Wednesday, August 9, 2023

The Reality of the Economy for Many


There are essentially at least 2 economies in this countries. 

One economy drives people to make day to day decisions in order to pay for life requirements. In their case a car repair or school clothes or electric bills can be paid paid, unless there is a problem. They essentially live pay check to pay check and primarily rent their home. I grew up this way, so it is situation I am well aquatinted with. And many issues will drive them into debt or worse. A medical bill, a doubling or tripling of an energy bill, or a lost job can mean a long period of scrimping or going without.

The second economy is basically everyone else. Whether rich or middle class, this economy does not live exclusively day to day. We probably have some savings. We make enough to manage our credit. We have health insurance.

For the "everyone else" group, the economy is doing well to great. Inflation is dropping, house prices rose and are still doing well. Salaries have gone up. Workers are in demand. Computers and the net make life easier.

But for the other economy, for the lower middle class and below, the economy is not so great. Gasoline prices spiked in mid-2022, but are still well above prices for the last 10 years (which is about out economic memory). Energy cost are much higher - albeit not the huge increase in prices in Europe. Food costs rise and rise and fall seemingly randomly. Climate costs are new and tough on the poor. For climate costs, think about now needing an air conditioner. It costs money to get one, it costs money to run one and this money is additive, you don't save money by having an air conditioner.

Cost of credit is a big problem for them. The latest interest rate hikes make borrowing either at a bank, credit card, or local check cashing location. Interest rates on credit cars are 24.69% this week. Now look at those folks that need credit cards and can't pay them off, versus people that pay them in full each month.

So when politicians complain about the economy, it is those day to day economic problems their constituents are having. That is what drives people to vote. The fact that these same politicians do nothing and protect the interests of the rich AFTER the election is lost in the idea that "DC can't get anything done".

So from a cause -> effect point of view, these voters are not voting against their interests. But from a results viewpoint, they are kind of screwed.

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