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Six Dumb Misconceptions About The Economy (that the Politicians Want You To Believe)

Well, it looks like we’re here in another US election year already. 

As Advanced Mustachians, we already know that the ongoing battle of Harris vs. Trump should not be consuming much of our time.  Sure, we do our research and cast our votes but after that we move right on to focus on other things within our own circle of control.

But out of all the things the politicians like to bicker about, there’s one area where MMM does need to set the record straight, and that area is of course money. Your money, the economy in general, and the overall wealth of the nation. 

Politicians are already not known for being the sharpest tools in the shed when it comes to technical stuff like science, technology, or economics. But this year the discourse has become particularly dumb, as our candidates try to manipulate undecided voters in swing states with ideas that are based on irrational emotions rather than sound economic sense. 

For one particularly funny example, you may have noticed that the competing party (Trump in this case) is attacking the incumbents (Biden/Harris) over the “bad economy.” When in fact the US economy is stronger than it has ever been, with the lowest unemployment we’ve ever seen as well. 

It’s hard to imagine a better situation than we have right now, and in fact the recent bout of higher inflation is a sign that things have been going too well, and we needed to step on the brakes with the help of higher interest rates

But somehow the people still seem to believe that we have a “bad” economy. Take a look at this Gallup poll showing that while most people (85%) are doing really well right now, they assume that it’s just their own good fortune – only 17% believe the economy is doing well. 

This is mathematically impossible, because if most people are doing well, that’s the definition of a good economy! And suspiciously enough, this widespread wrongness correlates quite nicely with the rise of social media misinformation.

So the politicians and the news have been doing the opposite of what they should be doing in an ideal situation (sharing accurate information). And sure, we can always just ignore their speeches and go on with our lives. But when it comes to economics, knowledge is power (and money). The more accurately we understand how things really work, the wealthier we will all become.

So with all that in mind, I hereby present you with my list of the… 

Top Dumb Things Politicians Want You To Believe About The Economy

1: The President Controls the Economy

If there’s a recession, the opposition party likes to blame it on the current president. If the economy is booming, the current president likes to give himself (or possibly soon herself) credit for all of that success. But really, the US economy is way too big – and thankfully way too free – for the president to control or really even influence all that strongly. 

In reality, our economy is a gigantic machine which converts labor and materials into things like iPhones, hospitals and pumpkin pies. And although we’re the biggest economy at 26% of the planet, we are still heavily influenced by that much bigger 74% of economic activity that the other 7.6 billion people on Earth are busy producing everywhere else.

When we have our inevitable little boom and bust cycles, they are mostly caused by the normal cycle of irrational exuberance (and greed) like the 2007 housing boom, followed by brief periods of extreme fear and pessimism like the 2008-2012 financial and housing crash. 

The government does play a role too, by setting tax rates and other rules. But the effects of these policies are usually so delayed and unpredictable, that you can’t draw a straight line between today’s president and today’s economy. In other words, the government does its best to adjust the rudder on our giant ship, but in the short term our economy lurches around on the waves and storms of the ocean.

2: The President Controls Interest Rates

This one is especially funny to me, as our candidates feign sympathy for the hard life of middle class Americans, who now face higher borrowing costs on their credit cards and car loans and mortgages. They claim they will fight to bring the interest rates down. Trump even goes as far as bullying our Federal Reserve board members (who can only do their jobs if we allow them to function as independent experts) and suggesting that he would take over the whole department, if elected.

The real story is that while monetary policy would be a terrible tool to leave in the hands of a sitting president (see Argentina), it does function as an excellent set of gas and brake pedals for the economy if used properly. When things slow down and unemployment gets too high, a cut to the interest rates will produce a boost in everything from new jobs to stock prices. But if things get too hot, you get rapid inflation which can mess up the system.

3: Inflation has Made Life Harder for Americans (and the President Can Magically Reverse it)

This line of reasoning is even dumber than the last one. For a couple of years after the Covid era, we had rapid inflation. It was caused by a rare combination of a goods shortage caused by things like factory closures and remote work, plentiful demand from government stimulus spending and low interest rates. These factors have since ironed themselves out, and inflation is back down to an ultra-low 2.4%.

Steve Ballmer explains the inflation vs wages debate in his useful new video series called USA Facts (see note below)

But most significantly, wages have still risen faster than inflation so we are all better off than before! Since 2019, overall prices are up 19% and our wages are up 21%. So even after all that inflation, we are still doing just fine. But the candidates are still bickering over inflation as if it’s an actual problem, and even worse promising to “bring prices back down”. And they’ve managed to convince the electorate that “higher wages and prices” is the same thing as “a bad economy”. Which is just plain wrong.

Bonus dumbness: politicians also occasionally blame “greedy corporations” for increasing prices to hoard profits. While price increases are totally acceptable in a market system (as a business owner you are free to set prices wherever you like), in reality it doesn’t usually happen because our markets are too competitive. For example, a recent deep analysis from NPR showed that no, grocery stores haven’t made any windfall profit at all off of this recent bout of Covid-fueled inflation.

4: The President Controls Housing Prices

One important thing that has changed over the past ten years is that US house prices and rents have both risen much faster than general inflation and even wages. On the positive side, interest rates have also risen which tends to make houses feel more expensive and is supposed to help bring house prices down. But it hasn’t happened yet which means we have the double whammy of higher prices and higher interest costs for mortgage borrowers. 

The dumb part is that our candidates are proposing things that would make the problem even worse, like subsidies for first-time homebuyers or schemes to reduce the interest rates. When really the solution is to increase the supply of housing, which I personally think will happen if we stop putting up roadblocks for homebuilders (myself included) to build housing. 

Things like faster and cheaper permits, less onerous and expensive building codes, eliminating suburban-style zoning and setback and car parking rules, and changing laws so that NIMBYs no longer get any say over what other people do with their own land could all help reduce the cost of building a house by about 50%, quickly and permanently.

5: The President Controls Gas Prices, and They Are Currently “High” and We Want Them Lower

Ahh, gasoline! The most ridiculous of things to worry about and the fuel for many of MMM’s rants since 2011. 

First of all, on an inflation-adjusted basis, gasoline is still about the same price as it was in 1950: in the $3-4 range per gallon, in today’s dollars. 

Secondly, it is so cheap that even with our huge inefficient American vehicles, the average household is still only spending 2.5% of their disposable income on the stuff! (The funny part is that they spend many times more on the rest of the car ownership experience while thinking gas is the part that is expensive)

Third, gasoline has been obsolete for almost a decade now. You can get a used electric car for less than the price of a comparable used gas car, or if you’re a fancypants money waster like me, new EVs are also cheaper than their gas counterparts. You get a faster, nicer car that almost never needs maintenance OR gasoline, and save money.

So why are we even still talking about this antique fuel of a previous era? Why aren’t the candidates also arguing over the price of Kodak film or typewriters or fax machines?

6: The Economy is Something We Should Even Worry About

The funniest part about all this economic talk is that we’re focusing on the wrong thing. While hard work and business and advancing the frontiers of human knowledge are all fun things, the reality is that we passed the point of having “Enough” decades ago. When the American middle class complains about how hard we have it these days, it’s like a bunch of overfed people at a buffet wishing they could just have one more flavor of donuts stacked onto the table.

Yes, we have income and wealth inequality so that the rich tend to get richer more quickly. And yes, we should keep that in check with a somewhat progressive tax system because a more equal society tends to be a more peaceful and happy one. 

But have you noticed that as the rich people get richer, they don’t get any happier? It’s because after you pass the point of “Enough”, adding more money doesn’t really help much. 

And “Enough” is much more defined by your mindset (and your collection of life skills) than your paycheck. So if the politicians really cared about improving our happiness and wellbeing, they’d be preaching the Principles of Mustachianism rather than pandering to the specific requests of coal miners or billionaires.

But alas, winning an election is a very different thing than proposing stuff that is actually best for the country. And for that reason, we cast our votes for the best party and then tune back out until the next election.

Happy voting!

In the Comments: Has the election season been getting you down, pumping you up, or just giving you a thorough dose of “Meh”?

Further Reading/Watching: 

While researching economic stats for this article, I came across a quirky but informative series of videos called USA Facts by none other than former Microsoft CEO Steve Ballmer. It seems that he had the same frustration as me: Americans are fighting over a bunch of opinions and misinformation without even bothering to look up the actual facts. So he made a well-produced series of videos that just share the facts without the baggage of political hype on top of them. I wish our politicians could do the same thing!

Bonus Podcast based on this article!
Thanks to the magic of AI, you can direct the wizardry within Google to generate a custom-made podcast on almost anything on the Internet. A reader just emailed me this take on this episode – remarkably human-like and even entertaining!
https://notebooklm.google.com/notebook/0e1d0af8-8888-466c-abe4-8b1da8986773/audio

  • Joe O. October 13, 2024, 3:30 pm

    I appreciate your overall point but feels like hand waving on the inflation. My family food costs, insurance, and property taxes increases have taken a big bite well beyond the percentages you sight. It’s a real problem.

    Reply
    • Mr. Money Mustache October 13, 2024, 3:46 pm

      Yeah, while inflation has a pretty neutral effect overall, is not always fair or evenly distributed.

      If you feel like sharing more, would you mind doing this analysis on the overall effect for your family?

      – your salary in 2019 vs. today (percentage change)
      – your home value the same time period (% increase)
      – your mortgage balance in 2019 (because overall inflation has effectively shrank your mortgage relative to your wealth)
      – the value of your investment portfolio in 2019 (because every $100,000 you had on Jan 1, 2019 is now worth $215,000 here in October 2024!)
      – your combined annual spending on food + insurance + property taxes in 2019 vs today

      For most of us, when considering these factors we are far ahead today of where were four years ago. Even if certain expenses have risen faster than inflation.

      Reply
      • AlexN October 13, 2024, 6:34 pm

        So true. Definitely way better today than I was 4 years ago and better today than I was 10 years ago and better today than I was 20 years ago. Because of you and others with simple personal finance plans and having the right portfolio to include having emergency funds to prepare for increased inflation during certain periods in the economy, this has no real affect on me currently nor in the future. Just stay on pace and watch my 7 figure portfolio continue to grow and provide the lifestyle I’ve always wanted. So to you MMM I thank you so much.

        Reply
        • Mr. Money Mustache October 13, 2024, 8:16 pm

          Glad to hear it Alex!

          Even though I’ve never had an emergency fund – if your base spending is low enough relative to your income, any “emergencies” just go onto your credit card which gets paid off automatically the next month with your regular income. (Plus you can always sell a few shares or use your line of credit in the unlikely event that balance is ever too high)

          Reply
          • AlexN October 13, 2024, 10:06 pm

            Yeah when I say emergency fund I technically don’t have money set aside in an account that isn’t invested. So yes if I needed some cash on hand I can dig into my Roth and get some of my principle. And honestly I’ve never really had an emergency that I really needed to cash anything out. So always has stayed untouched only to add to. I’m at a 75% savings rate of my take home pay. Expenses super low. Never carry any debt. No state income tax state. The difference goes right to my 3 accounts. 401k, Roth IRA using backdoor and the rest into the taxable account. Steadily and happily employed for 21 years straight. Just staying focused and keep going.

            Reply
      • kellile October 14, 2024, 8:37 pm

        “every $100,000 you had on Jan 1, 2019 is now worth $215,000 here in October 2024!”

        Can you explain? Is this investment growth assuming a particular asset allocation and withdrawal rate?

        Thank you!

        Reply
        • Mr. Money Mustache October 14, 2024, 9:53 pm

          Absolutely – that’s just the crazy recent run-up of our S&P500 index, which is basically both the easiest and best investment via an exchange traded index fund like Vanguard’s VTI.

          You can calculate your own returns for any time period here: https://ofdollarsanddata.com/sp500-calculator/

          Reply
          • Kelli October 15, 2024, 7:51 am

            Thanks!
            I’ve read asset allocation posts here but they are over a decade old. Do you have updated advice? 100% VTI?

            Reply
      • Joe November 8, 2024, 10:39 pm

        This is a really good point that I think is often overlooked. My Fiance is a Family Dr, I work in early stage tech start ups. The difference in interest rates has virtually no effect on her job.

        A few years ago, stupid money was getting thrown at the companies I worked with. Now that money has nearly dried up. This is almost entirely because of the change in interest rates affecting investment in early stage start ups.

        Reply
    • Lynn B. October 13, 2024, 7:13 pm

      I disagree with some of your points.
      Does anyone find it interesting that the interest rates were dropped a few weeks ago? Right before an election? Esp after the feds said numerous times they would lower them anymore? That looked to me as a special favor to the incumbent party.

      Also- I agree with Joe that ALL of my costs have gone up. So the raises that I’ve received are covering the increased costs of daily living. Therefore, I do not have “more” discretionary income. I’m essentially stagnant bc my dollar doesn’t go as far.
      Fortunately, I make a good salary and can handle the increased costs but that doesn’t mean I’m better off. I’m saving the same amount of money I always have – not more bc the extra money is going to towards all of the increased costs.
      Yes my home value is up but it doesn’t matter bc I live in it. The value of my house only matters when I sell. It doesn’t change my everyday. Of course my mortgage loan is down- bc I have to pay it every month no matter what. I do have to fork out a lot more money for property taxes, escrow, home insurance – etc. so my monthly cost for the mortgage is up. That does not make me happy bc that means I can’t save more.
      And yes my retirement amount is up due to the stock market – fortunately- but again – I’m not using it right now. What happens to folks Who do need to retire? Aren’t the tax cuts in place about to expire? Aren’t retirees going to pay higher taxes?
      I feel like yes I’m fortunate I can weather the storm now – but what about those families that make less? How are they making ends meet? Is their paycheck going further? This country isn’t just about high earners. The economy in general and high cost of living is affecting lower wage earners and possibly retirees.
      We need to think about how everyone is affecting not just savers. I also find it interesting how you are posting this right before an election.
      I normally enjoy your posts but this one is a bit biased

      Reply
      • Larry Beagle October 14, 2024, 4:06 am

        As much as we’d love to avoid politics, elections Matter.
        One candidate offers a $6,000 child tax credit which will help all families with children.
        One candidate promises to eliminate the Affordable Care Act subsidies with a “concept of a plan”, which will raise health insurance costs for pre-Medicare retirees, like myself by thousands of dollars. One candidate promises to roll back the insulin price cap and the senior price cap on prescription medications negotiated by Medicare. One candidate promises huge tariffs, which do not need approval from congress, which will raise prices across the board. The companies that do manufacture domestically, will unilaterally raise prices to be in parity with the companies affected, leading to higher inflation overall. Plus expect a retaliatory trade war from other countries, making it harder to export products – lower sales, smaller corporate profits, layoffs, shrinking economy.

        All of these will have an immediate impact soon after the election.

        Reply
        • Luke October 14, 2024, 12:56 pm

          The fact that tariffs weren’t discussed in the original article is an unfortunate oversight. It’s astounding to me that so many people are basing their voting decision on this vague discontent over the cost of goods, and yet haven’t even taken the steps to understand what blanket tariffs will do to those costs.

          Reply
          • ER October 18, 2024, 8:38 am

            Agreed! I think this is the biggest economic myth that needs to be addressed. Autarky is the end goal of all these tariffs, and it has negative economic consequences that seem to be missing from what the politicans say. Without the ability to trade, countries lose the benefits of specialization and comparative advantage. This leads to higher prices for in country consumers and a lack of diversity in available goods. Autarky stifles innovation and technological progress by isolating a country from global competition and advancements. An autarkic system is also more vulnerable to domestic economic shocks, such as natural disasters or supply disruptions, because it cannot rely on imports to balance shortfalls. Autarky reduces a country’s economic growth potential by cutting off access to international markets, foreign investment, and trade-driven employment opportunities. Finally, it risks diplomatic isolation, as trade restrictions often result in retaliatory measures from other nations, further limiting a country’s global economic and political influence. While autarky may appeal in terms of self-reliance, the downsides—higher costs, reduced growth, and vulnerability—make it unsustainable in the modern country.

            Reply
            • The SocialCapitalist October 21, 2024, 7:20 am

              Thanks for bringing this post up. We are a tail wagging the dog society- seeing past inflation (like a dog turning around to lick its privates) as a problem instead of future concerns (the dog licking us in the face).
              But tariffs fit with the anti-international agenda. MMM makes many great points and I am glad he wrote the article because these two politicians as a rule are lying about the past, but more scary is which future side are you on? Silliness of housing subsidies, or terror of tariffs? Many other decisions to make in this election, this may not be most important… yet.

          • GG November 11, 2024, 8:28 pm

            A lot of people don’t even know what tariffs are. My son works for a local mom and pop pizza joint owned by a nice Greek family. My son was telling the owner why he voted for Harris (he just turned 18). The owner claimed Trump will be better, blah blah blah, and then
            Y son said “but what about those tariffs? Don’t those concern you as a business owner and how that might impact your cost of goods?” It was then that the owner said he doesn’t know anything about tariffs. I’m guessing most of trumps base doesn’t either 😆

            But as MM correctly states, politicians are mostly hot air with little actual impact on our economy in the long run.

            Reply
        • BobJ November 4, 2024, 2:49 am

          One candidate promotes open borders, is responsible for more crime.. spends like a fool and wants to tax even higher the people that are providing the jobs that make up our great economy. Yes, one canddate promotes spending your hard earned tax dollars at an unsustainable rate.

          Reply
      • Marcia October 14, 2024, 10:58 am

        The plans to roll back some tax cuts – back to 39.6% top tax rates – certainly will affect me, but not the poor. The point is for people like me to pay more so that others don’t have to.

        Reply
      • Rounding the bend October 14, 2024, 6:33 pm

        Tax rates are set the the legislature, not the president.

        Reply
      • Matt November 1, 2024, 12:42 pm

        “Does anyone find it interesting that the interest rates were dropped a few weeks ago? Right before an election? Esp after the feds said numerous times they would lower them anymore? That looked to me as a special favor to the incumbent party.”

        To be frank, I think that you may be out of the loop in terms of tracking the Federal Reserve’s intentions. It isn’t out of the blue, a rate cut when the inflation data was right has been getting signaled for almost a year and Fed watchers were aware of it. They are always incredibly measured since markets tend to overreact to their signals. The inflation data was decreasing but still jumpy until recently, making it difficult to tell when the right time is. They were (and are) frankly in a damned-if-they-do, damned-if-they-don’t situation.

        Obviously, I have a positive view of them as experts trying to do their best. I suppose it could be as you say, but I think it’s also true that a rate cut now was reasonable given the current data and continued pain from high rates.

        Reply
        • Mr. Money Mustache November 4, 2024, 7:12 am

          Yeah, that’s kind of exactly what this article was about. The politicians like to spin things one way or the other to make it sound like the economy is a political tool that the other side is weaponizing against them in a big secret conspiracy.

          The truth is much more boring: we have hundreds of millions of hardworking people here toiling and inventing things and building things throughout the country, and that just creates wealth. And we have a very competent central bank system that is the envy of the world, doing their best to flatten out the inevitable boom/bust cycles.

          On top of that, we did NOT need a rate cut to boost the economy and “help the incumbent party” – we’re already on top of the world, economically speaking. But the recent rate cuts are an attempt at keeping things going on the longer horizon. They will be providing a slight lift to the economy 12 months from now, when the newly elected administration is settling in.

          Reply
      • Matt November 8, 2024, 2:27 pm

        Lynn, the Fed has been telegraphing steady interest rate cuts to close out the year since the summer. Their Open Market Committee meetings are on a fixed schedule. Everything about the most recent rate cut was expected and predictable as a response to a slightly less off the charts good economy. Further, the Fed is one of our few government institutions that has remained mostly independent and free of political influence. Remember how often Janet Yellen and after her Jerome Powell had to refuse Trump’s screams that they cut interest rates? I do.

        As for tariffs, folks, tariffs are basically sales taxes paid by the importing country. And that cost is passed on to you, the consumer. It is not a fee paid by the exporter for the privilege of sending us their goods. That means every time you see the words, Made in China printed on the goods you buy, every last one of those purchases becomes more expensive.

        Reply
      • Mysticaltyger November 11, 2024, 10:53 am

        Similar for me. My portfolio has jumped, but I actually had to move in with family due to Covid policies (which I won’t get into here unless someone really wants to know). Rents and home prices have skyrocketed even in areas that used to be cheaper.

        I do agree, though, with MMM 100% on zoning laws and NIMBY-ism. I lived through what that did to California. It’s turned it into a state of total haves and have nots. Lots of hypocrisy there.

        Reply
    • Robert October 13, 2024, 7:22 pm

      I agree that the inflation bit felt hand-wavy. It is true that the aggregate effect is pretty close to neutral. However, the unevenness of the distribution is understated. Inflation (especially on the goods in the CPI basket) disproportionately affect lower wage earners. Additionally, lower wage earners are often in unskilled jobs (which means theoretically infinite competition for limited jobs) and things like cost-of-living wage increases frequently lag many months or even more than a year when compared to the inflation effect.

      The typical Mustachian probably hasn’t even really noticed inflation, except maybe in some of the bigger ticket items that are difficult to control like home and auto insurance. (That’s about how it has been for me.) But sadly, most people aren’t Mustachians and the current economic gyrations are at a greater amplitude than they have been in the past. When someone doesn’t have adequate financial cushioning, the bumpier economic ride can be noticeably more painful.

      Reply
      • A guy October 15, 2024, 3:42 pm

        But similarly neither are wage increases the same across income quintiles. For example, if low earners are most impacted by both they may net out just fine, right.

        Reply
    • B. Clark October 14, 2024, 8:18 pm

      Food costs for me are higher than they were but my insurances have remained unchanged in 6 years and my property taxes went down $30.00. I am in New York state.

      Reply
    • Figuy October 31, 2024, 7:56 pm

      According to the USDA, the average american spends the same 5-6% of their income on food as the past 20 years. It was 14% in the 1960s. If your property taxes are going up a lot, it probably means your home prices have gone up a lot which is net positive. The high increases in insurance is also partially due to the higher home replacement costs.

      Reply
      • Tyler November 1, 2024, 1:06 pm

        This is nice if you’re up-and-coming, but if you’re a retiree, it can suck the money right out of you. Property taxes and insurance are drains. The value of your home doesn’t put money in your wallet unless you sell your house – and then where are you going to live? You can borrow against your equity, but then you have a new liability. Inflated values are not always a huge gift to homeowners.

        Reply
        • Figuy November 10, 2024, 5:12 pm

          Retirees and anyone who depends on dividends and capital gains from equity like investments have done even better than wage earners the during the past 5 years relative a bundle of typical expenses like food, property taxes, and insurance.

          Reply
          • Tyler November 11, 2024, 11:00 am

            You do realize that lots of retirees live on social security, right? They aren’t all rich mustachians.

            Reply
            • Figuy December 3, 2024, 8:36 pm

              Do Traditional retirees with low savings rates rely heavily on SS? Yes.
              Do Mustachian early retirees mostly rely on equities or other similar investments? Yes

  • Tim October 13, 2024, 3:37 pm

    Always enjoy your articles. Have you ever read the writings of John Tamny @ realclearmarkets.com? He, I believe, is kind of a libertarian thinker. That’s just my guess, I don’t know for sure. He shares your belief that our presidents have limited influence over our economy. He also believes the Fed also has limited influence. From your article, I take it you believe they hold a bit more punch than Mr. Tamny believes. Anyway, I find his writings interesting and wondered if you’d heard of him or what you thought. Thanks for the work you put into your blog. I’ve found it very inspirational over the years.

    Reply
  • Tanner October 13, 2024, 4:01 pm

    I agree with the vast majority of your post, most people are wildly misinformed about the economy and how it affects them, and people pursuing FI are likely doing great since the pandemic ended.

    While my families grocery costs have gone up, that has more than been offset by increased wages thanks to raises I got to keep up with “inflation.” And the 2.8% mortgage we got on a refi in 2020 is a massive bargain now. Gas prices don’t bother me since I’m riding my bike to work most days like a good Mustachian!

    Two minor quibbles: I don’t think Harris or any non Trump politician has ever said anything about wanting to control the Fed. I also don’t think the housing credit is a great idea, but Harris has said a lot about encouraging building by streamlining building approval. Unfortunately, those issues are generally hyper local and will have to be dealt with county by county.

    Reply
  • Republic DC-9 October 13, 2024, 4:47 pm

    MMM for President! :)

    And all great points.

    By following the principles in your articles over the years, my wife and I have noticed that (as you predicted in your articles) we’ve become millionaires with zero debt surprisingly quickly.

    We’ve simultaneously realized that we don’t need a lot of “stuff” nor unnecessary driving and travel to be happy, which makes us richer still (in both money AND time), and less susceptible to inflation (though my wages and net worth have risen faster than inflation).

    Both of these factors greatly reduce worry about inflation, gas prices, “the economy”, potential job loss, etc.while giving us NEW things to worry about like when to stop working and what we’d like life to be like after work stops.

    Glad to see another post, MMM, keep them coming and thank you as your blog really was the inspiration that caused us to take action and become FI (still working on pulling that RE plug).

    Reply
    • carl October 13, 2024, 5:21 pm

      I like the idea of President Stache’, but he’s too smart to take that awful job.

      Reply
      • Mr. Money Mustache October 13, 2024, 6:00 pm

        You’re right, I am much more of a DICTATOR than the type of endlessly patient person you need to be to get things done in a big democracy. I can’t even stand the bureaucracy of getting a building permit!

        I’d personally love to see Jocko Willink hang up the machine gun and the microphone and come serve his country one last time as president. A bit of DISCIPLINE would do this country some good! (Plus his book Extreme Ownership is a damned good and fun to read leadership book)

        Oh, and Congratulations Republic, glad to hear things are going so well for you and your family!

        Reply
  • Betsy October 13, 2024, 6:38 pm

    I usually agree with you, but… “wages have still risen faster than inflation so we are all better off than before!” I haven’t received a paycheck since I retired 17 years ago, but all my expenses are up.

    I’ve cut back on discretionary purchases and am fortunate to still be able to pay my essential bills, but I am not better off.

    When Kamala starts taxing the unrealized appreciation on our assets, the government will really rack in the money. I hope after a down year we will get a refund for our unrealized losses.

    Reply
    • Mr. Money Mustache October 13, 2024, 8:12 pm

      Do you have any investments that are funding your retirement?

      If so, I’d encourage you to check their value now versus your balance in 2019, you might find you are better off than you think.

      However, unless that balance is over $100 million dollars, you wouldn’t be a target of Harris’ proposed tax on unrealized capital gains. Taxes almost NEVER rise on the middle class in this country because it’s too hard to do it from a political perspective.
      https://taxfoundation.org/blog/harris-unrealized-capital-gains-tax/

      In fact, even that $100-millionaire tax is unlikely to pass, because if the Democrats win they will be faced with a very divided house and senate.

      The real lesson: Don’t watch political debates and don’t listen to the flashy campaign promises! But *do* read the longer form analyses of all the proposals.

      Reply
      • Tyler October 24, 2024, 11:51 am

        “In fact, even that $100-millionaire tax is unlikely to pass, because if the Democrats win they will be faced with a very divided house and senate.”

        The fact that you have to point this out should tell you how extreme and radical this idea is… I would never, ever support someone who proposes such an insane idea. It’s akin to wealth confiscation.
        Keep in mind, the income tax also began as a tax on the wealthy, so before you say this is “slippery slope fallacy,” there is a precedent and demonstrated history of governments turning the heat up in this manner until we are cooked.

        Reply
      • Betsy October 27, 2024, 8:16 pm

        I’m glad many people are doing well; we each have our own situation. The first three years of the Biden/Harris inflation were manageable for me, but this year it has started to pinch. My margin of safety has shrunk as the cumulative effect of year after year of above average inflation eroded my life style. This year my personal CPI has sky rocketed.

        The 60% increase in my property insurance has forced me to really clamp down on spending to squeeze out the needed additional $580. My umbrella policy bill will come in the next month and I am holding my breath.

        It took politicians 40 years to dare to light the inflation fire again, after they had committed political suicide decades ago.

        Yes, my portfolio hit an all time high mid-2021 and has gone sideways since. It continues to support an annual 5% increase in income. It’s fun to see the portfolio grow, but it is more like a milk cow than a show pony. .

        You said “Taxes almost NEVER rise on the middle class in this country because it’s too hard to do it from a political perspective.” But Congress does raise taxes on the middle class. Remember when they started taxing Social Security in the 1980’s? Or the Clinton’s tax increase? If Kamala lets the Trump taxes cuts expire, taxes will go up.

        Joe Biden put the tax in unrealized capital gains in his latest budget and Harris still supports it. They hope someday it will go through and then they will start including more and more taxpayers, just like when they started the income tax in 1913.

        Reply
    • Ken October 14, 2024, 11:03 am

      Harris has proposed taxing unrealized gains on portfolios of $100M or more. Pretty sure no Mustachean is in that crowd (though a couple of Billionaires do trend Mustachean in attitude). So this lament probably is a worry based on faulty information.

      Further, I don’t think it’ll become law as drafted, but people at that level of assets can (and do!) simply borrow money to live on & pledge assets as security. So instead of paying cap gain taxes, they pay meager interest. With $100M+, indeed it’s possible to live profligately while never sustaining significant cap gain tax because you can defer them your entire lifetime. That is some 🐂 💩 & should be fixed.

      But probably all Mustacheans *will* feel the pinch of harmonizing tax rates between labor income and realized appreciation. And while I don’t really love that I’ll pay more taxes, this position is fundamentally just. It’s high time we fixed it.

      Reply
    • A guy October 15, 2024, 3:46 pm

      Do you get social security? If so, are you aware how the COL is calculated? If not, inflation is indeed a risk of any retirement plan and you have my sympathy that it happened in yours. It’s a lot more luck than we’d like to think.

      Reply
  • Juice October 13, 2024, 6:50 pm

    Nice try Sparky. This entire article is a PsyOp and sounds like gas lighting to me.

    Reply
    • Mr. Money Mustache October 13, 2024, 8:12 pm

      Hahaha… Economics 101 is branded as gaslighting now?

      Reply
      • Aaron October 13, 2024, 10:46 pm

        “You cannot reason a person out of a position he did not reason himself into in the first place.” Jonathan Swift

        Some people like Juice here aren’t worth wasting your breath on. I really appreciate the reminder and the timing of this article though. Those who DO reason appreciate a reminder of the real numbers and facts when we make our voting decisions.

        Reply
      • Glen October 13, 2024, 11:10 pm

        So interesting to read these comments trying to argue that the economy is in fact terrible right now because it feels bad.
        Unfortunately the fixes you identified for the housing market seem to me unlikely to happen.

        Reply
        • Tyler October 14, 2024, 6:58 am

          The fixes he identified for the housing market are happening all over the country, they just don’t tend to make national news. Check out Minneapolis if you want a larger scale example, or take a look at the Strong Towns organization for many, many more.

          Reply
          • Ben October 14, 2024, 12:48 pm

            Glad to see a Strong Towns mention here, they’re doing fantastic work!

            Reply
      • Bryce October 29, 2024, 8:24 am

        I think you should calculate PAST the increase in the nominal value of a portfolio – show us whether someone living 100% off of The 4% Rule has gained or lost ground to inflation as a function of their safe and passive income. This is the heart of Mustachian analysis. Remember, for every $1 of increased monthly cost of living, your portfolio must gain >$300 annually ($1x12x25).

        Let’s do it hypothetically for someone living in Florida whose homeowners insurance increased by $125 per month.

        $125 x 12 x 25 = $37,500. This is the amount their portfolio would need to grow just to cover this line item. If we factor in all of the other inflationary COL’s, does it mean a mustache trim? Or does the Rule stand up?

        Reply
        • Mr. Money Mustache October 29, 2024, 11:52 am

          There are lots of calculators out there to do this! I really like Engaging Data: https://engaging-data.com/visualizing-4-rule/

          But the quick answer is that YES, in recent years the Mustachian would definitely come out ahead. For the simple reason that stock prices have drastically outpaced inflation.

          Or to use the Florida Homeowner example, suppose they retired in 2019 with $1M in index funds. Today after dividends they have just about $2M, which even after adjusting for the cumulative 21% inflation is about 1.65M. So they are laughing all the way to the bank even with the higher nominal prices!

          Reply
        • Michael November 8, 2024, 5:03 pm

          The increase in homeowners insurance isn’t only inflation. It’s a combination of increased repair costs and increased risk of claims due to extreme weather caused by global warming.

          Reply
          • Mr. Money Mustache November 9, 2024, 9:09 am

            Good point – those insurance companies update their models after every storm and take climate models into account as well. So the real measure of house insurance inflation would have to be on policies from a company that operates only somewhere that is isolated from natural disasters.

            Reply
            • Tyler November 11, 2024, 11:02 am

              Which is really silly, because that’s the whole point of insurance – to cover the costs of natural disasters. It’s kind of like a health insurance refusing to cover those with “pre-existing conditions.” In a free market, companies would see a need (those without coverage) and they would meet that need with an offer. This looks like an organized effort to take coverage away from certain people. Why?

  • Margaret Barrett October 13, 2024, 6:55 pm

    Amen!!! It’s so sad that nobody remembers American Government from high school or college. Presidents have very little control over these things. Yes inflation is higher but we are also making more on investments. Even people who are risk averse have been making 5-6% on CDs and money market accounts. Even with the recent drop in interest rates high yield savings accounts are paying 4%. This stuff is all cyclical and politicians are preying on people who lack critical thinking skills and have a very limited understanding of the checks and balances that govern our political system.

    Reply
    • Kelly October 14, 2024, 6:36 am

      This is also why it’s important to emphasize that we’re not just electing a president, we’re voting all down the ballot – the folks that actually make and pass the laws. Pay attention to those folks and who they report to and what they hope/plan to do.

      Reply
    • Tyler October 28, 2024, 7:52 am

      There are about a hundred other things we learned in high school government class that nobody seems to be remembering – the president pretty much can’t do anything except veto bills, pretty much all of the first 10 amendments to the bill of rights (that’s more like middle school, really), the principle of legal precedent, the idea of judicial activism versus judicial restraint… We are pretty far off course. Our government is bloated and our rights are getting curtailed.

      Reply
  • Robert October 13, 2024, 7:04 pm

    Minor nit: Steve Ballmer did not co-found Microsoft. It was co-founded by Bill Gates and Paul Allen. Ballmer was an early employee who joined when the company was only a few years old, and eventually became CEO. He was there early enough on that he is commonly misidentified as a co-founder.

    Reply
  • Charlie October 13, 2024, 7:20 pm

    Policy does influence a few items in this list. The definition of inflation is government spending. Unnecessary COVID relief spending tipped inflation and set off a chain reaction.

    Many items in this article feel like a sponsored post. Hard to have someone preaching how things are actually better than what most people are feeling. This one is a miss for me.

    Reply
    • Mr. Money Mustache October 13, 2024, 8:01 pm

      How strange, I got almost the same comment over on Twitter – it’s a common misconception but no, inflation is absolutely NOT the same thing as government spending!

      A government can spend (and even run a deficit) in the presence of inflation, stable currency, or even deflation and we have seen examples of all three around the world in the modern era.

      Here’s that discussion over on that platform: https://x.com/BGA_512/status/1845568664637968781

      And I’ll also post the same response here to save people a click:

      – government deficits don’t necessarily cause inflation. They are funded by the sale of T-bills and bonds.

      – separately, the Federal Reserve Bank (which is not part of the federal government) controls the money supply, sometimes increasing it and other times decreasing (it shrank by over $2 trillion last year!) The Fed does not have to print money in order to fund a deficit.

      – but wait! Even an expanding money supply does not dictate the inflation rate. As we saw last year, we can have inflation even when the money supply shrinks, and this year we have much LOWER inflation even with a growing money supply

      – moderate inflation is NOT bad and does not destroy purchasing power (unless you keep your wealth all in cash)

      Reply
      • Charlie October 13, 2024, 10:03 pm

        I guess I return to government policy. Adding 2 trillion of unnecessary spending to try and “one up” an opposing party which then cascades (insert any technical justifications here) into 40 year high inflation is bad policy let alone the amount added to our ever growing debt. I am surprised at the levels of defense of what many Americans feel are very poor management of our tax resources (wiping out student loans for a targeted cohort, funding foreign conflicts, encouraging mass illegal immigration which then drives up housing prices due to increased demand, etc.). Stack that on top of talks of introducing taxation on future unrealized earnings which I’ve heard many concerned about the shock it would cause on the economy. Sure, these have been focused on the “billionaires”, but they have many tax and legal loopholes to minimize their exposure. It gets the concept on the books to then lower the thresholds down and down over time until it hits the “middle class”. The history of our income tax would show that these things begin small and naturally increase over time. Look at the impact to middle class taxes over time. And should we really give the government more of our income tax if they are so fiscally irresponsible with what they are taking now? When does it end?

        I know I am paying more for common goods, my wages are not keeping up with inflation, and I have a very real concern for my kids ability to afford home ownership given current market conditions.

        Our encouragement should be for responsible spending of available resources and balancing a budget as we would with our own finances. It feels like many of our own financial independence core principals are side stepped to support political beliefs. I guess saying the “President Controls” argument although technically accurate doesn’t appear to highlight that the “President Impacts” these same areas. I strongly feel policy matters.

        I personally feel the model below would serve our country well;
        https://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/

        Thanks for the discussion.

        Reply
        • Frank October 14, 2024, 3:39 am

          Illegal immigration plays barely a role in driving up house prices, whereas most immigrants both legal and illegal contribute far more to the economy in taxes then they take out.

          On a side note this is why American politics is so warped at the moment. Someone says something, someone comes along and points out clearly and rationally why this or that statement is wrong and what the correct point is. But then the original persons ignores the science and the experts and believes what they want anyway.

          Reply
          • Charlie October 14, 2024, 8:19 am

            You agree government spending does not affect inflation? They may not control it but they do impact it. You may not live in a community impacted by illegal immigration but it does affect housing prices and rent affordability. I’m not saying it is tipping the scales overall. It would be interesting to see actual data on how much is contributed to the economy by illegal migrants vs the spending now to shelter and feed and social services consumed.

            Government wants to massively spend money, then warned of inflationary impact, then spends money, then inflationary impact, then justification and “science” and “experts” “fact check” everything to tell you “to reject the evidence of your eyes and ears”. We are definitely in a state where experts and science are justifiably questioned. It would have been nice to connect the dots on what then caused the last inflationary period without saying “the president doesn’t control inflation”.

            If 2 Trillion wasn’t spent, would we be in an inflationary period?

            Reply
          • PG October 18, 2024, 8:39 pm

            I see your point. In general, I think we should value science, and I’m trained as a scientist. I just want people to not use the word “science” like it is the absolute truth. Science is an approximation of reality or nature based on models and experiments and on how we analyze and interpret the data from them. Models and experiments are not perfect and sometimes our interpretations of the data (even if the data are correct) can be wrong. So, science is continuously being perfected with new theories, models, and interpretations. I often see now when people use the words scientific or science-based, they use them to shut down discussions. “It’s based on science, so you have to accept my viewpoint.” What if your “science” is selectively choosing what models, studies, data, and interpretations to consider. What if that selection is politically or financially motivated? These are the things we should consider when debating “science.”

            Reply
            • trugs October 26, 2024, 4:30 pm

              I am a scientist. Science is not perfect. But it is a thousand times better than politicians who just make sh*t up.

            • trugs October 27, 2024, 5:58 pm

              I am a scientist. Of course, science is not infallible.

              Consider however an issue (health, climate, …) on which almost all the scientific experts are in agreement. In opposition are some so-called “news” commentators and allied politicians whose job is to keep viewers constantly agitated by spouting outrageous nonsense.

              Bet on the scientists. You will not be right every time. But almost every time.

        • fishfish October 14, 2024, 4:01 am

          Did you hear about the time the US paid off the national debt? The Indicator from Planet Money did an episode about it, which I found enlightening. An interesting illustration of the difference between personal debt and national debt.
          https://www.npr.org/2021/12/23/1067429082/the-time-the-us-paid-off-all-its-debt-indigator-favorite

          Reply
          • Charlie October 14, 2024, 8:21 am

            So debt is good? At what point between $0 and $35 Trillion should the US hold debt?

            Reply
            • Tyler October 17, 2024, 10:24 am

              Maybe 1 quadrillion is the magic number for national debt.
              In all seriousness, it’s more about ratios between things like national debt, gross domestic product, national assets (makes me feel gross saying that because it almost implies the government owns all of your property)…

              Thing is, metrics like GDP vs national debt matter. So do the ratio between total tax revenue and interest on the national debt.

              At some point, you literally and mathematically CANNOT tax your way out of national debt.

              These are uncomfortable truths that some people don’t like to admit.

      • Daragh October 14, 2024, 1:55 am

        I see things differently:

        1. “Government deficits don’t necessarily cause inflation. They are funded by the sale of T-bills and bonds.”

        Yes, but if demand for those bonds is weak, the central bank steps in as the lender of last resort, printing money to purchase them, which can lead to inflation.

        2. “Even an expanding money supply does not dictate the inflation rate. As we saw last year, we can have inflation even when the money supply shrinks, and this year we have much lower inflation even with a growing money supply.”

        Yes, but inflation often lags behind changes in the money supply—it can take time for new money to fully circulate and impact prices.

        3. “Moderate inflation is NOT bad and does not destroy purchasing power (unless you keep your wealth all in cash).”

        Inflation does destroy purchasing power. Investing in assets that grow faster than inflation, like stocks or real estate, can keep you ahead of it. They don’t avoid inflation, they just try to beat it.

        Reply
        • carla October 17, 2024, 11:26 am

          Thanks Daragh. I am a MMM fan but this particular post is disappointing for the lack of understanding of these concepts.

          Reply
          • Karl hungus October 26, 2024, 10:19 am

            Daragh’s points do not counter MMM’s points, they are more like addendums.

            Reply
    • Karl hungus October 26, 2024, 10:16 am

      Inflation is the rise of prices of goods and services over time. Thats it. People look too deep into such things.

      Reply
  • Dharma Bum October 13, 2024, 7:31 pm

    You really hit the nail on the head this time. Whenever my acquaintances get into arguments about Trump vs Harris, Democrats vs Republicans, etc. (which is extra stupid because they are all Canadians), I point out that it’s mostly theatre and that the U.S. Machine pretty much runs itself regardless of whatever moron in “in charge”.
    Blaming others (including the president of the moment) for one’s financial situation is beyond ludicrous.
    Unfortunately this falls on deaf ears, so I am happy to see this post which corroborates my opinion. I will forward it on the the dumb and dumbers as a big fat “told ya!”.

    Reply
  • CK October 13, 2024, 7:33 pm

    I generally love your perspective on finance and work ethic etc. but the level of apathy in your political view is a perfect example of what is wrong with the US. Let’s help make this country as good for our children as it has been to us. No man is an island they say.

    Reply
    • Mr. Money Mustache October 13, 2024, 7:55 pm

      I’m surprised this article comes across as apathetic! It’s just me doing my part to help share information that can help people make a more informed decision, and then encouraging them to VOTE!

      Also, if more people call them out on their campaign rhetoric and instead show that we actually understand Economics, the politicians will gradually be forced to shift their campaign style towards facts rather than emotions.

      Or in fewer words: The only real safeguard of Democracy, is Education.

      Reply
      • Frank October 14, 2024, 3:45 am

        This article was great. If only more people understood the limited impact the president has on the economy the better. And the number of people who think recessions aren’t a part of the normal economic cycle is incredible

        Reply
      • Kelly October 14, 2024, 6:50 am

        I think all the things you talked about were helpful and true, and I know the focus of this post is on the top ticket, but I think it’s important to note that we’re also voting for the people who do actually impact the things you discussed. Dismissing the impact of politics on our financial well-being based on the presidential race alone might not be apathetic, but does feel a bit dismissive. We do have some control, it just happens to be down the ticket, including the local level. Folks making the laws about things like education (as you mention) are key, and slip through because we’re hand waving about the bluster at the top.

        Reply
  • Craig October 13, 2024, 7:35 pm

    Great article!! An Economics class would help a LOT of individuals understand things!! 😊

    Reply
  • Paul October 13, 2024, 7:39 pm

    Any guidance on buying used EVs?

    Reply
    • Mr. Money Mustache October 13, 2024, 8:26 pm

      Yeah!

      In a few words: Used Chevrolet Bolts and Tesla Model 3s and Ys

      Keep an eye on Carvana, Craigslist, Facebook Marketplace and any other used car sites you hear about. And compare those to the “Tesla Existing Inventory” page (because used model 3s are now under $20k!).

      Prioritize low mileage and check the battery health to see that the car’s range is still near its new level (both of those cars are known for long-lasting battery packs, 10+ years and upwards of 200,000 miles before they even lose significant range)

      Reply
      • Doug Hallberg October 15, 2024, 11:40 am

        What’s your opinion on hybrids? Are you just all in on full electric?

        Reply
        • Mr. Money Mustache October 30, 2024, 7:23 pm

          I think hybrids were great as a transition technology, because they helped our gas cars become more efficient back when batteries were too expensive to make an affordable all-electric car.

          For example, in 2013, electric car battery packs cost about $780 per kWh to build, meaning my Tesla Model Y’s 80 kWh pack alone would have cost $62,000!

          Today (2024 as I write this) that battery pack number is about $100, so my battery is only $8k of the car’s price. And since an electric car no longer needs an engine, transmission, exhaust system or all the other junk that comes with combustion, we now see electric cars have become LESS expensive than gas cars of equivalent quality/performance (the model Y is in the low $40s brand new, and under $30k used)

          With the combination of easy+cheap home charging plus a bunch of nationwide fast charging networks (Tesla’s is still the best by far), there is no reason to have to settle for a hybrid – unless you’re shopping in the cheaper end of the used market. An under $10k used Prius with low miles is still a great frugal car if you can find one!

          Reply
    • Michael October 13, 2024, 8:52 pm

      Avoid Nissan Leafs since their charging standard is no longer used and their batteries are air cooled, leading to far more degradation than other EVs that have active cooling. If you’re looking at Chevy Bolt’s make sure the battery modules were repaired per the recall. One of the best things about them is that your house is your “fuel” station. If you don’t have at home charging available it can be more of a challenge (unless your work has chargers).

      Reply
      • dandarc October 15, 2024, 12:21 pm

        Our 2014 Leaf that we bought used for a song in 2019 is still doing exactly what we need it to do – around town car, usually under 10 miles per day (eBike would be even more economical, but I kinda like my climate control here in the very hot, very humid southeast). If you’re needing to do a lot of long-distance driving, then yeah – Leaf’s, particularly older ones aren’t a great choice.

        Agreed on at-home charging still the best way – public charging is expanding, but paid public charging is often as expensive as gasoline.

        Reply
    • THorton October 14, 2024, 1:55 pm

      https://www.autotempest.com/ aggregates a bunch of different used car sales websites & has filters to make searching really easy.

      Reply
    • Chris October 18, 2024, 1:55 pm

      I bought a two-year-old Volkswagen ID.4 with 20K miles on it for a net cost of $17K in mid-2024, including a one-way plane flight to pick it up and drive home 800 miles. The blue book value was $24K, so I increased my net worth by $7K in the process.

      I am a low-income mustachian, so I haven’t paid federal income taxes in years (I withhold zero and get a check every year!), but the dealer was able to take the $4,000 federal tax credit for me. My state also chipped in $5,000 cash ($2,500 for regular folks, $2,500 for “low-income” people like me — they don’t ask about assets, just income).

      It is a great car. It has a few quirks, like any vehicle, but the short version is that it basically dropped out of an alien spaceship from the future. I would NEVER go back to a gas car.

      I found my car on autotrader.com. No endorsement intended; it is just a site that worked reliably for me.

      Reply
  • kellie October 13, 2024, 7:51 pm

    “But most significantly, wages have still risen faster than inflation so we are all better off than before!”
    Hmm…what about seniors on fixed incomes? I’ve been shocked by the increase in monthly costs at my father’s assisted living facility.

    Reply
    • Mr. Money Mustache October 13, 2024, 8:30 pm

      Yes, you’re right – if anyone does not have their own investments and is living on an income which is specifically NOT indexed to inflation, their spending power will decrease over time.

      Note that this is not the case with Social Security – that is sometimes referred to as “a fixed income” but in reality it is indexed to inflation. A few of the most recent adjustments:

      2022 5.9%
      2023 8.7%
      2024 3.2%
      2025 2.5%

      Reply
      • kellie October 14, 2024, 11:30 am

        Thanks for writing back! I always appreciate hearing your thoughts.

        There are plenty of people who say SS does NOT keep up with inflation:

        “Though the COLA is supposed to keep up with inflation, it’s missed the mark in eight of the last 15 adjustments, according to a recent analysis by The Senior Citizens League, an advocacy group, which looked at the annual increases prior to the one for 2025.
        Over the past five years, only the 2023 adjustment has beaten the rate of inflation. The COLAs lagged inflation by as much as 1.1 percentage points the other years.

        “Social Security benefits have lost 20% of their buying power since 2010, according to the league. Those who retired that year would need a boost of $370 a month, or $4,440 a year, on average, to regain the lost value.

        “The automatic annual cost-of-living adjustment is one of Social Security’s most essential and unique features. It is intended to ensure that benefits do not erode over time,” Nancy Altman, president of Social Security Works, an advocacy group, said in a statement. “However, the formula currently used to calculate annual COLAs under-measures the expenses that Social Security beneficiaries face. Seniors spend a greater proportion of their income on medical expenses―and the Social Security COLA should reflect that.”

        “What’s more, senior citizens typically don’t receive the full adjustment. Medicare Part B premiums, which are automatically deducted from monthly Social Security benefits, can erode the annual boost. For 2025, the standard monthly premium is expected to be $185, an increase of more than $10 from this year, according to the latest Medicare trustees report.”

        https://www.cnn.com/2024/10/10/politics/social-security-cola-increase/index.html#:~:text=Though%20the%20COLA%20is%20supposed%20to%20keep%20up,2023%20adjustment%20has%20beaten%20the%20rate%20of%20inflation.

        Reply
        • MrColton October 16, 2024, 1:51 pm

          This. CPI-W is used on SS, which is known to outpace what is generally referred to as a more accurate reflection of the real cost of goods people endure, CPI-U.

          Also, lots of people are retired with pensions which are adjusted by either a flat % or not adjusted at all, and these retirees have seen serious pain from inflation, even if their stock portoflio has done well. Considering that most retirees hold lots of bonds and bonds got completely thrashed in 2022, it’s very possible for a retiree to have not been able to keep up with inflation.

          Reply
    • Matt November 8, 2024, 2:41 pm

      Look, this “fixed income” myth is one that really needs to go away right now. As a practical matter there is no such thing as a “fixed income” in the United States, unless some unfortunate retiree stuck their entire net worth under their mattress on the day they bid their employer farewell. Social Security receives annual cost of living adjustments. Defined benefit pensions almost always adjust for inflation. Private retirement account can and should be very easily invested in interest bearing securities or the stock market. Heck, even a no risk money market account has paid around 5% annually for the last couple of years.

      Reply
      • Betsy November 9, 2024, 2:03 pm

        Don’t forget income taxes. Earning 5%, for me, paying 25% federal and state taxes, equals 3.5% after tax income. Of the 2.5% Social Security increase this year, after tax, my check will effectively be 1.875% more than I received last year. This isn’t enough to keep my nose above water when (August 2024 year over year core) inflation is up 2.8%. This may seem small decrease, but it is in addition to past years, after tax increases, not keeping up with inflation.

        My salvation is a portfolio (80% stock/20% cash) from which I take 5% a year (minus 25% tax withholding) and a small rental cottage. Retirement income for me is a three legged stool; Social Security, securities portfolio, and rental real estate. Diversification is crucial.

        Reply
        • Matt November 10, 2024, 9:40 am

          Something is not adding up here. I’m going to assume this 25% tax rate you’re referencing is some combination of federal and state income taxes and that represents only your top marginal rate that likely applies to only a small share of your annual income. You definitely DO NOT have a 25% effective tax rate unless this three legged stool is generating enormous income for you. The 22% federal tax rate for a single taxpayer doesn’t kick in until around $45,000 per year, and the 24% rate at a whopping $95,000 per year. Every dollar below those thresholds is taxed at much lower rates or not at all. We should add this to the economic myths that need to go away. Most Americans pay vastly smaller taxes than they think they do.

          But wait, the good news doesn’t end there! If a person doesn’t like paying these income tax rates they can invest their entire portfolio in equities and never pay more than the puny 15% rate on their capital gains. That 80/20 portfolio you mention would have generated huge gains for you in the last 4 years while paying very little in tax. I’m not really buying that a person in this situation would be having even the slightest difficulty keeping their nose above water.

          Look, I don’t know your precise situation or anyone else’s, but I have grown really sick to death of objectively well-to-do Americans complaining about how hard up against it they are. We all need to get a grip and a little perspective. By any global or historical measure a middle class American in 2024 is among the top 1% wealthiest people who have ever lived. We are kings who somehow have convinced ourselves that we are paupers.

          Reply
  • Roi October 13, 2024, 7:52 pm

    I am not US citizen or resident, but it is interesting reading your comments on inflation in US.

    In my country, Spain, we have suffered the same inflation rate more or less, but it has been really damaging to real economy, as salaries didn’t grow at the same rate and taxes didn’t change or adapt to adjust to inflation.

    I think inflation affects different to poor people that middle-upper class or more qualified workers. Those who are not invested in the market, who do not own houses or who have difficulties to negotiate salary raises or change jobs, are really affected negatively by inflation. That’s why I think is bad, mostly for the poorest part of the society.

    Reply
    • Derrick October 15, 2024, 6:11 am

      Maybe that is true in Spain, but there were numerous reports post-pandemic that, in the US, the highest wage growth (as a %) went to the bottom decile of wage earners.
      https://www.epi.org/publication/swa-wages-2023/
      https://www.cnbc.com/2023/03/30/low-wage-workers-saw-tremendously-fast-wage-growth-since-2019.html

      Reply
    • Marc October 16, 2024, 9:42 am

      Well, the minimum salary in Spain has increased by 47% between 2019 and 2023 (part of it was long due, because of the harsh economic crisis in 2012-2014), but saying that salaries did not grow at the same rate is partly untrue. Not all have increase by 47%, agree, still, most have increased by more than 20%.
      Also, inflation was out of control on electricity for example, but it has now come back to much lower prices (and general inflation data are now below 2%)

      Reply
  • Vs October 13, 2024, 8:36 pm

    Vivek Ramaswamy (Republican) says he is going to stay in politics for a long time. Take a look at his books and podcasts (rather than his campaign speeches which are targeted at masses). He has some very good ideas about the country and economy.

    Reply
  • Ricky October 13, 2024, 9:40 pm

    As someone who enjoys the absurd, it has been great entertainment. Each side ratcheting up the ridiculous promises, divorced from reality. It is better than football, because of the hysterical responses from almost everyone.

    Reply
  • Madge October 13, 2024, 10:37 pm

    I mean, no, the president does not “control” the economy, but certainly bone-headed moves like putting giant tariffs on imported goods and destroying the capacity of the government to regulate or enforce safety and environmental standards makes a big difference in how the economy functions. Surely if the United States is seen as not operating under the rule of law, or not actually being a democratic republic anymore, that impacts the economy, too.

    Reply
  • Nico October 13, 2024, 10:46 pm

    I see that in your country, as in Europe, disinformation is there.

    Reply
  • Zack October 14, 2024, 12:01 am

    Since January 2019, my hourly wage is up about 20% and my investment portfolio has gone from about $10,000 to about $220,000. Because I discovered this Blog in October 2018 and never looked back.

    Between Covid, the 2022 recession, and all of the other geopolitical insanity between now and then, I’ve focused on what *I* can control (dumping money into index funds as often as possible) and while I paid attention to everything going on, I didn’t let it Influence me to get off track.

    So yeah, while some things such as assisted living facilities (as my 98 year old grandmother will attest) have no doubt gone through the roof, on AVERAGE, things are better now than they were 4 years ago. They’re damn sure better for me.

    I’ve discussed the points in this article with close friends and family over the last year or so. It’s often met with the same skepticism I’m seeing in this comment section. Every time, we end up at the same conclusion: THEY are actually a lot better off today than they were 4 years ago, but that’s “only them” because they’re “lucky” and “everyone else” is suffering. The news and youtube said so, after all.

    Excellent post, MMM

    Reply
  • Greg October 14, 2024, 12:04 am

    As always, I agree with the bulk of your article.

    On point 3 though, in my view this is superceded by point 4. Rents have risen so fast compared to wages that imo this torpedoes any argument anyone could make that life isn’t harder now than it was 5 years ago

    Wages/investment income have kept pace with groceries, and even if they hadn’t, no biggie – root veg/alliums/dried pulses/plant oils/spices allow us to make a healthy and tasty meal for pennies if we learn to cook some basic Indian or middle eastern recipes, rendering it a non-issue for most people

    Same for gas prices – as you say, it’s such a small percentage of overall spending that it’s a non issue for most people

    However, when your biggest expense goes up by 50% more than your wages, this is an issue. Shelter is so low on the hierarchy of needs and relatively inelastic. I enjoyed your previous post on moving to a different area (maybe because that’s what I did 7 years ago, so I’ve got the bias lol), but we shouldn’t pretend that a disproportionate increase in rent in most metro areas isn’t making life harder for many people

    In point 4 onwards I’m back to fully agreeing with you as normal. There doesn’t appear to be a cogent plan from any politician right now to address long-term falling housing affordability. We’ll move through the economic cycle and a time will come when housing is temporarily less unaffordable, but I don’t see any longer term potential solutions being mooted. Mustachians will of course be fine as always, but my empathy for those who haven’t been lucky enough to find your wonderful blog is strong on this issue

    Reply
    • Mr. Money Mustache October 14, 2024, 7:08 am

      Sounds like we both agree that rent and housing have outpaced inflation in the last few years. But I still disagree on the “torpedo” effect:

      Housing (aka “Shelter”) is part of the Consumer Price Index (CPI) and it is weighted at a pretty appropriate level in my opinion – I see it’s currently 36%. The Bureau of Labor Statistics has always done pretty good work!

      https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.htm

      So with the overall CPI up by 19% and average wages up by 21%, we are still probably doing all right. It’s just that our mix of expenses has shifted around.

      I have a theory that the natural Human bias towards negativity is playing into this as well: we notice eggs doubling in price and are EXTREMELY pissed about that every time we go to the grocery store. Meanwhile, the decreased price of things like clothing and home goods and other things which have actually dropped on an inflation-adjusted basis doesn’t feel nearly as “good” as the eggs feel “Bad”.

      Reply
      • Dharma Bum October 14, 2024, 7:52 am

        I guess it’s because you can’t do clothes and home goods scrambled, Western, over easy, poached, omelet, devilled, hard boiled, soft boiled, sunny side up, Florentine orBenedict.

        Reply
      • Greg October 14, 2024, 10:08 am

        I agree that our mix of expenses has shifted – clothes, home goods, and other semi-luxury items are more affordable than ever, while housing is notably less affordable than it was 5 years ago

        I’m undecided on your theory about a bias towards negativity. On the one hand, I’m originally from England, so moaning is deeply embedded in my DNA. On the other hand, the thing that can most effectively hinder the Mustachian dream of a 66% (or higher) savings rate is a significant relative increase in our biggest and least elastic expense

        When the cost of clothes and household goods goes down (relatively speaking), the real numbers change in weekly expenditure is minimal. Barbells, bikes and salads mean that expensive flattering clothes aren’t needed. Active participation in buy nothing groups and repair cafes keeps spending on household goods to a minimum

        When mortgage repayments double, the real numbers change in weekly expenditure is huge. Whilst not everyone keeps their spending on clothes and household goods sensibly low, the option is there if needed. Going without that new shirt or dishwasher for a few months is doable with no real negative consequences. Going without shelter isn’t

        I’m fortunate in that my weekly income far outstrips my housing cost, so the only real consequences I’ve felt from the spiralling prices are a delay in my FIRE date and an urge to spend more time on online forums complaining that housing is unacceptably overpriced/the politicians who actively create policies which cause housing undersupply and misuse are bellends

        However, for the people for whom the significant increase in relative cost of shelter takes care of a large chunk of their weekly income, I still believe the stress created means that life does indeed feel much harder now than it did 5 years ago.

        I completely agree that a president won’t come along and magically solve it, especially given the apparent accidie demonstrated by both Trump and Harris on the issue

        Reply
        • Patrick October 14, 2024, 11:22 am

          I’m with Greg on this. The BLS is not perfect, and the CPI estimate of housing costs leaves a lot to be desired (Google it). That is just an average across the country. Coastal cities have gone up a lot more, and not everyone can easily move to Colorado, where real estate is still surprisingly affordable.

          Also, CPI up by 19% with wages up 21% – those are just averages across a very large bucket (the US). As an engineer I can’t believe MMM isn’t getting this. You can have an average which makes it seem like the average person is doing fine but within that average distribution you can have people that are doing horrible. And you can have more people that are doing poorly if you have a small number of people that are doing much better. Averages mean nothing about distribution.

          Reply
          • Amy October 14, 2024, 5:30 pm

            Great point! As a data analyst my supervisors would be very disappointed in my analysis if I only presented averages as a holistic summary. I would very much like to see the distributions. For anyone interested, the BLS website does show geographic distribution of CPI by geography (regions and select major metro areas). Based on some cursory analysis wage and price increases are not homogeneous geographically, and the inelastic nature of housing (as already mentioned) makes it difficult for people to move to take advantage of inefficiencies in wage/price changes.

            Reply
            • Justin October 21, 2024, 10:05 am

              Come on, MMM understands distributions. He understands there are all kinds of experiences and averages are generalizations. But they allow us to make some sense of the world. It will always be true that there are winners and losers among distributions so long as we can and want to attach value judgements to their realities.

              If I had to criticize the article it would be that any whiff of a suggestion that economic realities are the source of our happiness or not. Anyone who follows MMM knows this is far from true, and that national elections and in particular the president can sets a tone and an agenda that can affect happiness indicators like access to quality health care, clean air, water, and food supply, climate change mitigation, personal and reproductive liberty, and access to high quality education. If you think the two main political parties in this country are the same on these issues I have a lot of land to sell you that floats in the sky.

      • DLL October 14, 2024, 3:39 pm

        Some things are definitely not controlled by the government. Who can I blame? The avians? From Investopedia: “Egg prices have surged since late spring, rising amid a surge in avian influenza in the nation’s commercial poultry flocks. (There was a similar outbreak in late 2022.) The U.S. Department of Agriculture (USDA) in July estimated that avian flu had sickened over 3 million birds, or roughly about 1% of the nation’s supply of egg-laying chickens”

        Reply
      • Doug Hallberg October 15, 2024, 11:49 am

        Probably because people buy eggs a lot more than clothes. The increase is more in your face than the decrease. Some prices SHOULD have gone up. How the hell was anyone making money on the $.99/dozen eggs I was buying at Aldi’s?

        Reply
  • Matt Hofmann October 14, 2024, 2:08 am

    Hi MMM
    What will the effect of a win of Trump be on the US stock market, the economics of high market capital US corporations and the economic emotions amongst Americans??
    Thanks for your opinion!
    Matt

    Reply
    • Mr. Money Mustache October 14, 2024, 6:53 am

      Oh that’s another great question that I should have included in the article:

      7) The President does not control the stock market

      The effect of a Trump or Harris win on the stock market will be pretty much neutral, just as it was in 2016 when Trump won or 2020 when Biden did. Lots of short term noise, but no real effect over the years. The stock market will continue going UP as long as our economy continues to grow.

      Of course, a bad enough president/government CAN steer our giant ship into an iceberg if they push through enough dumb policies. Tariffs and trade wars (currently promised by both sides) are one such dumb idea. Another one is behaving erratically so that companies have less trust in our economic and legal systems – stable institutions and predictable policies matter if you want big companies to continue investing and hiring people in your country.

      But in general, our big corporations have such a big say in US politics that both parties need to be pretty business-friendly in order to get anything passed.

      And although some corporations do plenty of bad things at the margins, I’m still in favor of a business friendly country that is not overly regulated. It’s why I moved here in the first place!

      Reply
      • Brian October 26, 2024, 3:35 am

        I would add to this, that the only thing that would have a major (potentially permanent effect) on the stock market is if our form of government changes. That is, if we tragically go from a democracy to authoritarianism. This has been shown to torpedo the stock market in other countries it has happened to, both very acutely in the short term as well as in the long term.

        If that doesn’t happen, the stock market could have a major correction that has nothing to do with who is in office, and mostly just from the fact that valuations are extraordinarily high.

        Reply
      • Tyler October 28, 2024, 7:57 am

        Fed Chair appointees, 3-letter-agency party switches, congressional changes (see: presidential coat tails), tax cuts versus tax increases, and on and on… all affect the stock market tremendously.

        Reply
  • Sally Hill October 14, 2024, 2:55 am

    Although it might seem the chief executive would be unable to directly influence concerns you’ve mentioned, dedication to maintaining power by one political group might inspire actions by other influential people

    We don’t know ANYONE who isn’t impacted by inflation, crime, world war.

    And frankly, the attacks on constitutional freedoms are deeply concerning.

    Any concerns about globalism?

    Reply
  • Geoff October 14, 2024, 3:26 am

    As an observer across the pond in the UK, your election looks very different. The US economy looks like it’s doing just fine from here, frankly. Obviously there will always be individuals affected in different ways – some of the comments reflect this. But you might (or might not!) be surprised at how the candidates are perceived overseas – things like personal integrity for example. Although sadly we’ve had some crappy politicians elected here over the last 5 years based on unjustified economic claims. Feels like it’s way too easy to fool people with this stuff.

    Reply
    • Justin October 21, 2024, 10:16 am

      I appreciate this comment. And while many Americans outright dismiss international comparisons, its helpful to get beyond the typical American chauvinism and have some perspective given the long established global economic and security realities. US inflation caused largely by supply side shocks was among the lowest in the developed world. Our stock market held up better than just about anyone’s. And our unemployment averages were also among the very lowest. It’s disappointing and frankly worrying to see so much negativity infecting the comments section here. Almost like the MMM community has also taken the bait of the political class that is fishing in waters of resentment and grievance… I’d hate to think we are forgetting our Mustachean readings and lifestyle choices. I know the actual forums are full of less negativity but this one has surprised me.

      Reply
  • Aaron Hemry October 14, 2024, 5:26 am

    Great article!

    You said it all when you advised to concentrate on our circle of control.

    I wonder how much time and money, and how many family connections and friendships are wasted fighting over who should or shouldn’t get elected president.

    Unless you can personally influence thousands of voters in a swing state to vote for your chosen candidate, I say go back to your normally scheduled lives…

    Reply
  • Eva October 14, 2024, 6:23 am

    MMM,

    Always excited to see a new post from you! I discovered your blog in December of 2022 and it completely changed my life. I became a single mom about 4 years ago and had to completely start over. Today I have a 6 figure net worth, went back to school and finished my degree that was paid for with scholarships and grants, bought a house with %20 down last May (even with these high rates), and I’m on track to pay off the house and have 1 million invested in 13 years (right around the time my kids will graduate high school). This stuff really does work, even in “today’s economy”. I just want to say thank you for the inspiring content.

    Reply
  • G October 14, 2024, 6:36 am

    I disagree with the “bonus dumbness” about corporate greed. Yes, grocery stores and food producers didn’t make more money, but they didn’t lose money either, they passed on the extra costs to the customer. The main cause of the increase in grocery prices, especially fresh meat and produce, was fuel costs. The groceries, actually, everything we buy, gets shipped via giant diesel guzzling tractor trailer trucks. The price of fuel tanked during the pandemic, and both OPEC and american oil companies shut down production in the face of reduced demand, then the war in Ukraine cut off Russia from the global oil market. Suddenly the recovered economy from the pandemic increased demand, and supply was still low, so fuel prices skyrocketed. Instead of keeping production up, for fear of losing money, or quickly ramping production back up, petroleum producers deliberately dragged their feet in ramping production back up to artificially lower supply to increase prices and make record profits. This is somewhat similar to the DeBeers diamond corporation hoarding diamonds to artificially reduce supply to increase prices and thus profits.
    The end result is higher prices of everything, since everything is shipped via trucks that use too much fuel. I long for the day when our entire economy doesn’t depend upon a global oil market, when electric tractor trailers deliver goods using electricity generated by solar panels and windmills, but we aren’t there yet unfortunately. I personally work from home as a software engineer, and from the teachings of this blog deliberately live within bicycle distance of the grocery store, so I have minimal fuel costs, however I still feel the effects of fuel costs at the grocery store, from my home builder, other contractors (which is why I try to DIY everything), etc. Car prices went up from chip shortages after covid, like way up. Housing prices when up after covid because people like myself no longer had to live near our high paying jobs and could work remotely from a lower cost of living area, so people suddenly increased demand in the suburban/exurban/semi-rural areas. I do agree with the main point of the article, is that the president has nothing to do with this, lol. What I disagree with is that corporate greed has nothing to do with this either. Business works the way it works. Capitalism works the way it works. No business will deliberately lose money to please its customers, and displease it’s shareholders. I guess this makes me anti-capitalist. I am working on FIRE, so I can retire early and join the owner class, so I do buy VTSAX, but I am still in the working class, and I guess I’m just jealous of those who are rich enough they don’t have to work. To those who think I am a hypocrite, I cite the old saying “if ya can’t beat em, join em” and by them I mean the capitalists.

    Reply
  • The Orchard October 14, 2024, 7:08 am

    Great article. This is a misconception I notice all the time, and it’s good to see more high-profile debunkings.

    It’s true that politicians can steer the long-term direction of the economy – either with bad policies like immigration restrictions, NIMBY laws and trade wars, or good policies like fixing infrastructure, incentivizing renewable energy and making healthcare affordable.

    But far too many people think that the president has a magic wand to control inflation or gas prices. When their lives are going well, they give the party in power too much of the credit, and when their lives are going badly, they give the party in power too much of the blame.

    The unfortunate thing about democracy is that most people who study the issues and think carefully have already decided who they’re going to vote for. For politicians to win elections, they have to get the increasingly tiny slice of swing voters – who, by definition, tend to be the people who don’t pay attention to politics or know very much about policy. Thus, those politicians have to pander to swing voters with ideas that don’t make sense but sound good to the uninformed. If us Mustachians were in charge, things would be different.

    Reply
  • Tim Livian October 14, 2024, 7:20 am

    Great post clarifying things! It’s similar to religion, if people are small and helpless they need someone big and mighty to help them get what they deserve. Sad that politicians take this same route and don’t try to better explain how things worth and have faith in the masses ability to eventually learn how things actually work, even though it’s not black or white, but more nuanced. Similar to why they don’t have real economists on CNBC/Bloomberg, but instead pumpers and forecasters that make definitive statements with what’s a guess seem like a certainty. People have to learn about statistics and probabilities and that there’s a range of possibilities that are weighted differently. But I guess that would make people feel nervous and uneasy and not confident in their leaders abilities to try and will things in the direction of their wishes, even if in reality they have very few levers to enact the changes. Most of it is just political circus and wasting everyones time with another version of the Colosseum or a soap opera-like bunch of drama that distracts us from the real issues that should be priorities.

    *Dismount from my soapbox*

    Reply
  • Tim Livian October 14, 2024, 7:39 am

    Quick correction: Steve Balmer was not a co-founder of Microsoft, that would be Bill Gates and Paul Allen, he’s just a CEO (that did a pretty bad job running the company and kept wasting shareholder capital on acquisitions that didn’t materialize and ended up getting written down. But since MSFT is like a quasi-monopoly it still did fine during that time, but nothing special. Similar to how Zuckerberg is now throwing billions at the Metaverse now in hopes that he can finally have his own platform and not be at the mercy of iOS or Android, with very little care for shareholders capital and no real estimate of when/if these HUGE investments will pay off. It’s nice to have supervising shares and effectively control a public company)

    Reply
  • Matias October 14, 2024, 8:00 am

    “Yes, we have income and wealth inequality so that the rich tend to get richer more quickly. And yes, we should keep that in check with a somewhat progressive tax system because a more equal society tends to be a more peaceful and happy one. ”
    “Socialist detected!”
    Real nice post as usual MMM. AS you say, “we should keep that in check”. I ‘m a Milton Friedman kind of capiltalist, and I’m convinced that way too much money in too few hands destroys markets and kills capitalism.

    Reply
  • Jason October 14, 2024, 8:08 am

    #7) Your vote for president is so precious that it must be the majority of the focus of all major, minor, and social media outlets.

    As a resident of the “Republic or non-Purple States,” you’re influence on the outcome of the presidential election is miniscule. For those, who instead reside the Democratic Republic of GA, NC, PA, MI, WI, AZ, NV – your vote counts about 10X (or more), so don’t screw it up!

    Reply
  • Todd October 14, 2024, 9:11 am

    Nice Article! As usual people hate facts. My general impression is I am certainly am better off than I was 4-5 yrs ago. No mortgage, no debt, 40% savings rate on my way to early retirement even though I started late.

    Reply
  • Laura Sonnier October 14, 2024, 9:57 am

    Gonna have to disagree with the salaries keeping pace with inflation. I’m in Texas and our food has doubled. We had $1500 disposable income before covid. Now our bills exceed our income. We have no debt. Don’t go on vacation, etc. I don’t know anyone whose salary has kept up. We are on the lower salary end tho (Is $70k lower end? Feels like it!). Maybe some white collar jobs have kept up? But two of the engineers I know have had tiny raises and two were laid off.

    My husband worked for Gallup as a pollster for years and he started laughing when I mentioned this article. He said not to put any stock in polls.

    My dad is on social security only and we all know that has NOT kept up.

    my cousins in central Texas and Arkansas are getting into debt too because salaries have not kept up. They said they don’t know anyone whose salary has kept up either. My cousins are very good with what little they have. Our grandmother was in a work house in the Great Depression. She taught us to be careful with money. We all respected that.

    It would be a blessing for sure if we would get raises commensurate with inflation! God bless.

    Reply
    • Kevin October 14, 2024, 12:02 pm

      Where I live, I have found that if you worked at a company, you definitely would not get a raise equal to inflation (I continued to get my 3% merit for 2 years). I started looking for jobs outside my company and the same job title with comparable work was offering me a 32% raise. After working that job for a year, I got an additional 15% for getting another job. My wife also netted a nice raise for searching outside her own company. In 2024, our pre-tax salaries are 64% higher than they were at the end of 2019 doing comparable work.

      I don’t live in Texas, so I’m not going to pretend that I know the job market there. But I think overall, people have to be willing to look if they want to earn more money, your current employer is probably not going to just hand you a raise to keep up with inflation.

      Reply
      • A guy October 17, 2024, 5:10 pm

        The Fed makes statistics available about wage increases which let you differentiate by those who changed jobs and those who didn’t. They also make data available about inflation and wage increases differentiated by locale and what quintile of income you fall in. Social security increases are tied to CPI. There’s data freely available for all of this stuff we don’t have to guess. Yes, there are ranges of outcomes for people in different situations. No, that doesn’t mean the president is serving some people poorly, because they have limited impact on economic outcomes in the short run.

        Reply
    • Leigh Ann October 23, 2024, 2:55 am

      Laura, I am also in Texas, and we have a similar experience. Our income has increased by about 2%, but our spending on basic necessities has increased 36% over the same 4 year period. We don’t save much outside of retirement accounts anymore, but at least we are keeping our heads above water.
      We have been greatly affected by increases in basic necessities: food, homeowners and car insurance (yes we shop around), utilities, and just day to day life. The value of my home or 401k seems insignificant when I’m trying to pinch pennies at the grocery store.
      This article seems very out of touch to families trying to live a middle class life and make ends meet, although I realize that is not the target audience.

      Reply
      • Laura Sonnier November 8, 2024, 11:35 pm

        Yeah. I was wondering if MMM is insulated and his peers have kept up with inflation bc they’re living on stocks / self-employed and didn’t lose clients when prices were raised ( Go mustachians!) , etc., or maybe when researching the data set was based on national averages. I was thinking I’m probably insulated in my own way as I know mostly working people though the incomes vary from $40k single moms to $300k married engineers.

        The math nerd in me is craving to know if Texas is different as so. Many. People have moved here. What I hear about on social media I can’t relate to most of the time.

        I’m so glad you shared! Sometimes I feel like I’m the only one struggling because so many people “appear” to have it made. You made me feel like I’m not alone. Thank you!

        Reply
  • Kevin October 14, 2024, 10:23 am

    My new year’s resolution this year was not to give a poop about politics. Best resolution I’ve ever made! I still plan to vote, but it’s very nice channeling out the constant noise telling me how terrible everything is or will be. Americans need better/healthier hobbies than politics.

    Reply
  • Patrick October 14, 2024, 10:45 am

    Well said.
    The one true messed up thing with the economy is the growing wealth disparity. The rich are getting richer and the poor are getting not poorer but they feel poorer because the gap between them and the rich is so ridiculously huge now.

    It’s not surprising the Republicans don’t point this out because then they’d have to admit their tax cuts for the rich are one of the causes of it. I don’t understand why the Democrats don’t point it out more though. The Republican candidates actually campaign on tax cuts, which mostly benefit the rich, at rallies that are mostly attended by people the tax cuts will hurt. It’s crazy.

    Slightly disagree on your #6 though – everyone has enough and the middle class shouldn’t complain about how hard they have it these days? Well, I think it’s actually the lower class that is complaining, and they have good reason to because they’re hamstrung by the high cost of real estate (which affects rentals too), low minimum wages, and inflation that raised the cost of basic essential goods (like groceries).

    Totally agree with you on gasoline being way too cheap. I filled up our car for $27 ($3/gallon with Fred Meyer discount points) which was only a little more than I paid for a bacon cheeseburger + fries + tip at an average local restaurant. 9.3 gallons of gas, which lasts me a month, should cost *way* more than one take-out meal.

    Reply
    • A guy October 17, 2024, 5:14 pm

      I don’t necessarily disagree but this is why we should use data not feeling. Wealth inequality shrunk for over of the few times in the last hundred years in the last few years and lower income Americans saw the largest increase in income by far, including disposable income and savings rate.

      Reply
  • Frugal Bazooka October 14, 2024, 11:44 am

    3M,

    You’re missing a lot of nuance in your analysis of the effects of policy on the economy and the average American.
    Does the president set interest rates? No. Does his policies affect interest rates? 100% yes. If you’re going to glibly refer to Econ 101 as the stuff that everyone should already know, then you need to take a refresher course. If the president signs a spending bill for 3 Trillion dollars, those dollars will chase fewer and fewer goods – otherwise known as inflation. Yes Covid was a factor, so why would they pass the “Inflation Reduction Act” spending trillions of dollars right on the heels of an already inflationary Macro event? Let’s talk about Gov’t regulation of oil production thru lease permits and regulations that cause the cost of oil to increase. If oil/gas go up guess what else goes up in price? EVERYTHING. Trucks move products and oil moves trucks. Price of oil goes up, price of moving products goes up, product price goes up. I know you are smart enough to know this stuff, but you left it out of your analysis. If I am wrong, explain how.
    Others have already talked about how much more things cost for the average family especially food. The rich on the other hand, have hardly noticed inflation. I guess the severity of inflation truly is in the eye of the beholder. I know that I cannot afford the same amount of protein as I did 5 years ago and nearly everything I buy at the grocery store is up 20 – 30%. Some things are even higher. I know that none of the prices I pay today have matched my yearly 2% increase in pay.
    When I read stories in the national media written by relatively wealthy national reporters that tell me that my economic life is “much” better than it was 5 years ago, I know it because they are either out of touch or have an agenda.
    If higher prices and stagnant wages are what elites are trying to convince average people is a great economy…then please, bring back the terrible economy of 5 years ago. All this greatness is kicking my ass.

    Reply
    • Luke October 14, 2024, 1:16 pm

      MMM responded to a similar comment above, but the gist of it is this: government deficits do not cause inflation. If that were the case, we wouldn’t have had such an extended period of ultra-low inflation leading up to the recent spike.

      You are also falsely attributing the rise in gas prices solely to US economic decisions. But if that was such a critical factor, then why are we now producing more oil than ever before? It’s the unrest in the other oil-producing countries that drove up the price of oil, which made it more profitable to extract and refine it here.

      Ironically, blanket tariffs will do the same thing to the rest of imported goods: they will raise the price you pay, potentially making it possible to produce those goods locally. Not more cheaply, mind you…more profitably. With blanket tariffs, the prices will go up.

      Reply
      • Frugal Bazooka October 15, 2024, 1:29 am

        With all due respect my post has nothing to do with deficits. You’re conflating massive govt spending with deficit spending – they are 2 distinctly different economic policies. Massive govt spending causes inflation every time. That’s why the Fed can reduce inflation by raising the prime interest rate and tightening the money supply. It’s not a theory, it works every time that’s why they do it to reduce inflation. I have been a fan of 3M for many years. Sometimes he’s right and sometimes he’s wrong, but none of that changes economic realities.

        No where do I falsely attribute gas price increases solely to “US economic decisions”. I simply state well established Economics – Govt Regs and interference in markets will cost those markets more to create their product. They will in turn pass those costs on to the consumers. It just so happens that decreased oil production has a significant ripple effect because nearly everything we consume in the US is made in China and must be shipped to consumers on gas guzzling ships and trucks. Those ship owners and truck drivers will pass the increase in gas prices onto the consumer. Again not a theory, well established economic behavior.

        Oil, as you know, is an inelastic commodity and therefore demand will be immune to increases in price. In fact, as I’m sure you also know, when the Govt tries to reduce oil production it typically increases oil company profits because smaller, competitive oil companies are priced out of the market, which decreases competition. That causes only the larger more profitable companies to survive and reap the upward pressure on prices. Until the supply of oil is increased dramatically the price of oil will remain high and inflation will be higher than it needs to be. The fact remains that “unrest” does not directly affect oil production. It might affect the price of a barrel of oil on the spot market on a day to day basis, but oil production is immune to nearly every economic pressure (again, inelastic demand) except US govt interference. It has been well established that the US has potentially billions of barrels of oil that could be exploited. Ironically if this were to happen the price of oil could fall so dramatically that the low profit margins would cause oil companies to view oil as a bad idea and seek more profitable energy sources. It’s unfortunate that our Govt officials never took a basic Econ class. It might unleash some efficient and logical policies.

        I’m not sure what tariffs have to do with this convo but ok. I’ve not heard anyone talk about blanket tariffs, only targeted tariffs against unfair trading partners who already impose tariffs on US products. The result of foreign based tariffs are US products are essentially blocked from some foreign markets and our workers lose their jobs because the cost of producing stuff in the US is significantly higher than other countries and foreign tariffs cause our companies prices to be non-competitive in those markets-de facto we are blocked from those markets. This has been going on for 40 plus years and American politicians have allowed it to happen to the detriment of our working and middle class. Meanwhile the rich enjoy cheap products, cheap labor and have no repercussions because they typically don’t have jobs that involve making products that have to compete with China.

        Reply
    • A guy October 17, 2024, 5:20 pm

      We have data on inflation and wage increases that break things up by locale, where you fall in the wage distribution, and if you changed jobs or not. Yes it is entirely possible that you’re in a spot where it’s worse than average and you genuinely have my sympathy if that’s the case. It’s also true that some periods are harder than others, but for most Americans this is not one of those times per publicly available data. Care to share your income and locale so we can verify with data, preferably now and, say, 2019?

      Reply
    • Tyler October 31, 2024, 7:29 am

      Exactly. Let’s not forget that oil is used to make plastic – even your Tesla uses petrochemical products, almost all of your EV’s use oil, just not for the fuel. People have no idea. Polyethylene, polystyrene, you name it. I thought there were a bunch of engineers here? I guess they aren’t chemical engineers or petroleum engineers.

      Reply
  • Crow October 14, 2024, 12:33 pm

    Always makes my day when I open my email and see that MMM posted.
    When reading the electric vehicle part I made a comment that your blog seems to be more city centric and doesn’t really work for country folks or people that have ranches. But I did some research after, and lo and behold, there ARE electric trucks with towing capacity. Granted they are ~$15,000 more expensive than their gas counterparts, which makes me wonder if they are worth it, but… I’m glad to see I have options.
    Do you think your economic and saving philosophies are applicable to small ranch owners who on average make maybe a ~11% profit margin? Many family ranches have to spend most of their yearly profits on the business, not even including food, personal items, etc. Plus when you live in an agricultural zone you can’t walk to the store, or take public transport. I very much subscribe to your philosophies and I am interested to hear your thoughts on non city-centric living.

    Reply
    • Cody October 24, 2024, 2:25 pm

      Hi Crow,

      I’m a city dweller with a desk job, so take this analysis for what its worth. Also, a farm or ranch is a business, so a approaching it from a personal finance perspective may not be the right way to look at it.

      From what I understand most small farms and ranches in the US aren’t profitable. Based on my parents’ neighbors and many of the sources I’ve read, I think this is because farming and ranching is often a cultural identity and a lifestyle choice, and these properties aren’t being run as an efficient business. They’re hobby farms run by rich dentists, or their owners identify as “cattle ranchers” whether or not the market supports that identity and without a diversified, efficient business plan to maximize the profitability of the entire enterprise.

      Here are some Mustachian principles I think apply to farms, ranches, and people who live in rural areas.

      Trade the pickup truck for a smaller, less expensive, and preferably used vehicle that does the job better and drive it as little as possible. For everything else, buy a bike or small (used) sedan. There are shades of rural, but a lot of transportation needs can still be met by bike or electric bike. I rode my ebike about 40 miles yesterday to run errands in the city. I grew up in the sticks, and I’d have had a lot more freedom if I’d had an ebike. An electric cargo bike may able to be substituted for a four-wheeler or pickup truck for a lot of on farm transportation. The bike I have can basically carry the weight of two people. If you’re moving a dozen 40lb bags of feed around, that’s a max of four trips by electric cargo bike. Bikes are low, so loading one is faster and easier than throwing bags up into a pickup truck bed.

      When it comes to farm equipment and purchases of all kinds, ask if you really need the equipment or if its just a status symbol. Can the job be done with muscle power. If you need the equipment, can you buy it used or substitute a less flashy alternative. Financing for farm equipment is similar to financing for a new car. Probably a money hole.

      Every single farm input needs scrutiny and optimization. Fertilizer that washes into the river is money going down the sewer. This includes water, fertilizer, pesticides, etc. Spraying money at the problem isn’t solving it.

      Cut your Cash-Leaking Umbilical Cord. If you moved to the country to enjoy the country, why do you need 500 channels of entertainment?

      Focus on your Circle of Control, not your Circle of Interest. You can’t change the global cattle market, but you can decide whether to add sheep and goats, get paid by a land conservancy, host duck hunters, market your beef to yuppies at farmers markets, or do any number of other things to increase the profitability of your property.

      Reduce grocery trips and expenses by growing your own food and trading with neighbors. Put in some fruit trees and a kitchen garden. Raise some chickens. Trade for milk. This should be one of the big advantages of living in the countryside in farm country.

      That’s just a quick look, but I think a lot of the Mustachian principles apply in rural areas too.

      Reply
  • Chris October 14, 2024, 12:47 pm

    Insightful article, overall.

    BUT, this election is a bit different in that I would say it’s existential to our country. If you have a crazy enough human, at the controls, that destabilizes our country to the point of war (civil or cross-border) or even brings down our democratic system, as we kn0w it (protesting a fair election and overturning), then we have bigger problems, than the economy.

    Reply
    • Mick October 18, 2024, 6:10 am

      Thanks, Chris! Let’s not forget that one of the two contenders vying for the presidency is a pathological liar who tried to overturn the results of the last election. While I agree with most of what MMM says here on the matter of how little the president can influence the economy, our society as a whole is certainly influenced by the moral character of our leaders.

      Reply
    • Tyler October 24, 2024, 11:55 am

      Every election I’ve ever seen since I was born has been contested…
      Bush won in 2000 and the Democrats said Al Gore won and demanded a Recount. Democrats said the Republicans cheated.
      (I don’t remember 2004 to be fair)
      When Obama won, Republicans said he wasn’t a citizen.
      When Trump won, Democrats said he cheated and the Russians helped him. This was proven to be false.
      When Biden won, Republicans said the Democrats cheated.

      I have NEVER been alive for a non-contested election, except maybe Clinton, but he was impeached, and I was an infant. So this all seems a bit hyperbolic.

      And why does everyone forget when the Dems denied elections?

      Reply
      • Katie October 24, 2024, 10:11 pm

        Define “contested”. To me, that carries a meaning of being either formally challenged by those in government (as in 2000) or a significant group of citizens actively trying to prevent the outcome (as in 2020). Aside from fringe types, the outcomes of the other elections were accepted without issue by the American public and government figures, even if many may were upset with certain outcomes.

        In 2000, a recount was done and Al Gore conceded defeat. I don’t recall anyone making accusations of actual cheating at the time. Feel free to show proof if I’m wrong!

        In 2008, accusations of Obama not being a citizen were started by Trump before the election, although they were mostly only repeated by the fringe. McCain vehemently shut down a woman who repeated this lie in a town hall. While some continued to repeat this lie (and still do), the election wasn’t contested in any way.

        In 2016, Democrats said that Trump had benefited from Russian interference. Certainly nobody contested the outcome of the election even if it was protested (as in the Women’s March).

        As for the 2020 election, well…

        Reply
        • Tyler October 28, 2024, 8:01 am

          To me, the parties and electorate and media “contested” every election.
          To you, it sounds like it is only “contested” if the one individual person (the opposing candidate) contests the election. Is that a good enough steel man argument of what you are saying?
          I would say that if the media, the DNC, and the voters all think an election is rigged or fake or not fair, then that is a contested election, no? So then, Bush and Trump in 2016 were just as much contested (complete with rioting after Trump won in 2016) as 2020.

          Reply
  • Mary stone October 14, 2024, 1:17 pm

    Ballmer’s videos were on broadcast TV a few weeks ago (CBS, I think), and he was featured on 10/13/24 60 Minutes episode (more emphasis on his work as Clippers owners). His videos debunk all the noise about the emotional campaign issues that Congress influences (more so than whoever’s president) in easy understood terms. But some cannot and will not be swayed by facts because they are mired in hating perceived common enemy

    Reply
  • John Lanza October 14, 2024, 1:40 pm

    Great post!

    A few questions about your recommendations at the end:
    >Doesn’t the amazing Mint Mobile deal last only 3 months? That doesn’t seem like a great deal.
    >Did you just use Personal Capital for tracking or investing? I ask because we found the investing fees weren’t worth it and switched to Fidelity Zero Total Stock Marketing Index funds.

    Thanks again for your thoughtful insights.

    Reply
    • Mr. Money Mustache October 14, 2024, 5:01 pm

      Thanks for checking those out John!

      The Mint Mobile phone plans are a pretty great deal regardless of the time period ($15/month for 5GB of data which is way more than I use). In fact, since they finally added free data roaming to Canada I am finally going to make the switch from Google Fi which I’ve had for the past 10 years.

      https://mint-mobile.58dp.net/c/2096958/447965/7915

      One interesting feature: they actually *subsidize* the phones and plans if you buy a new phone through them. The deal I want is the Google Pixel 9 at $399 which also unlocks a year of unlimited data at $15/month. So you pay $579 for the phone AND a year of unlimited service – way less than Google wants for just the phone!

      https://www.mintmobile.com/devices/google-pixel-9/6810275/

      Personal Capital: yeah I’m in the same boat – I only use their net worth and spending tracking features, my actual investments are with Vanguard and Betterment.

      Reply
  • tag999 October 14, 2024, 1:41 pm

    On the Harris/Walton policy proposals there is info about incentives for new housing construction to address the shortage.

    https://nhc.org/wp-content/uploads/2024/08/Harris-Walz-economic-policy-press-release.pdf

    Reply
  • Tammy from San Diego October 14, 2024, 2:02 pm

    I think this is my first post here, but I wanted to say that I appreciate your tone, your clarity , your honesty and your bravery. Your articles and thoughtful research have helped me quite a bit on my own path, so thank you.

    Reply
  • Clinton October 14, 2024, 4:18 pm

    These are things that I know but forget sometimes.
    I’m grateful for Mr Money Mustache in times like these to keep me grounded and sane.

    Reply
  • Bob Reisner October 14, 2024, 4:19 pm

    Maybe the word ‘controls’ gives the advantage to your point of view. But the simple substitute of ‘heavily influences’, in my mind, changes your conclusions. In 2017, federal spending was around $4 trillion. In 2025 it will be over $7 trillion. Absent a general war or a rogue congress, this inflationary and deficit adding growth was driven by our last two presidents. By intent, ignorance or indifference, it was the call of the last two presidents.

    Presidents have great power especially since the federal system was changed to make the executive stronger. Elected senators took states out of the loop. Congressional districts were originally about 1 district per 30,000 persons. Today about 500,000 per district. Congress is totally a big money purchase. The 2020 NC senate race was a $300 million campaign. The presidential campaign in 2020 was over $2.5 billion. This kind of spending screams that the federal offices and especially the executive are offices that are on the spectrum of ‘influential’ to ‘controlling’.

    Presidents create wars (Vietnam), wage freezes (Nixon), high inflation (Johnson, Nixon, Ford and Carter), immigrant influx (Biden) and a wide range of ‘bad things’. Some presidents do some good like tax cuts (Regan, Trump) or lower mortgage interest rates (Clinton, Bush). We can disagree on what is a good or bad change but we can usually a president involved in big changes.

    You and many on here might not care because you and they are fully successful and can ride out almost anything that happens. It certainly includes me and my family. But what about those starting out on their life journey or those who are less successful (for whatever reason)?

    Take a look at median household income (HHI) between 1995 and 2022: https://taxpolicycenter.org/statistics/household-income-quintiles The median HHI (call it average) has barely doubled for the bottom 40% of American families from 1995 to 2022 (27 years). Home prices are up over 3x in the same period. New cars about the same. Gas from $1.11 to around $3.5.

    Politics matter. For some of us, it means less rich at worst. For others, like the bottom 40%, it might mean less opportunity to do what many in this group has done.

    Reply
    • Tyler November 1, 2024, 10:35 am

      Well said and couldn’t agree more. Thank you.

      Reply
    • Ricky November 19, 2024, 6:43 pm

      I think you’re largely right that who’s in office has a great chance of affecting those on the fringes. And like you said, it affects the ultra-wealthy too or they wouldn’t be spending so much every election. The middle class really doesn’t have much to gain or lose.

      Still, I’d say the people at the margin of being affected should not pay too much attention besides spending a little bit of time to make an informed decision. Their time is still much better spent with their nose to the grindstone. So yeah, it matters, but not to the point that it has to become their identity and they attend rallies and bicker online over dumb things.

      Reply
      • Tyler November 20, 2024, 7:02 am

        It definitely matters if they are sent overseas to die in battle.

        Reply
  • Peter Harpster October 14, 2024, 6:27 pm

    MMM – I have had similar thoughts to what you shared today. When voting, I ask myself, is my life better today, from an economic standpoint, than it was four years ago? The answer in 2024, 2020, 2016, and 2012 (my first time being able to vote in a federal election) was YES. I also take a look around and see family and friends complaining about inflation yet continuing to purchase new vehicles, take vacations, and eat out. It doesn’t add up. Thanks for this read.

    Reply
  • Kevin October 14, 2024, 8:56 pm

    Always appreciate a good MMM article to help me chill out. My biggest worry right now (as a 30yo) is the job market. I’ve been fortunate to not be affected by layoffs but know many who have, so my biggest concern is getting laid off and losing headway on purchasing a house at some point. Been applying to new jobs as my current one is getting stale but it has been pretty dry.

    Reply
  • April October 15, 2024, 8:02 am

    The economy is what it is. The bigger problem is that no matter who is voted in, people are not happier despite better finances. The government is getting too complicated and gets in the way of hardworking people. For example, our long-running licensed afterschool care program was shut down abruptly by the State during renewal license process despite passing all city safety and health inspections. The state inspector just showed up and said we didn’t get your paperwork, sent the kids home and hey we did it at 2 PM Friday afternoon so working parents had a whole weekend to figure out alternative care, how considerate. What could you do? Smash the state license agency with a sledgehammer? Or suck it up and let the rage build internally and continue the long process to cooperate with the bureaucracy? Didn’t MMM say he couldn’t stand this bullshit to get a building permit?

    Reply
  • Alison M October 15, 2024, 9:44 am

    I really enjoy Mr. MM’ s articles – re-read them on a regular basis, actually! – and I firmly believe in everyone’s right to free speech (minus a caveat for hate speech, which is gross). But what stands out for me in this article and most, but not all, of the subsequent comments, is a bunch of finance bro’s dicing and slicing various libertarian views amongst themselves. And you’re welcome to do so! But it’s SO far off from the lived reality of my low-income friends that I couldn’t resist calling you guys out on it. My friends, who would be classified as the ‘working poor’, are NOT having a good time of it, and none of them are wasteful or stupid with money. And to blame immigrants for housing shortages is just plain weird (with a possible side-dose of underlying racism).

    Reply
  • ACLR8R October 15, 2024, 12:17 pm

    Always interesting to read through your posts. While I agree the president doesn’t control all of those things I think they can definitely have influence, and some form of impact no matter how small it is.
    As a teacher I can tell you my income has most definitely not kept up with inflation (this year was a 2% increase in our contracts), and I do feel that.
    I do have bigger concerns that the economy though living in Arizona, border security has been a larger concern for me, and decided my vote a long time ago.

    Reply
    • A guy October 17, 2024, 5:30 pm

      I won’t obliquely try to convince you to change your mind on this issue or any other, but I’ll ask you to periodically reconsider if being a single-issue voter is your best option. It’s clear that parties create wedge issues out of cloth. It’s perhaps most clear if/after they “accomplish” something on said issue and, what do we know, a new issue rises up to replace it as a long-running worst thing ever. It’s especially obvious when said issue actually has a neutral impact and/or has an impact on a negligible portion of the population. Even better if there’s no possible agreed upon definition of “done” for fixing the issue. It’s a way to sway voters to one side without alienating others while distracting from important issues that are controversial for good reason.

      Reply
    • Troy October 25, 2024, 12:48 am

      A single issue voter, and on that issue there was a bipartisan bill that trump sunk so that he could continue to campaign on it…ya that makes a ton of sense to me

      Reply
      • dandarc October 28, 2024, 3:21 pm

        yup. “I do have bigger concerns that the economy though living in Arizona, border security has been a larger concern for me, and decided my vote a long time ago.” must mean they voted for Harris.

        Reply

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