If you’re a car dealer or a consumer, the news that the Federal Reserve cut its benchmark rate target by 0.5 points (or 50 bps) is music to your ears. It is as smooth and sweet as Steely Dan and a cold Mai Tai at The Rusty Pelican. But it doesn’t mean cars will become cheaper instantaneously.
I’ll start off this deep-cut Morning Dump with an explanation of what will and will not likely happen after the rate change. It’s mostly positive for those of us in the United States. If you’re in Europe, well, nothing is positive. It’s bad.
Video killed the FM radio star, but AM is here. Forever. In a rare moment of bipartisan agreement, legislators agreed that AM was too important, and rebuffed a push from automakers to allow them to remove the radio band from in-car entertainment systems.
And, finally, Waymo might be buying some new robotaxis to replace its… new robotaxis.
Rate Cuts! Rate Cuts! Rate Cuts!
The above image is a joke, of course, because the Federal Reserve is currently independent (mostly) from the President and Congress, so it can chart a course without having to worry about interfering with elections. This is probably a good thing, though a potential Trump administration could change this independence.
This is all to say that, unless you’re a trader with an active portfolio, most of what the rate cuts are good for in the short term are vibes and political talking points.
Why did the Fed do this? In theory, what the Fed has been trying to do is bring inflation down to a specific target and, yet, it hasn’t quite hit that target. On the other hand, the job market has been softening a lot, which is often a precursor of a recession.
Here’s exactly what Powell said:
Today, the Federal Open Market Committee decided to reduce the degree of policy restraint by lowering our policy interest rate by 1/2 percentage point. This decision reflects our growing confidence that, with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2 percent.
Ok, neat. There’s the policy reasoning. We understand that there will possibly be short-term political ramifications. This is a car site! What about cars?
Last year I put down a bet that we’d be able to get above 16 million car sales in 2024, assuming we might get a rate cut in the summer or earlier. Specifically, I wrote “If the Fed holds off until later in the year it may not create that much relief for consumers.”
That’s what happened. Inflation returned a bit in the first half of the year and the Fed delayed the rate cut. Car sales were better, but still stagnant.
Now that we have a cut will there be a quick rush to the dealership? Maybe! But that’s not super sensible as a change in the Fed’s benchmark rate target will probably take a while to filter down to car sales.
“Many Americans have been holding off on making vehicle purchases in the hopes that prices and interest rates would come down, or that incentives would make a return,” said Jessica Caldwell, Edmunds head of insights, in a statement Sept. 16 ahead of the Fed’s announcement Sept. 18. “A Fed rate cut wouldn’t necessarily drive all those consumers back into showrooms right away, but it would certainly help nudge holdout car buyers back into more of a spending mood, especially coupled with some of the advertising messages that automakers typically push during Black Friday and through the end of the year.”
Even if rates don’t come down immediately, if other things become more affordable as rates on all sorts of things go down (including floating rate credit card debt) then people might feel spendier. And, while the rate cut does signal some concern about the economy, the general message was that the economy was strong enough to withstand a little nudge.
Still, it’s not like we’ll see 0% car financing for credit-risk customers anytime soon. Or, as Cox Automotive puts it:
It may take several weeks or even months for consumers waiting on lower auto loan rates to see any meaningful change. With auto loan performance still shaky, lenders will be reluctant to reduce the spreads they charge to compensate for risk. That means that auto loan rates are likely to be sticky on the way down. However, with the financial performance of consumers improving from lower rates on credit cards, auto loan performance should improve as well.
As proof of that stickiness, average auto loan rates have drifted slightly higher in September, while longer-term bond yields and mortgage rates have declined. The average new auto loan interest rate so far in September has averaged 9.63%, and the average used auto loan rate has averaged 13.95%.
What I’ll be watching for in October/November is an increase in 0-1.9% financing offers from automakers with captive finance arms that think they can roll the dice on more generous terms with the expectation of more rate cuts coming.
Everyone believes that there’s a huge portion of the market sitting on the sidelines just looking for a reason to get in the game. Maybe this is the reason?
Europe Car Sales, Especially EVs, Plummet
Car sales in the European Union were down 18.3% in August, which is the lowest amount since 2021 when there were fewer cars to sell. This is bad. Are EV sales good, at least? Nope, and only a fool would say that they are. In fact, they’re down 43.9% overall and down 68.8% in Germany, where subsidies have been pulled back.
This is super duper extra terrible because European automakers basically signed onto aggressive CO2 targets and invested in electric cars with the hope that:
- Consumers would buy these vehicles.
- Governments would help subsidize these vehicles.
If electric car sales fall then automakers are extremely hosed because they’ll have to stop making as many gas-powered cars or pay billions of dollars in fines. Oh boy.
Here’s what the European car industry group (ACEA) has to say about this:
We are missing crucial conditions to reach the necessary boost in production and adoption of zero-emission vehicles: charging and hydrogen refilling infrastructure, as well as a competitive manufacturing environment, affordable green energy, purchase and tax incentives, and a secure supply of raw materials, hydrogen and batteries. Economic growth, consumer acceptance, and trust in infrastructure have not developed sufficiently either.
As a result, the zero-emission transition is highly challenging, with concerns about meeting the 2025 CO2 emission reduction targets for cars and vans on the rise. The current rules do not account for the profound shift in the geopolitical and economic climate over the past years the law’s inherent inability to adjust for real-world developments further erodes the competitiveness of the sector.
This raises the daunting prospect of either multi-billion-euro fines, which could otherwise be invested in the zero-emission transition, or unnecessary production cuts, job losses, and a weakened European supply and value chain at a time when we face fierce competition from other automaking regions.
I asked last week “How Screwed Is The European Car Industry?” and the answer seems to be, at least if you listen to the industry: extremely.
Right now Europe has three ways to deal with this crisis, none of which they’re going to like:
- Say screw it, and let Chinese automakers flood the market with cheap electric cars.
- Tell Germany to get its head out of its ass and allow the EU to open up government coffers to spend money on incentives in the short term and investment in the long term.
- Say screw the environment, and relax rules/fines significantly.
I don’t know what they’re going to do.
If it were me, and as always I am thankful it is not me, I would negotiate a tariff deal with China that would allow for Chinese automakers to sell imported EVs under existing brand partnerships (i.e. VW can sell Baojun KiWi EVs as VW Polos or whatever and Dacia can sell Springs, et cetera) for a limited amount of time that gives Chinese automakers runway to plan/build new plants in Europe. Give the industry a two-year pause on C02 targets IF they invest that money in battery plants/EV production.
Everyone wins. But again, what do I know?
AM Radio Lives Again
The fate of AM radio has been up in the air (pun!) for a while. Automakers have been worried that AM radio is obsolete technology and it might cause problems for electric vehicles due to electromagnetic interference. Elected officials, especially Democrats, seem to be worried about the loss of a communication channel in an emergency. Republicans seem to also like AM radio because conservative radio stations are generally on AM bands.
In fact, our Pontiac Aztek’s best (only?) functioning audio source is the AM radio, and I listened to a lot of it while Jason and David slept in the backseat. I learned so many things and even listened to a man sing a song about how VP Kamala Harris was going to turn everyone gay.
It now seems like both the U.S. Senate and House will successfully pass a bill requiring AM radio in every vehicle.
Who could be against it? Well, The Verge found someone:
Critics say the bill could also add to the costs of producing EVs at a time when many manufacturers are struggling to rein in their costs.
“With a new mandate, [EV companies] will have to go through a significant powertrain redesign, vehicle redesign,” Albert Gore, executive director of the Zero Emission Transportation Association, said in an interview earlier this year, “because of the degree to which electric motor generates this [electromagnetic] interference.”
No, not that Al Gore! It’s apparently his son.
Waymo May Switch To Hyundais
Waymo has long planned to swap its hard-serving Jaguar iPace robotaxis for the Zeekr-based taxis pictured above. And then President Biden’s massive Chinese EV tariffs happened. What next?
According to South Korea’s Electronic Times, it might be Hyundai that gets that contract (translated):
According to industry sources on the 18th, high-ranking executives from Hyundai Motor Company and Waymo met more than three times at Waymo’s headquarters in the U.S. to discuss the contract manufacturing of robotaxis.
The meetings between the two companies are interpreted as a result of the interests of Waymo, which seeks to secure a stable supply of robotaxis, and Hyundai, which is looking to expand its new business.
This would make a lot of sense given that Zeekr taxis are now probably twice as expensive to import. What does Waymo say? Reuters got a quote:
Regarding the media report, Waymo said in a statement to Reuters: “We’ll decline to comment on speculation, but I can share that we are hard at work validating the 6th-generation Waymo Driver on the Zeekr platform and intend to introduce it into our fleet when ready.”
Time will tell.
What I’m Listening To While Writing TMD
I am not a Steely Dan fan, per se. I do not seek them out. I am not a Steely Dan hater and I’m usually quite pleased when a little Steely Dan comes on the radio to introduce a little yacht rock into the day. This morning the bluesier “Daddy Live In That New York City No More” came on the radio and it just felt right. I was taking my kid to school and remembering that my life is quite different than it was 10 years ago when I lived in Williamsburg.
The Big Question
How do you feel about the rate cuts?
Top photo: depositphotos.com
Don’t threaten me with a good time. The gay part, I mean, not the song. The song sounds hateful and silly.
Yeah, you have to go to FM to find stupid songs accusing Trump of things.
https://open.spotify.com/playlist/0vdhmCnLwhvtrYQrxlc5FL
My favorite from the list? (To be honest, I haven’t listened to any of them, but anyhow)
“Donald Trump makes me wanna smoke crack.”
The rate cut is good news for people not in cash. For the $6.whatever trillion that it in cash/cash equivalents, it will force much of it to move into the markets, and that could be very dangerous.
As far as rates actually coming down, some of that is priced in already, and in the case of credit cards the cut isn’t anything more than a rounding error. It makes no tangible difference.
At the end of the day, the rates of return on investments will be the first to react/decrease by magnitudes faster than rates charged for borrowing, and that will only happen after the little fish bite the bullet and go first. The big fish are in no hurry to decrease their margins, and they won’t need to for awhile.
I’ll also add that decreased rates help the commercial real estate market much more than retail. It will allow them to finance more projects/purchases, increasing their stakes in the “landlord game.” Which ain’t good news for nobody except them.
So if I’m reading this correctly, Europe eliminated the “carrot” for EV manufacturing (subsidies), but retained the “stick” (massive fines)? How does that make any sense?! Something’s gotta give. They will go with option 2 or 3 — whichever is the path of least resistance.
Rate cut is fine. I’ve been “prepared” to buy a car for years now. This doesn’t change that. Probably doesn’t make HELOC money cheap enough where I’d use it for some home projects next year.
If I could have just waltzed down to a Toyota or Lexus dealer and bought a car off the lot, or placed an order for one and be assured I’d get it, I’d probably have two new cars instead of the two decade plus old cars I have instead.
I am better off than I was 4-5 years a go, but not because of the government. My wife and I made the conscience decision to pay off all our debt (except our 2.5% mortgage). We stopped buying $10 cups of fufu coffee, we stopped buying $6 bags of cheat-o-lays chips, and we pretty much stopped eating out. We were able to get some savings so when our car crapped out last month we had a little cushion to buy another (with cash). Financial responsibility is not the government’s or big business’ job, its up to the individual and making choices.
GTFO with your Horatio Alger nonsense. I’m a responsible citizen who has seen my spending power erode massively over the past 5 years, while my income has remained stagnant. I guess it’s all my fault for not investing in a relocation to a better country?
I’m convinced there’s some underground internet commentariat paid to post things that are completely opposite to the reality for the benefit of the globalist society of people who want us to own nothing. One More Last Chance seems like that. It’s delusional to say the world is a better place than it was 4-5 years ago for the reasons you stated. Adjsuting for inflation I make $10K less than I did 4 years ago and I’ve not taken pay cuts. While my taxes go up, food goes up, fuel goes up, housing goes up, EVERYTHING is more expensive by leaps and bounds and the common man makes the same. It’s a bunch of bullshit. Eat the rich.
I don’t know about the eat the rich part, but there is unfortunately a large swath of folks that are doing just well enough in life that when they hear the narrative they are “supposed to hear”, it gets absorbed hook, line, and sinker. No scrutiny involved, whatsoever.
When 50% of America is screaming about how hellish everything is, is that the narrative I’m “supposed to hear”?
You and I have fundamentally different views on the state of the economy. There’s really no point in going any further than that from me.
So “No scrutiny whatsoever” is when I bring facts to the debate and you bring vibes?
That, and also some people that have a massive blind spot for lucky opportunities they’ve gotten and attribute 100% of their success to their own “hard work an’ gumption”. Just zero self awareness for how fortunate they might actually be.
Katy Lied is my favorite Steely Dan album and the Rusty Pelican has delicious garlic bread. Lower interest rates make me more likely to finance my next car but I am not in a hurry to do that anytime soon.
The average new auto loan interest rate so far in September has averaged 9.63%, and the average used auto loan rate has averaged 13.95%.
What in the fudge? Is the average US buyer’s credit score in the 500s? My credit union has 4.5% on new cars and 5.49% on used. Not to mention the low rates offered by manufacturers.
I bought a 6 year old Mercedes van last year. My score is in the low 800s and the best rate I got was 6.45% and I was still mad about it. Can’t imagine double digits! I’m hoping to re-fi if the rates come down enough, preferably below 5%.
I was wondering this too. If someone presented me a 14% interest rate on a car loan, I would be in great shape. Cause I’d be biking.
It has been a while, and maybe had something to do with the brand I sold, but when I sold cars, most customers did not have squeaky clean 800 credit scores.
Hell, you did your best to try and determine if they could qualify for any loan, and even then they would lie to you. They’d say their credit was “good” when they filed for bankruptcy last month. Like we’re not going to find out when you apply for a loan.
And as a reader of personal finance forums, lots of people come out there with horrible car loan terms wondering if there is a way out. They get screwed by the dealer coming and going, and they just see that they want a car. The perfect victim for the dealership.
I just bought a car last weekend, so I’ve been spending time at dealerships recently. Multiple salespeople shared horror stories about what some people qualify for when they finance. I’ve got good credit, so I came out okay, but I got the impression from the finance guys that I talked to that I’m in the minority when it comes to that.
Where was Congress in 1995 when Ford was allowed to sell me a Ranger with NO RADIO??
FM. No static at all.
I see what you did there.
Regarding the AM radio requirement, are manufacturers required to make an AM radio that works well? I doubt congress had the foresight to consider the problems related to electromagnetic inference.
Perhaps manufacturers could quarter-ass an AM radio setup to comply with the letter of the law and not the spirit?
AM radio?
Don’t care about robotaxis as long as they are far away from where I am.
The Europeans will do as they always do, debate, argue, squabble, kick the can done the road and maybe begin debating your idea or variation thereof once everything is nearly engulfed in fire.
I can see more rate cuts, likely in .25 basis points range in the next couple of meetings.
I see driverless Waymo Jags all the time in LA. It’s strange to see them stop at a crosswalk with a flashing red light while all the other cars with drivers in them blow right through it.
“We are missing crucial conditions to reach the necessary boost in production and adoption of zero-emission vehicles: charging and hydrogen refilling infrastructure, as well as a competitive manufacturing environment, affordable green energy, purchase and tax incentives, and a secure supply of raw materials, hydrogen and batteries”
My suggestion, forget hydrogen, focus on chargers and REXEVs. Most of the electric infrastructure already exists and any renewable hydrogen can be used more efficiently to replace industrial hydrogen made from methane for a better green gain.
The rate cuts are ok but dropping the MSRP 30% would be better.
Europe will pick option 3
Rate cuts only mean folks can borrow more for the same payment. Prices will increase accordingly.
Rate rate cut is good for my HELOC.
My favorite driving song, Roadrunner by The Modern Lovers: “Got the AM, RADIO ON!”
What is this AM? I’m on a Mexican Radio.
It’s the Mexican, Woah Oh, Radio!
Interest is a SIN in our culture.
I will ONLY pay for a car by cash, NOT by card.
Credit card is fine as long as you pay it off that month.
Ok.
I was gonna say that’s one thing I do admire about Islam. But it only really works when coupled with some modesty and living within one’s means. An unfortunate impossibility in the thinking of many western societies.
Good luck building any meaningful generational wealth without a mortgage to buy a home. You can live within your means and have debt at the same time.
I feel like “Steely Dan and a cold Mai Tai at The Rusty Pelican” is a reference, but I can’t put my finger on it.
I appreciate the way this Dump all ties together. No discussion of AM radio is complete without the Dan.
I think rate cuts within reason are a good thing because they have the potential to stimulate the economy and they lighten the load for working class people. I’ve always taken issue with how it’s literally always the working class that’s forced to carry the economic burden in this country. When things get rocky we get told that we have to weather it out for the common good while the 1% continue to hoard inconceivable amounts of resources.
Your average household can’t afford to buy a home or car right now and interest rates play a huge role in that. The well being of the economy in general really only matters to people of regular means when things are bad, because we’re the ones who get stuck holding the tab. At the end of the day “the economy is doing well!” is pretty irrelevant for the average person when corporations are still price gouging everything and interest rates suck mondo ass. They don’t care about line going up, they care about how much it costs to live…and as of right now it’s still too damn much.
High interest rates also lower the value of assets. That doesn’t matter much for your local orthopedic surgeon Dr. Douche or your company’s head honcho because they can pay cash for whatever they want and wait it out, but for normal people? It can be catastrophic. The recent “lol rates go up be a patriot and suck it up” approach of the Fed literally wiped out equity for pretty much everyone I know.
Everyone I know who bought a home in the last few years has lost money on it. Everyone’s retirement accounts have been stagnant. Everyone’s car is worth less than it should be. Etc. This shit has really sucked for like 90% of the population. And like, cool…we managed the global inflation catastrophe better than most countries, and that IS something to celebrate.
But is anyone here better off than they were 4 years ago? We’re not, and none of our peers are either…and we’re all pretty privileged all things considered so it’s even worse for people of less means. I think that’s something Democrats are really going to have to grapple with leading up to November. I do think their approach is significantly better than continuing to weekend at Bernie’s the shambling corpse of voodoo economics like Republicans want to…especially considering the majority of working class economic woes are a pretty direct result of Reaganomics and the absolute dumpster fire of a reaction to them that is Third Way Dems, but at the end of the day we can do so much better.
“local orthopedic surgeon Dr. Douche”
Knocking doctors that spend hundreds of thousands, many times by taking on debt, to earn a difficult and valuable education for making a relatively decent living is certainly a take. Hope you never need surgery.
Lol I’m married to an NP, am related to multiple physicians, and work in healthcare. I don’t hate doctors…but I do think that when it comes to specialists their pay is completely out of control and that there’s a lot of toxic bro culture that needs to be addressed. I also think the ones making and demanding the crazy money are perpetuating our insanely broken, for profit healthcare system and are to a degree complicit in it.
Much like any profession there are good ones and there are bad ones. The bad ones are unfortunately REALLY bad and really visible. I know because I’ve had to work with a lot of them and seen family members in the field make themselves incredibly wealthy through practices that are less than ethical.
“I also think the ones making and demanding the crazy money are perpetuating our insanely broken, for profit healthcare system and are to a degree complicit in it.”
Physician salaries are high, but that is a minor contribution to healthcare costs. Physician salaries represent ~10% of healthcare spending in the US. There are a LOT of reasons why healthcare is very expensive here. Obviously, healthcare affordability is a problem in the US, but attributing that to “Dr. Douche” is exceptionally shitty of you.
“Knocking doctors that spend hundreds of thousands, many times by taking on debt, to earn a difficult and valuable education for making a relatively decent living is certainly a take. Hope you never need surgery.”
Eh, its just a matter of time till a dirt cheap, yet highly talented surgeon on the other side of the world can operate on a patient in the US remotely:
https://my.clevelandclinic.org/health/treatments/22178-robotic-surgery
“But is anyone here better off than they were 4 years ago? “
I sure enjoy going out to bars, restaurants, and concerts instead of hiding in my 700 square foot house from the world, I am significantly better off than I was in September of 2020.
Not seeing cooler truck trailers full of dead bodies on the news? That is also a LOT better than it was 4 years ago.
Right? Maybe Nsane should’ve said 5 years ago. Because 3 and 4 years ago were bleak AF for a lot of us.
I meant to say 5 rather than 4 and I’m speaking solely when it comes to finances. I should have specified further before I went ranting.
Thanks and no worries. My sense of time over the last several years is completely fucked.
And yeah. My salary and other comp has gone up every year in the last 4 years. And yet I don’t have more disposable income. The other day I bought 2 tote bags of groceries (like REGULAR ASS groceries, not fancy stuff) and it came to about $100. Just … what?
That sucks.
I like to shop at outlet stores. They are usually a LOT cheaper than conventional grocery stores. Its gotten to the point I only shop at conventional stores when I have a combination of coupons and sale prices that can beat a discount store. It can make a difference. I took great pride in walking out of a Safeway a couple of months ago with an arm full of groceries and $0.03 richer.
That’s right, a human cashier PAID me to take those groceries! Fuck yeah!
I feel like I have been the proverbial frog in boiling water. The prices kept creeping up and I had a nagging feeling but no real pain. Then last week I saw a pound of regular store brand unsalted butter in a mainstream grocery store listed at $13 ($CDN, mind you). I left my cart full of other items and just walked out. I’m not in financial peril, but I’d rather starve than play this game anymore.
I saw an organic gallon of milk for sale for $10(USD) on that same shopping trip. Like, fine, it was organic but TEN DOLLARS?
Aldi is the answer.
I’d say 80% of our groceries come from Aldi now. The place is an absolute zoo, but I save about 100$ a week by going there. It’s worth it.
“I sure enjoy going out to bars, restaurants, and concerts”
Sigh. Yet more proof nothing whatsoever was learned from the pandemic.
What were we supposed to learn from the pandemic? To stay home and be sad and alone?
Not trying to be a jerk but I am genuinely perplexed by your response.
That bars, restaurants, and concerts are filthy Petri dishes of contagion.
Only the best ones.
Unfortunately the worst pain from those comes not from the contagion but the bill.
Howie Mandell, ladies and gentlemen!
“Your average household can’t afford to buy a home or car right now and interest rates play a huge role in that.”
Yes, by making those things so expensive in the first place.
I’m going to put the shovel down at this point. I made a bad comment that’s correctly being called out. My bad, everyone. This really wasn’t the forum to be ranting about this stuff and I’ve come across as very out of touch. That’s on me.
Shit happens. It’s all good.
Huh? I don’t think your comment was bad at all. It’s accurate- no amount of media gaslighting about how “good” the economy is doing detracts from the fact that the median person has less purchasing power and less savings at the end of the month than they did a few years ago.
This isn’t accurate unless you’re referring to the skewed labor market of 2020 when low-wage workers were disproportionately laid off. Real wages are higher than at any point in 2019 or Q1 2020.
https://fred.stlouisfed.org/series/LES1252881600Q
I love how people think the last 4 years of Biden are to blame for the negative aftermath of the biggest fucking economic black swan event of the modern world economy.
There hasn’t even been a big negative aftermath!
We had a year or so of elevated inflation (lower than most of the developed world), extremely low unemployment, growing wages, especially for lower income workers, a surging stock market, a huge runup in home prices (remember a majority of Americans are homeowners) and so on.
I understand conservative doom-and-gloomers, because they are at least trying to lie to get their guy elected, but people who are nominally liberal complaining about the economy baffle me. Were none of you alive and working in 2008-9??!! I sure as hell was, and it was 100x worse than anything since 2021.
My god 2009 was so much worse! It took us over 10 years to fully recover (from a home-buying mistake + investment account hits).
Overall the last few years just mirrors normal economic fluctuations and is largely due to how much money was printed to cope with COVID.
It doesn’t matter how good the economy is, people will complain about it.
I also think there are a lot of people in the workforce now who didn’t experience 2008 themselves and have no idea what a recession actually looks like.
To be fair, young adults are dealing with some pretty nasty affordability issues right now though. If you don’t own a house already it’s a rough market to get into. New car prices have gotten absurd. Ironically, those are indicators of how strong the economy has been for the past 15 years, but if you’re not enjoying the fruits of that market because you weren’t in it until recently it probably feels pretty bad.
For my own sanity I have to hope you’re right and that the people complaining are mostly in their 20s.
I’m not here trying to say that things are perfect. It is hard to afford houses and cars for a lot of people.
Houses were really cheap in 2009! That didn’t mean we were all doing great!
I try to remind people all the time of just how putrid ’08 and the following years were. I graduated from college in ’10, and I’d argue I’m still recovering from that absolutely miserable exercise in poor timing.
Seriously, there were NO jobs. None. The place I had interned at laid off damn near everyone. People with masters degrees were delivering Dominos. Half of the US was living on the Dominos that the guy with the masters degree just delivered. And that Dominos was a real treat!
People have ludicrously short memories.
I graduated from college in 2007, got let go in early 2009, and did not find steady work in my field again until mid-2011.
Losing those 401k contributions (and associated 900% compounding returns!) has set my retirement accounts back by six figures.
I bought a house for peanuts in 2008 but had to rent it out and move back in with my parents because I could neither afford to keep it nor afford to sell it (because prices were still going down). I barely broke even selling that house in 2015.
I’m sure every generation has it hard in some ways, and thinks they have it hard in even more, but objectively, being a young adult in the late ’00s was not easy.
I’m not looking for sympathy, since I’m obviously doing OK now. Just perspective from people who think the price of eggs going up by a few percent is worth burning the country down over.
I was lucky to find a job 6 months after graduation after sending out, no joke, 200+ applications to every available civil engineering job in the country. With 85k of student loans wrapped around my neck in deferment. It was a dark time. And boy did my future employers know they could pay me nothing based on the wreckage strewn about the job market.
I feel bad for some of the younger people around here because the housing market is just absolutely freaking nonsense. But yeah, they do all have jobs so that’s clearly an improvement from back when I graduated. Presumably anyway.
there was a line about the Vietnam war from the prospective of the Vietnamese.
Vietnamese people never forget.
Americans never remember.
The affordable housing crisis is obviously the #1 issue at hand. My brother’s apartment just got bought out, and the new owner wants to jack up his rent by 600$/month. He’s trying to buy a house but it’s absolute madness out there.
This isn’t the bay area, this is near Albany, NY.
As you point out, inflation was/is happening across the globe. It is not a uniquely American problem. There is not much you can do as a government when the cost of goods/materials that are largely part of a global market are receiving inflationary pressure all over.
But a lot of people also think the President can just hit the down arrow on the gas price button when it is convenient, so I wouldn’t expect everyone to see things like they really are.
The US has weathered COVID shockingly well compared to the rest of the world, but of course, knowing that there is a rest of the world is a stretch for many. We bought a house in ’06 and were underwater from the ’08 recession for about 5 years. By 2018, we sold it for a sizable profit.
It absolutely is accurate. The purchasing power of your dollar is down.
Also, uh, your chart shows another problem. Even disregarding the coof spike, real wage growth has been stagnant since 2019. If you want to get technical about the intervals you named, I guess 368 (Q2 2024) is more than 367 (Q1 2020), but that falls into the category of “smaller than the error bars”.
Of course the purchasing power is down, that is how an economy works. Nothing about that trend is unique to 2021-24.
The relevant question is whether your wages have risen enough to compensate for it, and the answer for the majority of people since 2019, especially on the lower end of the wage spectrum, is yes.
https://www.epi.org/publication/swa-wages-2023/
Inflation is at 22% since August 2019. From your link, Q4 2019 wages were at 362. Q4 2024 they are at 368.
Which probably has more to do with a low wage earners earning more. That’s an easy number to affect. But America is more than flipping burgers and waiting tables.
Those numbers are already adjusted for inflation (and in 1980s dollars).
Yes, lower income folks have reaped the majority of the real wage gains since 2019. Inequality is way down. Isn’t that what everyone claimed to want?
“Everyone’s retirement accounts have been stagnant.”
What have they been investing in?? The s&p 500 is up a lot over the past few years, as are all other major indices. If you have been contributing to a retirement account and haven’t seen you balance increase substantially over the past few years, you are doing something wrong.
“Everyone I know who bought a home in the last few years has lost money on it.”
I bought a house two years ago. The value has decreased by ~3%, yet I haven’t lost a dime since I still live in the house and plan to live there for the long term. If you bought a primary residence with the intention of it being a short-term investment, you did something wrong.
“Everyone’s car is worth less than it should be.”
Cars are not an investment (aside from some rare vehicles). If you bought a car and its value went down, that is normal.
I know that prices are still high due to inrlq5ion, and that is making things difficult for a lot of people. I still see a lot of middle-class people doing well, though. I genuinely have a hard time understanding where you are coming from with some of the statements you made.
See my above response. This was a bad comment that I shouldn’t have hit post on.
Thanks for acknowledging the concerns of your fellow commenters. I know I have posted stuff before that I regretted later (I’m sure everyone here has, whether they are willing to admit it or not).
I appreciate your frequent comments on this site, though.
I appreciate yours as well. Sometimes I let my emotions get the better of me and just go off on something I’m incorrect about. I think in this case I was venting some of my personal frustration about my own kind of stagnant finances that was super out of touch because the reality is I’m very fortunate.
There are also plenty of excellent doctors out there and it’s absolutely a profession I respect. I think some of my own personal experiences with having some really shitty ones I don’t see eye to eye with in my family got me rambling in a way that wasn’t cool.
I also have butt heads with a fair amount of them professionally before…but those are all psychiatrists and they’re really not a representative sample. And idk why I went off on orthopedists because I owe my surgically repaired ACL to a really good surgeon.
I think today I just needed to not hit send. I’m also about to go out on paternity leave and my emotions are all over the damn place right now as I try to get everything I need to done at work/manage the anxiety I’m feeling about such a massive transition.
Speaking as someone with three kids, it’s both normal to feel anxiety and comforting to know that babies are really much easier than our culture has made them seem.
90% of the culture war fights over parenting practices simply don’t matter. Kids are resilient and if they have loving parents who try their best to do right by them (even if not every attempt is perfect), they will turn out OK.
You got this, dad.
I appreciate your humility in regards to your original comment. I’m sure there are plenty of doctors out there that don’t have the best intentions, just like there are in any other profession.
I have two little kids myself so I can appreciate the anxiety that comes with that particular major life change. It hit me in ways that I never expected when we had our first. Lean on your support system if you need to and like v10omous said, kids are extremely resilient. We’re all bound to make mistakes along the way but do the best you can, love them and they’ll be just fine. Congratulations!
Eh, there was some bitterness there, but I don’t think your comment was too crazy, or necessarily too far off. It’s fair to want to tee off on some of the BS that most of us have to endure to get ahead (or survive). And I’m sure the proverbial Dr. Douche gave an impassionate shrug to his new moniker anyway.
I’ve got two kids, and when I do the math… yeah nothing works. So that’s not great! But they’re still great kids, we’re happy and healthy and while I swear this house is trying to murder me, it’s keeping us dry and warm (for the time being). It’s all an adjustment, but you’ll be just fine. Just remember to have fun with it! Sometimes I have to remind myself of that.
Eh, we all do it from time to time. I have a few posts here I’m not proud of, and it sounds like you’ve got a lot on your mind. Acknowledging when you go overboard with something instead of doubling down on it is something we need more people to do.
Congrats on the new child and enjoy the ride if this is your first.
I have said on here before I don’t feel like I am better of then I saw pre-covid to now. I might be making more money now but it doesn’t feel like that more money is actually getting me more vs what I was getting pre COVID. Some people would argue that things are so much better now but any friends, family or coworkers I have talked most do not feel like they are doing better.
Especially with home prices and mortgage rates. I wanted to keep my job out in VA and move out there but with the cost of homes and the rates it was just not finally safe so I decided to keep my house in Indiana and find a job back here. The difference in a mortgage from the 3.75% I have in Indiana to the 7.3% I have had in VA are night and day. Glad that VA house should be sold by Oct 2.
I’m not at retirement age yet but I can see it on the horizon. When we went through COVID initially and the country took on that massive amount of debt (that likely contributed to inflation more than any single factor) my retirement accounts took a massive hit. The good and bad of having a fairly large nest egg built up is the swings up and down are amplified.
But now it has absolutely recovered largely. It’s not overly grown over that time but it is higher and of course during the times when it was depressed I bought in at lower rates so it should climb higher still. So I am in a much better place than even before 2020.
I went through a period of unemployment and dealt with things that happened well enough but I am definitely in a better place financially.
I don’t place credit or blame on either political party really. They can have an effect but honestly if you look back at history of who has power when, how much really changes over time? Not much really. Some years you pay higher taxes. Some years less. Not huge but annoying.
Mostly what changes is the noise. How annoyed we get at what is happening. The Social media era amplifies this. If you try to not pay attention you even notice the differences less. It can make you happier (or at least less stressed).
Generally speaking, have a life plan and push forward to your goals. Ignore what everyone else is doing. Realize that you will go forward and backward sometimes in your plan but as long as you’re making progress it will always get better for you over the longer run. It’s all we can do. Don’t worry about what everyone else is doing so much and you’ll find yourself worrying less.
Now, aren’t you glad you took life advice from a random internet-person?
I am most definitely doing much better than I was 4 years ago. I am not rich in the slightest, I do fairly well for myself given the rural area where I live. My retirement has had gangbusters growth and my house has increased in value. We had no vaccines for a virus no one really knew anything about and my teacher wife and kids had to go to school. There was no toilet paper as well as general grocery store runs where shelves were empty. A lot of us were lysoling our packages before we brought them inside our house. People I know had family members die from the virus in a hospital. My health department had to build a cooler building because of the death count to hold bodies. I dodged a layoff. I can understand that my experience may not be the norm but I am very much better off than I was 4 years ago.
EDIT:
I don’t really say this to “own” you with my experience but I get tired of this narrative that things are so awful than they were 4 years ago. They aren’t and by all accounts they will be getting better.
Your experience is more the norm than you might think given the mood of the country (and the comment section).
Rate cuts are good, I’d like to start building a house (more like a garage I can live in) in about a years time so this is good news for me.
For AM radio I’m picturing manufacturers just putting the equipment in with no efforts for shielding or mitigating RF from the EVs and ending up with AM that is useless unless the car is stopped. Everybody loses but it is the path of least resistance.
I heard you on the wifi back in ’22
Lying awake, intently tuning in on you
If I was young, it didn’t stop you coming through
Oh-a oh-a
They took the credit for your electric utility
Rewritten by machine on AI technology
And now I understand the problems you could see
Oh-a oh-a
I met your children
Oh-a oh-a
What did you tell them?
AM killed the EV car
AM killed the EV car
Audio came and broke your heart
Oh-a-a-a-oh
Put the blame on EV cars…
The more I read into business ‘news’, the various stock market daily machinations, the commentary on it in general, the more certain I am is that the whole financial sector is a half-insane scheme dedicated to ‘virtual line must go up’ in ever more complex ways.
Which is to say: It seems to be a nice way of disguising the falling technological yield of recent times as compared to the past and our ingrained expectations of 20th century growth levels going on forevermore.
Europe hits the wall first if those auto sales are any indication. It might be a long, drawn out process.
Sort of an interesting juxtaposition to AM radio. Century old technology still chugging along without really changing, because most of the gains have been harvested from that particular technology a long time ago.
“If all economists were laid end-to-end, they wouldn’t reach a conclusion.” — Dorothy Parker
The AM radio requirements for cars may have a silver lining. The issue isn’t that the AM radios lack RF shielding, its that the EVs are huge RF generators. Requiring EVs to be less RF polluting now, could head off other headaches in the future.
or they just meet the requirements to include AM but dgaf about interference and they barely work.
From what I’ve been hearing the issue isn’t just the small requirement to include AM receivers. Those are very inexpensive and some hardware really doesn’t need much modifications, if any, to pick up AM.
The complaints from EV manufacturers is that they now have to add shielding to various parts to contain RF emissions. Thus they complaint that it will burden ($ costs for design, materials and build) them grievously. Considering how expensive EVs are and how simple some shielding could be, I don’t think it is a big deal.
There are many devices that the government regulate when it comes to RF pollution. Why should EVs, which can generate a lot of RF pollution with high powered motors, not be expected to follow the reasoning imposed on other devices.
Agree about interference from EVs though. I can’t imagine the shit they are dealing with in the NRQZ. One Tesla and their whole installation is probably shut down.
I’ve done zero research on this, so I’ll expose my ignorance by asking the following.
Are any ham radio bands affected by EVs? I’d love to read comments from people who’ve operated handhelds and mobiles on the 70cm and 2 meter frequencies while in EVs.
Replying to myself here….
Here’s sort of an example, but in reverse. Years ago AM stations broadcasted at pretty high power rates to reach out hundreds of miles. As little as 8 years ago I could pick up a Chicago station all the way down in central TX. Granted it was a high end Icom transceiver, but still impressive outside of SW bands. Back to the example…I grew up a few miles from KOMA and I’d get their signal bleed into electronics that shouldn’t have been affected. I could listen to the station on my home telephone. On unused TV channels I could sometimes see visual distortions in the TV fuzz that corresponded to the AM broadcast.
I heard crazy stories about WLW when I lived in Cincinnati. Signal would cause mattress springs to vibrate and lights to glow.
That giant antenna is still out there even if it isn’t pumping out 500kw like the good old days.
I used to live in Mason, and I could hear WLW when I picked up my land line phone.
I remember picking up WPHT from Philadelphia at night in Ottawa like 10ish years ago. Came in pretty clear, too
When we moved to San Jose as a kid we lived in the shadow of Mount Umunhum with its AN/FPS-24 Radar system, one of the most powerful over the horizon distant early warning radar systems in existence. That thing could fuzz radios, TVs even sound systems for 250 miles! Imagine what it could do to an EV.
https://en.m.wikipedia.org/wiki/Mount_Umunhum
AM Radio? Everclear would be proud LOL
I literally hear that in my head whenever I read AM radio lol. It’s a great song.
Rate cuts are great, if not somewhat disappointing given mortgage rates have already priced them in in advance. I’d really love an extra half percent lower rates in order to hopefully be able to buy a house early next year, but we’ll see.
Europe really is screwing itself over, after so many governments have mandated aggressive EV mandates and then cut incentives back. We’re reaching a point where some large legacy manufacturers will have to consider drastic changes to their lineups in certain countries in order to maintain compliance. If this gets bad enough, not selling many cars will be more profitable than the fines that will be levied, and some countries will find themselves with really terrible new car markets unless governments adjust accordingly. Or you know, keep EV incentives reasonable and realistic, and have an acceptable market.
Great news! Been waiting for the rates to drop.
Now I can afford that sweet Mitsubishi finally.
In other news, bring back the notifications bell please.
It’s not rocket science, and my OCD has kicked in again.
Not in favor of the Feds screwing with interest rates.
Funny, I was looking at an Outlander with 0% APR for 36-48 months
I want a Kia, but insurance rates are too high since the Kia Boyz, and Mitsubishi has the same warranty levels
As someone who’s also into vintage electronics, one of the great things about old radios is that you can recap them, plug them in, turn them on, and immediately listen to something. A 90 year old radio will work exactly the same as a new one when it comes to receiving AM broadcasts.
It makes them more approachable and more functional than vintage televisions, which require you messing around with a converter box, which also renders most of the controls on the TV itself no longer functional (and those boxes are usually of pretty poor quality, since they were only ever designed to be temporary stopgaps until people could buy new TVs after the digital switch). I think the continued persistence of AM is really the only reason antique radios continue to have any sort of following
Also, crystal radios pick up the AM band—no power needed. Practical use, IDK, but if I had kids, I’d make one with them. Old radios are cool. I resto-modded a gutted midcentury Magnavox cabinet I got for free, but I would prefer the old guts. At least there were no external dials or anything that got lost. I use it to listen to old radio programs. Really love the old Art Deco radios, but I haven’t found a free one.