMu (before WaMu failed, Chase made an offer to buy WaMu which was rejected as it was quite a bit under the current stock price at the time.) WaMu did not fail due to credit card portfolio (which actually was performing quite well) or even Option ARMs but just the run like you see in It's A Wonderful Life but in this story.... they ran out of cash and time.

That all being said, the amount of credit card debt is at an all time high. One way that many Americans have got themselves out of a mess of high credit card debt has been doing a cash out refinance on their homes. Many Americans have the equity but they are less inclined to refinance due to a severely low interest rate. I talked to one client last week that has about $30K in high interest credit card debt and also a 2.75% mortgage. Due to their credit scores being so low, they were referred to me by a bank MLO to help. I then found out that they also had a recent 30 day late on their mortgage which severely complicated things. I was able to find a solution but in my own words 'it was ugly'. It would have cost them about $10K just to do the refinance and then the rate would have been about 10%. Even with it being that ugly, I calculated that their break even point with the much higher mortgage rate AND the high costs of the refinance was short of two years AND that was with my using a very conservative 20% interest rate among all their debt which I know their actual rates are higher than. (if you were wondering, the plan was to refi them, clear the debt, their credit scores would jump up significantly and then after 6 months had passed from their 30 day late, do another FHA refinance to get them a much better rate- they declined this option... I do think to their detriment but I understand the psychological challenge of accepting losing a 2.75% mortgage and spending $10K to get out of credit card debt. They said they would try to pay down their debt, unless they somehow greatly decrease their expenses and/or increase their income, they will not make much of a dent. I can still refi them in 6 months but their credit score will still be much lower and they will have a higher mortgage rate than they would have if they followed my plan.

I brought up Providian as an example because they were bought out by a bigger entity. That was my point.

So.... you are saying I wrote all of that for no reason?

 

[General Malaise]

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

She can’t afford it. She put it on a credit card. But, who cares? Right?

At what point do these credit card companies fold when their customers default? I don’t know. They’re pretty flush. But, it’s coming, eventually.

What's coming? Credit card companies going out of business? Really? No. Wrong, hard no. They are fine. They LOVE this environment. They never fold, they just get bought out. We're you even alive in 2000? Do you not remember Providian?

No, I don't think so. The following is the largest credit card companies in the US ranked by purchase volume. These 8 have about 3/4 of the credit card market share. No other issuer has more than 3% market share.

1. Chase
2. American Express
3. Citi
4. Capital One
5. Bank of America
6. Discover
7. U.S. Bank
8. Wells Fargo

Notice that 6 of the 8 are also some of the largest banks in the country. It would take an economic event worse than the 2008 RE crash to topple these. If they did fail, there is a choice of two options: 1) Do what government and regulators swear would not happen and save them because they are too big to fail or 2) Actually break up, wind down and spin off a saved institution. Of which would be a huge undertaking for just one of these companies, let alone during a crisis event where more than one would have failed or be failing. What I am saying in this is that first, most of these are nothing like Providian. Second, there economic downturn would have to be significant for these to fail due to their required reserves. Third, even if that actually happened, the government is likely to bail them out or perhaps take ownership and then break it all down.

As for Providian, Providian did not fail. It sold to WaMu. Of course, the reason of the sale was a weakened company with financial distress. Now to head off any arguments that that acquisition lead to WaMu's demise, that would be completely unfounded and false. WaMu failed due to a good old fashioned run on the bank. It lost more than 10% of it's deposit base with the span of a week. Let me be very clear about this. EVERY SINGLE BANK THAT HAS EVER BEEN OR IS OR WILL BE, would fail in the same way facing that same circumstances unless rescued by the government. The reason for the run was a lost of confidence due to the failure of IndyMac which lead to large scale media speculation of 'who is next' of which since IndyMac was a large lender of Option ARMs the speculation landed on the other lenders that did large volumes of Option ARMs- namely, WaMu and World Savings with Countrywide having sold about a month or so before IndyMac failed and BofA was seen as impervious due to it's size and being 'too large to fail'. Further eroding confidence was one particular Senator trying to grandstand and ended up pouring gas on the fire as well as, at least I believe, executives at Chase that helped spread and push rumors of WaMu failing in order to continue to pursue their acquisition of WaMu (before WaMu failed, Chase made an offer to buy WaMu which was rejected as it was quite a bit under the current stock price at the time.) WaMu did not fail due to credit card portfolio (which actually was performing quite well) or even Option ARMs but just the run like you see in It's A Wonderful Life but in this story.... they ran out of cash and time.

That all being said, the amount of credit card debt is at an all time high. One way that many Americans have got themselves out of a mess of high credit card debt has been doing a cash out refinance on their homes. Many Americans have the equity but they are less inclined to refinance due to a severely low interest rate. I talked to one client last week that has about $30K in high interest credit card debt and also a 2.75% mortgage. Due to their credit scores being so low, they were referred to me by a bank MLO to help. I then found out that they also had a recent 30 day late on their mortgage which severely complicated things. I was able to find a solution but in my own words 'it was ugly'. It would have cost them about $10K just to do the refinance and then the rate would have been about 10%. Even with it being that ugly, I calculated that their break even point with the much higher mortgage rate AND the high costs of the refinance was short of two years AND that was with my using a very conservative 20% interest rate among all their debt which I know their actual rates are higher than. (if you were wondering, the plan was to refi them, clear the debt, their credit scores would jump up significantly and then after 6 months had passed from their 30 day late, do another FHA refinance to get them a much better rate- they declined this option... I do think to their detriment but I understand the psychological challenge of accepting losing a 2.75% mortgage and spending $10K to get out of credit card debt. They said they would try to pay down their debt, unless they somehow greatly decrease their expenses and/or increase their income, they will not make much of a dent. I can still refi them in 6 months but their credit score will still be much lower and they will have a higher mortgage rate than they would have if they followed my plan.

I brought up Providian as an example because they were bought out by a bigger entity. That was my point.

So.... you are saying I wrote all of that for no reason?

Nah, it was a good read. Always interesting to read stories from insiders.

 

[Courtjester]

Maybe the answer is something other than "because they can," but why are the credit card companies deciding to raise the interest rates to the levels they are and how can they even get away with it.

I have a CC that I have had for years and unfortunately has around a 10k balance right now because of some unforeseen life events. I haven't been using it now at all and my wife and are just working on get it paid off. I believe this card was typically in the 14.99% interest rate range. It went to 29.99% last month!!! Payment went up almost $100 more per month. We have excellent credit and have never missed a payment on anything in 30 years, so that can't be the reason.

Needless to say I find myself quickly in the market for a balance transfer to a 0% APR offer on a new card. It was just shocking when I got the notice on this.

 

[culdeus]

Mortgage rates in 1990 were 10.4%. It was not easier back then for people in their mid-20s to buy a home.

This is misleading. PITI is a much better metric

Do you think it was "easier" for a person in their mid-20s to buy a home in 1990? I don't.

College was cheaper. That's going to be a factor. School debt and car debt is going to keep 20s out of homes for a bit.

 

[IvanKaramazov]

Maybe the answer is something other than "because they can," but why are the credit card companies deciding to raise the interest rates to the levels they are and how can they even get away with it.

I have a CC that I have had for years and unfortunately has around a 10k balance right now because of some unforeseen life events. I haven't been using it now at all and my wife and are just working on get it paid off. I believe this card was typically in the 14.99% interest rate range. It went to 29.99% last month!!! Payment went up almost $100 more per month. We have excellent credit and have never missed a payment on anything in 30 years, so that can't be the reason.

Needless to say I find myself quickly in the market for a balance transfer to a 0% APR offer on a new card. It was just shocking when I got the notice on this.

I'm getting 4.5% on cash right now. You're surprised that credit card interest rates have gone up?

 

[STEADYMOBBIN 22]

If you run to Wal-Mart 3 times a week

This sounds horrible. I think I've been to a Walmart under a dozen times, total.

It's a smart place to grocery shop. I've never understood the hate, but to be fair I am part West Virginian.

I mean if smart is short sighted then I guess. Walmart is an awful company because of how it impacts smaller companies and communities.

 

[culdeus]

One of the more low-key lessons that I've learned over the past few years is that people get a lot more upset about inflation (and, relatedly, higher interest rates) than I would have guessed. I was a kid at the time, but folks must have been incandescently pissed through much of the 1970s and early 80s. I understand now on a psychological level why the Fed is so willing to accept some extra unemployment if that's what it takes to keep inflation in the 2-3% range.

So true, people HATE inflation. I can't find it now, but there was a survey result going around a few months ago where most people said something like a 2% increase in inflation was worse than a 2% increase in unemployment. So paying a few extra pennies for your Little Debbie Nutty Buddy at the Piddly Widdly or your 128 oz Mtn. Dew Baja Blast at 7-11 is worse than hundreds of thousands of people losing their jobs. Got it.

Replace Nutty Buddy with gasoline. Nothing seems to get people more upset than seeing gas go up.

We don't pay enough for gas.

And when we buy prescription medicine we're buying one in the UK, three in India, and another couple in Japan. We subsidize the world.

I don't feel guilty paying for cheap gas - we make it up elsewhere.

The damage we do using carbon emitting fuel is a global problem that impacts generations to come. I don't think inefficient price distribution of prescription drugs is equivalent.

We should also pay a lot more for everything plastic, ideally we should look to eliminate use of plastics to the greatest extent possible.

Totally agree on the plastic thing. The carbon thing is irrelevant unless we get countries like China to match our efforts.

You need to pay attention more to the advances they are making. China realizes the world will run out of gas. We just build bigger SUVs and ***** a ev can't go 300 miles.

I’m not just focused on cars. Industrial carbon usage matters too.

They are winning there also.

Did anyone say otherwise?

Help me understand what "match our efforts" means then.

 

[IvanKaramazov]

Mortgage rates in 1990 were 10.4%. It was not easier back then for people in their mid-20s to buy a home.

This is misleading. PITI is a much better metric

Do you think it was "easier" for a person in their mid-20s to buy a home in 1990? I don't.

College was cheaper. That's going to be a factor. School debt and car debt is going to keep 20s out of homes for a bit.

There's probably something to this. Neither my wife nor I had any student load debt when we graduated. Neither did most people we knew. Student loans existed, of course, but it seemed pretty uncommon to encounter anybody with substantial college debt unless they were a cardiologist or something. My wife and I made it a priority for our own kids to graduate debt-free, and I'm surprised at the number of people in their peer group graduating with debt even though their families could have easily afforded otherwise.

For example, my son's girlfriend (who he can propose to any day now, but that's a separate conversation for another time) has about $50K in student loans stemming from her graduate degree in occupational therapy. Now, obviously, she is going to be just fine. It's not like she took out this debt for a master's degree in gender studies or something -- she'll have no problem recouping this. But I've met her family, and they're loaded. They're taking their kids and SOs (including my son) to Europe for a family trip later this year. That's nice and everything, but don't you think getting your own children off to a debt-free start is a little more important than galavanting around a dying continent? I'll admit to being very judgey about parents who get their kids set up for success but just choose not to do so.

 

[dkp993]

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

I linked to a podcast earlier, and an analyst was discussing the fortunes of Uber/Lyft. They were discussing it in terms of their outlook, but he mentioned offhand that their revenue continues to grow. I looked it up, Uber is up 16% from '22 to '23.

Anyhow, it seems to me that Uber may be a pretty decent measure on middle America economy.

It's everywhere, it's a luxury that a lot of people use, no one really needs, and Uber Eats and Uber rides would be among the first things many people wI ageee but with a bit of a caveat. The

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

I linked to a podcast earlier, and an analyst was discussing the fortunes of Uber/Lyft. They were discussing it in terms of their outlook, but he mentioned offhand that their revenue continues to grow. I looked it up, Uber is up 16% from '22 to '23.

Anyhow, it seems to me that Uber may be a pretty decent measure on middle America economy.

It's everywhere, it's a luxury that a lot of people use, no one really needs, and Uber Eats and Uber rides would be among the first things many people would give up. Just a thought

I agree with a lot of this but with a caveat.
I’ve ubered once in my life. I have the Ap but never used it personally (wife’s account one time). I’ve never used Uber eats. If I want something I go pick it up.
That said, my 27 year old daughter ( who makes more than me) uses both Uber and Uber eats/door dash multiple times per week. My eldest son uses each a few times a month and my 19 year old users Uber eats 2-3/month
I can well afford it, but I’m cheap. And old. With younger generation I think this is a stickier service and it will take a lot of economic shock for it to be affected. That to me will make it a more difficult barometer of the economy. Kids love it. They’ll give up other things before having someone bring food to their door. I’d need to be unbelievably rich, or disabled to use this service. It’s a mindset.

This is interesting. I have a niece who is 28 and dead broke. A $500 car repair is beyond her. Her checking account is under $0 often. She makes $22/hr and lives at home. She does doordash/uber eats several times a week, and easily spends $10/day on coffee drinks. She smokes weed daily. This is all normal for her, and the thought of giving these things up is... it's not doable for her. She actually doesn't see how this hurts her. "I work - how am I supposed to eat?" she'll say. As if making soup and grilled cheese at home is 100% not an option.

It's so odd to me. I was young and irresponsible once too. But I always knew where I was irresponsible, and when it came time to pay the piper (about 23-24 years old), it was pretty easy to pivot. It's not as easy for younger people now for whatever reason. Maybe I'm looking at it with the "hindsight is 20/20" glasses, but I definitely do not remember being so stubborn when I went underwater financially.

They key to this problem, and the reason why, is in the “28……lives at home” portion. She’s making these bad decisions because she’s being subsidized and enabled too. Why eat soup an grilled cheese when mom and dad will subsidize the Uber eats and weed? As usual it’s us (gen x) and our enabling helicopter don’t want our kids to feel any hardship parenting that is creating it. Rant over.

 

[Mitchie]

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

She can’t afford it. She put it on a credit card. But, who cares? Right?

At what point do these credit card companies fold when their customers default? I don’t know. They’re pretty flush. But, it’s coming, eventually.

What's coming? Credit card companies going out of business? Really? No. Wrong, hard no. They are fine. They LOVE this environment. They never fold, they just get bought out. Were you even alive in 2000? Do you not remember Providian?

We just borrow and spend and borrow and spend for eternity.

And yet your grandparents left money for your parents who left money for you to leave money behind for your kids.....

Rich white folks getting an inheritance isn't really what I'm talking about.

The struggle is real for the majority of people right now. Dumping expenses on credit cards works for a while, but eventually something has to give. The financial sector seems to want to ignore it or just go with "everything is fine." I've been working and spending and investing for 20+ years. It has never felt like this to me.

Felt like what?

Tight. People feeling a real squeeze. I guess.

So you've lived through Covid and the mortgage crises and never seen anything like you're seeing now, mmm ok.

From my perspective, yes. I was in my mid-20's during the mortgage crisis and bought my first home during. Cheap foreclosure. I'm in Florida so Covid didn't impact us as much due to the policies here. Post-covid inflation has been much more difficult to navigate. Again, from my perspective.

have no clue what some of your statements mean, mabye others do but i'm genuinely at a loss.

 

[Juxtatarot]

That all being said, the amount of credit card debt is at an all time high. One way that many Americans have got themselves out of a mess of high credit card debt has been doing a cash out refinance on their homes. Many Americans have the equity but they are less inclined to refinance due to a severely low interest rate. I talked to one client last week that has about $30K in high interest credit card debt and also a 2.75% mortgage. Due to their credit scores being so low, they were referred to me by a bank MLO to help. I then found out that they also had a recent 30 day late on their mortgage which severely complicated things. I was able to find a solution but in my own words 'it was ugly'. It would have cost them about $10K just to do the refinance and then the rate would have been about 10%. Even with it being that ugly, I calculated that their break even point with the much higher mortgage rate AND the high costs of the refinance was short of two years AND that was with my using a very conservative 20% interest rate among all their debt which I know their actual rates are higher than. (if you were wondering, the plan was to refi them, clear the debt, their credit scores would jump up significantly and then after 6 months had passed from their 30 day late, do another FHA refinance to get them a much better rate- they declined this option... I do think to their detriment but I understand the psychological challenge of accepting losing a 2.75% mortgage and spending $10K to get out of credit card debt. They said they would try to pay down their debt, unless they somehow greatly decrease their expenses and/or increase their income, they will not make much of a dent. I can still refi them in 6 months but their credit score will still be much lower and they will have a higher mortgage rate than they would have if they followed my plan.

If they could qualify (now or in near future), a home equity loan or line seems like a much better plan.

 

[Chadstroma]

That all being said, the amount of credit card debt is at an all time high. One way that many Americans have got themselves out of a mess of high credit card debt has been doing a cash out refinance on their homes. Many Americans have the equity but they are less inclined to refinance due to a severely low interest rate. I talked to one client last week that has about $30K in high interest credit card debt and also a 2.75% mortgage. Due to their credit scores being so low, they were referred to me by a bank MLO to help. I then found out that they also had a recent 30 day late on their mortgage which severely complicated things. I was able to find a solution but in my own words 'it was ugly'. It would have cost them about $10K just to do the refinance and then the rate would have been about 10%. Even with it being that ugly, I calculated that their break even point with the much higher mortgage rate AND the high costs of the refinance was short of two years AND that was with my using a very conservative 20% interest rate among all their debt which I know their actual rates are higher than. (if you were wondering, the plan was to refi them, clear the debt, their credit scores would jump up significantly and then after 6 months had passed from their 30 day late, do another FHA refinance to get them a much better rate- they declined this option... I do think to their detriment but I understand the psychological challenge of accepting losing a 2.75% mortgage and spending $10K to get out of credit card debt. They said they would try to pay down their debt, unless they somehow greatly decrease their expenses and/or increase their income, they will not make much of a dent. I can still refi them in 6 months but their credit score will still be much lower and they will have a higher mortgage rate than they would have if they followed my plan.

If they could qualify (now or in near future), a home equity loan or line seems like a much better plan.

They can not qualify for it and I have access to lenders doing equity lending that banks and credit unions would not get close to doing.

Out of all of my non-QM lenders (non-QM is basically everything outside the conventional conforming and government backed loans which took the place of "subprime") all but one wouldn't touch it because of the late payment. For the one that would, it was yes, we can do it... here is what it looks like.

I get referrals from other mortgage lenders not infrequently because when they can't do it they know pretty much if it can be done, I can get it done. I actually know of only one "kind" of mortgage that is possible that I can not do... and I think I might actually be able to do it asI think we have been testing out a lender that can. If we bring them on, I won't know of a single instance of it being possible but me not being able to do it.

 

[IvanKaramazov]

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

She can’t afford it. She put it on a credit card. But, who cares? Right?

At what point do these credit card companies fold when their customers default? I don’t know. They’re pretty flush. But, it’s coming, eventually.

What's coming? Credit card companies going out of business? Really? No. Wrong, hard no. They are fine. They LOVE this environment. They never fold, they just get bought out. Were you even alive in 2000? Do you not remember Providian?

We just borrow and spend and borrow and spend for eternity.

And yet your grandparents left money for your parents who left money for you to leave money behind for your kids.....

Rich white folks getting an inheritance isn't really what I'm talking about.

The struggle is real for the majority of people right now. Dumping expenses on credit cards works for a while, but eventually something has to give. The financial sector seems to want to ignore it or just go with "everything is fine." I've been working and spending and investing for 20+ years. It has never felt like this to me.

Felt like what?

Tight. People feeling a real squeeze. I guess.

So you've lived through Covid and the mortgage crises and never seen anything like you're seeing now, mmm ok.

From my perspective, yes. I was in my mid-20's during the mortgage crisis and bought my first home during. Cheap foreclosure. I'm in Florida so Covid didn't impact us as much due to the policies here. Post-covid inflation has been much more difficult to navigate. Again, from my perspective.

have no clue what some of your statements mean, mabye others do but i'm genuinely at a loss.

He's saying that the mortgage crisis didn't negatively impact him, because he was able to buy a foreclosed-upon house at a discount. [Good! Always happy to see a young FBG catch a lucky break.] He didn't feel too put-out by covid because he was in a state that mostly stayed open during the pandemic. The spurt of inflation that we all experienced impacted him more than either of these events, and he acknowledges that other people's experiences might have been different.

 

[Alex P Keaton]

One of the more low-key lessons that I've learned over the past few years is that people get a lot more upset about inflation (and, relatedly, higher interest rates) than I would have guessed. I was a kid at the time, but folks must have been incandescently pissed through much of the 1970s and early 80s. I understand now on a psychological level why the Fed is so willing to accept some extra unemployment if that's what it takes to keep inflation in the 2-3% range.

So true, people HATE inflation. I can't find it now, but there was a survey result going around a few months ago where most people said something like a 2% increase in inflation was worse than a 2% increase in unemployment. So paying a few extra pennies for your Little Debbie Nutty Buddy at the Piddly Widdly or your 128 oz Mtn. Dew Baja Blast at 7-11 is worse than hundreds of thousands of people losing their jobs. Got it.

Replace Nutty Buddy with gasoline. Nothing seems to get people more upset than seeing gas go up.

We don't pay enough for gas.

And when we buy prescription medicine we're buying one in the UK, three in India, and another couple in Japan. We subsidize the world.

I don't feel guilty paying for cheap gas - we make it up elsewhere.

The damage we do using carbon emitting fuel is a global problem that impacts generations to come. I don't think inefficient price distribution of prescription drugs is equivalent.

We should also pay a lot more for everything plastic, ideally we should look to eliminate use of plastics to the greatest extent possible.

Totally agree on the plastic thing. The carbon thing is irrelevant unless we get countries like China to match our efforts.

You need to pay attention more to the advances they are making. China realizes the world will run out of gas. We just build bigger SUVs and ***** a ev can't go 300 miles.

I’m not just focused on cars. Industrial carbon usage matters too.

They are winning there also.

Did anyone say otherwise?

Help me understand what "match our efforts" means then.

China has polluted the regional environment to a level that we can’t even fathom. Larger cities have air that is thick with pollution. That’s not the mark of a country that is ready to stop polluting the environment. Does that mean they aren’t investing in alternative energy? Of course not. But it means that they aren’t going to stop mass polluting anytime soon.

As long as China, India and others are mass polluters, our efforts will be minimally effective on a grand scale. Doesn’t mean we shouldn’t try though.

 

[Gatorade]

If you run to Wal-Mart 3 times a week

This sounds horrible. I think I've been to a Walmart under a dozen times, total.

It's a smart place to grocery shop. I've never understood the hate, but to be fair I am part West Virginian.

I have one near me where I live now, but for 25 years I was one of the very few in America that didn't have one within 10 miles (which according to Walmart themselves, 90% of the population does).

I also don't have a kid at home anymore, so I may go 2-3 weeks without stepping foot in any kind of grocery store. And, to tie it into the recent conversation here, it's not because we order delivery, we only do that maybe 1-2 times a month. We just buy in bulk and load up the freezer and the pantry. It's usually the need for salad/veggies/produce that gets me to go to the store. Or wine, can't run out of wine.

I only buy pet food, dry goods or pharmacy items at Walmart. I shop every week at Kroger, publix and Harris teeter for the BOGOs and fresh meat and veggies. I'm retired so it gives me something to do. Plus my wife says I am cheap. And Wine! Never run out for sure. Buy by the case when Kroger or Harris teeter run 20% off each month. Between winery visits.

 

[Sand]

As long as China, India and others are mass polluters, our efforts will be minimally effective on a grand scale. Doesn’t mean we shouldn’t try though.

It means that until there is an economic solution to energy based pollution it won't stop. We're misallocating monies in this area horribly. It's incredibly frustrating to see.

 

[Gatorade]

If you run to Wal-Mart 3 times a week

This sounds horrible. I think I've been to a Walmart under a dozen times, total.

It's a smart place to grocery shop. I've never understood the hate, but to be fair I am part West Virginian.

Alabama here, Walmart is second only to ALDI’s. The only other grocery chains we go are Trader Joe’s, Kroger and Costco. Although, a piggly wiggly just opened a little further away so we might have to hit that. The one in HHI is part of our annual vacation.

The Pig is great for weekly meat sales (and the meat department tends to be very good). Otherwise it's quite expensive.

Great fresh seafood too at The Pig on HHI.

 

[Juxtatarot]

Maybe the answer is something other than "because they can," but why are the credit card companies deciding to raise the interest rates to the levels they are and how can they even get away with it.

I have a CC that I have had for years and unfortunately has around a 10k balance right now because of some unforeseen life events. I haven't been using it now at all and my wife and are just working on get it paid off. I believe this card was typically in the 14.99% interest rate range. It went to 29.99% last month!!! Payment went up almost $100 more per month. We have excellent credit and have never missed a payment on anything in 30 years, so that can't be the reason.

Needless to say I find myself quickly in the market for a balance transfer to a 0% APR offer on a new card. It was just shocking when I got the notice on this.

Part of the reason is most credit cards have variable rates. However, that doesn’t explain your situation. The CARD Act of 2009 did put in some restrictions on raising rates on existing balances. Frankly, the situation with your card doesn’t make sense to me. There must be something else going on there.

 

[culdeus]

As long as China, India and others are mass polluters, our efforts will be minimally effective on a grand scale. Doesn’t mean we shouldn’t try though.

It means that until there is an economic solution to energy based pollution it won't stop. We're misallocating monies in this area horribly. It's incredibly frustrating to see.

It's not just that. We are heavily dependent as a society for petroleum that we don't set on fire.

Even if climate change isn't bad, when we run out of oil to take us to get a latte we also run out of nearly every aspect of modern medical care, clothing, and dildos.
Even if you make dildos out of glass, that's just the start of a huge uphill climb.

And energy really isn't the biggest driver. It's refrigeration. But that's another topic.

 

[Grahamburn]

As long as China, India and others are mass polluters, our efforts will be minimally effective on a grand scale. Doesn’t mean we shouldn’t try though.

It means that until there is an economic solution to energy based pollution it won't stop. We're misallocating monies in this area horribly. It's incredibly frustrating to see.

It's not just that. We are heavily dependent as a society for petroleum that we don't set on fire.

Even if climate change isn't bad, when we run out of oil to take us to get a latte we also run out of nearly every aspect of modern medical care, clothing, and dildos.
Even if you make dildos out of glass, that's just the start of a huge uphill climb.

And energy really isn't the biggest driver. It's refrigeration. But that's another topic.

I read this a few times.

 

[SFBayDuck]

Mortgage rates in 1990 were 10.4%. It was not easier back then for people in their mid-20s to buy a home.

This is misleading. PITI is a much better metric

Do you think it was "easier" for a person in their mid-20s to buy a home in 1990? I don't.

College was cheaper. That's going to be a factor. School debt and car debt is going to keep 20s out of homes for a bit.

I keep seeing this "young adults in their mid-20s can't afford to buy a home," statement. When could they?

Out here on the West Coast among a pretty large group of college educated friends and acquaintances, I knew exactly one guy who bought a house before age 30. And he house hacked by buying a fixer-upper (he had the skills to do the work) in Portland and having three other buddies live there and pay rent. This was 20-30 years ago, in the mid-90s-early 2000s. We pretty much all lived with roommates out of college. Then many of us partnered up and moved into an apartment. And then as we got into our 30s, that's when I saw people start to buy homes (in many cases, condos).

But despite my love for anecdotal economic indicators, I do like to look for the data. And it does seem to show that first time buyers is shifting older. According to this article, the median age of first time buyers was 29 in 1981, 31 in 2013, and 35 in 2023. This article says the median first-time buyers was 33 in 2021 and 36 now. So ok, 43 years ago about half of first-time home buyers were in their 20s. So why are we still using that as the standard?

Maybe I'm just seeing it through my own lens and the right question to ask is actually where can/could 20-somethings buy a home? Are there places in middle America where that's still a thing?

In any case, this thinking that most 20 years olds, even those with degrees and good jobs, should be able to buy homes just doesn't seem right to me. It's not a new thing, this hasn't really been the case for decades. All that said, we can all agree (I know, a dumb statement to make in the FFA) that it's getting harder for people of any age to buy a home for the first time. And until there is inventory to match demand, that seems unlikely to change any time soon.

 

[SFBayDuck]

That all being said, the amount of credit card debt is at an all time high

Here we go again?

 

[Alex P Keaton]

As long as China, India and others are mass polluters, our efforts will be minimally effective on a grand scale. Doesn’t mean we shouldn’t try though.

It means that until there is an economic solution to energy based pollution it won't stop. We're misallocating monies in this area horribly. It's incredibly frustrating to see.

It's not just that. We are heavily dependent as a society for petroleum that we don't set on fire.

Even if climate change isn't bad, when we run out of oil to take us to get a latte we also run out of nearly every aspect of modern medical care, clothing, and dildos.
Even if you make dildos out of glass, that's just the start of a huge uphill climb.

And energy really isn't the biggest driver. It's refrigeration. But that's another topic.

Man, I would love a separate topic to learn about the refrigeration issue.

 

[Dinsy Ejotuz]

It was not easier back then for people in their mid-20s to buy a home.

Almost no one I knew back then had a house before they were 30. And some of those had help from parents or bought a long-term fixer upper in bad neighborhoods or etc.

 

[dkp993]

keep seeing this "young adults in their mid-20s can't afford to buy a home," statement. When could they?

Out here on the West Coast among a pretty large group of college educated friends and acquaintances, I knew exactly one guy who bought a house before age 30. And he house hacked by buying a fixer-upper (he had the skills to do the work) in Portland and having three other buddies live there and pay rent. This was 20-30 years ago, in the mid-90s-early 2000s. We pretty much all lived with roommates out of college. Then many of us partnered up and moved into an apartment. And then as we got into our 30s, that's when I saw people start to buy homes (in many cases, condos).

Also, as a fellow west coaster, it’s was and is about what they want in their first home. I bought my first home at 26, but it was in a less then desirable neighborhood and was a **** box. But it was what first affordable starter homes often are. Seems todays 20 somethings are largely unwilling to make that choice, so they just stay living at home.

 

[Chadstroma]

That all being said, the amount of credit card debt is at an all time high

Here we go again?

What.... out of my statement.... is false?

 

[jwb]

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

I linked to a podcast earlier, and an analyst was discussing the fortunes of Uber/Lyft. They were discussing it in terms of their outlook, but he mentioned offhand that their revenue continues to grow. I looked it up, Uber is up 16% from '22 to '23.

Anyhow, it seems to me that Uber may be a pretty decent measure on middle America economy.

It's everywhere, it's a luxury that a lot of people use, no one really needs, and Uber Eats and Uber rides would be among the first things many people wI ageee but with a bit of a caveat. The

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

I linked to a podcast earlier, and an analyst was discussing the fortunes of Uber/Lyft. They were discussing it in terms of their outlook, but he mentioned offhand that their revenue continues to grow. I looked it up, Uber is up 16% from '22 to '23.

Anyhow, it seems to me that Uber may be a pretty decent measure on middle America economy.

It's everywhere, it's a luxury that a lot of people use, no one really needs, and Uber Eats and Uber rides would be among the first things many people would give up. Just a thought

I agree with a lot of this but with a caveat.
I’ve ubered once in my life. I have the Ap but never used it personally (wife’s account one time). I’ve never used Uber eats. If I want something I go pick it up.
That said, my 27 year old daughter ( who makes more than me) uses both Uber and Uber eats/door dash multiple times per week. My eldest son uses each a few times a month and my 19 year old users Uber eats 2-3/month
I can well afford it, but I’m cheap. And old. With younger generation I think this is a stickier service and it will take a lot of economic shock for it to be affected. That to me will make it a more difficult barometer of the economy. Kids love it. They’ll give up other things before having someone bring food to their door. I’d need to be unbelievably rich, or disabled to use this service. It’s a mindset.

This is interesting. I have a niece who is 28 and dead broke. A $500 car repair is beyond her. Her checking account is under $0 often. She makes $22/hr and lives at home. She does doordash/uber eats several times a week, and easily spends $10/day on coffee drinks. She smokes weed daily. This is all normal for her, and the thought of giving these things up is... it's not doable for her. She actually doesn't see how this hurts her. "I work - how am I supposed to eat?" she'll say. As if making soup and grilled cheese at home is 100% not an option.

It's so odd to me. I was young and irresponsible once too. But I always knew where I was irresponsible, and when it came time to pay the piper (about 23-24 years old), it was pretty easy to pivot. It's not as easy for younger people now for whatever reason. Maybe I'm looking at it with the "hindsight is 20/20" glasses, but I definitely do not remember being so stubborn when I went underwater financially.

They key to this problem, and the reason why, is in the “28……lives at home” portion. She’s making these bad decisions because she’s being subsidized and enabled too. Why eat soup an grilled cheese when mom and dad will subsidize the Uber eats and weed? As usual it’s us (gen x) and our enabling helicopter don’t want our kids to feel any hardship parenting that is creating it. Rant over.

Yup. It's funny, when I see my old high school friends complaining about kids today and softness/etc, I'm like "IT WAS US WHO DID THIS".

Yea, WE were feral kids and rode our bikes all day and stayed out until the streetlights came on (and after). Then we became adults and collectively started making "playdates" for our kids and didn't let them out of our sight and made sure they got recognition for every little thing.

 

[SFBayDuck]

That all being said, the amount of credit card debt is at an all time high

Here we go again?

What.... out of my statement.... is false?

It’s not false, in fact it will almost always be true. But without proper context, it is meaningless.

 

[Chadstroma]

That all being said, the amount of credit card debt is at an all time high

Here we go again?

What.... out of my statement.... is false?

It’s not false, in fact it will almost always be true. But without proper context, it is meaningless.

In the context of how I used it, it absolutely has meaning.

You need to stop injecting my statement into another conversation. What I stated is accurate and over flowing with meaning.

 

[Grahamburn]

That all being said, the amount of credit card debt is at an all time high

Here we go again?

I mean, we get it, but saying the economy is fine and looking the other way when really it’s just artificially propped up by bad debt that continues to increase at staggering levels is just disingenuous to me.

Maybe none of that really matters and it’s completely inconsequential because I guess it has always been this way? I don’t agree.

People, especially young people, carrying more bad debt than ever is not good for the future of the economy.

 

[Mitchie]

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

She can’t afford it. She put it on a credit card. But, who cares? Right?

At what point do these credit card companies fold when their customers default? I don’t know. They’re pretty flush. But, it’s coming, eventually.

What's coming? Credit card companies going out of business? Really? No. Wrong, hard no. They are fine. They LOVE this environment. They never fold, they just get bought out. Were you even alive in 2000? Do you not remember Providian?

We just borrow and spend and borrow and spend for eternity.

And yet your grandparents left money for your parents who left money for you to leave money behind for your kids.....

Rich white folks getting an inheritance isn't really what I'm talking about.

The struggle is real for the majority of people right now. Dumping expenses on credit cards works for a while, but eventually something has to give. The financial sector seems to want to ignore it or just go with "everything is fine." I've been working and spending and investing for 20+ years. It has never felt like this to me.

Felt like what?

Tight. People feeling a real squeeze. I guess.

So you've lived through Covid and the mortgage crises and never seen anything like you're seeing now, mmm ok.

From my perspective, yes. I was in my mid-20's during the mortgage crisis and bought my first home during. Cheap foreclosure. I'm in Florida so Covid didn't impact us as much due to the policies here. Post-covid inflation has been much more difficult to navigate. Again, from my perspective.

have no clue what some of your statements mean, mabye others do but i'm genuinely at a loss.

He's saying that the mortgage crisis didn't negatively impact him, because he was able to buy a foreclosed-upon house at a discount. [Good! Always happy to see a young FBG catch a lucky break.] He didn't feel too put-out by covid because he was in a state that mostly stayed open during the pandemic. The spurt of inflation that we all experienced impacted him more than either of these events, and he acknowledges that other people's experiences might have been different.

Thanks I understood that. I don't really care about his individual situation though, his initial comment was the 'the struggle is real for the majority of people right now'. The discussion is about the economy as a whole.

 

[massraider]

The discussion is about the economy as a whole.

I don't think it is. Maybe it was at one point.

 

[SFBayDuck]

That all being said, the amount of credit card debt is at an all time high

Here we go again?

What.... out of my statement.... is false?

It’s not false, in fact it will almost always be true. But without proper context, it is meaningless.

In the context of how I used it, it absolutely has meaning.

You need to stop injecting my statement into another conversation. What I stated is accurate and over flowing with meaning.

Cool, I’m always looking to learn. I respect you and in particular your knowledge of your industry, which gives you insights into individual finances that I certainly don’t have. Just reread your post and I’m obviously still missing something in terms of the meaning of that statement. Is cc debt at an all time high relative to income? Home equity? GDP? Payments as a percentage of income? Historical rate of delinquency? Or is there a context I’m just missing (which is entirely possible!).

 

[Chadstroma]

That all being said, the amount of credit card debt is at an all time high

Here we go again?

What.... out of my statement.... is false?

It’s not false, in fact it will almost always be true. But without proper context, it is meaningless.

In the context of how I used it, it absolutely has meaning.

You need to stop injecting my statement into another conversation. What I stated is accurate and over flowing with meaning.

Cool, I’m always looking to learn. I respect you and in particular your knowledge of your industry, which gives you insights into individual finances that I certainly don’t have. Just reread your post and I’m obviously still missing something in terms of the meaning of that statement. Is cc debt at an all time high relative to income? Home equity? GDP? Payments as a percentage of income? Historical rate of delinquency? Or is there a context I’m just missing (which is entirely possible!).

The context was simply about how the dynamics of having exceptionally low mortgage rates with then a stark increase in rates has taken away a way that many Americans dealt with their credit card debt in the past. That is a stresser on many households in a way that is unlike anything we have seen.... in.... I am not sure.... maybe ever.

Anything else I will let you and others to debate. I have no dog in the fight.

I will say that your statement that you think credit card is at an all time high is always true is absolutely false. If memory serves me from 2008 to maybe 2011 it actually continually declined. I don't recall any data pre-2008 so I do not know if that was an aberration or a cyclical thing based on many different factors.

Just saying what I am saying bud. Nothing more than that or alluding to more. My context was on the consumer debt in relation to relief through mortgage debt being severely limited.

 

[fruity pebbles]

I like credit card delinquency rates better and we’re at the highest % of over 90 days since 2012 and in an upward trajectory.

 

[Grahamburn]

I like credit card delinquency rates better and we’re at the highest % of over 90 days since 2012 and in an upward trajectory.

Not a thing. Don’t worry about it.

Almost 1 in 5 Maxed Out

 

[Grahamburn]

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

She can’t afford it. She put it on a credit card. But, who cares? Right?

At what point do these credit card companies fold when their customers default? I don’t know. They’re pretty flush. But, it’s coming, eventually.

What's coming? Credit card companies going out of business? Really? No. Wrong, hard no. They are fine. They LOVE this environment. They never fold, they just get bought out. Were you even alive in 2000? Do you not remember Providian?

We just borrow and spend and borrow and spend for eternity.

And yet your grandparents left money for your parents who left money for you to leave money behind for your kids.....

Rich white folks getting an inheritance isn't really what I'm talking about.

The struggle is real for the majority of people right now. Dumping expenses on credit cards works for a while, but eventually something has to give. The financial sector seems to want to ignore it or just go with "everything is fine." I've been working and spending and investing for 20+ years. It has never felt like this to me.

Felt like what?

Tight. People feeling a real squeeze. I guess.

So you've lived through Covid and the mortgage crises and never seen anything like you're seeing now, mmm ok.

From my perspective, yes. I was in my mid-20's during the mortgage crisis and bought my first home during. Cheap foreclosure. I'm in Florida so Covid didn't impact us as much due to the policies here. Post-covid inflation has been much more difficult to navigate. Again, from my perspective.

have no clue what some of your statements mean, mabye others do but i'm genuinely at a loss.

He's saying that the mortgage crisis didn't negatively impact him, because he was able to buy a foreclosed-upon house at a discount. [Good! Always happy to see a young FBG catch a lucky break.] He didn't feel too put-out by covid because he was in a state that mostly stayed open during the pandemic. The spurt of inflation that we all experienced impacted him more than either of these events, and he acknowledges that other people's experiences might have been different.

Thanks I understood that. I don't really care about his individual situation though, his initial comment was the 'the struggle is real for the majority of people right now'. The discussion is about the economy as a whole.

My situation is fine. I’m worried about my kids and other people.

 

[dkp993]

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

I linked to a podcast earlier, and an analyst was discussing the fortunes of Uber/Lyft. They were discussing it in terms of their outlook, but he mentioned offhand that their revenue continues to grow. I looked it up, Uber is up 16% from '22 to '23.

Anyhow, it seems to me that Uber may be a pretty decent measure on middle America economy.

It's everywhere, it's a luxury that a lot of people use, no one really needs, and Uber Eats and Uber rides would be among the first things many people wI ageee but with a bit of a caveat. The

Still think it’s a tale of two economies. The top 20% or so are doing very well, house prices are up, stock prices are up, inflation doesn’t affect them as much because it’s such a small percentage of their spending. The bottom 40% are flat out struggling or worse. That middle 40% are a case by case basis depending on job, debt load, whether you own your home etc.

For sure but I think those percentages are way off. The top 20% have always done well. The top 20% can't smash through new records for travel, concerts, ballpark tickets, restaurant spend, iphones, and basically every other non-essential item in existence. That requires the combined work of the entire populace.

Yes it blows for the bottom 20%, no doubt. But this is America and that's always the case, it's the system. Though I do still contend that we've all (including the bottom percentile) become accustomed to having more to the point where we spend on non-essential luxuries that people in the same socio-economic class of prior generations would have never even considered.

People under 25 spent over 40% as much on travel as boomers last year, which is an insanely high amount of spend for people that haven't even come close to entering their prime earning years yet. Anecdotally my sister in law is a single mom, kindergarten teacher that has seen Taylor Swift 4 times in the last few years, one of them in Rio as part of a big international trip. I honestly have no idea how she can afford that, but she's gonna spend on it anyway.

I linked to a podcast earlier, and an analyst was discussing the fortunes of Uber/Lyft. They were discussing it in terms of their outlook, but he mentioned offhand that their revenue continues to grow. I looked it up, Uber is up 16% from '22 to '23.

Anyhow, it seems to me that Uber may be a pretty decent measure on middle America economy.

It's everywhere, it's a luxury that a lot of people use, no one really needs, and Uber Eats and Uber rides would be among the first things many people would give up. Just a thought

I agree with a lot of this but with a caveat.
I’ve ubered once in my life. I have the Ap but never used it personally (wife’s account one time). I’ve never used Uber eats. If I want something I go pick it up.
That said, my 27 year old daughter ( who makes more than me) uses both Uber and Uber eats/door dash multiple times per week. My eldest son uses each a few times a month and my 19 year old users Uber eats 2-3/month
I can well afford it, but I’m cheap. And old. With younger generation I think this is a stickier service and it will take a lot of economic shock for it to be affected. That to me will make it a more difficult barometer of the economy. Kids love it. They’ll give up other things before having someone bring food to their door. I’d need to be unbelievably rich, or disabled to use this service. It’s a mindset.

This is interesting. I have a niece who is 28 and dead broke. A $500 car repair is beyond her. Her checking account is under $0 often. She makes $22/hr and lives at home. She does doordash/uber eats several times a week, and easily spends $10/day on coffee drinks. She smokes weed daily. This is all normal for her, and the thought of giving these things up is... it's not doable for her. She actually doesn't see how this hurts her. "I work - how am I supposed to eat?" she'll say. As if making soup and grilled cheese at home is 100% not an option.

It's so odd to me. I was young and irresponsible once too. But I always knew where I was irresponsible, and when it came time to pay the piper (about 23-24 years old), it was pretty easy to pivot. It's not as easy for younger people now for whatever reason. Maybe I'm looking at it with the "hindsight is 20/20" glasses, but I definitely do not remember being so stubborn when I went underwater financially.

They key to this problem, and the reason why, is in the “28……lives at home” portion. She’s making these bad decisions because she’s being subsidized and enabled too. Why eat soup an grilled cheese when mom and dad will subsidize the Uber eats and weed? As usual it’s us (gen x) and our enabling helicopter don’t want our kids to feel any hardship parenting that is creating it. Rant over.

Yup. It's funny, when I see my old high school friends complaining about kids today and softness/etc, I'm like "IT WAS US WHO DID THIS".

Yea, WE were feral kids and rode our bikes all day and stayed out until the streetlights came on (and after). Then we became adults and collectively started making "playdates" for our kids and didn't let them out of our sight and made sure they got recognition for every little thing.

I have a theory as to why, at the risk of derailing this thread. But I believe it’s because we are the first generation in history of mass divorce. It’s a reactive over compensation of dealing with that trauma.