If you only looked at the gold standard(?) Michigan Consumer Sentiment survey’s new report, you would think we were in the midst of a generational economic crash surpassing the scale of the 2008 Great Financial Crisis or the stagflationary malaise of the 1970s where the Misery Index hit all-time highs. A new survey is out today, and it reveals a populace with incredibly negative forward-looking views on the economy. This certainly is related to Trump, who per a recent AP-NORC poll, had his lowest approval rating ever on the economy (31%), which surely helped prompt president sundown to rant to the country on primetime TV this week. But the fact that the 2025 line is digging down as deep as the 2022 line proves that this is not a Trump-centric dynamic, and people feel bad about the economy for reasons that go beyond tariffs and all his other ineffectual bullshit.
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I wrote about this revelation from Moody’s Analytics earlier this year, and how connected it is to the stock market creating a wealth effect fueling this spending. “Affluent people also found themselves with assets, such as stocks, that suddenly were worth far more,” wrote the Wall Street Journal back in February. “The net worth of the top 20% of earners has risen by more than $35 trillion, or 45%, since the end of 2019, according to Federal Reserve data. Net worth grew at a similar rate for everyone else, but it translated to a lot less money: an increase of $14 trillion for the bottom 80%.”
Many Stancilites will point to the fact that wage growth for the lowest earners has outpaced those of higher earners, but fail to recognize the facts of a rate of change metric. Look at those charts I screenshotted above, measuring from 2020 is measuring from a complete collapse, and while ten steps back and seven steps forward does give you a pretty good rate of change result, you’re still down a net of three steps from where you started. That’s the employment situation a lot of low wage earners are dealing with these days in our cooling job market, and jobs like cashiers that once were some of the most prevalent in America are now being replaced by robots. The same is true for entry level college graduates, as the bottom layer of many organizational charts is being replaced with AI as we speak. That may help the company save money and aid executives’ spending fueled by their stock-based compensation that makes topline economic figures look good, but it doesn’t do much for the low wage worker whose job is being replaced and isn’t seeing the benefits of the broader economy. In many ways, AI is the poster child for the K-shaped economy. Executives like Elon Musk are openly plotting to kill our jobs, and are promising us a future utopia with “universal high income” at an undetermined later date.
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The Great Financial Crisis
Perhaps it is because I graduated into the job market in 2009, a year where we began losing 800,000 jobs a month, and thus have a bias about 2008, but I think it is the central fault line in our present age. It is where both the capitalist backlash on the left and the reactionary fascism on the right have sprung from, and where fervent modern distrust of the establishment was born. The Iraq War was our generation’s Vietnam, but the widespread age of distrust began when a bunch of criminals defrauded the world and came within days of completely nuking the entire global economy. The Troubled Asset Relief Program (TARP) is wrongly looked back at negatively for many reasons—a lot of leftists falsely attribute the bailout to Obama, but a simple recap of the nature of linear time will reveal this was a Bush bailout—and it is reviled by many for being a handout, but that is wrong too. We got paid back. The best critique of TARP was that it wasn’t big enough and Congress chickened out because they didn’t want to vote for something with a trillion-dollar price tag even though the scale of the crisis could only be measured in the trillions.
A gigantic hole got blown in the economy by fraudulent financial schemes orchestrated by the uber-elite, upending millions if not billions of people’s lives for a generation. We know that those like me who graduated in its wake have had their professional prospects harmed relative to people who did not graduate into the genesis of ZIRP, while professions like lawyers and academics suffered, and the economy changed in a very fundamental way. The bitterness around TARP is that in 2008, Wall Street got bailed out but Main Street didn’t, which is a valid criticism, but Wall Street had to get bailed out. We had no choice; we’d be using bottle caps for currency right now if we hadn’t.
But instead of fixing the fundamental economic problems in our age of inequality revealed by 2008, we just flooded the zone with cheap debt which jacked up asset prices and made inequality exponentially worse. What once was viewed as a policy only to be utilized in emergencies now became a decade-plus of a wildly distorted and anomalous status quo. We didn’t fix what 2008 broke, we just built a land of unsustainable burrito taxis and increasing financialization hacking the magic of zero percent interest rates. When 2020 rolled around and we were forced to enact emergency ZIRP measures again, this didn’t spawn another wave of affordable burrito taxis, but dog coins and inflation, proving the limits of this policy.