How have the affordability crisis and "K-shaped economy" affected you?

[Wesley_Clark]

I’m in the upper arm of the K shaped recovery. I’m doing well and do not stress about money. However I have no idea if my job will just randomly disappear either.

I don’t own a home, I rent. However there have been a lot of new apartment building constructions in my city, which is helping to keep down rent hikes I was seeing a few years ago. I can afford to buy, I just prefer to rent.

I’m very lucky because I don’t have kids and I have good health insurance. For ‘me’ the economy is good but I know one layoff can change that.

[Hari_Seldon]

Although my pension will never increase, we are still living on it and have not touched out retirement savings accounts. We own our condo with no mortgage and hope to leave a nice nest egg to our kids. One left Microsoft with about $10M worth of options and a second is married to a doctor so no worries about them. Our daughter has problems and we may have to help her. Although she is well paid, her husband was just laid off by Amazon (he’s a programmer) and has a severely retarded brother whose care will devolve on him when his father dies.

[LSLGuy]

Now that we’ve got lots of anecdata (and thanks to everyone for contributing) I’m going to return to the OP for a moment. I’m not the OP, but IMO it’s worth discussing this aspect as a subtopic off the anecdata:

@Reply

Over the past year or two, high inflation mixed with stagnant wages, rampant layoffs, AI, and poor jobs availability has led to quality of life declining for many middle-class and lower households. Per AP: Here’s why everyone’s talking about a ‘K-shaped’ economy

There’s nothing wrong in that opening statement and that’s a good cite. But implicit in both the article’s words and the OP’s is that this “K-shaped” economy is something unusual or novel. I’m not sure that’s so true. IMO the only novel thing is the catchy label.

How long has “The rich get richer and the poor get poorer” been a saying? Per The rich get richer and the poor get poorer - Wikipedia, something on the order of 200 years now. And itself harks back to Matthew in the Bible, so 2000-ish years.

Reagan’s “Rising tide that lifts all boats” was always a rhetorical device with nonsense at its base. That rising “tide” of national economic prosperity will raise yachts far higher than it raises rowboats or folks clinging to driftwood. True, everyone is going up, not down, in an absolute sense, but “tide” implies a universal and equal effect that’s very much unreal. But it did attract votes.

I suppose my bottom line is that the economy is always K-shaped. Perhaps the angle of the two legs changes from time to time, and right now may well be especially happy for the upper leg and especially unhappy for the lower. As an upper-leg person I gotta say 2025 is (nearly “was” with just 3 weeks to go) a good year, but also one of the worst good years of the last 5 or so.

So what may matter more to everyone’s perception is a combo of “How much swing towards the upside or downside has your leg had recently?”, “How close to the hinge versus the tip are you on your leg?” and “How close to your personal minimum nut were you when before any recent changes?”

Folks close to the bone can see huge swings in emotional comfort and practical quality of life with comparatively small swings in income or expenses. Folks with more padding may not even notice the same percentage changes even though their numbers associated with those changes are much larger.

Summation:
Income and asset inequality is very real. And has been increasing for a long time in the USA once the post WW-II economic boom had largely subsided. It’s not a new or recent phenomenon.

What’s interesting to me is how MAGA has successfully weaponized this among the non-wealthy classes in the service of making it worse, not better.

[Gatopescado]

Eh… I’m gettin’ by

[Spice_Weasel]

@LSLGuy

Summation:
Income and asset inequality is very real. And has been increasing for a long time in the USA once the post WW-II economic boom had largely subsided. It’s not a new or recent phenomenon.

This is true, but I guess I thought that usually when the average Joe had it bad, the stock market tended to correlate. Whereas when the stock market was doing well, Joe didn’t stand to benefit as much, but he still benefited a little.

What’s different here, maybe, is that the middle class are feeling the pinch while investors are making hand over fist.

Is that not the case?

I actually spoke with our financial advisor today. It was all for a very good reason. He doesn’t think the AI boom is a bubble. His focus with our non-retirement investments is 3-5 year returns and he seemed pretty optimistic that the next couple of years are going to be good ones.

Our total portfolio has grown 18% in the last year.

My husband and I commented once again about how easy it is to make money when you already have money. Everyone else? Out in the cold. I’ve lived it and it sucks.

[enipla]

We are (where) DINKS. My wife retired in August, I retire in 4 days. 4. Days. Our financial planner/adviser says we are in good shape. I agree.

As we are both basically retired now, we go out to eat more often. Usually a late lunch with 2 drinks each. That get’s expensive, and we have to watch it.

The Trump economic bullshit has not really affected us. At least not yet.

[MrAtoz]

@Spice_Weasel

What’s different here, maybe, is that the middle class are feeling the pinch while investors are making hand over fist.

I sort of feel like I’m in both of these camps.

We are pretty solidly middle class, and we definitely feel the pinch as far as buying groceries, filling up the car with gas, going to movies, etc. But at the same time, we’re also investors (through our 403b’s and IRAs and such). And those investments are doing quite well. But of course those are all retirement accounts, so we can’t use any of those investment gains yet.

So I’m not quite sure how I feel about the current state of the economy. I’m glad the stock market is doing well, because that money is going to fund our retirement. But I also wish that daily life was more affordable, both for me and for other people.

[Voyager]

@Spice_Weasel

I actually spoke with our financial advisor today. It was all for a very good reason. He doesn’t think the AI boom is a bubble. His focus with our non-retirement investments is 3-5 year returns and he seemed pretty optimistic that the next couple of years are going to be good ones.

Did he live through the 2000 bubble? I did. It looks very much like that one to me.

@Spice_Weasel

My husband and I commented once again about how easy it is to make money when you already have money.

Damn right.

[Spice_Weasel]

@Voyager

Did he live through the 2000 bubble? I did. It looks very much like that one to me.

He said the difference between then and now is that a lot of the major players right now have gobs of money they can afford to lose. He did not think Open AI was on a good trajectory, though. I got the impression he thinks one of the tech cartel corporations (Google, Meta, etc) is going to come out the winner.

At any rate, none of our stocks are heavily invested in AI-related ventures, so for the purpose of our investments, it’s a moot point. We are on the conservative side when it comes to investing. I don’t think our riskiest account is even that risky. But we have everything staggered out. We’re invested at four different levels of risk.

I’m also really far from retirement so I’m not too worried about it.

[Voyager]

@Spice_Weasel

He said the difference between then and now is that a lot of the major players right now have gobs of money they can afford to lose. He did not think Open AI was on a good trajectory, though. I got the impression he thinks one of the tech cartel corporations (Google, Meta, etc) is going to come out the winner.

Sure, someone will come out a winner, there is demand enough for that. The problem is that when the smaller following companies decide there is no way they are going to make money (or the VCs decide for them) they close up their data centers and sell off their equipment. Once one company does this so will many others. With lots of used boards and chips on the market, companies still expanding will find it cheaper to buy used than new. There goes the board manufacturers, and the demand for Nvidia parts goes way down. That leads to lots of lay offs. I was in the middle of this in 2001. All of a sudden our servers, which we couldn’t make fast enough, were showing up on the resale market at gigantic discounts.

In the long run we’ll all be fine. And no one can tell a downtick from nerves from the oncoming crash.

[msmith537]

@LSLGuy

Reagan’s “Rising tide that lifts all boats” was always a rhetorical device with nonsense at its base. That rising “tide” of national economic prosperity will raise yachts far higher than it raises rowboats or folks clinging to driftwood. True, everyone is going up, not down, in an absolute sense, but “tide” implies a universal and equal effect that’s very much unreal. But it did attract votes.

I always found this expression amusing. It doesn’t matter how much water is under your boat. Some people will still own yachts and some will still be stuck with leaky-ass dinghies.

@Roderick_Femm

So the economy seems to be doing okay, for now, but there is one group of people who clearly think the bottom is going to fall out soon, and that’s the people who buy and own gold. The price of gold has gone up by over one third ($3k to $4.2k) in about 9 months, and shows no sign of stopping. Anyone buying gold at these prices must be convinced that serious trouble is coming very soon.

Because there isn’t anything driving the stock market growth except maybe Big Tech and AI related stuff that has yet to produce any real value.

I’m currently not working. I keep encountering a lot of people who work in similar roles in project management who are also struggling to find work. Consulting firms like Accenture and Mckinsey and the Big-4 have had large-scale layoffs as have many large tech companies as well as conventional companies like P&G.

That tells me that companies are not spending money. And I think they are covering up how much they aren’t spending by blaming AI.

My wife OTOH is busier than ever. She works in structured finance on the same sort of financial products that ruined the economy in 2008.

[LSLGuy]

@Roderick_Femm

but there is one group of people who clearly think the bottom is going to fall out soon, and that’s the people who buy and own gold. The price of gold has gone up by over one third ($3k to $4.2k) in about 9 months, and shows no sign of stopping. Anyone buying gold at these prices must be convinced that serious trouble is coming very soon.

There is a LOT of advertising for retail gold buying on RW TV & internet. The higher the current spot price the more advertising and seemingly the more effective it is at roping those folks in. Which is the classic “buy high sell higher at a loss or never” come-on.

Scared people buy gold. Whether they’re scared of a stock market crash or scared of political unrest or scared that wokeness will invade their home. RW media is one continuous Fright Night 24/7/365. And very deliberately so.

Now there’s a lot more movers in global gold prices than just US retail buyers.

It’s also the case that the USD has declined about 10% versus a commonly used global basket of currencies significant to global trade. So we can “blame” ~10% of the recent ~30% increase (IOW 1/3rd of the increase) in USD gold prices to the drop of USD versus that currency basket. The idea that gold is inherently non-inflationary and hence a perfect standard unchanging ruler to measure everything else’s changes by is mostly a tautology. But there is some explanatory value in that general direction.

[Frodo]

Even those who are in the “/” part of the K-shape have to be continuously nervous about losing their jobs or other financial disaster moving them to the "" part of the “K”.
My newfound suspicious mind wonders if this is not a feature, rather than a bug, for the movers and shakers of the economy: a terrified employee is easier to control.

[msmith537]

@Frodo

Even those who are in the “/” part of the K-shape have to be continuously nervous about losing their jobs or other financial disaster moving them to the “” part of the “K”.
My newfound suspicious mind wonders if this is not a feature, rather than a bug, for the movers and shakers of the economy: a terrified employee is easier to control.

I honestly think it’s mainly indifference.

The trend I’ve witnessed pretty much since I’ve started working in the 90s is a constant focus on using tech to automate work and a growing financial services industry to figure out increasingly complex and esoteric methods of owning stuff and mitigating market risk (not always successfully and often spectacularly unsuccessfully). So if you are in those spaces (like my wife and I are) you tend to be on the “/” of the “K”.

If you work a regular Middle America job that doesn’t scale with technology or doesn’t provide a service that is valued by financial services or big tech, then you are at risk of having your job automated by software or simply not showing any growth.

[Al128]

@msmith537

That tells me that companies are not spending money. And I think they are covering up how much they aren’t spending by blaming AI.

I have the same feeling… it mostly seems to be about plausible deniability…

But I do not see artificial intelligence do the work of those people who were laid off… neither in quality nor quantity.