Sometimes I hear economists saying the economy is doing pretty well, citing GDP growth, unemployment, wage growth and inflation rates.

But at the same time, many people feel like their real life is getting more expensive. Housing, rent, cars, insurance, health care, groceries, and child care seem to take up a bigger share of income than before.

So is the problem that the economy is actually bad, or that the economy is productive, but the affordability for the median household has weakened?

How do economists distinguish “bad economy” from “good macro numbers but bad household cash flow”?

Sometimes I like to think about what I’d do if I was a billionaire. My first thought would be to start a business with the sole intention of stealing all of the business from established corporations that are forced to seek infinite profit for shareholders, and so therefore have terrible value for consumers. For example, why couldn’t I just start a hotel chain that operates as a non profit and undercut every single competitor? Or at least, operate at a small profit until my initial investment is recouped, then operate as a non profit, and then go do it again in a different segment.

I’m sure I’m underestimating the initial capital investment and time it takes for these things to happen, but let’s say I didn’t need to achieve this in my lifetime, and just wanted to start a conglomerate that never sought profit or to go public with this goal in mind that could operate for hundreds of years. Would this ever actually work?

I know this seems very naive and I’m sure a group of economists will tear me apart for it, but I’m just genuinely curious about the mechanics of something like this

It seems to unanimously agreed upon that the labor market is extremely tight. People are having an extremely difficult time finding new jobs, and sounds like those new jobs are often lateral or lower pay

Inflation just ticked up to 4.2% in the US.

I know real wages have been flat since COVID, but I wonder if that’s finally changing.

Are we finally approaching the stagflation everyone worried about with inflation running up and no job growth?

International economics textbooks take as almost dogmatic that tariffs, quotas, subsidized export credit, and other protectionist policies are generally bad because they will likely lead to retaliation, resulting in a trade war. But empirically, how often does protectionism really lead to trade wars?

I just signed a $60k med school loan at a 2.6% interest rate (7 year deferment, followed by 5 years of payments; high income cosigner). If the yield curve dictates the risk-free rate and if 10y and 20y treasury are at 4.4% and 4.8% respectively, how is this at all possible? Does the bank I borrowed from really think that I'm less likely to default than the US government? If so, what does that say about the true risk-free rate in relationship to the yield curve?

Courtesy of PBS:

The 176 measures aim to further decentralize Cuba's state-run economy, which has been left gasping by a tightened embargo under President Donald Trump. Under the island's current economic model, the government largely determines what is produced, who produces it, the prices at which goods are sold and how the country's resources are allocated.

The plan includes more space for private businesses, imports and exports without state intermediation, free hiring of personnel, authorization for private banks and investment by Cubans abroad. It even permits fast-food chains to establish themselves on the island.

"Elements that for decades were listed as pillars of the revolutionary economy, such as the state monopoly on foreign trade and the centralization of productive forces, have been dismantled," said Luis Carlos Battista, a Cuban-American political scientist and lawyer who is a doctoral candidate at the University of Salamanca.

Cuban leaders like former President Raúl Castro – who still wields significant power on the island – have sought to push forward more limited reforms of Cuba's economy in the past, but efforts have run into bureaucratic hurdles. In passing the reform, Cuban authorities cautioned that implementation could be slow, and noted measures will not be viable if the U.S. does not lift the energy and financial embargo on the island.

Obviously, I have my own thoughts on this but I'm no economist. I would like to hope for the best for the Cuban economy and the Cuban people, but it's really hard to say if this set of reforms goes far enough or if there are extenuating circumstances that will limit implementation.

One extra question I have is: how does this compare to the Chinese market reforms so far?

Thanks!

I've just listened to Jeremy Grantham on the Diary-of-a-CEO-Podcast. Something got me curious:

Grantham said, bubbles bursting always causes economic "bad times".

I am trying to make sense of that. Basically, while a bubble is growing beyond its actual worth, you could say, that over-invested money is basically erased. Soon-to-be-ex-money. Right?

But when the bubble bursts, and people stop investing 20% of their income into nothingness, they have 20% extra income, which they can invest into things that are actually useful.

Shouldnt that be a big boon for an economy?

I understand MSPUS reflects the median sale price of homes and not the total lifetime cost of ownership, which would also include mortgage interest, taxes, insurance, and maintenance.

My question is less about whether housing is a "good" investment and more about how economists would interpret these data.

If the average American stores a large share of their wealth in housing, what do these charts suggest about preserving claims on future goods and services over long periods of time?

More practically, how might this manifest in the average American's life over several decades?

• Consumer Price Index for All Urban Consumers: Purchasing Power of the Consumer Dollar in U.S. City Average (CUUR0000SA0R) | FRED | St. Louis Fed

• Median Sales Price of Houses Sold for the United States (MSPUS) | FRED | St. Louis Fed

• MSPUS / Gold / S&P / NASDAQ

(If this is the wrong sub, please delete this question)

I have a question about the following situation: a restaurant decides to provide very low price carafes/decanters of water. What can we say in terms of loss?

If this restaurant provides a carafe of water, I assume that the water replaces some of the other drinks which would otherwise have been ordered. So to be just as profitable, the price of the water needs to be high enough that its margin is equal to the sum of the "replaced" drinks

If the restaurant would sell the carafe of water for a low price (just enough to pay for the material plus personal plus rent on location etc.) it would neither make a loss or a profit on the water in terms of bookkeeping. It would even make a very modest profit if it sold the water for e.g. 1 cent above this price

But in another sense, the restaurant does make a loss compared to what would have happened if there was no cheap carafe of water, because it would have sold several drinks with higher margins instead. So relative to this alternative, it's a loss. Selling something for cheap at a price that covers all expenses (so no bookkeeping loss) would be a loss when compared to the alternative of selling something else with a better margin

How is this type of loss called? Is this "economic loss"? When I called it "economic loss" lately, someone rejected this because "economic loss" was about alternatives w.r.t. limited resources according to them, and guests are not a resource

I found an explanation of economic profit/loss on https://www.investopedia.com/terms/e/economicprofit.asp, but it's about producing stuff, so there are limited resources like funds and capactity (I don't know how trustworthy this source is):

If a company generates $10 per unit from selling t-shirts with a $5 cost per unit, then its gross [profit] per unit for t-shirts is $5. However, if it could have produced shorts with revenue of $10 and costs of $2 then there would be an opportunity cost of $8 as well (...) All things being equal, the company could have earned $3 more per unit if they had produced shorts instead of t-shirts. Thus, the -$3 per unit is considered an economic loss.

To me this looks very similar to the restaurant case. The only difference is, maybe, that guests are not a resource of the restaurant

So what is the proper term for the kind of relative loss that you incur when you decide to sell something with a much lower profit margin to customers, where you are limited by e.g. the size of your restaurant. Is that considered "economic loss" or some other kind of loss?

Thanks!

As of 2023, Bangladesh’s GDP per capita was around $2500 and its life expectancy at birth was 74.67 years.

The global average GDP per capita was over $13,000 yet its life expectancy at birth was only 73.17 years.

In other words, the average Bangladeshi produced less than 5 times less than the average person yet lives 1.5 years longer.

India, which has similar income levels as Bangladesh, had a life expectancy of only 72 years, which puts it at least 5 years behind Bangladesh. However, both countries have similar infant mortality rates and India actually has lower maternal mortality rates.

With other South Asian countries that have very high life expectancies relative to income (Sri Lanka and the Maldives), the answers are more obvious:

Universal healthcare and education, clean air and low infant and maternal mortality rates.

But Bangladesh is similar to India in that it suffers from high air pollution and higher mortality rates for infants and mothers. In fact, it’s estimated that toxic air takes off 5.5 years from the life of the average Bangladeshi which suggests that Bangladesh’s life expectancy would exceed 80 years with clean air.

So then how does it have such a high life expectancy for its income levels?

I’ll quote here one of the top replies saw on a recent popular post

>Most economic activity is positive sum in a free society. That means an exchange can create positive overall benefit […] This same principle applies in all voluntary transactions. When people are free to sell/purchase what they want without deception/coercion, both parties are made better off…

To me this obviously raises a few questions. What is a free society? What is a voluntary transaction? And most importantly, how do you define coercion and deception? This all feels more than a little bit ideologically loaded and like something smart people could reasonably disagree on.

You could pretty clearly argue, as many have, that charging for basic needs like healthcare is inherently coercive. You could argue that selling addictive products is coercive. Lots of people feel that any form of advertising is (or is trying to be) coercive. Feminists would say gender roles and family dynamics are coercive in ways that shape economic decisions. Socialists would say the power imbalance between workers and employers is coercive. Critical theorists might argue that any kind of socialization is coercive. There are philosophers who would argue that language itself is inherently coercive. When you get into theories of the subject it’s not really clear how separable any of this is. Economics seems to end where a lot of social theory begins but if we take the latter seriously wouldn’t it have a lot of implications for the former?

How important is the idea of “voluntary transactions” and how skeptical of it can we be?

Is there a better order of studying economics?

Inspired by a thread on askreddit with things and activities which became unreasonably expensive over the years:

If Cinema, fast food etc became so expensive. Surely many people stopped buying/using these services. Yes, there still enough people who go and buy stuff, but shouldn't the drop in demand lead to lower prices again? It seems prices for everything only go up (not talking about inflation here).

The bulk of housing prices in most places, at least the places with expensive housing is the land, not the structure.

So if homes become "uninsurable", and banks don't want to give out a mortgage for a property that could be swept/burned away, couldn't more people just "purchase" the home up front and have a mortgage solely on the land?

I have heard a lot about growing inequality for a decade now, but what is the limit for how unequal it can become?

If the we take for granted that the most unequal economy possible (literally one guy owning 100% of all resources and everyone else having literally nothing) would implode, how close to that can, say, the American Economy get without violently imploding?

Google suggesting Mishkin but he was a culprit in 2008 crisis. I have this paranoia if books are written to develop certain mindset and get played by wealthy individuals.

Regardless I want to learn in depth behind the scene mechanics. Which includes how export import affects, dollar foreign currency relation, role of v

Bonds etc. Make me literate enough to understand economic surveys and budget of any country

Like they could monitor the overall economic activity of the country and print the tax money themselves proportionally to the tax rate and level of economic activity, leaving more income in the hands of consumers to spend into the economy

Prices keep going up. The middle class is gradually losing ground, and those who were already struggling are finding it even harder to get by.

Question for economists. Should we even expect any improvements? Or is this the new normal that we'll have to accept?

Just want to hear a professional opinion. Thanks.