US Economy thread

[dgies9156]

Brother BM;

First off, I think each succeeding generation wants to do better than the previous one. It's a fact and our parents sent us to college (or we went to college) in part to reach that goal of being better off. I never, ever thought I'd do better than my Dad. Maybe I didn't, but I'm pretty darn close if I didn't. It takes time.

One of the things most younger people lack is patience. I know I did in my 20s and 30s. When I was 23, I thought I would spend the rest of my life working for a creepy old afternoon newspaper in Rock Island, IL. I could not see beyond 1981 or 1982 and I was scared to death. This is not what I went to Marquette for, I thought. Needless to say, I managed to leave Rock Island and in time, do more than I ever imagined I would.

I bought my first home in 1984 in Downers Grove, IL (what a depressing name for a community!). The fixed mortgage rate was 12.75 percent and its maturity was 2014. I thought I'd be dead by 2014 and I was scared to death about a mortgage payment, all-in, of nearly $1,000 per month. We had to give up a lot to make the payment and get money into savings. We were fortunate because we had no children at the time and we both worked. But we had certain rules we lived by, even then, including we didn't buy things we could not pay cash for (meaning no credit card debt), we made sure every payment went out the door on-time every month and that as much of her salary as possible got into savings.

I don't doubt that today's 20-somethings are fearful. Heck, so were we! My parents, who paid about $8,000 for their first house in 1961, looked at us and said, "my gosh, how are they going to afford that...."

Much of financial planning boils down to setting goals and being disciplined. I get that for many, that's not enough. You barely get by. But my son, who is in his 20s, faces much of the same problems we see in this room. When we talk about getting rid of his video game subscriptions, his AppleMusic subscription, his Sirius/XM subscription etc., we get a blank stare at us and a "I can't do that" response.

As a final thought, my wife and I had our children relatively late in our lives. They never saw when we lived over a dry cleaners or when money was really tight and we were arguing about whether we could spend money on X, whatever it might be. The house they grew up in was nice and if something was needed, we reached into what my daughter called "the wallet of happiness." Sometimes, I think we did them a disservice by not saying "no" more often!

[Jockey]

And the right-wing lie machine is incredibly powerful. They've honed it to perfection over the last 30 years. Turn on Maria Bartiromo's screechfest any time to get a flavor; listen to any Trump speech; check out any of the thousands of doomsaying podcasts.

Aaah, Maria Box-o-wine. I remember when you could get fired for drinking on the job.

[Hards Alumni]

Brother BM;

First off, I think each succeeding generation wants to do better than the previous one. It's a fact and our parents sent us to college (or we went to college) in part to reach that goal of being better off. I never, ever thought I'd do better than my Dad. Maybe I didn't, but I'm pretty darn close if I didn't. It takes time.

One of the things most younger people lack is patience. I know I did in my 20s and 30s. When I was 23, I thought I would spend the rest of my life working for a creepy old afternoon newspaper in Rock Island, IL. I could not see beyond 1981 or 1982 and I was scared to death. This is not what I went to Marquette for, I thought. Needless to say, I managed to leave Rock Island and in time, do more than I ever imagined I would.

I bought my first home in 1984 in Downers Grove, IL (what a depressing name for a community!). The fixed mortgage rate was 12.75 percent and its maturity was 2014. I thought I'd be dead by 2014 and I was scared to death about a mortgage payment, all-in, of nearly $1,000 per month. We had to give up a lot to make the payment and get money into savings. We were fortunate because we had no children at the time and we both worked. But we had certain rules we lived by, even then, including we didn't buy things we could not pay cash for (meaning no credit card debt), we made sure every payment went out the door on-time every month and that as much of her salary as possible got into savings.

I don't doubt that today's 20-somethings are fearful. Heck, so were we! My parents, who paid about $8,000 for their first house in 1961, looked at us and said, "my gosh, how are they going to afford that...."

Much of financial planning boils down to setting goals and being disciplined. I get that for many, that's not enough. You barely get by. But my son, who is in his 20s, faces much of the same problems we see in this room. When we talk about getting rid of his video game subscriptions, his AppleMusic subscription, his Sirius/XM subscription etc., we get a blank stare at us and a "I can't do that" response.

As a final thought, my wife and I had our children relatively late in our lives. They never saw when we lived over a dry cleaners or when money was really tight and we were arguing about whether we could spend money on X, whatever it might be. The house they grew up in was nice and if something was needed, we reached into what my daughter called "the wallet of happiness." Sometimes, I think we did them a disservice by not saying "no" more often!

oh boy

[The Hippie Satan of Hyperbole]

Fluff

Don't you think we had better leaders on both sides when we were young? Both parties have embarrassed themselves and let down all of us, imo. I believe that our leaders have caused an extreme level of harm over the past 20+ years by their lack of ability to lead.

I get bashed, or outed on here, for being a doomsday economy guy and I am fine with that. I think the core of that belief stems from the Great Recession. Virtually every credible economist stated we are just kicking the can down the street and we have never stopped. Our leaders have kicked that can around the globe a dozen times and their legs still aren't tired.

IMO, our kids deserve better leadership than they are getting. I would go as far to say that if the D's had the courage to run a credible candidate I would consider that candidate. It makes disappointed because the D's actually have a chance to lead and do not have the courage to do it. Kind of reminds of the R's that are afraid of Trump. Both parties are SOFT.

Yes, our leaders are undoubtedly worse now.  George HW Bush and Bill Clinton were eons better than these knuckleheads.

But that's not really what we are talking about here. BM was specifically talking about financial decisions and the rewards that come from them. I don't know what rewards I received as a GenXer that Millenials have not. 

[Hards Alumni]

So you can't answer the question? Maybe I'm not understanding the term "rewards" in the context in which he is using it.

Sorry, I just assumed you knew the answer.  He's (likely) saying that many from his generation did everything they were told to do financially and are worse off than their parents generation financially at a similar time in their life.  And he'd be right. 

[MurphysTillClose]

I think most of your post is spot on, but I am not really understanding how previous generations were "rewarded" differently. What rewards do you believe that previous generations were receiving that yours is not?

Clueless boomer

[tower912]

Goose,  I have been worried about the deficits going back to Reagan.   So much so that I voted for Tsongas in 92.  Thought for a long time about Perot in the general.

[Goose]

Hards

I think everyone, aside from Fluff, knew BM meant. In a lot of ways BM is 100% spot on.

[lawdog77]

Hards

I think everyone, aside from Fluff, knew BM meant. In a lot of ways BM is 100% spot on.

I have to admit, I was wondering the same thing the Hippie was in terms of "rewards".

[The Hippie Satan of Hyperbole]

Clueless boomer

I'm smack dab in the middle of Gen X.

[MurphysTillClose]

I'm smack dab in the middle of Gen X.

even worse

[reinko]

Color me suspicious when a certain slice of this country who has historically ignored and vilified the poorest 1/3 (and probably still does), but as soon as their are some warning signs that the economy might impact the middle third...we have a crisis in leadership and something needs to be done.

[jesmu84]

Dgies,

Love your diatribes and anecdotes.

But you really need to re-examine costs of necessities (housing, food, insurance, retirement, healthcare, college) compared to income in each generation.

[The Hippie Satan of Hyperbole]

Sorry, I just assumed you knew the answer.  He's (likely) saying that many from his generation did everything they were told to do financially and are worse off than their parents generation financially at a similar time in their life.  And he'd be right. 

Eh...not so sure about that.

https://www.marketplace.org/2023/04/25/debunking-the-myths-about-millennials-boomers-and-other-generations/

And I will say, part of my feelings on this matter are more my bias based on my personal experience. I graduated MU in '90, got married, had kids and it was financially difficult at times. At 33, my career felt stalled and it seemed like every extra dollar was just being put back into the house on some project.

But in my late 30s / early 40s, when my career took off, and I was able to cash out on the equity of my home, life got easier.  (Although I lost most of that equity when I bought my next house in 2007.) I guess I am just optimistic that, as tower said, people can make it work.

[rocky_warrior]

Sorry, I just assumed you knew the answer.  He's (likely) saying that many from his generation did everything they were told to do financially and are worse off than their parents generation financially at a similar time in their life.  And he'd be right.

Forgive me for going all "old man story" mode on you here.  But 20 years ago (2004 for those doing math) I was 29 and had just moved to Colorado with zero debt, and a little money saved.  7 years prior I had graduated from MU with zero money and $25k in student loan debt.  In the subsequent years I paid that off, and bought/owned 2 vehicles.  My second year in Colorado (2005) I finally managed to buy my first house with 5% (!!) down.  Like BM, I wasn't really struggling, but I didn't have a lot of extra cash.  After 2008, I was underwater on the house.  In 2012 I bought a 2nd house as an investment (rented it out)...and thus began Rocky's empire.  (both houses now worth 3x more...)

But the real point of that, is I don't understand the worries of BM for his peers.  Instead, it sounds like he's set himself (or herself) up for a financially prosperous future, not much different than how I started.

So while you may not be as far along as your parents at a similar age, I'd argue you're not that different than a lot of Xers at that age, and clearly we turned out just fine 

[Hards Alumni]

Eh...not so sure about that.

https://www.marketplace.org/2023/04/25/debunking-the-myths-about-millennials-boomers-and-other-generations/

Do you want me to dunk on this.

[The Hippie Satan of Hyperbole]

Do you want me to dunk on this.

If it gets you to finally say something substantive, rather than making vague statements or posting mere punctuation marks, I'm all for it.

[Hards Alumni]

Forgive me for going all "old man story" mode on you here.  But 20 years ago (2004 for those doing math) I was 29 and had just moved to Colorado with zero debt, and a little money saved.  7 years prior I had graduated from MU with zero money and $25k in student loan debt.  In the subsequent years I paid that off, and bought/owned 2 vehicles.  My second year in Colorado (2005) I finally managed to buy my first house with 5% (!!) down.  Like BM, I wasn't really struggling, but I didn't have a lot of extra cash.  After 2008, I was underwater on the house.  In 2012 I bought a 2nd house as an investment (rented it out)...and thus began Rocky's empire.  (both houses now worth 3x more...)

But the real point of that, is I don't understand the worries of BM for his peers.  Instead, it sounds like he's set himself (or herself) up for a financially prosperous future, not much different than how I started.

So while you may not be as far along as your parents at a similar age, I'd argue you're not that different than a lot of Xers at that age, and clearly we turned out just fine 

I'm much further along than my parents, but I know I am an outlier, and sit directly on the border of X and Millennial.  Personally, I'm a bad example.  But I know of plenty of folks who haven't been as fortunate as me.  The anecdotal stories of this board are not very representative of entire generations.   

[The Hippie Satan of Hyperbole]

I'm much further along than my parents, but I know I am an outlier, and sit directly on the border of X and Millennial.  Personally, I'm a bad example.  But I know of plenty of folks who haven't been as fortunate as me.  The anecdotal stories of this board are not very representative of entire generations.   

Huh.

[Hards Alumni]

If it gets you to finally say something substantive, rather than making vague statements or posting mere punctuation marks, I'm all for it.

As opposed to posting a link to a transcript of an NPR interview (which presents no actual data), followed by a personal anecdote?

[Goose]

Rocky,

A serious question and I hope you answer it seriously. Before the question, I am happy that there is a Rocky empire. Your life experiences are great and thanks for sharing.

Now to the question, how much different would the Rocky empire be if the two houses did not go 3x?

If you simply would have had the one
house with normal appreciation would your empire be as big simply via traditional savings and investments?

Again, great job on building a great life.

[The Hippie Satan of Hyperbole]

As opposed to posting a link to a transcript of an NPR interview (which presents no actual data), followed by a personal anecdote?

Which I admitted was a personal anecdote that could lead me to be biased.

But again, I await your data-based dunking.

[rocky_warrior]

Now to the question, how much different would the Rocky empire be if the two houses did not go 3x?

For those two particular houses - not at all.  Neither has been sold, and I didn't use equity from the one to buy the other.   I have subsequently made fantastic gains by buying, living in, and then selling a couple other houses.  Much of that was aided by low interest rates (4% ish).  And the bad mortgage fiasco certainly helped me get the first investment property by keeping prices low.

If you simply would have had the one
house with normal appreciation would your empire be as big simply via traditional savings and investments?

This is a great question.  Had I just stayed in my first house, and sunk all my money extra money over the years into a S&P500 index fund and reinvested dividends.  I suspect I'd be at a similar place (let that be a lesson for you kiddos).  Though have not run the numbers.

But that's for the investing thread!  Back to the economy...

[dgies9156]

Dgies,

Love your diatribes and anecdotes.

But you really need to re-examine costs of necessities (housing, food, insurance, retirement, healthcare, college) compared to income in each generation.

Jesmu:

Enjoy your's too.

But if you're the age I think you are, you never lived through double digit inflation AND 19 percent interest rates and had to figure out how to deal with it. You have no idea what I made in the late 1970s and early to mid-1980s. Ditto for my wife. Or what it costed then to make ends meet. I don't know what you make today either so comparisons are superfluous. But I would argue the challenges were not easy, then or now, for anyone.

Permit me to be a boomer for a moment but one of the things that's different today, particularly in housing, is expectations. Millennials and Xers likely would scoff at what we bought for our first home. It was small, put together on the cheap and we loved it. Thought we were going to spend the rest of our life there. It was our's, no matter what the warts. To get it decently habitable, my now late Father-in-Law and late Mother-in-Law raced down from Dubuque to help us. They were incredible.

I don't claim Househunters on HGTV is representative of the market at large, but what I see there is obscene. Everybody wants 3,000 square feet, four bedrooms and an office, granite, white kitchens... etc. We would have loved that too but we saved and bought what was available.

Think about what goes into housing affordability for a moment. Building codes, land costs, the aforementioned market expectations, insurance costs and taxes. Yeup, even taxes! The market gives people what they want.

I agree that education is way out of control. I have voiced my concerns repeatedly to Marquette's leaders (since they are, after all, my alma mater). Falls on deaf ears.

[Hards Alumni]

Jesmu:

Enjoy your's too.

But if you're the age I think you are, you never lived through double digit inflation AND 19 percent interest rates and had to figure out how to deal with it. You have no idea what I made in the late 1970s and early to mid-1980s. Ditto for my wife. Or what it costed then to make ends meet. I don't know what you make today either so comparisons are superfluous. But I would argue the challenges were not easy, then or now, for anyone.

Permit me to be a boomer for a moment but one of the things that's different today, particularly in housing, is expectations. Millennials and Xers likely would scoff at what we bought for our first home. It was small, put together on the cheap and we loved it. Thought we were going to spend the rest of our life there. It was our's, no matter what the warts. To get it decently habitable, my now late Father-in-Law and late Mother-in-Law raced down from Dubuque to help us. They were incredible.

I don't claim Househunters on HGTV is representative of the market at large, but what I see there is obscene. Everybody wants 3,000 square feet, four bedrooms and an office, granite, white kitchens... etc. We would have loved that too but we saved and bought what was available.

Think about what goes into housing affordability for a moment. Building codes, land costs, the aforementioned market expectations, insurance costs and taxes. Yeup, even taxes! The market gives people what they want.

I agree that education is way out of control. I have voiced my concerns repeatedly to Marquette's leaders (since they are, after all, my alma mater). Falls on deaf ears.

This is insanely out of touch.