Weak Recovery

Bob Hennelly cites the most recent "Report on the Economic Well-Being of U.S. Households" from the Federal Reserve to argue the next recession could hit some Americans harder than the one in 2008.

Although the report itself notes improvement over 2013, Hennelly points out that 39 percent of those polled for the report would still have trouble paying a $400 emergency expense, that 25 percent have no retirement savings, that debt has exploded, that a record number of people are behind on car payments, that the proportion of renters is the highest in over 30 years.

One essential element of keeping the lid on America’s collective anger over decades of declining wages, disappearing benefits and actual decline in our average lifespan, is to cover the ups and downs of the economy as if it were some sort of naturally occurring meteorological phenomenon.

But the kinds of market gyrations that promote dislocation and misery for the masses are not the result of gravity or barometric pressure. They are the consequences of decisions driven by an ever-shrinking circle of people and institutions who engineer scarcity — because making a killing is the only way they know how to make a living.

Update (August 27):  Annie Lowrey shows how young adults will be especially susceptible to the next recession.

The toxic combination of lower earnings and higher student-loan balances—combined with tight credit in the recovery years—has led to Millennials getting shut out of the housing market, and thus losing a seminal way to build wealth.

Millennials have put off saving and buying homes, as well as getting married and having babies, because of their crummy jobs and weighty student loans. A downturn that leads to higher unemployment and lower wages will force Millennials to wait even longer to start accumulating wealth, making it far harder for them to accumulate any wealth at all.

Update (February 28, 2022):  Coming out of the pandemic recession, housing prices are soaring. 

[H]ome prices shot up nearly 19% last year, up from a gain of roughly 10% in 2020. That's the steepest one-year increase in the index in more than three decades.

Incomes can't keep up. Daryl Fairweather:

Unfortunately, the middle-class dream of homeownership has been fading away. [It] is a signifier of the upper class now.