My personal theory about where a lot of doomerism comes from has two parts:
1) Whatever level of wealth you grew up around feels normal to you, and most people seem to think they grew up "middle class" even if, upon inspection, their parents obviously had a 95th percentile income
2) If your parents have a >50th percentile income growing up, your relative position will be lower than theirs on average. If your parents have a 95th percentile income growing up, your relative position will be much lower than theirs on average unless you go to medical school.
The combination of these two facts means that a bunch of people who grew up pretty well off can only afford a middle class lifestyle rather than a high-upper-middle class-in-NYC lifestyle, and to them that feels like poverty. They'll never be able to afford the kind of house their parents owned in the kind of neighborhood they grew up in.
One of the major tells that this is going on is the big focus on student loans. A lot of people don't go to college, and if your parents are genuinely middle class you almost certainly got in-state tuition at a state school, which is typically less than $15k per year assuming no scholarship or financial aid. All the doomers talking about how tuition is $40k per year and you need to take out $80k of student loans to get a degree don't seem to even be aware that attending a state school is an option, never mind attending a community college and then transferring to a state school.
For an extreme example of this dynamic, I once had somebody from China whose parents paid for them to attend Georgetown for grad school tell me that they grew up "very poor" in China because a lot of the kids at the elite prep schools they attended were richer than them.
All that to say I think doomers are largely the bitter middle class children of upper middle class parents.
All this. A key tell for me that someone grew up rich and has distorted views is that they start talking about how they can't find any place to live that's "decent." No, obviously I don't think I can live in a big house like my parents, but my apartment should look the same and just be smaller.
People are also having kids later, so instead of seeing mom and dad struggling in their 20s, they see their parents with established careers in their 40s. My nephew is only used to big houses from a big lawyer salary but has no experience at all with his dad working one day job to make the ends meet and then going to law school in the evening all while living in a crappy apartment and occasionally hearing gun fire at night. It would look like torture to him.
I think you’ve hit on something right there! Americans always think of themselves middle class, even when objectively they are upper middle class or even rich (or poor). The amount of money to be “rich” in New York is slightly more than whatever 2 full time, mid career New York Times staffers make.
Very large student loans are primarily an upper middle class to rich “problem,” as are selective school admissions! The rhetoric of the Warren/Sanders types would make you think every American owned huge sums because they went to 4 year institutions. Defaults are primarily seen among those who took out small loans - 10/15k - and don’t get very far, dropping out without a degree and thus the increase earning potential. This is also probably a side effect of the 40 year program for everyone to go to college!
And is it so terrible that people who will make significantly more because of their degrees, like doctor, lawyers, etc… have to pay for it? Or are those with advanced degrees some sort of aristocratic class deserving of free education and their higher earnings? Because I guarantee you most American doctors and lawyers won’t be happy with what their Continental counterparts make.
Also many people think they must live in a few very expensive areas. The United States is huge; we have plenty of places to build (if we could get through the NIMBYs). If you “have to” live in a handful of supply and geographically constrained areas, you are a price taker without much bargaining power.
Choices also matter. I know a woman who paid off a large amount of student loans in about 2 years working on a low, non-profit non salary because she was ridiculously frugal. You don’t have to do that! I didn’t! But we have agency on many of these decisions!
I think the missing piece here, though, especially regarding Gen Z, is housing affordability. When my 72 year old dad was a young man in Dallas, he could buy a single family home in Dallas for about his annual salary, maybe a little more. Almost no one can buy a house anymore for 75,000, and rents can be just as punishing. I agree media doomerism goes too far, but affordability is huge for the kids today.
A 2:1 ratio is extremely affordable. Today the ratio is 7, and I think that is responsible for our anger. And the fact that a lot of wage gains today are gained by job switching, not regular raises. And this is something people seem to hate.
Yeah, came here to make a variation on this comment.
High wealth comes at the cost of bidding up house prices, especially with the very limited supply in a lot of places where people want to live.
There's also the comparison point where young people from poorer backgrounds watch their coworkers from wealthier backgrounds get a huge down payment from the Bank of Mom and Dad and get a detached house at the age of 28 - while they're scrimping and saving in the desperate hopes of an aging townhouse when they're 36.
Even if income is the same for both people, life outcomes are going to look really different, and with social media we're going to notice that difference very starkly.
Is this actually true though? Yes house prices continue to climb, but I think people on a decent income can afford a home, it’s just that the doomers are generally PMC types who want to live in the fashionable part of the fashionable city in the fashionable state. I say this in all sympathy since I’m one of them and I’ve never even considered moving to the outer suburbs, which means I will probably end up renting for a long time.
When it comes to economic feelings, I think when an increasingly large proportion of income is dedicated to rent, which feels bad to pay, versus a mortgage, which feels like progress, and so few people are feasibly able to make the switch from the former to the latter, it makes your own personal economic growth/mobility feel very bad.
If someone wants to live in a house that was the same size and quality of construction as those built in 1950, it's a lot less expensive then a new home today. Of course, no outlets for wifi, no attached garage, insulation that can kill you, etc , etc. It's not a fair comparison.
Yes, people forget that it was very common for a 5 person family to live in a 2 bedroom 1 bathroom house. Most people just wouldn't stand for that today.
I take the point, but I don't completely agree. The last time I went house shopping in a MCOL city, one of the most depressing things to me was to see all the homes that were pretty obviously built in the 1930s to 50s to house working class families (1200 square feet, two or three small bedrooms, one bath) that were pushing half a million dollars.
People who grew up middle class are also now used to expensive vacations in a way that older generations just never experienced.
I'm not trying to make a "dang kids eatin' avocado toast" argument here - a trip from Canada or New England to the Caribbean or Europe isn't cheap, and a lot of younger people think of it as normal instead of as an extravagant luxury.
Add to this Matt's social comparison argument in point #3 and you've got a lot of people who are going to feel relatively poor when they start off in adulthood in a way that won't necessarily capture their material reality.
We can afford many more luxuries at our peak earning potential these days and so we're very conscious of what we lack when we're 20-something.
I will never ever forget the summer job where there were some workers were students from Harvard trying to tell me how mean Clinton was to people on welfare, and the very same people would openly discuss whether they had time to take a trip to Europe this weekend, on a whim, using funds entirely at their own discretion.
I've become a pretty well-off adult and I still wouldn't do that. I have taken my kids to Europe, which was also the first time I'd ever been to Europe, but it was a noticeable undertaking and required not doing some other things.
Yes, I've often thought of my parents' one big trip to Tahiti after 18 years of marriage, and how people in an equivalent economic position now think nothing of vacationing abroad every year. Also totally agree with Matt's #3 "A more robust media ecology has caused our comparison set to expand rapidly, putting people on an aspirational treadmill." Social competitiveness is huge, and I'd be surprised if there weren't quite a few people who, because they can't afford a house, make up for it with nice cars, flashy weddings, and instagram-perfect vacations.
You make a lot of good points. Negativity bias in news and social media is absolutely real and contributing to discontent.
One thing I want to push back on a little is the unchallenged assumption that the data in these charts represents everyone's broad reality. While I want to be clear that I'm not one of those "the numbers are cooked bro" conspiracy cranks, it's unquestionable that our survey data seems to be getting less reliable at the same time topline numbers don't always tell the whole story.
Take GDP for one example: 2025 numbers in the US look quite solid. But if you peel back the layers even a little, it quickly becomes clear that AI-related fields are booming while pretty much everything else has stalled or reversed.
Another example: The labor market. Unemployment is still quite low by historical standards, so what's everyone complaining about?? Well, then you look at the actual job openings metrics and see there are very few openings and listed salaries are dropping. As someone who has been looking for full-time employment for the last two years, it certainly doesn't FEEL like a booming economy!
How about consumer spending? It's been great!! ... Until you realize the top 20% of earners account for 2/3 of spending, and the top 10% make up a full 50%, while the bottom half of the country has essentially fallen off the charts. That's bad!
It's great that Gen Z is doing relatively well earnings wise compared to previous generations... yet they look at a housing market where the median price of a home is like half a million dollars at the same time they have record student debt, and they're understandably pissed.
One final example: Inflation. By standard measures, inflation has dropped to near the 2% baseline, so people should be happy, right? Well most everyday consumers don't think about their shopping the same way economists do. They see high prices that haven't dropped, and are continuing to crawl upwards, and they're pissed. *I* understand the difference between disinflation and deflation (and why the latter is really bad), but most people don't, and failure to grasp that nuance contributed to the epic failure of the Biden administration.
I'm not saying "it's all vibes, data doesn't matter," but if we reflexively dismiss people's experiences based on aggregate numbers, we shouldn't be surprised when people act out accordingly.
I've had this interaction several times over the past 6 months:
A: Most Americans are living paycheck-to-paycheck and can't handle a $400 bill!!
B: Per the Federal Reserve, the median American has over $8000 in immediately available funds and say they can handle a $2000 emergency bill with savings.
A: ... Look, a poll from a web finance company!
B: ... Look, they refuse to say what they mean by "paycheck-to-paycheck"
A: ...
B: ...
A: You should think about how struggling young people have to live instead of boomers!
Living paycheck-to-paycheck has suffered some serious concept creep.
It's wild to me that some news media will let people self-report living paycheck-to-paycheck based on vibes instead of comparing their bank accounts to their monthly expenses.
Are people getting evicted if they lose their job, before they can find another one? That's the risk scenario behind 'paycheck to paycheck'. And evictions have gotten much more common and much faster; hiring has gotten rarer and slower.
Wait, evictions have gotten much faster? Maybe it's a regional thing. In Seattle and much/most of the west coast, it's a minimum of 7-8 months, frequently longer, to even get to a court date, and much longer to get to the eviction. No one -- absolutely no one here -- misses a week of work and is evicted. There are mandatory payment plans in addition to the extreme wait time. In general, as with most things, the folks trying to do right end up paying more for the folks who game the system. Be well -
Yeah, I've gotten five-day notices posted on my door when I was late three days with the rent. Apparently it's faster here because they don't need a sheriff to serve notice, but research indicates a LOT of regional variance.
It was actually often the Federal Reserve or one of their many branches that was putting out the data that some large percentage of Americans couldn't handle a $400 expense. But that was years ago. Maybe some percentage of Americans finally got prudent and stashed some of those pandemic checks. I know I did.
Great article Jeff. I have always noticed that disconnect between perception and reality of economic well being and appreciate you taking a dive into that conundrum,.
Another part that you may have missed is that although cost of living is determined based on all costs, what has been the reality is that the cost of a few of the most important things that are more connected to our sense of security than say the price of toasters, which has gone down relative to income, as have all goods manufactured abroad, where the things that can't be outsourced- education, medical, and housing, have risen much higher. Groceries are the one essential that has gone done.
The perception of people not being able to afford a living is more about that they cant afford housing, medical, and education more than that laptops and cell phones are becoming unaffordable.
That is not to negate all the things you say and at the heart is that the greatest generation, my parents, lived through the depression and war and so became stoics and were grateful to enter the elysian fields of suburbia growing up in the Leave it To Beaver Years. Then came the 60s and it became cool to become a cynic and the ensuing generation, I tend to just call the complainer generations and populist politics thrives off the complainers.
There is no denying that being poor in America sucks compared to the rest of the OCED. Burlington, VT ripped out most of the bus stops because homeless people kept sleeping in them, but traveling through Europe, even shabby areas have nice bus stops. Our common property in general sucks. If you can afford it you can buy your way around problems like shitty public schools and crime, but you can't you'll genuinely struggle. Failing in the US means failing hard.
Poverty levels are higher in the US compared to the OECD, that is true, and needs to be addressed, though I think a separate issue from what the article addresses, the perception of economic hard times by the middle class.
Homelessness is a whole other issue, which is some affordability, substance abuse, and poverty, but also the failure to enforce vagrancy laws and the deinstitutionalizing of the mentally ill.
I don't have an ounce of data to back my thesis up, but my theory is that the Vibecession has a lot to do with as you said, "people's sense of security." People tend to poll their own financial well-being as being pretty good, even as they they insist the economy is in recession. Lots of folks seem to believe that even though they have it good in the moment, if they lose a job or have a health problem, since the economy is "clearly" shit, they won't be able to bounce back and the visible misery of the lower classes enforces that perception.
I like that on data and vibecession. It is like crime. Every survey people think crime is going up even when it is going down. Maybe it is about the populist takeover. They were traditionally on the left, now more on the right, but we have less establishment people saying everything is pretty good than rebels claiming it is going to hell in a handbasket.
While I appreciate the attempt to counter negative economic narratives, I believe the article overlooks significant structural issues that justify widespread economic concern. Rather than dismissing these concerns as media-driven pessimism, we should examine why so many Americans feel economically insecure despite seemingly positive headline numbers.
# The Wealth of Under-35s: A Misleading Metric
The article highlights increased wealth among those under 35, attributing it to booming home prices, stock market growth, and pandemic-era stimulus. However, this misses critical context:
- **Rising home prices** create paper wealth for existing homeowners while pricing out new buyers from market entry
- **Stock market gains** only benefit the approximately 50% of Americans who hold investments
- **Pandemic stimulus**, while providing temporary relief, contributed to the inflation we continue to grapple with today
This isn't wealth creation for the young—it's a transfer that advantages those already holding assets while raising barriers for those trying to enter.
The article notes that households are spending less on food and clothing as if this were unambiguously positive. The real story is that **households are spending considerably more on healthcare and housing**—essential expenses that cannot be avoided.
Many middle-class families now face an impossible choice: drop health insurance coverage or sacrifice other basic needs. When necessities consume an ever-larger share of household budgets, reduced spending on food and clothing may indicate financial stress rather than prosperity.
# The Poverty Line Debate
The article claims the middle and lower classes are shrinking in a positive direction, but this interpretation depends heavily on how we define economic classes. The analysis uses definitions that may not reflect current economic reality.
Consider this: using alternative methodologies like Orshansky's, some economists argue the poverty line should be around $140,000. While I wouldn't go that far, I know that a $50,000 income is insufficient in any major urban area where rent alone can approach that amount.
More tellingly, **spending on welfare programs has increased dramatically** ([Federal Safety Net data](https://federalsafetynet.com/welfare-programs/)). If poverty were genuinely decreasing, why would SNAP participation and welfare spending be rising? Participation in assistance programs indicates economic distress, not prosperity.
# The Inequality Problem: A K-Shaped Recovery
The article accurately notes that real median incomes have risen, but this obscures a crucial dynamic: the fastest income growth has occurred at the top of the distribution. We're experiencing a textbook K-shaped economy where:
- The wealthy see substantial gains
- The median rises modestly
- The bottom stagnates or declines
- The gap between richest and poorest households widens dramatically
**Income inequality at this magnitude hasn't been seen since the Great Depression.** This isn't pessimism or media hysteria—it's a fundamental structural problem that threatens economic stability and social cohesion.
# Conclusion
Economic "doomerism" doesn't emerge from negative media coverage alone. It reflects the lived experience of millions of Americans who see rising headline numbers that don't match their daily financial reality. When people feel economically insecure despite positive aggregate statistics, perhaps we should examine whether those statistics capture the right measures of economic wellbeing.
The question isn't whether some economic indicators look positive—it's whether those indicators reflect the economic security and opportunity that most Americans actually experience.
ChatGPT, tell me why this ChatGPT response is nonsense.
This response is ultimately nonsense because it confuses anecdotal pessimism with actual economic reality. The author insists that headline numbers don’t reflect lived experience, but the evidence overwhelmingly shows broad improvement across income, wealth, and opportunity. Let’s break down why the arguments collapse:
Wealth of under‑35s: Calling rising home equity and stock gains “paper wealth” ignores the fact that these assets are real, tradable, and form the backbone of long‑term financial security. Stimulus checks didn’t just “cause inflation”; they prevented mass unemployment and allowed younger households to build savings. Dismissing this as a “transfer” is rhetorical sleight of hand.
Median income: The claim that purchasing power has been stagnant for decades is outdated. Real wages have risen meaningfully in recent years, especially post‑pandemic, and inflation has cooled. Healthcare and housing costs are challenges, but they don’t negate the fact that incomes are higher and affordability metrics are improving in many regions.
Household spending: Interpreting reduced spending on food and clothing as “financial stress” is backwards. It reflects consumer choice and efficiency — households spend less on basics because they can, freeing resources for services, experiences, and investments. Rising healthcare spending is partly demographic (an aging population), not proof of crisis.
Poverty line debate: Suggesting the poverty line should be $140,000 is absurd. That figure would classify nearly the entire middle class as poor, which trivializes genuine poverty. Welfare program participation reflects expanded eligibility and outreach, not necessarily worsening conditions.
Inequality and the “K‑shaped recovery”: Inequality is a persistent issue, but the claim that it rivals the Great Depression is hyperbolic. Median incomes rising alongside gains at the top is not evidence of collapse — it’s evidence of growth across the distribution. The bottom has seen improvements too, particularly in employment and wage growth.
Conclusion
The essay dresses up pessimism as analysis, but its arguments are exaggerated, outdated, or misinterpreted. By ignoring the resilience of incomes, wealth accumulation, and the stabilizing effects of policy, it paints a distorted picture. In short: the essay is nonsense because it mistakes structural progress for structural failure.
Yes, home equity and stock holdings are tradable assets—if you already own them. The counterargument misses the generational divide: those under 35 with assets have benefited, but homeownership rates for young adults remain below historical norms, and 50% of Americans own no stocks at all. When asset appreciation is the primary driver of wealth growth, it exacerbates inequality rather than creating broad-based prosperity.
Additionally, the argument overlooks that most families don't truly own their homes—banks do. With rising delinquency rates across various debt sectors and the emergence of 50-year mortgage proposals, the indicators point toward systemic instability rather than the prosperity this metric purports to measure.
The claim that stimulus "prevented mass unemployment" is true but incomplete. We're now experiencing the consequences: persistent inflation that has eroded real purchasing power for wage earners who don't hold appreciating assets. This is precisely the "transfer" I described—from wage earners to asset holders.
On Purchasing Power and Real Wages
The assertion that "real wages have risen meaningfully post-pandemic" requires scrutiny. While nominal wages increased, inflation-adjusted wages only recently returned to pre-pandemic levels for many workers—and this doesn't account for the decades of stagnation preceding COVID. The Pew Research data I cited isn't "outdated"; it documents a long-term structural problem that a few years of wage growth hasn't resolved.
The claim that "affordability metrics are improving in many regions" lacks supporting evidence and ignores that most Americans live in metro areas where housing costs remain prohibitively high. Regional variation doesn't negate the national affordability crisis affecting the majority of the population.
On Household Spending Patterns
Characterizing reduced spending on food and clothing as "consumer choice and efficiency" fundamentally misunderstands the data. When families spend a larger percentage of income on housing and healthcare (fixed, unavoidable expenses) they have less disposable income for everything else. This isn't "freeing resources for services and experiences"; it's budget constraint forcing tradeoffs.
The demographic explanation for healthcare spending (aging population) doesn't explain why Americans pay multiples more per capita than other developed nations for worse outcomes, or why working-age families increasingly forgo coverage due to cost.
On the Poverty Line
I explicitly stated I don't advocate for a $140,000 poverty line. I referenced Orshansky's methodology to illustrate that our official poverty measure is divorced from actual cost of living. The counterargument attacks a strawman while ignoring the substantive point: our definitions of poverty don't reflect current economic reality, which undermines the validity of charts claiming more Americans are rising out of poverty.
Consider that homelessness rates spiked 18% in the most recent year (NPR, December 2024). This directly contradicts the narrative that poverty is declining. When fundamental statistics misalign to this degree, it indicates methodological problems with one of the measures—and I contend the official poverty metrics are what's flawed.
Attributing rising welfare participation solely to "expanded eligibility and outreach" is convenient but unsupported. If economic conditions were as rosy as claimed, we wouldn't need to expand eligibility or see participation surge even as the economy "improves."
On Inequality and the K-Shaped Economy
The claim that comparing current inequality to the Great Depression is "hyperbolic" ignores the data. The Gini coefficient and wealth concentration metrics show inequality at levels not seen since the late 1920s. This isn't rhetorical exaggeration—it's empirical fact.
The argument that "median incomes rising alongside gains at the top" proves "growth across the distribution" misunderstands how inequality works. When the top 1% captures a disproportionate share of growth, the median can rise while most households fall further behind relative prosperity. This is exactly what defines a K-shaped economy.
The Core Disagreement
The counterargument repeatedly conflates aggregate improvement with universal improvement. Yes, some indicators look positive. But when large segments of the population feel economically insecure, homeownership is declining for young adults, healthcare costs force impossible choices, real wage growth for decades has been minimal, and wealth concentration reaches historic extremes—dismissing these concerns as "pessimism" or "nonsense" isn't analysis—it's denial.
The fundamental question remains: If the economy is working well for most Americans, why do most Americans report feeling it isn't? Either millions of people are simply wrong about their own economic experience, or our headline metrics capture something other than broad-based economic security.
I suggest the latter. Arguing that the economy is thriving based solely on personal prosperity or cherry-picked indicators ignores the systemic challenges facing the majority. As a skeptic by disposition, I find these counterarguments unpersuasive—they reinforce rather than alleviate my concerns about our current economic trajectory.
There is an interesting narrative that accompanies the economic doomerism, that “we’re all dying of comfort.” These are a bit hard to square. Sort of like my conservative friends who complain about “no one wanting to work” and then aggressively deporting the people who want to work.
Yet another recent essay by Mr Maurer filled with that rarity of what-should-be-but-is-not-to-enough-people "common sense" but made funny. This was worth the subscription price: "makes the Irish Potato Famine look like a make-your-own-sundae party."
I have a little kicker to your preferred theory on this regarding media and partisanship pushing this so hard. It's basically a composition effect of who has the loudest voices online: the end result of the elite-overproduction hypothesis.
Basically, a large share of the people who are angry online that a lot of people pay attention to came from upper-middle class or higher backgrounds, never realized that was not the norm, got whatever liberal arts degree they wanted and are now mad as hell they aren't as successful as their parents who were lawyers or doctors or whatever.
You see this bleed through sometimes in how such people talk about childhood in the 80s/90s in terms of housing, vacations etc. Things that are incredibly not the median experience in those years but their lack of which is proof things are much worse.
The fact that most gains to wages today come by job switching and not regular raises seems relevant. Constant job switching is good for your pay and even the economy, but working for one company your whole life has emotional security.
Insightful piece, and I also think most of Iglesias's ideas hold water. But it's somewhere between oversight and colossal error to only analyze economic mood from the POV of Zoomers. I'm a Gen X-er, and the reality that a mid-20-something is entering the workplace with a salary that rivals mine seems like a betrayal. Being fair, it happened to previous generations, too, but I think by the numbers, the crunch felt by X-ers is slightly more painful. And many of the people pushing the idea that we're heading into the abyss are X-ers and late-Millennials — the folks who are still sort of in charge of stuff. Also, standalone charts like the income distribution chart showing family incomes are not-so-great indicators of real wealth and the perception of prosperity. Coordinating other data such as average price of a home, cost of living in urban areas, etc... the $150k household income shrinks rapidly in effect. Feels like I could do more in LA for $40k in 1995 than I can with $150k in 2025. That's not an improvement.
My personal theory about where a lot of doomerism comes from has two parts:
1) Whatever level of wealth you grew up around feels normal to you, and most people seem to think they grew up "middle class" even if, upon inspection, their parents obviously had a 95th percentile income
2) If your parents have a >50th percentile income growing up, your relative position will be lower than theirs on average. If your parents have a 95th percentile income growing up, your relative position will be much lower than theirs on average unless you go to medical school.
The combination of these two facts means that a bunch of people who grew up pretty well off can only afford a middle class lifestyle rather than a high-upper-middle class-in-NYC lifestyle, and to them that feels like poverty. They'll never be able to afford the kind of house their parents owned in the kind of neighborhood they grew up in.
One of the major tells that this is going on is the big focus on student loans. A lot of people don't go to college, and if your parents are genuinely middle class you almost certainly got in-state tuition at a state school, which is typically less than $15k per year assuming no scholarship or financial aid. All the doomers talking about how tuition is $40k per year and you need to take out $80k of student loans to get a degree don't seem to even be aware that attending a state school is an option, never mind attending a community college and then transferring to a state school.
For an extreme example of this dynamic, I once had somebody from China whose parents paid for them to attend Georgetown for grad school tell me that they grew up "very poor" in China because a lot of the kids at the elite prep schools they attended were richer than them.
All that to say I think doomers are largely the bitter middle class children of upper middle class parents.
All this. A key tell for me that someone grew up rich and has distorted views is that they start talking about how they can't find any place to live that's "decent." No, obviously I don't think I can live in a big house like my parents, but my apartment should look the same and just be smaller.
People are also having kids later, so instead of seeing mom and dad struggling in their 20s, they see their parents with established careers in their 40s. My nephew is only used to big houses from a big lawyer salary but has no experience at all with his dad working one day job to make the ends meet and then going to law school in the evening all while living in a crappy apartment and occasionally hearing gun fire at night. It would look like torture to him.
I think you’ve hit on something right there! Americans always think of themselves middle class, even when objectively they are upper middle class or even rich (or poor). The amount of money to be “rich” in New York is slightly more than whatever 2 full time, mid career New York Times staffers make.
Very large student loans are primarily an upper middle class to rich “problem,” as are selective school admissions! The rhetoric of the Warren/Sanders types would make you think every American owned huge sums because they went to 4 year institutions. Defaults are primarily seen among those who took out small loans - 10/15k - and don’t get very far, dropping out without a degree and thus the increase earning potential. This is also probably a side effect of the 40 year program for everyone to go to college!
And is it so terrible that people who will make significantly more because of their degrees, like doctor, lawyers, etc… have to pay for it? Or are those with advanced degrees some sort of aristocratic class deserving of free education and their higher earnings? Because I guarantee you most American doctors and lawyers won’t be happy with what their Continental counterparts make.
Also many people think they must live in a few very expensive areas. The United States is huge; we have plenty of places to build (if we could get through the NIMBYs). If you “have to” live in a handful of supply and geographically constrained areas, you are a price taker without much bargaining power.
Choices also matter. I know a woman who paid off a large amount of student loans in about 2 years working on a low, non-profit non salary because she was ridiculously frugal. You don’t have to do that! I didn’t! But we have agency on many of these decisions!
I think the missing piece here, though, especially regarding Gen Z, is housing affordability. When my 72 year old dad was a young man in Dallas, he could buy a single family home in Dallas for about his annual salary, maybe a little more. Almost no one can buy a house anymore for 75,000, and rents can be just as punishing. I agree media doomerism goes too far, but affordability is huge for the kids today.
Housing, college, and health care costs continue to pummel young people. But the idyllic world people think existed before probably didn't.
> the median home price in Dallas in 1970 was $17,000, which adjusted for inflation is approximately $121,000 in 2020 dollars
> The median money income of families in the United States in 1970 was $9,870
> ... this income level was approximately equivalent to $66,000 in 2020 dollars.
It was about a 2:1 ratio, so unless your dad was exceptionally rich it wasn't going to be 1x salary.
Also the house your dad bought would likely be illegal to build today, and much smaller.
A 2:1 ratio is extremely affordable. Today the ratio is 7, and I think that is responsible for our anger. And the fact that a lot of wage gains today are gained by job switching, not regular raises. And this is something people seem to hate.
Yeah, came here to make a variation on this comment.
High wealth comes at the cost of bidding up house prices, especially with the very limited supply in a lot of places where people want to live.
There's also the comparison point where young people from poorer backgrounds watch their coworkers from wealthier backgrounds get a huge down payment from the Bank of Mom and Dad and get a detached house at the age of 28 - while they're scrimping and saving in the desperate hopes of an aging townhouse when they're 36.
Even if income is the same for both people, life outcomes are going to look really different, and with social media we're going to notice that difference very starkly.
Is this actually true though? Yes house prices continue to climb, but I think people on a decent income can afford a home, it’s just that the doomers are generally PMC types who want to live in the fashionable part of the fashionable city in the fashionable state. I say this in all sympathy since I’m one of them and I’ve never even considered moving to the outer suburbs, which means I will probably end up renting for a long time.
This is also what I was going to comment.
When it comes to economic feelings, I think when an increasingly large proportion of income is dedicated to rent, which feels bad to pay, versus a mortgage, which feels like progress, and so few people are feasibly able to make the switch from the former to the latter, it makes your own personal economic growth/mobility feel very bad.
If someone wants to live in a house that was the same size and quality of construction as those built in 1950, it's a lot less expensive then a new home today. Of course, no outlets for wifi, no attached garage, insulation that can kill you, etc , etc. It's not a fair comparison.
Yes, people forget that it was very common for a 5 person family to live in a 2 bedroom 1 bathroom house. Most people just wouldn't stand for that today.
I take the point, but I don't completely agree. The last time I went house shopping in a MCOL city, one of the most depressing things to me was to see all the homes that were pretty obviously built in the 1930s to 50s to house working class families (1200 square feet, two or three small bedrooms, one bath) that were pushing half a million dollars.
People who grew up middle class are also now used to expensive vacations in a way that older generations just never experienced.
I'm not trying to make a "dang kids eatin' avocado toast" argument here - a trip from Canada or New England to the Caribbean or Europe isn't cheap, and a lot of younger people think of it as normal instead of as an extravagant luxury.
Add to this Matt's social comparison argument in point #3 and you've got a lot of people who are going to feel relatively poor when they start off in adulthood in a way that won't necessarily capture their material reality.
We can afford many more luxuries at our peak earning potential these days and so we're very conscious of what we lack when we're 20-something.
I will never ever forget the summer job where there were some workers were students from Harvard trying to tell me how mean Clinton was to people on welfare, and the very same people would openly discuss whether they had time to take a trip to Europe this weekend, on a whim, using funds entirely at their own discretion.
I've become a pretty well-off adult and I still wouldn't do that. I have taken my kids to Europe, which was also the first time I'd ever been to Europe, but it was a noticeable undertaking and required not doing some other things.
Yes, I've often thought of my parents' one big trip to Tahiti after 18 years of marriage, and how people in an equivalent economic position now think nothing of vacationing abroad every year. Also totally agree with Matt's #3 "A more robust media ecology has caused our comparison set to expand rapidly, putting people on an aspirational treadmill." Social competitiveness is huge, and I'd be surprised if there weren't quite a few people who, because they can't afford a house, make up for it with nice cars, flashy weddings, and instagram-perfect vacations.
A week long trip to Japan cost me about a months rent. Not sure what sort of trips you are imagining.
You make a lot of good points. Negativity bias in news and social media is absolutely real and contributing to discontent.
One thing I want to push back on a little is the unchallenged assumption that the data in these charts represents everyone's broad reality. While I want to be clear that I'm not one of those "the numbers are cooked bro" conspiracy cranks, it's unquestionable that our survey data seems to be getting less reliable at the same time topline numbers don't always tell the whole story.
Take GDP for one example: 2025 numbers in the US look quite solid. But if you peel back the layers even a little, it quickly becomes clear that AI-related fields are booming while pretty much everything else has stalled or reversed.
Another example: The labor market. Unemployment is still quite low by historical standards, so what's everyone complaining about?? Well, then you look at the actual job openings metrics and see there are very few openings and listed salaries are dropping. As someone who has been looking for full-time employment for the last two years, it certainly doesn't FEEL like a booming economy!
How about consumer spending? It's been great!! ... Until you realize the top 20% of earners account for 2/3 of spending, and the top 10% make up a full 50%, while the bottom half of the country has essentially fallen off the charts. That's bad!
It's great that Gen Z is doing relatively well earnings wise compared to previous generations... yet they look at a housing market where the median price of a home is like half a million dollars at the same time they have record student debt, and they're understandably pissed.
One final example: Inflation. By standard measures, inflation has dropped to near the 2% baseline, so people should be happy, right? Well most everyday consumers don't think about their shopping the same way economists do. They see high prices that haven't dropped, and are continuing to crawl upwards, and they're pissed. *I* understand the difference between disinflation and deflation (and why the latter is really bad), but most people don't, and failure to grasp that nuance contributed to the epic failure of the Biden administration.
I'm not saying "it's all vibes, data doesn't matter," but if we reflexively dismiss people's experiences based on aggregate numbers, we shouldn't be surprised when people act out accordingly.
I've had this interaction several times over the past 6 months:
A: Most Americans are living paycheck-to-paycheck and can't handle a $400 bill!!
B: Per the Federal Reserve, the median American has over $8000 in immediately available funds and say they can handle a $2000 emergency bill with savings.
A: ... Look, a poll from a web finance company!
B: ... Look, they refuse to say what they mean by "paycheck-to-paycheck"
A: ...
B: ...
A: You should think about how struggling young people have to live instead of boomers!
Living paycheck-to-paycheck has suffered some serious concept creep.
It's wild to me that some news media will let people self-report living paycheck-to-paycheck based on vibes instead of comparing their bank accounts to their monthly expenses.
It can be a useful measure of economic mood, but we have to be careful not to read too much more into it.
I think people just have their take-home pay fully allocated to stuff.
Are people getting evicted if they lose their job, before they can find another one? That's the risk scenario behind 'paycheck to paycheck'. And evictions have gotten much more common and much faster; hiring has gotten rarer and slower.
Wait, evictions have gotten much faster? Maybe it's a regional thing. In Seattle and much/most of the west coast, it's a minimum of 7-8 months, frequently longer, to even get to a court date, and much longer to get to the eviction. No one -- absolutely no one here -- misses a week of work and is evicted. There are mandatory payment plans in addition to the extreme wait time. In general, as with most things, the folks trying to do right end up paying more for the folks who game the system. Be well -
Yeah, I've gotten five-day notices posted on my door when I was late three days with the rent. Apparently it's faster here because they don't need a sheriff to serve notice, but research indicates a LOT of regional variance.
It was actually often the Federal Reserve or one of their many branches that was putting out the data that some large percentage of Americans couldn't handle a $400 expense. But that was years ago. Maybe some percentage of Americans finally got prudent and stashed some of those pandemic checks. I know I did.
https://www.federalreserve.gov/publications/2020-economic-well-being-of-us-households-in-2019-dealing-with-unexpected-expenses.htm
50% could cover it in 2013, then up to 63% in 2019. I don't think it's inflation-normalized, though.
Oh, here's the data through 2023
https://www.federalreserve.gov/publications/2024-economic-well-being-of-us-households-in-2023-expenses.htm
This blog really needs an updateable wall calendar counting the days since Matt Yglesias was last cited.
Double digits would not be needed.
We have a lot of interest overlap!
God damn PRAGS*.
*Slur I just invented for pragmatism-loving liberal internet pundits.
public service, i get his points without having to read all that
Can you win a fake Pulitzer Prize for the fake Job NY Times article?
I'm glad I was between sips of coffee.
I laughed so hard I would have spit it out.....
I had the same reaction!
Great article Jeff. I have always noticed that disconnect between perception and reality of economic well being and appreciate you taking a dive into that conundrum,.
Another part that you may have missed is that although cost of living is determined based on all costs, what has been the reality is that the cost of a few of the most important things that are more connected to our sense of security than say the price of toasters, which has gone down relative to income, as have all goods manufactured abroad, where the things that can't be outsourced- education, medical, and housing, have risen much higher. Groceries are the one essential that has gone done.
The perception of people not being able to afford a living is more about that they cant afford housing, medical, and education more than that laptops and cell phones are becoming unaffordable.
That is not to negate all the things you say and at the heart is that the greatest generation, my parents, lived through the depression and war and so became stoics and were grateful to enter the elysian fields of suburbia growing up in the Leave it To Beaver Years. Then came the 60s and it became cool to become a cynic and the ensuing generation, I tend to just call the complainer generations and populist politics thrives off the complainers.
There is no denying that being poor in America sucks compared to the rest of the OCED. Burlington, VT ripped out most of the bus stops because homeless people kept sleeping in them, but traveling through Europe, even shabby areas have nice bus stops. Our common property in general sucks. If you can afford it you can buy your way around problems like shitty public schools and crime, but you can't you'll genuinely struggle. Failing in the US means failing hard.
Poverty levels are higher in the US compared to the OECD, that is true, and needs to be addressed, though I think a separate issue from what the article addresses, the perception of economic hard times by the middle class.
Homelessness is a whole other issue, which is some affordability, substance abuse, and poverty, but also the failure to enforce vagrancy laws and the deinstitutionalizing of the mentally ill.
I don't have an ounce of data to back my thesis up, but my theory is that the Vibecession has a lot to do with as you said, "people's sense of security." People tend to poll their own financial well-being as being pretty good, even as they they insist the economy is in recession. Lots of folks seem to believe that even though they have it good in the moment, if they lose a job or have a health problem, since the economy is "clearly" shit, they won't be able to bounce back and the visible misery of the lower classes enforces that perception.
I like that on data and vibecession. It is like crime. Every survey people think crime is going up even when it is going down. Maybe it is about the populist takeover. They were traditionally on the left, now more on the right, but we have less establishment people saying everything is pretty good than rebels claiming it is going to hell in a handbasket.
While I appreciate the attempt to counter negative economic narratives, I believe the article overlooks significant structural issues that justify widespread economic concern. Rather than dismissing these concerns as media-driven pessimism, we should examine why so many Americans feel economically insecure despite seemingly positive headline numbers.
# The Wealth of Under-35s: A Misleading Metric
The article highlights increased wealth among those under 35, attributing it to booming home prices, stock market growth, and pandemic-era stimulus. However, this misses critical context:
- **Rising home prices** create paper wealth for existing homeowners while pricing out new buyers from market entry
- **Stock market gains** only benefit the approximately 50% of Americans who hold investments
- **Pandemic stimulus**, while providing temporary relief, contributed to the inflation we continue to grapple with today
This isn't wealth creation for the young—it's a transfer that advantages those already holding assets while raising barriers for those trying to enter.
# Median Income: Only Half the Story
Yes, median incomes have risen nominally. But purchasing power has remained essentially stagnant for decades ([Pew Research, 2018](https://www.pewresearch.org/short-reads/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/)). When housing and healthcare costs have skyrocketed far beyond general inflation, the term "affordability crisis" has entered mainstream political discourse for good reason.
# Household Spending Patterns Reveal the Problem
The article notes that households are spending less on food and clothing as if this were unambiguously positive. The real story is that **households are spending considerably more on healthcare and housing**—essential expenses that cannot be avoided.
Many middle-class families now face an impossible choice: drop health insurance coverage or sacrifice other basic needs. When necessities consume an ever-larger share of household budgets, reduced spending on food and clothing may indicate financial stress rather than prosperity.
# The Poverty Line Debate
The article claims the middle and lower classes are shrinking in a positive direction, but this interpretation depends heavily on how we define economic classes. The analysis uses definitions that may not reflect current economic reality.
Consider this: using alternative methodologies like Orshansky's, some economists argue the poverty line should be around $140,000. While I wouldn't go that far, I know that a $50,000 income is insufficient in any major urban area where rent alone can approach that amount.
More tellingly, **spending on welfare programs has increased dramatically** ([Federal Safety Net data](https://federalsafetynet.com/welfare-programs/)). If poverty were genuinely decreasing, why would SNAP participation and welfare spending be rising? Participation in assistance programs indicates economic distress, not prosperity.
# The Inequality Problem: A K-Shaped Recovery
The article accurately notes that real median incomes have risen, but this obscures a crucial dynamic: the fastest income growth has occurred at the top of the distribution. We're experiencing a textbook K-shaped economy where:
- The wealthy see substantial gains
- The median rises modestly
- The bottom stagnates or declines
- The gap between richest and poorest households widens dramatically
**Income inequality at this magnitude hasn't been seen since the Great Depression.** This isn't pessimism or media hysteria—it's a fundamental structural problem that threatens economic stability and social cohesion.
# Conclusion
Economic "doomerism" doesn't emerge from negative media coverage alone. It reflects the lived experience of millions of Americans who see rising headline numbers that don't match their daily financial reality. When people feel economically insecure despite positive aggregate statistics, perhaps we should examine whether those statistics capture the right measures of economic wellbeing.
The question isn't whether some economic indicators look positive—it's whether those indicators reflect the economic security and opportunity that most Americans actually experience.
ChatGPT, tell me why this ChatGPT response is nonsense.
This response is ultimately nonsense because it confuses anecdotal pessimism with actual economic reality. The author insists that headline numbers don’t reflect lived experience, but the evidence overwhelmingly shows broad improvement across income, wealth, and opportunity. Let’s break down why the arguments collapse:
Wealth of under‑35s: Calling rising home equity and stock gains “paper wealth” ignores the fact that these assets are real, tradable, and form the backbone of long‑term financial security. Stimulus checks didn’t just “cause inflation”; they prevented mass unemployment and allowed younger households to build savings. Dismissing this as a “transfer” is rhetorical sleight of hand.
Median income: The claim that purchasing power has been stagnant for decades is outdated. Real wages have risen meaningfully in recent years, especially post‑pandemic, and inflation has cooled. Healthcare and housing costs are challenges, but they don’t negate the fact that incomes are higher and affordability metrics are improving in many regions.
Household spending: Interpreting reduced spending on food and clothing as “financial stress” is backwards. It reflects consumer choice and efficiency — households spend less on basics because they can, freeing resources for services, experiences, and investments. Rising healthcare spending is partly demographic (an aging population), not proof of crisis.
Poverty line debate: Suggesting the poverty line should be $140,000 is absurd. That figure would classify nearly the entire middle class as poor, which trivializes genuine poverty. Welfare program participation reflects expanded eligibility and outreach, not necessarily worsening conditions.
Inequality and the “K‑shaped recovery”: Inequality is a persistent issue, but the claim that it rivals the Great Depression is hyperbolic. Median incomes rising alongside gains at the top is not evidence of collapse — it’s evidence of growth across the distribution. The bottom has seen improvements too, particularly in employment and wage growth.
Conclusion
The essay dresses up pessimism as analysis, but its arguments are exaggerated, outdated, or misinterpreted. By ignoring the resilience of incomes, wealth accumulation, and the stabilizing effects of policy, it paints a distorted picture. In short: the essay is nonsense because it mistakes structural progress for structural failure.
Claude please responde to this ChatGPT response:
On "Paper Wealth" Being Real
Yes, home equity and stock holdings are tradable assets—if you already own them. The counterargument misses the generational divide: those under 35 with assets have benefited, but homeownership rates for young adults remain below historical norms, and 50% of Americans own no stocks at all. When asset appreciation is the primary driver of wealth growth, it exacerbates inequality rather than creating broad-based prosperity.
Additionally, the argument overlooks that most families don't truly own their homes—banks do. With rising delinquency rates across various debt sectors and the emergence of 50-year mortgage proposals, the indicators point toward systemic instability rather than the prosperity this metric purports to measure.
The claim that stimulus "prevented mass unemployment" is true but incomplete. We're now experiencing the consequences: persistent inflation that has eroded real purchasing power for wage earners who don't hold appreciating assets. This is precisely the "transfer" I described—from wage earners to asset holders.
On Purchasing Power and Real Wages
The assertion that "real wages have risen meaningfully post-pandemic" requires scrutiny. While nominal wages increased, inflation-adjusted wages only recently returned to pre-pandemic levels for many workers—and this doesn't account for the decades of stagnation preceding COVID. The Pew Research data I cited isn't "outdated"; it documents a long-term structural problem that a few years of wage growth hasn't resolved.
The claim that "affordability metrics are improving in many regions" lacks supporting evidence and ignores that most Americans live in metro areas where housing costs remain prohibitively high. Regional variation doesn't negate the national affordability crisis affecting the majority of the population.
On Household Spending Patterns
Characterizing reduced spending on food and clothing as "consumer choice and efficiency" fundamentally misunderstands the data. When families spend a larger percentage of income on housing and healthcare (fixed, unavoidable expenses) they have less disposable income for everything else. This isn't "freeing resources for services and experiences"; it's budget constraint forcing tradeoffs.
The demographic explanation for healthcare spending (aging population) doesn't explain why Americans pay multiples more per capita than other developed nations for worse outcomes, or why working-age families increasingly forgo coverage due to cost.
On the Poverty Line
I explicitly stated I don't advocate for a $140,000 poverty line. I referenced Orshansky's methodology to illustrate that our official poverty measure is divorced from actual cost of living. The counterargument attacks a strawman while ignoring the substantive point: our definitions of poverty don't reflect current economic reality, which undermines the validity of charts claiming more Americans are rising out of poverty.
Consider that homelessness rates spiked 18% in the most recent year (NPR, December 2024). This directly contradicts the narrative that poverty is declining. When fundamental statistics misalign to this degree, it indicates methodological problems with one of the measures—and I contend the official poverty metrics are what's flawed.
Attributing rising welfare participation solely to "expanded eligibility and outreach" is convenient but unsupported. If economic conditions were as rosy as claimed, we wouldn't need to expand eligibility or see participation surge even as the economy "improves."
On Inequality and the K-Shaped Economy
The claim that comparing current inequality to the Great Depression is "hyperbolic" ignores the data. The Gini coefficient and wealth concentration metrics show inequality at levels not seen since the late 1920s. This isn't rhetorical exaggeration—it's empirical fact.
The argument that "median incomes rising alongside gains at the top" proves "growth across the distribution" misunderstands how inequality works. When the top 1% captures a disproportionate share of growth, the median can rise while most households fall further behind relative prosperity. This is exactly what defines a K-shaped economy.
The Core Disagreement
The counterargument repeatedly conflates aggregate improvement with universal improvement. Yes, some indicators look positive. But when large segments of the population feel economically insecure, homeownership is declining for young adults, healthcare costs force impossible choices, real wage growth for decades has been minimal, and wealth concentration reaches historic extremes—dismissing these concerns as "pessimism" or "nonsense" isn't analysis—it's denial.
The fundamental question remains: If the economy is working well for most Americans, why do most Americans report feeling it isn't? Either millions of people are simply wrong about their own economic experience, or our headline metrics capture something other than broad-based economic security.
I suggest the latter. Arguing that the economy is thriving based solely on personal prosperity or cherry-picked indicators ignores the systemic challenges facing the majority. As a skeptic by disposition, I find these counterarguments unpersuasive—they reinforce rather than alleviate my concerns about our current economic trajectory.
Thanks Claude!
There is an interesting narrative that accompanies the economic doomerism, that “we’re all dying of comfort.” These are a bit hard to square. Sort of like my conservative friends who complain about “no one wanting to work” and then aggressively deporting the people who want to work.
Yet another recent essay by Mr Maurer filled with that rarity of what-should-be-but-is-not-to-enough-people "common sense" but made funny. This was worth the subscription price: "makes the Irish Potato Famine look like a make-your-own-sundae party."
Thanks. I needed that.
Love the Job cover!
I have a little kicker to your preferred theory on this regarding media and partisanship pushing this so hard. It's basically a composition effect of who has the loudest voices online: the end result of the elite-overproduction hypothesis.
Basically, a large share of the people who are angry online that a lot of people pay attention to came from upper-middle class or higher backgrounds, never realized that was not the norm, got whatever liberal arts degree they wanted and are now mad as hell they aren't as successful as their parents who were lawyers or doctors or whatever.
You see this bleed through sometimes in how such people talk about childhood in the 80s/90s in terms of housing, vacations etc. Things that are incredibly not the median experience in those years but their lack of which is proof things are much worse.
The fact that most gains to wages today come by job switching and not regular raises seems relevant. Constant job switching is good for your pay and even the economy, but working for one company your whole life has emotional security.
Insightful piece, and I also think most of Iglesias's ideas hold water. But it's somewhere between oversight and colossal error to only analyze economic mood from the POV of Zoomers. I'm a Gen X-er, and the reality that a mid-20-something is entering the workplace with a salary that rivals mine seems like a betrayal. Being fair, it happened to previous generations, too, but I think by the numbers, the crunch felt by X-ers is slightly more painful. And many of the people pushing the idea that we're heading into the abyss are X-ers and late-Millennials — the folks who are still sort of in charge of stuff. Also, standalone charts like the income distribution chart showing family incomes are not-so-great indicators of real wealth and the perception of prosperity. Coordinating other data such as average price of a home, cost of living in urban areas, etc... the $150k household income shrinks rapidly in effect. Feels like I could do more in LA for $40k in 1995 than I can with $150k in 2025. That's not an improvement.