CounterPunch Exclusives

CounterPunch Exclusives

Why People Say the Economy is Bad: Fees and Insurance

House, Knappa, Oregon. Photo: Jeffrey St. Clair.

People’s negative assessments of the economy continue to be somewhat of a mystery. The recent run-up in gas prices and inflation more generally is unambiguously bad news, but is this the worst economy ever, as some of the consumer confidence measures have been showing recently? Real income for those at the middle and bottom has generally been rising by standard measures, so it seems that we’re missing something, and I’m not sure any of us have figured out what.

My friend, Jared Bernstein, argues that a big part of the story is that consumers are unhappy not just because of inflation, but because prices are high. Implicitly, they expect them to come down and are unhappy that they don’t. I’m not entirely happy with this story, primarily because I remember the 1980s. Back then we had a big surge in inflation in the 1970s, which was brought down by a severe recession (actually two recessions) from 1980 to 1982.

But prices never actually fell; we just got the rate of inflation down from peaks of more than 10% to around 3-4%. And most people seemed happy, or at least they told survey takers they were happy.

I will come back to this issue. I think there might be something to the prices are high complaint, but maybe in a somewhat different way than Jared has laid out. I do think we need to consider the possibility that people don’t see inflation in the same way economists measure it.

I’ll address two areas where I think the Consumer Price Index (CPI) and Personal Consumption Expenditure Deflator (PCE) may miss part of the story. Then I will talk a bit more generally about how we measure inflation versus how it might be perceived by consumers.

Fees Charged to Renters

The Guardian had a great investigative piece this week, by Tracie McMillian, about the fees charged to tenants by the real estate management company Greystar. According to the piece, Greystar tacks a wide range of fees for everything from sewage and trash pickup to access to amenities, even to the cost of processing rent payments. According to a study cited in the article, these fees averaged 20% of rents.

Greystar is just one company, but the piece indicates that it manages approximately 1.1 million rental units across the country. That by itself would be more than........

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