Here are some things I think I am thinking about:
1) The One Income Family is Never Coming Back.
Here’s Blake Masters running on a platform for Arizona Senate that includes bringing back the one income family. You’ve probably heard or thought about this. The theory goes like this – American living standards are worse because it now takes two working parents to support a family as opposed to one income like the “good old days”. I think this narrative is somewhat backwards. Not only does the evidence show that living standards have improved, but I believe that the two working parent family is an implicit choice most of us have made.
This is a complex discussion, but I am going to massively oversimplify it because I have two other things I need to think about here. In essence, I believe Americans have chosen to have a two working parent family structure. In short, if we wanted to live like people did in the 1950s then we would just do that. We would get rid of our computers, our internet, our smart phones, our super computer cars, our super computer & super sized homes, etc. Most of us wouldn’t go to high school, college or even imagine being able to work from home. And then we’d magically be able to afford a single parent family (or certainly much closer to it). It would be weird living in a 1950s style home without any of the modern amenities we take for granted today, but I guess it could be done.
I think we’ve chosen, as a society, to have all this extra stuff that we didn’t have back in the 1950s which has resulted in the need for higher incomes and more hours worked. More importantly, we’ve chosen to have a much more inclusive work force. This hasn’t decreased our living standards. It has given greater purpose to many of us while also allowing us to live fuller lives. Yes, there’s trade-offs and I know that modern living standards are worse in many (mostly subjective) ways. But I find it unconvincing to argue that life was better in the 1950s than it is today.
2) Meta What?
Okay, I might have to retract my first thought. Here’s Mark Zuckerberg explaining Facebook’s rebranding and the introduction of the “metaverse”. Basically, he envisions a world where we’re all sitting around living in an alternate reality wearing our virtual reality headsets. Gulp.
I’m kind of old school I guess. Because childhood for me was chasing my friends outside from dusk til dawn. So the idea of my kids sitting around wearing VR headsets “hanging out with each other” is kind of depressing. But that seems to be the future we’re headed for. It’s hard to imagine that’s going to be a good development for physical well-being and longevity, but maybe I am a just an old fuddy duddy who doesn’t know any better….
Or, maybe living standards are declining after all?
3) Where did the money go?
Back in May of 2020 I wrote a post explaining why the stock market rally made total sense. The basic
gist of it was that all that government stimulus was likely to flow to corporations when the personal saving rate declined. Basically, the money went mostly to households, but because Americans don’t save it would end up in corporate America’s hands before long. And Friday’s data pretty much confirmed that theory.
The chart at the right shows the personal saving rate – right back where we were before COVID.
In my view this is more evidence that aggregate demand is likely to return to pre-COVID levels which means that lower growth and lower inflation probably isn’t too far behind.