What’s Really Happening in Trump’s Economy

In the summer of 2016, the Brits were debating whether or not to leave the European Union. And someone said something that really resonated. It was at a public event in Newcastle just before the referendum, where a panelist warned that voting yes

would hurt Britain's GDP. And after they said that, someone in the audience yelled back that's your bloody GDP, mate, not mine. I thought a lot about that comment recently. Not so much because like I'm a big Brexit guy, but because, you know, I think it captures something that feels very true about my own country, right? The United States. More and more, it seems like there are two Americas, two economies, two apparently incompatible realities.

First, there's the America that's prospering, even despite Trump's tariffs and everything else that happened since Trump took power. Where while GDP shrank 0.6% in the first quarter last year, it grew 3.8% in the third quarter and 0.7% in the fourth quarter, which was less than expected, but overall the economy expanded by about 2.1% last year, even as some predicted a recession.

And in fact, it wasn't just growth, even unemployment's kept surprisingly steady at around 4.4%.

And that's like a historically normal-ish number.

That's Christopher Clark, an economist at Washington State University.

We're near peak employment. Now, what I mean by that is if you look at prime age workers, people between the age of 25 and 55, so we're not worried about students, we're not worried about retirement, but between 25 and 55, the employment to population ratio is in the range of historic highs.

Right, and inflation, it's remained pretty low since 2023, even despite the tariffs hovering around two and a half percent. Consumer spending also looks surprisingly strong. And I mean, if you look at the stock market, I mean, I don't need to tell you.

The Dow is over 50,000 right now. The S and P at almost 7,000 and the NASDAQ smashing records.

And putting aside that that was her response to a Jeffrey Epstein thing, it looks like the economy is booming, right? Everyone should be thriving. It's all good, right? Well, the thing is, if you ask ordinary people, their answer is, it's very clear, no. One survey found that 87% of Americans think

that there is a cost of living crisis, with half struggling to pay their bills on time each month or afford necessities like groceries. At the end of last year, six in 10 Americans said and said that the economy was not working well for them. Over a third said that their finances got worse over the year compared to just a fifth who said they got better. The share of Americans who predicted

that their finances would improve this year, it dropped 15 points from nearly half to exactly a third. And as one op-ed in the Hill put it, aspirations been replaced by survival. That the future feels less like a horizon

and more like a choke point. The Consumer Sentiment Survey is right now, it's almost lower than it was during the great financial crisis. And there is not a single measure that says our economy is anywhere close to as bad as it was in 2009. In terms of this disconnect between perceptions and data,

no, this is the first time we've seen this. Now to be clear, you know, perceptions and economic data, they've diverged before. For example, it's long been documented that when a Democrat enters the White House, Republicans say that the economy is doing poorly and as soon as a Republican takes power, Democrats go sour. But this time, while yes, the partisan effect is still observable,

it's notably muted. So pretty much everyone agrees that things kind of suck.

Even the team that's rooting for the person who's in charge, so whether it's Republicans right now or Democrats a few years ago, they are not as enthused as say they were in comparable economic conditions in decades past.

You know, with this, I want to understand what the hell is actually going on. And so I did some digging and what I found is very strange. And so I want you to get in the car with me. We're gonna go for a ride. We're gonna learn some history,

sort out fact from fiction, hear from some of y'all and get to the bottom of why your life feels like it sucks so much. Starting with the fact that that's kind of surprising, but also kind of not. It turns out that many of the ways that we typically measure the economy were never actually meant to measure your wellbeing at all. We should start with the big one, right? The one that both political parties

have smacked each other with for decades, GDP. Because believe it or not, the concept of calculating national income, which preced term GDP, it didn't replace GNP until the 90s, but they're basically the same thing.

So just for clarity sake, I'm gonna use GDP going forward. But that said, the big inciting event was the Great Depression, which made a lot of people realize, oh shit, we need a better idea of what's going on in the economy. Granted, the overabundance of data that we enjoy today, back then, there just wasn't much being collected. Right, and what data they did have, it was years old and pretty much useless

for explaining whatever the hell just shook the capitalist world to its core. With the US Commerce Department's then head researcher telling a senator, I'm impressed constantly with the requests for information that we get in the Department of Commerce.

and they proved helpful in planning how to roll out and justify the new deal. Meanwhile, over in Britain, they didn't hop on board the GDP train until the Nazis invaded Europe and then the government finally realized

that you need stats to plan war production. Because until then, even the people overseeing aircraft production, for example, had no idea how many propellers were being made and they were just kind of flying blind. So the government, they start pulling out quarterly bulletins detailing their stock levels, as well as things like the state of the working population and locations of production bottlenecks.

Now, the thing is, at first, the idea of economic growth didn't have the all deciding importance that it does today. In fact, there was no single number that was meant to represent the. But over time, GDP, national income, and economic growth, they started to be used as metrics for progress. You had people throwing them around in debates,

FDR citing them during his election campaigns, companies relying on them to get a picture of the economic environment. And after the war, GDP was given an extra boost by its association with the Allied victory, since the United States had massively

outproduced Germany and Japan. Then, with the Great Depression still in recent memory, policy makers feared that the transition back to a peacetime economy, it would cause a sharp contraction in chronic unemployment. So boosting GDP was top of mind, not just for the sake of economic stability, but also for social cohesion,

political success, and military superiority. Also, speaking of which, during the Cold War, GDP became a metric for comparison between the US and the Soviet Union as well as between the world's developing economies. Meanwhile, you also had the US using GDP in the rollout of the Marshall Plan that rebuilt Western Europe

to calculate how much aid each country needed. And the White House said of its Council of Economic Advisors, which as historian Philip Lepanese put it, became a vehement advocate of what was later to be termed growthmanship, the idea that increasing gross national product

must be accorded absolute political priority. With him also adding, growth was the decisive factor in politics, more important than distribution of wealth or other social parameters. It would solve America's material and social problems. Consequently, politics was the politics of productivity. And the rest, it's history, right? People gradually forgot GDP's origins as a policy tool

to deal with the extreme circumstances of the Great Depression and the Second World War. And so eventually it just became taken for granted as an end in itself, rather than a means to an end and other social goals receded into the background. But from its very start, and especially over the past 20 years or so, critics have pointed out its numerous shortcomings

as a metric of general wellbeing. So for example, there's a long list of things that increase GDP, but that we definitely don't want more of. Think car crashes, natural disasters, hospital bills, legal fees, financial speculation. You kind of get the point here. As long as money's exchanging hands,

it doesn't matter where, when, how, why, or between whom it's happening, GDP goes up. In fact, more recently, a huge amount of growth that we've seen has been concentrated in just a few places, one of which is AI. Nearly half of GDP growth last quarter

went toward purchases of information processing equipment.

that's been spent on the app, build out. And maybe that's to come, who knows?

That's Kyla Scanlon. We've had her on the podcast before. She's an economics writer, best known for coining the term by obsession to describe the data perception gap that we're talking about.

And late last year, she actually traveled around the country to see how folks were doing, observing what she called invisible prosperity, visible decay. So there's all of this prosperity that's like really hidden

within technology, but if you go around certain cities, you know, you see this very visible decay in terms of infrastructure, like Los Angeles as a city hasn't fixed any potholes for the past few months because of some regulatory problems.

And there are other less quantifiable, more qualitative stuff that's really gotten much worse over the past year, namely uncertainty. And I mean that, yes, in the conventional sense that businesses don't know how to plan for a future right now because they don't know

what the economic landscape's gonna look like next week, nevermind next month or next year. Yes, also in a broader sense that most people can feel uncertainty about your job getting replaced by AI, uncertainty about your neighborhood getting raided by ICE, uncertainty about your democracy even existing a year or three years from now. And so when someone tells you that the economy is just doing great and there proves

the latest growth numbers, what they're really saying is that the total value of goods and services being purchased, it's going up. That's it, that's all it means, which isn't to say that it's meaningless. Growth does matter and it gives some indication as to how the economy's doing, however flawed it is. And so as Clark points out, thanks to Trump's tariffs, growth was about half a percent lower

than previously expected, and inflation's about a half percent to 1% higher than it otherwise would have been, which isn't just numbers, that's bad. In fact, he says that the reason that things aren't worse isn't that economists' predictions were wrong,

it's that Trump backed off. The average tariff rate on China today is 15%.

Had we kept 150% tariffs on China permanently, we most likely would have seen a recession.

But with that said, you know, we've got to dig a little deeper into GDP, as well as a few other popular metrics, because that big, broad average, it conceals a ton of important details that help explain why people feel so shitty right now. So let's start here with a very simple, very obvious, yet often forgotten point. Nobody experiences the economy in the same way.

A less than 1% are homeless. That's as awful as you can imagine it to be. 12% below the poverty line, that's really, really, really difficult. Above the 30 percentile, now people can afford to pay their bills.

Once you get to the median, so the 50th percentile, they're actually doing really, really well. Now, if you're in the top 30%, my gosh, you're

living on the moon, you know? It's an extraordinary time. So there's a huge diversity of economic experiences, and it's not as simple as saying that other people do better than others. Instead, it's more accurate to say that some people's lives are getting better and others are actually getting worse. And this is an idea you might've heard of called the K-shaped economy. Basically, you can imagine this graph where the Y-axis measures how people are doing, and you've got two groups that branch off from the middle.

One trending upward and the other trending downward, so it forms the letter K. What that's meant to show is that while the broad averages might suggest that everybody is doing okay, the truth is that a large chunk are just not. And you know, there's a number of ways to kind of slice and dice this, but let's start with the way that people participate in the economic growth most directly, the stock market. Because while it's true that most people own at least some stock,

it's also true that the vast, vast majority is held by the wealthiest slice of society. And so the top 10% of Americans, they own over 87% of corporate equities And richer people, they spend more money. So nearly 60% of consumers spending recently,

it's come from the top 20% of Americans, which is a record high. And it's something that economists have been concerned about because it means that the economy is basically being held up by a smaller and smaller closer to the bottom, they're already pretty screwed

and that's just their normal existence. So when someone says, hey buddy, GDP is up, stock market's up, consumer spending's up, the question you have to ask is up for who?

So if we really wanted to measure a healthy society, look at the cost of housing, and you can get a pretty good sense of how expensive it is for people to, you know, get a house, build a family, retire their parents, and get the help that they need for their own health.

And yeah, you guessed it, all of the things that she listed have gotten more expensive. But also, before we dive into those, I want to take a closer look first at one of the other metrics that seems kind of pretty good right now, unemployment. Right, I mentioned earlier that it's only 4.4%, but that reflects two things.

One, people aren't getting fired, and two, people aren't getting hired either. This is why you often hear people describing the job market as frozen. There's not a lot of activity going on. you're sitting pretty comfortable, at least for now, right? Some folks are still worried that AI is gonna replace them any minute. But if you don't have a job, then you're in a tough spot, right?

It can feel like you're just locked out of the system. Especially if you've just gotten out of college, right? You don't have much of any experience under your belt yet, and you're just kind of thrust into this job market

we haven't seen that since like 2012. And the economy in 2012 was still sluggish and recovering from a huge, huge recession.

And while it's true that a lot of people have jobs, it doesn't tell you anything about what kind of jobs those are, whether they're part-time or full-time, pay well or very little, gives benefits, have reasonable hours, and on and on and on. Nevermind whether it's the job that someone actually likes, you know, the one they imagined that they'd have

when they left school.

When you graduate college with a degree, it's more and more unlikely that you get a job in whatever your degree was.

In fact, as of 2024, 42% of recent college graduates were classified as underemployed, the highest level since 2020. With that meaning that they're employed in a position that typically doesn't require a degree. I'll get you back to the show in just a minute, but first let me thank a sponsor and ask, you know, do you realize that your kid can get profiled

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with a symbolic $1 donation to the Proton Foundation and keep it protected for up to 15 years until they're ready to actually use it themselves. to protect your digital identity now. Reserve your child's email address before the internet does. But again, even if it's the job you wanted,

it still might not be the job you wanted. Right, and for this, I'll let Erin explain. And like you, Erin's a beautiful bastard, right? She watches the Philip DeFranco show, I actually reached out to the community to kind of try and see what people were experiencing. And Erin, well, she's from Chattanooga, Tennessee, and you know, she's doing what she wanted. But also, it didn't pan out exactly the way that she wanted.

When we were interviewing for grad schools and stuff, they were saying like, Oh, yeah, when you're done with school, you're gonna make plenty of money, and you'll be able to pay off these student loans, no problem. No. Occupational therapists make around, if you look at the whole US, 100K a year. I'm right around 76,000. I've been working for four years

and it's been slowly creeping up. And it's like, when is that 100K gonna happen?

Now on paper, her income's still above average. And when you add in her husband, you know, they're doing pretty well making $130,000 before taxes, closer to 110 after taxes. But then when you look at the other side of the ledger, things are a little less pretty.

She's got around $400,000 in student loans that she hasn't even begun to pay off yet and she lost her part-time job during grad school when the pandemic hit. And so it all adds up. Every month, there's several hundred dollars

for her husband's student loans, another 500 for his car payment, around $600 to her parents for their help securing her house and moving costs, and so he went to a chiropractor to manage the pain, but that wasn't covered by his insurance,

so they had to pay thousands of dollars out of pocket. But the main point here is that even if you've got six figure household income, you can still feel like Without those jobs, the United States would have nearly 400,000 fewer jobs than it did a year ago.

Meanwhile, blue collar and manufacturing jobs, as Bucky experienced firsthand.

I worked at a drink production facility. They made kombucha. They laid off the majority of the staff. It was on President's Day last year. I get there at 7 a.m. And the first thing they do is the founder of this, you know, companies like starts his speech.

Like I started this in my basement kind of thing. And I'm like, oh God.

There's a number of reasons why healthcare is doing better than other industries. Historically speaking, it's relatively insulated from ups and downs in the market. You know, we have an aging population that requires more care and older people tend to have more money to spend on elective procedures. And so we're seeing the same K-shape in healthcare

as we are in the economy as a whole. Thanks to rising home values and stock prices, those at the top enjoy long-term care, full body scans, plastic surgery, and expensive dental treatments. and spiking premiums for everyone else,

but even before all that, healthcare had been getting more expensive for decades. In 1960, healthcare ate up just 5% of GDP. Today, it is 18%. In 1970, the average person paid about $700 in today's money for out-of-pocket healthcare costs.

Today, that number's over $1,500. Since 1999, insurance premiums have risen three times as fast as workers' earnings. And there are many, many reasons for that. One of which, ironically, is the way our enormous GDP interacts with the specific nature of healthcare.

It's very labor intensive. If you want someone to care for you, you have to pay them to care for you. And the US is a prospering economy in the globe. So to pay someone to take care of you in a very labor intensive fashion means you have to pay American wages, which are very high.

It's one reason why education is expensive because education is also very labor intensive.

So as a result, more than a third of US adults say that over the past year, they've skipped or postponed getting healthcare that they needed because of the cost. And that's something that we also heard

because the policy is not clear, and because the coverage seems to be changing to be less ideal for the workers, then I don't wanna go initiate these procedures and initiate these visits, and then end up being left with a big bill that I can't pay.

For that second guy, Peter, he told us how he was once referred to a specialist that was supposed to be in network. So he was expecting a 20, $30 copay, but a simple office visit ended up costing 150 to 200 bucks. And with the first guy you heard, James, he described routinely having to choose between a copay at the doctor, his phone bill, his trash bill, car insurance, gas, or some other necessity.

Savings don't exist. We're paycheck to paycheck.

And he's not alone. Last year, nearly a quarter of all US households lived paycheck to paycheck, according to Bank of America. When you're living that kind of existence, you're one surprise away from what I like to call being seriously fucked. Right, and we heard from people who got there thanks to unexpected medical bills,

vet payments, car repairs, you name it. One woman even resorted to a predatory lender and had to put up her car as collateral. to drive 45 minutes to work, without which he has no idea what she'd do. When you've got children like James does, forget about it.

One time, surprise, I had my kid, he stepped on the air conditioner unit. That was a good like 150 for all the parts and everything. My son's kids like to run play outside. It'd be near the new house here. They got into our shed where we have the water for the well

and he hit a pipe. So the pipe burst. That was like another, almost like 300 to a fix.

James, he's lucky enough to have a stay-at-home wife who takes care of the kids, but childcare, it's also gotten more and more expensive. Or with it rising 8% in less than two years, double the rate of overall inflation over the same period. And so with that, last year,

seven in 10 Americans said that raising a child, it's unaffordable, up from 58% a year earlier. Right now everyone's like, oh, just go for it.

And I'm like, with what money?

You know, who can blame them? It's understandable not to want more mouths to feed when prices of the supermarket have gone up and up since the pandemic, and they just keep on going.

Even if I get like a bag or two of groceries, it's like at least like 100 to 150, even like items like 12 packs of soda used to be 799 and now they're 1099. I know like roasts now are like $40 for a single roast.

Plus utility bills have also gone up with natural gas prices rising more than twice as much as wages over the past year and electricity outpacing inflation, especially due to the AI boom.

We have a very, very bad energy management in Indiana. Something like 60% of our electricity costs are because of like data centers in the state. And so our utility bills have creeped up steadily over the past year.

Now it's true when you look at the big, broad numbers, these rising prices, they don't seem like, you know, they're that big of a deal because they're paired with rising pay. Right on average, wage growth has kept pace with inflation, but the key word is average. In reality, just like no one experiences the economy the same way, nobody experiences inflation

the same way either. So inflation, it tends to be higher for lower income folks because a larger share of their budget goes towards the most inflated goods like housing, utilities, and groceries. And with lower income people,

they tend to see less wage growth as well. So it's actually not guaranteed that their paychecks are keeping pace with rising prices. Going back to that K-shaped economy idea, while you have people at the top maybe having more breathing room, many at the bottom are feeling the squeeze, like with Chris.

In our industries, the raises are not happening. And yet at the same time, the prices have gone up. And yet we still have debt that we're trying to pay down.

Now you'll often see media reports describing inflation as cooling. And yeah, that's true. It's back down to normal levels from the 2022 peak. But that just means that prices aren't going up as fast as they were before.

Even if inflation drops to zero tomorrow, there's still a whole bunch of accumulated inflation from the past several years that's just kind of baked in now. It's called rise like a rocket and fall like a feather.

So prices are gonna rise real quickly. They're gonna rise like a rocket. But when it's time for prices to go down because there's been some decision about tariff policy or there's been some supply chain realignment, prices don't go down that quickly.

Plus even the apparently low two or 3% inflation numbers that we're left with, they're kind of misleading. Right, because they make it seem like, oh, you're just spending a few percent more on all the same stuff, right? But what that hides is all the stuff that you stop buying

because you're devoting more of your budget to the stuff that you do buy. And when you and a bunch of other people the demand for those fall and so does their price. So at the end of the day, some things get more expensive, other things get less expensive. And when you look at the overall average number, it seems like inflation's pretty muted. But in reality, you're buying less stuff

and you're paying more for the stuff that you do buy. And the combined effect of those two things, it is a serious loss to your real purchasing power. So when it comes to Trump's tariffs, for example, negative impact on your average household. The National Tax Foundation puts out an estimate around $1,500 in 2025. When the cost of basic necessities goes up, you can't just stop paying for them, right?

They're necessities. So people then borrow money to make ends meet. And they've been doing that a lot recently with total household debt now reaching nearly $19 trillion. It's a credit card debt, nearly 1.3 trillion.

Mortgage balances over 13 trillion auto loan balances, 1.67 trillion. And almost 5% of all that debt is in some stage of delinquency, which is actually a pretty normal number, historically speaking, but you don't have to be delinquent to feel the squeeze of monthly debt payments.

Right, just take auto loans. Prices for both new and used cars soared after the pandemic. Car insurance rates have more recently spiked and repair bills, they've climbed 63% since 2020. Or, you know, take mortgages. According to the National Association of Realtors, the average principal and interest payment,

it has doubled since 2020. And then it's not just buying a home. Renting's more expensive too, going up 36% since 2020, according to Zillow.

So between 2009 and, I don't know, mid 2010s, housing was quite affordable. And then it was starting to rise again. And the big shock came like in 2022 to today.

And there were a number of reasons for that. There was a lumber shortage. The cost of construction labor rose dramatically and remote work drove people into the suburbs or even the middle of the country so they could have space in a home office.

And so you had 38% of respondents in a recent survey saying they've moved because where they were living became too expensive. With that percentage rising to just over half of Gen Z as opposed to under a fifth for baby boomers. Right, today your average young married couple needs 70% of their household income

to afford the average down payment. Just before the pandemic, it was still a lot, but they only needed 58% and in 2000, it was just 45%. you know, I've got to thank you for trusting us to wade through the chaos of the daily news cycle. You know, doing this special episode on the economy,

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which is the one I use. And remember for most people, their rent or mortgage, it eats up the biggest chunk of their budget by far.

It's like one third of your budget. And that's like a healthy budget for some people, especially if you're in like the 20th percentile,

income percentile, it's like half of your budget. But you're not just buying a house or apartment, you're also buying a neighborhood and all the things that come with that. Or maybe you have to commute really far to work. Maybe there's no public transit nearby. Maybe there's pollution or crime or too much noise.

Maybe the local hospital's underfunded or maybe the school your kids go to, it's fallen apart. Or maybe there's no good supermarket within reach. Maybe, depending on where you live, you've got to worry about the heightened risk of a climate disaster destroying everything you own. That's what happened with our guy James we spoke to, who had a nice deal renting out his father-in-law's house in Florida before Hurricane Helene

filled it with four to five feet of water.

So we pretty much had to start from scratch after that. We like got rid of everything. Couches, beds, toys, like everything, appliances. And we put a down payment on a mobile home

that his family's been living in for about a year now, but it's been financially devastating. Rufino helped a little, but it cost him $3,000 in fees just to start building it and another $10,000 for the home itself. And then when you add up all the furniture

and the appliances, he says that the total ended up somewhere around 30 to $35,000. And then the mortgage is about $1,400 a month plus property taxes and impact fees or another thousand dollars or so per year.

I had to pull out loans out of my 401k and had a hardship loan. I had to use like pretty much any money I got back to put the down payment on. So it got us pretty behind.

You know, while most people haven't lost their homes in 401k plans administered by Vanguard took a hardship withdrawal. That's up from the pre-pandemic average of about 2%. And the top reasons you had being cited were the need to avoid foreclosure and eviction

or pay medical expenses. in the short-term. We see that with retirement. We also see that with home ownership. So the median age for a first-time home buyer is now 40 years old, up from 33 years old,

just five years ago, and 28 years old back in 1991.

There's a lot of data that does point to these life milestones getting delayed, which I think creates some, you know, worry for people about if they're getting what they want out of their life. People are pushing marriage later and later, they're pushing kids later and later, they're having fewer kids, they're buying a house later and later. So I think people feel like it's not fair that they haven't been able to achieve

that quoted American dream. And that's something that we've heard over and over again from people who reached out to us. Y'all were told a certain story about how life is supposed to be, but when you finally grew up, the story, it turned out to be a fairy tale.

I feel like I'm failing myself and my girlfriend and my family. I just, you know, it's like, I was told growing up mean, you know, that would lead yourself to success. And that's just not been the case. You know who has been living the American dream?

The fucking boomers. So that's not fair. Not all of them, but on average. Right, on average, they did pretty damn well in a lot of ways compared to their kids and grandkids.

So the boomer owners have, you know, an extraordinary amount of wealth. 38% of the housing stock, despite being 22% of the population. They just got born at the exactly perfect time to benefit from the rise of globalization, the rise of suburbs, the rise of white collar work in the United States as we started to outsource manufacturing.

Now that's great for boomers, but you know, younger people are looking up at all the wealth that their parents and grandparents have

and going, okay, great, maybe pinch off a little for us. My grandma left me like a trust fund. I don't know how much money it is in it because I'm not allowed to have access to it. It's maybe enough that I could maybe own a house, but I don't know about that anymore because so many houses are so expensive.

So we have an $84 trillion wealth transfer happening, the greatest wealth transfer in history, but most boomer parents haven't really talked to their kids about what an inheritance would look like.

They've also got more political influence, but also because they vote more. So government policies often designed with that in mind, meaning that they get cool stuff like tax breaks so they don't have to chip in as much. Meanwhile, we're all spending the most on them

in the form of Medicare and Social Security. But also, you know, I'm not trying to be like, hey, fuck old people. I'm sure your parents, they're fine. They're lovely. I don't actually know if that's true. They could be awful. But what I'm trying to say is that when it comes to the K-shaped economy,

a lot of the inequality that put some people But with that said, you know, I don't want to make it sound like they're better off in every single way. They had no shortage of their own problems when they were our age,

and we're benefiting from our own historical developments as well.

So inequality has gone up, but this is a measure of relative inequality. In other words, how, top person. But if you look at absolute standard of living, that is improved at every level of the economy. Gen Z has a higher purchasing power than any generation has had before them, on average. Every decade, the purchasing power of the new generation or the median person is higher than it was before. They're living at a higher standard of living. They're able to afford bigger houses,

safer cars, better insulated houses and higher miles per gallon, higher quality healthcare. The middle class can afford cancer treatments that were totally impossible 30 years ago.

Now that's not to say inequality doesn't matter. It certainly does. Economic inequality can cause a lot of problems in housing markets, especially when new homes aren't getting built. It can also lead to some people

having disproportionate influence in our politics. And it creates some thorny issues when it comes to social cohesion and people's feelings about their own social status. Because human beings, they're not just isolated individuals.

We are social animals and we care about how we're doing relative to others. And so when we see teachers and nurses burned out, working harder than most people yet barely scraping by, Meanwhile, the Epstein class is living it up just because they own stuff. That doesn't feel super fair. That's when we start getting a little French revolutionary. And this is also where the subjective and the objective, the vibes and the reality,

it becomes a little hard to distinguish. Because while inequality, it has reached historic levels, people's perceptions of it are often driven more by the algorithm than the underlying economic reality.

I definitely think social media has exacerbated all of these problems because people do see this portrayed lifestyle on platforms like Instagram where, you know, these models and these creators are getting paid to go to like Tulum and do a photo shoot and to have a very

glamorous lifestyle. And Clark argues that's true of perceptions of the economy in general,

not just inequality. My primary hypothesis at this point is the rise of the internet and especially the rise of social media has made our attention scarce, scarcer than it ever has been. So people who write the news, people who tell you about what the economy is

have to compete for attention harder than ever before. And unfortunately with human psychology, what gains our attention is sensationalism and more than that, negativity. And my evidence for this is not just the fact that when we measure the negativity bias in headlines, it's been getting more and more negative. But if you do these surveys and you ask people, hey, how's your personal situation, your personal financial situation,

they'll say, uh, 72% of them will say it's okay. But when you start asking, hey, how's your local economy doing? Is it good or bad? Only 40% say it's good. Hey, how's the national economy?

Only 20% say it's good. Well, no one can experience the national economy. The only way we know what the national economy is doing is by looking at our information diet.

So yeah, it's true. A ton of people are really struggling, but it's also true that lots of people who aren't struggling say the economy is bad, not because, you know, anything they've experienced, but because the media that they consume tells them it is. Or in other words, some of y'all are on TikTok convincing each other

that we're in a silent depression when it's like, sure, things are bad, but they're not 1930s bad, And y'all, this sucks because I don't want to be the annoying old guy who's like, fucking murder. Because when I first started down this rabbit hole, I was hoping to kind of reemerge with a nice simple conclusion like, hey, the numbers lie, your feelings are correct. Or even, actually, you're all delusional.

The economy is doing pretty good. But the truth is it's complicated. The economy has improved in a number of ways, whether from generation to generation just the past several years. And things also don't seem to be quite as terrible as people think they are when you survey them. Yet, it's then also true that the economy is not doing as good as many

of the traditional metrics suggest. And there are in fact a bunch of ways that it has gotten so much worse, both from generation to generation and over the past several years. So the problem isn't that the data is lying

or that people are wrong, right in their own ways. The problem is that we've been measuring the wrong things for 70 years and nobody told us. We can't settle debates or properly move forward by citing abstract statistics like GDP or unemployment or stock market values, however useful they may be. We need to get specific about what we actually want from our economy and be real about making sure

that everyone gets it. Today's is simply assuming that the benefits of growth will automatically trickle down to everybody. Those are over. Because really, if there's anything I've learned from this deep dive, it's that you don't have to be starving or destitute to feel like the system's screwing you. And those feelings, they're not just feelings, right?

Some of it stems from social media, doomerism, sure. But a lot of it's the fact that our basic metrics miss a bunch of the stuff that the economy's actually failing to deliver

over and above basic necessities. privileged in a way that we're able to talk about the economy in terms of self-actualization. Most people, not all, most people in the United States can afford bare necessities. So our primary conversations about the economy in the US has been, well, why do people feel this way? And what do they really want out of a life? And thinking of an economy in that way

is relatively new, I would say.

What I heard from y'all covered the spectrum of hardships, from exhaustion and burnout to delayed life plans to a lack of any basic sense of security.

Especially right now, and especially being trans, I don't feel very optimistic about the future. I more or less just wanna be able to work so I can just relax when I'm not working.

It's hard to plan for bigger future things. Like we would like to get married in the near future and we'd like to do some more traveling while we're younger and able to do it. But getting the money ready for that set aside is just hard. And you keep having costs pop up here and there.

Whenever someone says,

what do you see yourself in five years?

Hopefully not homeless. So if we keep assuming that the things are good enough just because the GDP is okay, or the stock market's up, or unemployment's pretty low, or inflation's cooling, then we don't just miss how bad things really are. We also miss how much worse they could get. Because right now, this economy seems to be perched atop what the economist Diane Swank calls one-legged stools.

But that was referring to just a few things propping up the broad numbers, namely healthcare, artificial intelligence, and wealthy consumer spending. You kick out any of those three pillars, and she argues that the whole thing could topple. And so the question going forward isn't, is the economy good or bad? It's good or bad for whom? You know, with all that said,

I do want to give a big thank you to our experts, Clark and Scanlon, our beautiful bastards, and as well as everyone else who just sent us emails telling us about your unique situations. Even with how big this video is, we couldn't fit everyone in, but the team and I, we read them all. We deeply appreciate your input. And of course, a place where you can share your own,

have conversations with people on this is in those comments down below. With all that said, my name's Philip DeFranco. With all that said, my name's Philip DeFranco. You've just been filled in and I'll see you next time,