Rich And Unhappy

Why America is rich and unhappy.
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America is rich and unhappy. The latest data shows household net worth in America is at the highest level we’ve ever seen (https://fred.stlouisfed.org/series/TNWBSHNO)

Over 8% of adults in America, that’s almost 1 in 10 are millionaires, and there’s plenty of opportunity because unemployment levels are low (https://fred.stlouisfed.org/series/UNRATE)

Wages across the private sector are the highest levels they’ve ever been meaning people are making more money than they ever have before (https://fred.stlouisfed.org/series/CES0500000003)

And if you want to buy a house or borrow money - money is also cheap because interest rates are almost at the lowest point they’ve ever been (https://fred.stlouisfed.org/categories/22)

Money is all around us and yet - we’re not happy. The consumer sentiment - a study done by Michigan University is close to recession level lows (https://fred.stlouisfed.org/series/UMCSENT)

In the meantime, the stock market continues to make record highs, our real GDP is also growing (https://fred.stlouisfed.org/series/GDPC1)
which means the country is making more money and Americans are quitting their jobs because they’re also making even more money, but the confidence continues to go down and we’re still not happy.

According to a Gallup pole 2/3 of Americans are saying that the situation is getting worse (https://news.gallup.com/poll/356672/job-market-ratings-set-record-economic-confidence-slides.aspx)

WHY ARE WE UNHAPPY?
Reason number 1 - when it comes to money - everything is relative. For example Inflation (the measure of purchasing power over time) is closely tied to our individual needs. For example If you’re someone like me who works from home, you may not need to buy a car. But, if you need to travel to work and your car breaks down, you need to buy another one. However, the costs to buy a car, went up over 8.3% recently, and they were over 45% year over year in July. That hurts your wallet and your perception of the economy a lot - that feeds into the inflation is really bad narrative.

Reason number 2 - Asset inflation. This is not measured by the consumer price index because asset inflation is closely tied to interest rates. This means if you want to invest in the stock market - you might be hesitant when you look at the S&P500 which is almost at an all time high. If you’re looking to invest in Bitcoin you might look at that and think it's too expensive. Most importantly - if you’re looking to buy a house - you may be priced out.

WE'RE STILL RICHER
On the whole, we are doing better than we were 10 years ago (2011) when the average hourly rate was only $22.85 compared to $30.96 today - that’s a 35.5% increase. In comparison to inflation in the last 10 years which is roughly 24.5%. In reality - we’re are doing better than inflation in terms of wage growth and consumer prices.

WHY ARE WE STILL UNHAPPY THOUGH?
Economist Robert Shiller published a study in 1997 about how people perceive inflation (https://www.nber.org/system/files/chapters/c8881/c8881.pdf)

In that study 38% of people said they felt angry often, another 48% reported feeling angry sometimes whenever they saw prices go up. This is because we always see the negative aspects of inflation but we don't notice the positives (ie: wage growth).

WHAT CAN I DO ABOUT IT?
Know that comparison is the thief of joy. When we compare ourselves to others, we end up feeling like we’re not good enough. On a practical note, keep changing companies so you don’t fall victim to salary compression. With the surplus of money you’ve saved - start investing it. The government is increasing the 401k limit from $19,500 a year, to a maximum contribution of $20,500 which is a 5.1% increase which should help a little with inflation.

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.