As Andy just said it is generational expectations. The economic ideology has been changing.
Getting rid of most of the SALT deduction has been a problem. There is less money after inflation in the construction industry. Or I should phrase that less than there would have been if the SALT deduction had been left alone.
A generation is typically 15-20 years, itâs often defined by a cultural break rather than strict adherence to time.
Therefore it has been about âthreeâ generations since interest rates were this high.
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No - that these are the highest interest rates that weâve seen in a generation. Thatâs a major reason why people have a negative view of the current economy. High interest rates relative to their experience over the last 20 years make it much more difficult to buy a house or a car or a college education, all of which require (for nearly all purchasers) a lot of financing.
So while a low unemployment rate is great, a high interest rate is not - so good, not great.
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You need to look at your audience when you are speaking. What generation do you come from. Or do you just forget everything you have gone through in your life and only see what has been from a toddler to 23 years old. Because if you are talking about that generation then , IMHO, your thinking is flawed. Only because somebody that is in that generation ,does not have any real experience in what interest rates really mean, because they have not really had to deal with interest rates. Since their parents have shielded them from interest rates.
If you are saying that because you lived during that time, then you should also realize how unusual that was. In fact during that time many economists came out and said it was unusual and was not good for the economy or the country, lamenting how it was forcing the elderly to be invested in risky financial instruments.
In fact the interest rate, right now, is at the historical average and makes it much more healthy for the economy and the country. Yes, everyone likes interest rates at 1 percent, but that is not historically normal.
Andy
Andy
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I agree with you, but facts donât impact public perception. Long periods of low interest rates, high CEO pay, low income taxes, etc. create an idea of whatâs ânormalâ. Hell, people donât even understand current conditions. Expecting them to understand historical context seems unrealistic.
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Did you hear it in the press or from a few friends?
The press speaks for all of us. Just ask them.
term
Well, now I really regret using the term âgenerationalâ as shorthand for something that hasnât happened in two decades or so.
The point is that no one under the age of forty has seen interest rates this high during their adult lives. Thatâs a lot of people. So the fact that interest rates in the Long Long Ago (kidding!) were higher doesnt shape their expectations of what a good or bad economy is. And while we can decry their lack of historical perspective,many economic actors had shifted a lot of their actual economic practices to adjust to lower rates - so going back to the rates of a quarter century ago cause some real economic problems.
Unemployment rates used to be higher too, back in the day. It used to be that a UP rate of 6% was quite good - back in the day, we were taught that NAIRU was about 5% or so (which was clearly wrong). But if the UP rate shot up to six percent today, people would be quite put out.
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Back to talking inflation and interest rates what younger folks do you know who are âput outâ?
I know you heard that in all the press, but who do you know?
Take the poli guys out of it. I do not need to know what orange crap wants of us.
No, the language was quite adequate. Had he said âinterest rates since MY generationâ you might have a point, but it is common to talk about âin a generationâ meaning since the previous generation, which (as the chart I linked shows) is typically 15-20 years.
It is quite correct to say âWe have not seen interest rates like this in a generationâ, although to be more accurate he should have said âin several generationsâ. Capiche? (PS: stop arguing about how many angels can dance on the head of a pin. You miss the major point of the argument. Pin. Point. Get it?)
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But take away the poli folks and the pollsters and the press.
Who do you know that is âput outâ and YOUNGER?
A lot of this is the press telling us about this âgroupâ of people who can not stand it any longer. Who are those people?
I get grandma and gramps have longer memories. Who are the young folks who want vengeance?
BTW with Internet TV they know your age as you watch TV. The news and ads are targeted. But you know that.
The younger folks have different ideas on what they want out of this economy.
Someone said taxes on corporations should go up and suddenly CNN has dire warnings? Coincidence? Or needed balance by the corporate world?
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LOL sorry albaby.
Andy
Well, borrowers like low interest rates. Savers/lenders perhaps not so much.
I like that CDs are paying around 5% (though our mortgage is also around 5%, so kind of a wash).
Though it has been a long time (35 or 40 years), I remember mortgage rates as high as 13%, so 5% doesnât seem all that bad to me. I donât think it was realistic to expect interest rates in the low single digits forever.
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It can be argued that employment rates are more important than unemployment rates, at least for perception value. Right now, the labor force participation rate is close to the lowest itâs been (aside from the COVID shock) since more or less the late 1970s. And these low labor participation rates have been with us for about 10 years.
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