Why is the quality of life for Americans stagnant?

In recent years, the United States has experienced a series of turbulence. Despite some signs of improvement in economic news and a slight improvement in the macroeconomic situation, people still feel a real stagnation at the micro and daily levels. Despite a slight decline in inflation, prices are still much higher than before the outbreak of the epidemic. As interest rates rise, the labor market gradually cools down, and the advantage of finding new jobs is also weakening. These difficulties mean that if Americans want to change relative to the current situation, they will pay a considerable price.

Firstly, taking the real estate market as an example. According to the S&P CoreLogic Case Shiller National Housing Price Index, home sales prices have exceeded their peak in 2022, but are still 47% higher than in 2019. Even if a transaction is successfully completed, the cost of obtaining a loan can be quite high. Due to the Federal Reserve's interest rate hike, mortgage rates are much higher than a few years ago, at around 7%, compared to only around 2.5% in 2021. These high interest rates not only put pressure on potential homebuyers, but also may face difficulties for those who want to sell their homes, as their current mortgage rates may be lower than the new mortgage rates. Due to the pressure of rising mortgage interest rates on both buyers and sellers, coupled with the inability of home builders to keep up, there is a serious shortage of inventory available for housing transactions. Although many people hope to see the foam of the real estate market burst, this seems unrealistic.

Secondly, the automotive market is also facing similar challenges. With high car prices, obtaining loans has become increasingly difficult. Even if Americans try to obtain credit, rising interest rates will lead to high financing costs. The cost of car insurance is also much higher than before. According to the latest Consumer Price Index released by the US Bureau of Labor Statistics, car insurance costs have increased by over 20% in the past year. Dana Peterson, Chief Economist of the World Federation of Large Enterprises, pointed out that consumer confidence surveys show that more and more people are giving up plans to buy homes and cars. Consumers expect inflation and interest rates to decrease, which means many people may delay some large purchases until the situation improves.

In addition, the US labor market is currently in a stagnant state. Although the labor market is relatively stable, now is not an ideal time to look for new jobs. Although the company will not lay off employees on a large scale, it will not quickly recruit new employees. Compared to 2021 and 2022, the recruitment speed has significantly slowed down, far below people's expectations for the current unemployment rate. "Employers appear to be recruiting as if the labor market is relatively weak, rather than strong," said Matt Darling, senior employment policy analyst at the Niskaning Center

The decline in recruitment speed has also tilted power towards employers. Although wages are still rising, job hopping may not bring significant salary increases like the period of major resignations in 2021 and 2022. For those who are satisfied with their work, this may be a good thing, but in fact, many people do. However, for those who feel a bit uneasy or undervalued, it is not satisfactory.

In summary, all factors mean that some Americans are in trouble, making it difficult and expensive to improve their status and quality of life. In a society that encourages people to pursue more consumption and a culture that values economic mobility, this level of stagnation is disappointing. Although there is still the possibility of finding a better job or buying a new house, these things seem to be beyond people's control in the distant future. Compared to six months ago, Americans are more optimistic about the economy, but they are not as satisfied as before the pandemic because it is now difficult to make changes to their living conditions. Although the current situation is still good, the feeling of stagnation is somewhat discouraging.