With $2 Trillion Buffer Gone, Americans’ Spending Slows
When is the US government's third try at estimating aggregate economic activity worth mentioning?
That's a trick question. Don't answer it.
Derisive jokes aside, the final read on Q1 GDP, released on Thursday, was notable. Not for the slight upward revision (versus the second estimate) to the headline real growth pace. But rather for the meaningful downward revision to personal consumption.
Recall that the advance read on spending during Q1 showed a very healthy 2.5% pace. That was revised do
The savings might be gone, but younger generations are no longer (compared to older generations) contemplating home ownership as a realistic goal. If home ownership is out of reach- there is no need to save for a down payment and the related higher costs of being a homeowner, compared to being a renter.
YOLO is alive and well. This situation reminds me of stories I read in the 90’s and 2000’s about younger generations in Japan who had been priced out of having families or owning homes. Alternatively, they loaded up on electronics and luxury brands.
More than a few people are spending north of $1,000 to go to a Taylor Swift concert- and it isn’t my generation! Our country now has more who aspire to be an ‘Amateur de luxe”, even if they can’t afford it.
Well, it’s like reader John L. noted last week (I think it was last week): The math on home ownership for younger folks makes less and less sense, and if that cohort is psychologically predisposed to “YOLO” (or whatever) anyway, then the idea that they’re going to, you know, pay $4,200/month for a mortgage on a house they don’t even like versus $3,200 for an apartment they like a whole lot with $1,000 “extra” for Taylor Swift concerts is silly. Which is to say they’ll take the apartment and the concert all day long. Maybe we should start thinking about how to get those mortgage payments back down below the cost to rent (where they should be anyway) so that we’re not putting late-twentysomethings in a position where owning a home means giving up everything else.
All of that to say you’re exactly right. On this point, at least. 😉
The economic advantages of home ownership have always (in my lifetime, certainly) been debated. It might be ok for ownership to reside on the side of disadvantages unequivocally.
🙂
What would stop the government from creating a program where first time homebuyers get a subsidized mortgage in the 4 percent range and offering sellers of homes to first time buyers a similar mortgage rate on their next purchase following the sale?
Can we assume the buffer is the stimulus? meaning we needed it to get through the pandemic’s impact on the economy. What is the state of the US economy besides AI. Does that bring one back to employment level and wage growth as the best predictive measure of at least near term GDP growth and key for financial market direction?